Carphone plc Annual Report and Accounts Annual Report and Accounts 2016/17 2 016 /17

Dixons Carphone plc 1 Portal Way W3 6RS Telephone: +44 (0) 345 013 0345 Email: [email protected] www.dixonscarphone.com www.dixonscarphone.com @DixonsCarphone “Over the last few years a great deal of work has been done to make the company stronger, lower risk and more resilient. We are seeing the upside of these efforts now as we declare record headline profits before tax of over half a billion pounds – up 10%. More importantly, the improvement in our cost base, the strong leadership position that we have built, the investment that we have made in our digital business and, above all, the enormous shift in customer satisfaction and price competitiveness that we have driven leave us well positioned to flourish in the years ahead. While the UK consumer environment seems to be holding up for us, there will undoubtedly continue to be changes in the way people buy all of the products that we sell from phones to washing machines. Change always represents opportunity, and our job is to find the propositions that keep us compelling to our customers forever. We are excited about our plans in services and about the myriad of initiatives that will drive long- term relationships with our customers. In short, it has been a good year for and it gives me great pleasure once again to thank my 43,000 colleagues for the work that they have done to deliver so well and so energetically for our customers.”

Sebastian James Group Chief Executive 27 June 2017

Cautionary statement Designed and printed by Black&Callow Certain statements made in this Annual Report and Accounts are forward looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results This report is printed on Oxygen Offset 100% Recycled board and referred to in these forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not Soporset paper. Both papers are FSC certified and produced in ISO 9001 and ISO 14001 certified paper mills. undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Nothing in this Annual Report and Accounts should be regarded as a profit forecast. Contents

Strategic Report 2 Highlights of the year 3 Business segments 4 Chairman’s Statement 6 Group Chief Executive’s Statement 8 Strategy, KPIs and Risks overview 10 Our markets 12 Business model and strategy 15 Key Performance Indicators 16 Principal risks to achieving the Group’s objectives 22 Performance review 28 Corporate Responsibility

Corporate Governance 36 Board of Directors 38 Corporate Governance Report 47 Directors’ Report 50 Audit Committee Report 58 Disclosure Committee Report 59 Nominations Committee Report 61 Remuneration Report 63 Remuneration Report – Remuneration Policy 74 Remuneration Report – Annual Remuneration Report 87 Statement of Directors’ responsibilities

Financial statements 88 Independent Auditor’s Report 95 Consolidated income statement 96 Consolidated statement of comprehensive income 97 Consolidated balance sheet 98 Consolidated statement of changes in equity 99 Consolidated cash flow statement 100 Notes to the Group financial statements 145 Company balance sheet 146 Company statement of changes in equity 147 Notes to the Company financial statements

Investor information 154 Five year record (unaudited) 155 Shareholder and corporate information 156 Glossary and definitions

Dixons Carphone plc Annual Report and Accounts 2016/17 1 Highlights of the year

Dixons Carphone plc is Europe’s leading specialist electrical and retailer and services company, employing over 43,000 people in 10 countries. Strategic Report

• Group like-for-like* revenue up 4% • Total statutory revenue up 9% • Group headline* PBT of £501 million, up 10%, total statutory PBT of £386 million • Group headline* basic EPS of 33.8p, statutory basic EPS 25.6p • Free cash flow* of £160 million • Year end net debt* at £271 million • Final dividend of 7.75p proposed, taking total dividends for the year to 11.25p

Headline* revenue (£million) Headline* EBIT (£million) Headline* basic EPS (pence)

12,000 600 35 33.8 30 10,000 10,580 500 517 30.2 9,736 9,750 9,752 9,517 478 25 8,000 400 25.5 413 359 20 6,000 300 310 18.6 15 4,000 200 10 10.9

2,000 100 5

0 0 0 2016/17 2015/16 2014/15 2013/14 2012/13 2016/17 2015/16 2014/15 2013/14 2012/13 2016/17 2015/16 2014/15 2013/14 2012/13

Our European store presence

Store numbers Own Franchise Total • UK and Ireland 1,148 — 1,148 • Nordics 249 144 393 • Southern Europe 311 287 598 1,708 431 2,139

* See glossary for definition of terms including headline performance measures. Results for 2015/16 have been restated as set out in note 32 to the Group financial statements. Figures presented in charts for 2014/15 and previous periods are ‘pro forma’ results as defined in the glossary

2 Dixons Carphone plc Annual Report and Accounts 2016/17 Business segments

We operate four segments as follows:

Brands Websites UK & Ireland CurrysPCWorld .co.uk currys.ie • CurrysPCWorld is the largest specialist electrical retailing and Strategic Report services operator in the UK & Ireland. pcworld.co.uk pcworld.ie • is the largest independent retailer in the UK & Ireland. Carphone Warehouse carphonewarehouse.com carphonewarehouse.ie • operates in major UK airports, Dublin and Oslo. • Team Knowhow is our market-leading services brand. Dixons Travel dixonstravel.com • Geek Squad is the repairs and support provider for Team Knowhow knowhow.com Carphone Warehouse. Geek Squad geeksquad.co.uk • iD Mobile is one of the UK’s fastest growing MVNOs offering innovative and flexible propositions. iD Mobile idmobile.co.uk • Simplifydigital is the UK’s largest, and fastest growing, multi- Simplifydigital simplifydigital.co.uk channel broadband, phone and TV switching platform. PC World Business pcworldbusiness.co.uk • PC World Business provides computing products and services to business to business (‘B2B’) customers. Nordics Elkjøp elkjop.no

• The Elkjøp Group is the leading specialist electrical retailer elgiganten.se across the Nordics. elgiganten.dk

• Elkjøp, Elkjøp Phonehouse and Lefdal stores operate in , Gigantti gigantti.fi Elgiganten and Elgiganten Phone House in and and Gigantti in . Lefdal lefdal.com • Knowhow has been introduced in the Nordic region. Phone House phonehouse.se • InfoCare is the largest consumer electrical repair company in InfoCare infocareworkshop.no the region, operating in Norway, Sweden, Denmark and Finland. Southern Europe kotsovolos.gr

• Kotsovolos is ’s leading specialist electrical retailer. Phone House phonehouse.es

• Phone House is the leading independent telecommunications Geek Squad geeksquad.es retailer in Spain. • Geek Squad is the repairs and support provider for the Phone House in Spain.

Connected World Services (‘CWS’) connectedworldservices.com • CWS aims to leverage the Group’s existing expertise, operating honeybeesolutions.com processes and technology to provide a range of services to businesses. • CWS organises its services into two product towers: —— Value Chain Services —— honeybee platform

Dixons Carphone plc Annual Report and Accounts 2016/17 3 Chairman’s Statement Strategic Report

I am delighted to be reporting to you as the newly appointed Chairman of Dixons Carphone plc. It is great to be back at a business I served for more than a decade. Importantly, I would like to pay tribute to the achievements of my predecessor, Sir Charles Dunstone, one of the UK’s great entrepreneurs, who founded half of this business that has gone on to be one of the world’s major retailers, serving millions of customers every year in 10 countries and employing more than 43,000 people.

It has been a remarkable and sometimes challenging year. In the Nordic region, our expanded distribution centre in In the days after the referendum on the UK’s membership of Jönköping, Sweden, one of the largest in Northern Europe, the EU, the Company’s share price fell by as much as 34%, was completed to time and on budget with its own railway as retailers were considered vulnerable to a post Brexit station inside the centre. It distributes across the Nordics slowdown. In this environment and despite the uncertainty, and we expect to see benefits in stock availability and the team got on with their job of making the business efficiency. stronger by serving our customers better. We continue to gain market share across our businesses. In the UK & Ireland our new 3-in-1 stores bring together A particular mention should be made of Kotsovolos in Currys, PC World and Carphone Warehouse in an exciting Greece which further enhanced its position as market leader shopping environment and we are very pleased with the with 3ppts market share growth against a clearly difficult initial results of these stores. We have also improved economic environment. our online capabilities, particularly with a new Carphone The hard work of all our people and the management team Warehouse web platform and we have experienced strong led by Seb – and a huge thank you to all of them - have online sales growth across all our brands. helped deliver a 10% growth in headline profit before tax And it’s not just about great products. Team Knowhow, our on 9% higher revenue with total profit before tax increasing new services brand, is piloting a range of expanded services £123 million. This is an excellent achievement at a time in the and London conurbations. We think that this when many retailers are struggling. This has allowed support will be ever more important to help customers the Company to announce a dividend of 7.75 pence per to get the best from the amazing world which modern share for the full year, an increase of 19%, to be paid on technology can offer. 22 September 2017. We also have become an important centre to help customers choose the best providers of other services. We successfully integrated Simplifydigital into the Group and both in store and online made switching your energy, broadband or TV service easy. Go to one of our stores and try our 30 second challenge to save you money!

4 Dixons Carphone plc Annual Report and Accounts 2016/17

In business, it is not just what a company does but how it does it that matters and we are proud of our contribution to the societies in which we operate. Our relationship with our key stakeholders and the way we manage the business in a sustainable manner are set out in our Corporate Strategic Report Responsibility Statement on pages 28 to 35. We believe that our unique expertise in technology can be used to help tackle social issues and we are hugely supportive of our colleagues’ roles in contributing to good causes. Dixons Carphone is proud to be a founding partner of Heads Together, which seeks to support those with mental health issues. We are also a Charity Partner of the Mix which supports the physical and mental wellbeing of young people. This was recognised when Dixons Carphone were shortlisted for Charity Partnership of the Year. The future holds many opportunities and a few challenges and uncertainties. But we are well positioned. We have invested to make our stores best in class. We are market leaders in our key markets. We believe that the future will become more connected and more complicated. Customers will choose and buy through a mix of online and offline. We will be there with them providing technical knowhow and unbiased independent advice together with the ever important great prices, excellent service and great choice. Our job is to provide great value for customers and shareholders alike. Finally I would like to take this opportunity to express my thanks to not only Sir Charles but also Tim How and Baroness Sally Morgan who will both be stepping down from the Board following the 2017 Annual General Meeting. Tim and Sally have been long-serving members of the Board and have provided invaluable support and guidance during their terms. I wish them both all the very best in their future activities. I am also pleased to welcome Fiona McBain to the Board; Fiona’s business leadership, in particular in the financial services sector, will be a great asset as we evolve our consumer services propositions.

Lord Livingston of Parkhead Chairman 27 June 2017

Dixons Carphone plc Annual Report and Accounts 2016/17 5 Group Chief Executive’s Statement Strategic Report

I am very pleased to be reporting another set of strong numbers for the Group. In what continues to be a lively political environment, in particular in the UK, it has been good to see the business deliver a good year for Dixons Carphone both financially and operationally.

Dixons Carphone has had another strong year financially; we have trialled a new format for our standalone Carphone Group like-for-like revenues were up 4% over the year, Warehouse stores; we now have 9 open and will continue to with growth in every region in the Group leading to a open more during the course of the year. The performance 10% increase in Group headline PBT from £457 million to of these stores has been highly encouraging, in particular £501 million, slightly above the guidance we gave, resulting for sales of accessories and insurance. In addition we have in an increase in headline basic EPS from 30.2p to 33.8p. launched a new Carphone Warehouse web platform which At the same time, it is pleasing to see – across the Group is trading well. – sustained high levels of customer satisfaction and Net Price competitiveness continues to be an area of real focus; Promoter Scores driven by our continued relentless focus our customers are – rightly – savvy, and we need to be both on improving our proposition for our customers. Total competitive and transparent - not only on the products reported profit before tax has increased by £123 million themselves, but also on the cost and availability of delivery driven by the increase in headline EBIT and a reduction and services. Today, we show competitor prices on our in year on year non-headline costs, principally those websites so that customers can feel confident at all times associated with our ‘big-box’ property plan, the costs of that they are getting a great deal from us. We continue to which were fully recognised in FY16. be at parity or better versus our most aggressive pure- Our business in the UK & Ireland enjoyed a good year play competitors on pretty much all of our products, pretty despite some headwinds in particular within phone, with much all of the time and we are transparent about our like-for-like revenues up 4% over the year and headline delivery availability versus our main competitors. Our free EBIT up 4% to £385 million. This sales growth was driven app ‘Compare Prices’ is a great tool for colleagues and in large part by growth in electricals in a flat overall market. customers to check prices themselves. This was somewhat tempered by a more challenging phone iD mobile operations in the UK continue to grow from sector which was impacted by product safety issues, a strength to strength since launch in May 2015. iD allows limited supply in the market of some key lines and some us to offer highly differentiated propositions to customers, changing trends in SIM-only. Against this backdrop, the supported by an innovative IT platform, enabling us to tailor team have delivered good profit growth underpinned by plans, for example, with the ability to transfer data between solid cost control across the business. friends and family, as well as being at the vanguard of Over the course of the year we all but completed our free roaming. These propositions are proving to be very ‘big-box’ property plan, closing 80 stores, and providing successful and I am very pleased that the active customer a consistent experience with the latest categories and base is now more than 600,000, making iD one of the look-and-feel now right across our estate. Virtually all fastest growing postpay MVNOs (Mobile Virtual Network of our CurrysPCWorld stores now offer a fully-fledged Operator) in UK mobile history. embedded Carphone Warehouse shop-in-shop. Separately

6 Dixons Carphone plc Annual Report and Accounts 2016/17

Multi-play has had a great year. The proposition was re- Our Southern European business had a very good year in launched and supercharged a little over a year ago and we the face of ongoing political and economic turbulence and have more than doubled our market share of the fixed line I am pleased it has reported Group leading 6% rise in like- switching market. We are the only place where a customer for-like revenues over the year with headline EBIT growing can compare, discuss, choose and switch – from a wide from £17 million to £22 million. I am particularly proud of Strategic Report choice of national providers – the broadband and TV the team in Greece; our Greek business has increased package that is perfect for them, expanding the expertise profitability in 2016/17 against what continues to be a tough we have developed in mobile to all telecommunications operating environment on the back of continued innovation and TV content needs, but we will not stop there. We have and vigour. In the last year the team has opened new stores, ambitious plans for the business including our innovative grown market share, radically improved delivery options energy switching proposition in the coming year. for customers across the country and developed a new digital agenda including a new e-commerce platform due to Both our Dixons Travel business and Harrods Technology launch in the coming year. In Spain, we have continued to have had a very strong year, benefiting from an influx be agile in tough, albeit improving, economic conditions. We of visitors post the EU referendum. In Dixons Travel we continue to move to a more flexible franchise approach, and opened new stores in Heathrow Terminal 2 and at London to pivot the model to offer multi-play, SIM-only and handset City Airport as well as in Oslo, all trading well. In Harrods, only, as well as gaining traction with our new SmartHouse while sales have been good across the board the sales proposition. of mobile phone hardware has been particularly strong. While we do not expect to see the currency benefit extend Our Connected World Services division has also had a indefinitely in these stores, we have been pleased to be able good year, generating £21 million of headline EBIT, driven to take advantage of the increased demand. by deepening our existing partnerships. Our relationship with Sprint continues to evolve and we are currently in the Our new Team Knowhow proposition has had a promising process of rolling-out our IT platform, honeybee, across start, including our Leeds and London pilots. This has their estate. In light of very volatile US market situations focused initially on phone and white goods repairs and and responding to Sprint’s desire to accelerate its own NPS levels have been very encouraging indeed. Repair is distribution platform we have agreed to sell our share of the a critical first step, but we think that finance, protection joint venture that we built together back to them. honeybee, and support and services will all be strong elements of the our unique platform, continues to push forward, expanded proposition and we have put in place a strong and we have signed an agreement with WebHelp, a large team, led by Feilim Mackle, to drive this business forward. French outsourcer for our Contact Centre product. We believe passionately that customers will increasingly want somebody to take responsibility for keeping the Finally, the political sands in the UK continue to shift. We dozens of devices and appliances in their homes working, have, I believe, been able to manage the immediate fallout always on and upgraded and that we are uniquely placed to of the referendum result without significant issues and our do that cost-effectively and well. proposition remains as competitive and attractive as ever. Nevertheless, we will remain vigilant as the questions arising Our Nordics business, against, again, a relatively tough out of the recent election ebb and flow and look, as always, market backdrop, had a very respectable year with like- to turn changes in the market to our advantage. for-like revenues up 1% over the year and 2% in the fourth quarter, and headline EBIT increased 13% to £89 million. In short, it has been another year of strong delivery within Operationally the region has delivered some positive the business and I feel pleased to be ending the year well- improvements including the building and commissioning of positioned for the year ahead. I am also acutely aware that the new small-product warehouse in Sweden, creating the we are only in this position thanks to our more than 43,000 most efficient and modern operation of its type in Europe, colleagues operating in 10 countries across the Group integrating InfoCare, the largest repair company and my sincere thanks go out to them all. I am constantly in the region, developing its digital infrastructure, improving impressed by the passion and commitment of the men and its online proposition and integrating the Fona business women who make up the Dixons Carphone family, and am in Denmark. The business is also implementing electronic very proud to work alongside them. shelf-edge ticketing and a new merchandising model which will drive cost and stock out and improve margins.

Sebastian James Group Chief Executive 27 June 2017

Dixons Carphone plc Annual Report and Accounts 2016/17 7 Strategy, KPIs and Risks overview

Our markets1 Our strategic priorities2 Achievements in 2016/173

Product Continue to enhance and drive Market share and like-for-like revenue successful and sustainable growth in core markets Strategic Report business models in a multi- Sustained high levels of customer channel world satisfaction and price competitiveness Largely completed our 3-in-1 property programme and increased our SWAS presence Strong growth in iD mobile base and multi- play share Launch of new Carphone Warehouse web platform and store format Rollout of click and collect to 500 Carphone stores Launch of same-day delivery Opened newly extended distribution centre in Sweden

Services Leverage our scale, our knowhow, Feilim Mackle hired to lead the team and our unique infrastructure to Successful Leeds trial, extended to London drive growth in new product areas including growth in services Launch of energy saver app Instant repair trial in Nordics

Connected World Services (‘CWS’) Develop the Connected World Extension of contract with TalkTalk, renewal Services model and establish it as with RBS a material contributor to earnings

8 Dixons Carphone plc Annual Report and Accounts 2016/17

Plans for 2017/183 Relevant Group KPIs4 Principal risks5

Unrelenting approach to price and Headline revenue Dependence on networks service

Like-for-like revenue growth Dependence on key suppliers Strategic Report Extension of same day delivery and Market position Consumer environment and sustainable order up to midnight for next day business model Headline EBIT Enhanced and simplified online Greek business journeys Headline profit before tax IT systems and infrastructure Expand new Carphone store format Free cash flow roll-out Information security Return on capital employed Develop B2B in Nordics Non-compliance with Financial Conduct Authority (‘FCA’) regulation Colleague retention and capability Business continuity plans are not effective Health and safety Fraud Impact of Brexit

Rebrand and national roll-out of Team Headline revenue Consumer environment and sustainable Knowhow business model Market position Development of proposition IT systems and infrastructure Return on capital employed Develop Nordic on-site repair network Information security and expand at home services Colleague retention and capability Business continuity plans are not effective Fraud Impact of Brexit

Develop and convert pipeline Headline revenue Consumer environment and sustainable business model Market position IT systems and infrastructure Headline EBIT Information security Return on capital employed Non-compliance with Financial Conduct Authority (‘FCA’) regulation Colleague retention and capability Business continuity plans are not effective

1 Our markets pages 10 to 11 2 Business model and strategy pages 12 to 14 3 Chairman’s and Group Chief Executive’s Statements on pages 4 to 7 4 Key Performance Indicators are explained on page 15 5 Principal risks to achieving the Group’s objectives on pages 16 to 21

Dixons Carphone plc Annual Report and Accounts 2016/17 9 Our markets

Our markets The sophistication of mobile phones continues to grow, from simple mobile devices to sophisticated hardware with The Group’s core retail focus is the sale of consumer advanced functionality. There is a wide choice of operating electricals and mobile phone products and connectivity. platforms and network options for customers, which makes The Group also has a significant services infrastructure the Group’s expert and impartial advice, simplified by the Strategic Report focused on maintenance, support, repairs, delivery and tablet based tool, Pin Point, particularly relevant. installation of hardware and services. In addition, the Group has developed a business-to-business operation via its Customers continue to use ever increasing levels of data. Connected World Services division which leverages the As MNOs roll out their 4G networks and begin to trial 5G specialist skills, operating processes and technology of the technology, quality and speeds improve, facilitating much business to provide services to third parties. faster downloads and providing levels of performance comparable to many Wi-Fi networks, enabling a much better Product platform for streaming, in particular for video content. We have seen some significant shifts in capacity in many of CurrysPCWorld Carphone Warehouse is the only nationwide our markets in recent years; in consumer electricals some consumer electricals and mobile phone retailer in the UK & mass merchandisers have been reducing space for electrical Ireland. The Elkjøp Group in the Nordics and Kotsovolos in products, some single channel internet operators have Greece are the largest consumer electrical retailers in their de-emphasised certain segments, and in some specialists respective markets. have exited the market entirely. These shifts have helped us The consumer electricals retail market can be split between to gain market share and it underpins our view that a strong specialist electrical retailers, such as CurrysPCWorld, service-led multi-channel operation satisfies both customer and general retailers which sell electrical goods as part and supplier needs while delivering a sustainable business of a wider offering. The market can also be broken down as customer shopping habits continue to evolve. We believe into two distinct distribution channels: ‘assisted’ and further consolidation will occur in some of our markets. ‘unassisted’. In the assisted channel, specialist retailers The internet has established itself as an important part help customers through the buying process in the form of of the retail landscape. It supports enhanced product product advice, add-on services, delivery and installation. information as well as price comparability. It is an essential The unassisted channel, which includes single channel part of the buying process for customers, particularly for internet retailers as well as general retailers, tends not to large ticket discretionary products. However, the expert offer all of these services. advice provided by well-informed sales advisors within Specialist electrical retailers are the predominant destination stores is highly valued by customers and manufacturers. for customers in the European consumer electrical market. Larger retailers, with an integrated multi-channel offer, with Buying groups, general merchants and independents also scalable distribution and systems, together with proven have a retail presence through stores and / or online. The after-sales service and support are increasingly attractive to market is served by a relatively small number of global customers. manufacturers supplying goods to local, regional, national The increase in online penetration provides us with the and international electrical retailers. opportunity to increase both the range of goods on offer In each of our markets there are varying numbers of specialist and the availability of product information. Our multi- retailers who compete in the assisted market. Whilst we do channel approach is well placed to exploit synergies compete against general retailers, this is usually limited to between our internet sites and stores. certain lower price categories and we consider that these Our reserve&collect service (collect@store in the Nordics), retailers do not offer the full range of products, assisted sale where customers can order on the internet and collect or the other services that we are able to provide. from a convenient store at a time to suit them is proving In mobile phone retailing, Carphone Warehouse as the only to be increasingly attractive to customers. Similarly, our nationwide independent channel is uniquely placed to offer pay&collect service, where customers can access a wider impartial advice over the vast array of network, handset and range of products than is typically available in their local operating platform propositions available in the market. store for either home delivery or later collection from the store, is also increasingly popular. Over the course of In addition to Carphone Warehouse, the mobile phone the year we have greatly extended this option, enabling market is served by Mobile Network Operators (‘MNOs’), customers to collect smaller electrical products in over 500 with whom the Group has long and well-established Carphone Warehouse stores, providing a more convenient relationships, as well as independent and generalist collection point in high streets across the country. retailers. The MNOs will offer propositions for their own networks, whilst independent and generalist retailers will Innovation brings new products with improved functionality provide a greater variety of propositions on one or multiple that drives sales growth. These include 4K Ultra High networks. Furthermore there are online-only retailers Definition (‘UHD’) and smart TVs, wearable technology, providing a variety of these services. This market is also connected products for the home such as heating and served by MVNOs as well as a relatively small number of lighting and the latest smartphones. Content, such as social global manufacturers supplying goods to local, regional, media, apps, camera picture quality, digital media and national and international MNOs / MVNOs and retailers.

10 Dixons Carphone plc Annual Report and Accounts 2016/17

cloud storage, also help to drive hardware innovation and We have Europe’s largest tech and white goods repair replacement. facility in Newark with more technical support agents than any other business providing a nationwide solution. This is a The economic backdrop determines whether customers complex business to replicate. trade up or down. The consumer electricals market tends to grow at a rate that is at or exceeding the economy during We have put in place a new leadership team dedicated Strategic Report years of economic growth. The effects of an economic to this division and developed a commercial model with downturn may be mitigated by innovation. The mobile refreshed and innovative propositions that we will roll-out market is less cyclical and mobile phones are considered an during 2017 and 2018. Our revised service propositions essential part of modern life. will be accessed and delivered by customers through an increasingly digital interface with highly responsive care The rapid innovation cycle may lead to price deflation, but around the clock, easily accessed at home or on the move. also drives volumes as products become more affordable and replacement cycles accelerate. For larger ticket items, Once fully executed we expect our services business the low frequency of purchases limits the impact of price to provide long-term sustainable revenues in attractive, deflation on total market sales as consumers typically trade growing markets. up to higher specification products. Our ‘Customer Journeys’ are designed to explain the features and benefits of the latest Connected World Services (‘CWS’) technology to customers and help them understand the reasons for trading up to these newer technologies. Connected World Services aims to leverage the specialist skills, operating processes and technology of the business The sale of white goods is also driven by the dynamics of to provide services to third parties looking to develop their the housing market as new construction, house sales and own connected world solutions. CWS already provides refurbishment trigger new purchases. managed services to a number of major international businesses and has a significant pipeline of active Services opportunities. The current focus is on delivering value and growth from two specific areas, Value Chain Services and Everyday technology, whether smart TVs, computing, our proprietary IT software, honeybee. mobile phones or kitchen appliances, is becoming more complicated with connectivity and inter-operability becoming Value Chain Services increasingly necessary. Families are dependent on this technology for keeping in touch with friends and family, Value chain services leverages the end-to-end capabilities entertainment, work, finances and school homework. of Dixons Carphone to provide a full suite of services that enable the sale and support of connected devices. We run In addition, innovation drives new service requirements, the largest mobile phone repair centre in Europe, operate including TV installation, data backup, computer set up and the biggest handset sourcing operation in Europe, are instructional Showhow teach-ins. In this complex world proven experts in this complex and regulated industry we believe our assisted sales model is best placed to help and we already have a significant established client base, customers navigate the market and to help them choose a including TalkTalk, RBS and EE. We provide the following complete solution that best meets their needs. services to our clients: connectivity, insurance services in Most homes in markets in which we operate have more partnership with Aviva, device supply, sales operations, than ten connected devices, and this is expected to grow forward and reverse logistics, software platforms, and dramatically over the near term, creating more demand for customer service. home technology support services. honeybee We believe the market for home technology support to be honeybee is our proprietary IT software, developed in- already large, worth around £5bn in the UK alone, of which house initially to serve our mobile phone customers. It is a we estimate to hold a c. 10% share. Despite the significant unique omni-channel, multi-industry software that simplifies demand and a large market, the supply of services is highly the delivery and management of complex digital customer fragmented. journeys. The software has been developed through There is a major opportunity to grow our share in these 25 years’ experience of complex digital journey innovation valuable and growing markets more closely to match our and today enables multi-country carrier activations which share of product sales. Our aim is for Team Knowhow to be can revolutionise customer journey development tools. the leader in technology support. honeybee’s use is not limited to mobile phone retailing and we have recently signed an agreement with WebHelp to Importantly we start from a position of real strength; our trial the platform to improve the efficiency of its call centre services capabilities and operating platform developed to operations for a leading European MNO. support our product sales business is already class-leading and at real scale. We are the UK’s leading technology support business with: over 11m warranty and insurance customers; 1.1m mobile repairs per year; 4.2m home visits per year; 700,000 computer and TV repairs per year; and over 400,000 finance customers.

Dixons Carphone plc Annual Report and Accounts 2016/17 11 Business model and strategy

Business model completed the roll-out of Carphone Warehouse SWAS (‘stores-within-a-store’) and the transformation of our stores Our core retail business model, driven by customer insight, to the 3-in-1 format. These stores allow us to offer the best comprises three pillars underpinned by a low-cost operating of both worlds to customers, attracting new footfall and model. often at a lower cost. Strategic Report In order to ensure we understand what products and In the Nordic region as well as Greece and Spain we also services our customers want, how they use the products operate a number of franchise stores. This arrangement they buy from us and what they think of the service they get allows our brands to be present in a wider range of from us, we use extensive customer insights. This includes catchments, while increasing the volume of purchases customer panels, interviews, home visits and detailed and therefore buying power of the Group and reducing our surveys. We use this information to build our ranges, capital requirements. improve our stores and services and for other business decisions. This is supported by mystery shoppers, exit The Group sees distribution as one of the keys to success surveys and customer feedback. During the year our UK & in maintaining highly competitive margins and delivering Ireland and Nordics businesses continued to sustain high outstanding, market-beating service to customers. We levels of customer satisfaction. operate a centralised system of distribution centres for each of the regions in which we operate. This delivers significant Taking each of the three pillars in turn, our model can be competitive advantages, including reduced operating costs, described as follows: reduced supplier delivery costs, reduced stock volumes in store, increased flexibility as to where to deliver and when, Multi-channel retailing and a more efficient home delivery network for both us and The shopping trip for customers is constantly evolving. our customers. Our objective is to provide our customers with a seamless While continuing to reduce costs, we are also constantly and personalised experience where convenience, ease of raising the bar, both in terms of successful delivery and navigation and simplicity are key in attracting customers to installation rates, but also the range and quality of services shop with us whether it is online, in store or a combination we offer customers nationwide. In our Nordic operations of both. (Jönköping, Sweden) and the UK (Newark), we operate two of the largest distribution centres of their kind in Europe. We constantly aim to develop and improve our customer The Jönköping site is also expanding to incorporate an up- journey whether via our assisted sales tool Pin Point or by to-date automated ‘small box’ operation. In the UK alone we improving stores, making them easier to shop in, with, for now make more than 50,000 deliveries per week, including example, improved navigation, better signage, and enabling some 600,000 installations per year. customers to interact with products before they buy. Within our recently refitted stores, the TV and audio category is Products set up to resemble a living room enabling customers to experience the full sensation of a large wall-mounted 4K Combining our customer insight with our market-leading television with surround speakers. These journeys are presence we can make sure we have the right range of supported by product specialists providing expert advice on products and services in our stores to suit customers’ the products’ features and benefits. needs. Our scale and relationships with suppliers mean that we can work with them to showcase the latest technology, Our websites are a crucial and fundamental part of the connectivity and products in our stores with areas dedicated customer shopping journey. A customer’s initial interaction to key suppliers. is often online as is more and more of the customer’s journey. In recognition of how customer trends are evolving As market leader with an excellent reputation in the we have made it easier for our colleagues, in particular consumer electricals market we have exceptional within our CurrysPCWorld stores, to access products and relationships with suppliers. In a complex multi-channel extended ranges in store. environment, suppliers trust us with their new product releases and stock allocations, as they appreciate the Our training programmes, combined with our product service and advice offered by our stores and indeed our learning centres and customer journeys, provide our websites, as well as the exciting environments offered by colleagues with the right tools to understand customers’ our transformed stores in which customers can experience needs and to provide them with the complete solution to their brands and products. properly meet those needs. We will continue to improve the training of our colleagues and the ways in which we can In consumer electricals, own-brand products enable us make them experts in the products we sell. For example to offer customers greater choice and access to a range we have in the year recruited and trained colleagues in of products at competitive prices. We have defined a the selling of multi-play, helping to double our share of clear ‘good, better, best’ brand range including: Currys the broadband switching market. In the Nordics we have and PC World Essentials, Logik, iWantit, Advent, Goji and launched a new e-learning management system. Sandstrøm brands. We see particular opportunities in the area of accessories and essentials with, for example, our We constantly review our store portfolio to ensure we own range of Sandstrøm cables. In addition, we continue to have the right store for customers in the most competitive focus on the roll-out of our kitchen furniture brand, Epoq, in locations. Over the course of 2016/17 we have all but the Nordics.

12 Dixons Carphone plc Annual Report and Accounts 2016/17 After-sales services and support Our key service brands include Team Knowhow in the UK, Ireland and the Nordics, and Geek Squad in the UK, Ireland Our customers need help with their products, whether it and Spain. be maintenance and repair or delivery and installation, help keeping their products up and running or repair should B2B services are provided through CWS, PC World things go wrong. Our business in the UK & Ireland sets Business, Elkjøp Business and Carphone Warehouse Strategic Report the benchmark for our services infrastructure under our Business. Connected World Services aims to leverage Geek Squad and Team Knowhow brands; the latter is also the Group’s existing expertise, operating processes available across the Nordics. and technology to provide a range of services to other businesses. We operate the largest network of two-man deliveries in the UK with an average of 50,000 deliveries per week enabling We continue to drive the Group forward from a position us to provide customers with the convenience of next- of strength with a focus on three strategic priorities. By day delivery in a four-hour time slot or the option of a free focusing on these we can deliver not only a better business delivery at a later date. We repair more than 1m handsets for our customers and colleagues, but also better returns for per year and provide over 11m insurance or service our shareholders. agreements, carry out approximately 500,000 computing The strategic priorities are: set-ups per year and take over 40,000 technical support calls each week. 1. Continue to enhance and drive successful and sustainable retail business models in a multi-channel Our Geek Squad and Team Knowhow teams in stores, in world; our call centres as well as field technicians, can provide set-up and upgrade services and online fix and backup 2. Leverage our scale, our knowhow, and our unique services. Our market-leading range of help and support infrastructure to drive growth in value added consumer services ensure a customer, both business-to-customer services; and (B2C) and business-to-business (‘B2B’), has the backing of 3. Continue to develop the CWS B2B division. expertise and support that keeps their technology up and running. Our state-of-the-art repair facility in Newark is able Looking at each of these in turn: to repair and return a laptop in seven days. Our network of field technicians offer white goods repair in a market we 1. Continue to enhance and drive estimate to be worth around £700 million a year. successful and sustainable retail Through ownership of the service infrastructure we can business models in a multi-channel ensure the quality of service delivered to customers. This, we believe, provides us with a significant competitive world advantage in meeting the needs of our customers, as well Our customers tell us that when buying consumer electricals as a revenue stream not readily available to single channel they want advice to ensure they are making the right online and mass market competitors. choices, particularly as these are often major purchases that customers will own for several years. The growth of Strategy the internet has empowered customers, providing instant access to information including product knowledge and Dixons Carphone is Europe’s leading specialist electrical price transparency. and telecommunications retailer and services company, employing more than 43,000 people in 10 countries. In mobile, we are uniquely positioned in the UK & Ireland Focused on helping customers navigate the connected and the Nordics to provide independent advice and meet world, Dixons Carphone offers a comprehensive range of customer requirements for impartiality, comparability and electrical and mobile products, connectivity and expert flexibility, both online and in store with the Pin Point tool after-sales services from the Geek Squad and Team in the UK. In consumer electricals, single channel internet Knowhow. The Group’s core retail focus is the sale of operators have a different model whose principal advantage consumer electrical and mobile phone products. The Group is structurally lower costs and which have historically also has a significant services infrastructure focused on been able to offer competitive prices versus store-based maintenance, support, repairs, delivery and installation. In operators. By focusing on the advantages that we, as a addition, the Group has developed a business-to-business multi-channel specialist, can offer customers and suppliers operation via its Connected World Services division which we can eliminate the cost advantage that pure-play internet leverages the specialist skills, operating processes and operators have historically enjoyed. As a result we are able technology of the business to provide services to third to offer customers very competitive prices against our parties. competitor set and still be more profitable. The Group’s primary brands include CurrysPCWorld There are four distinct activities that we believe are the key Carphone Warehouse in the UK & Ireland, Elkjøp and Elkjøp strengths of our multi-channel, service-based model and Phonehouse, Elgiganten and Elgiganten Phone House, which will support our competitive advantage going forward: Gigantti and Lefdal in the Nordic countries, Kotsovolos in 1. Work closely with suppliers to harness benefits available Greece, Dixons Travel in a number of European airports to our business model: Suppliers want to ensure that albeit predominantly in the UK and Phone House in Spain.

Dixons Carphone plc Annual Report and Accounts 2016/17 13 Business model and strategy

customers not only choose their brands, but also 2. Leverage our scale, our knowhow, experience the benefits of the latest products. As a and our unique infrastructure multi-channel operator we work with our suppliers to ensure we can explain the benefits of these products to drive growth in value added and demonstrate them to customers in our stores and

Strategic Report consumer services our suppliers support us in this work in a variety of ways. We continue to expand and strengthen our proposition to 2. Ensure a seamless and personalised multi-channel customers, our service capability and our relationship with experience for customers: We are indifferent whether suppliers to underpin and drive even greater advantage in our customers buy in store and / or click ‘Buy’ online, the markets in which we operate. but the experience across these channels must be Growing complexity and interconnectivity of products joined-up and consistent. Today all our stores are means that customers are increasingly demanding help equipped with Beacon devices and we are increasingly and support, not just in choosing the right product, but able to gain a better understanding of consumer activity also installation, connection, support and repair. Our Geek to improve their shopping experience as well as tailoring Squad and Team Knowhow services are at the forefront more focused customer orientated marketing activity. of this in the UK and we have introduced our Knowhow 3. Reduce costs: The scale of our operations across services across the Nordics. stores, ranges, logistics, distribution, repairs and We must continue to innovate new services to help services means that we can continually improve customers and to remain relevant to the way products and processes to reduce costs. We have removed a connectivity is evolving. Behind our end-to-end service considerable amount of cost from the business over the operation we have a comprehensive infrastructure, including last few years by making the business simpler, easier technical phone support, delivery, installation, repair and to operate and more efficient; we remain relentlessly recycling. We can leverage this infrastructure to widen focused on managing costs to make our business more our customer base either to customers who bought their efficient. Over the course of 2016/17 we have all but products through a third party (for example, our fault&fix completed our UK & Ireland property plan, right sizing computer service), or for business customers. By doing this and revamping of ‘big-box’ estate into a best-in class we can increase the efficiency of using this infrastructure 3-in-1 format. and deliver even better value services to our customers. 4. Drive our service proposition: We need to be able to We are driven to provide unparalleled expertise and services stand shoulder to shoulder with our customers and to help our customers navigate the new digital era. We are for them to know they can come to our stores and get focused on improving every possible aspect of the shopping knowledgeable advice and great service to help them journey. We want our colleagues to become famous for buy the right product. They need to be confident that service and we want to retain customers for life by having we will solve their problem quickly and efficiently. Geek exciting new stores, with the best range at great prices and Squad in the UK & Ireland and Team Knowhow in the providing excellent after-sales support and service. We are UK & Ireland and in the Nordics offer customers services making excellent progress; however, we can continue to and technical support that can help them with their make improvements to delight customers and to outpace product throughout its lifetime. This is expanded in our the competition. second strategic priority. In consumer electricals, we do more than simply sell the product; we will also get it working and keep it working, as well as delivering it, and 3. Develop the Connected World providing peace of mind through product support and Services division after-sales services. The conversations our colleagues have in store with customers give us an opportunity to Building on the success of PinPoint, which has been explain the benefits of these solutions and sell more of transformational in our Carphone Warehouse stores, we them than our single-channel competition. are now seeking to expand our honeybee platform into new categories and across all brands. Good progress has also been made in securing honeybee software contracts in the US, with Sprint and a leading device manufacturer in Canada. The honeybee proposition of simplifying the delivery and management of complex digital customer journeys has resonated well across several industries and we now have an active pipeline in the travel, general retail and finance sectors, alongside significant opportunities in our mobile heartland. To achieve global scale quickly and access new industry verticals, we have agreed partnerships with both Accenture and PwC who bring industry experience, global scale and delivery credibility.

14 Dixons Carphone plc Annual Report and Accounts 2016/17 Key Performance Indicators

Financial and operational

What we measure(1) Why we measure Our performance

Headline The ability to grow revenue is an important measure of a brand’s appeal 2016/17 2015/16 revenue(2),(3) to customers and its competitive position. It is a key measure of the

£10,580m £9,736m Strategic Report Group’s progress against our strategic priority to continue to enhance and drive successful and sustainable retail business models in a multi- channel world.

Like-for-like Like-for-like revenue enables the performance of the Group to be 2016/17 2015/16 revenue growth measured on a consistent year-on-year basis. 4% 5%

Market In line with the Group’s strategy to be the leading specialist electrical Market-leading position and mobile retailer in Europe, this is an important measure of how well positions in: customers are being engaged by the Group’s brands in each market. UK & Ireland Retailing operations should be, or be capable of becoming, the number Nordics one specialist electrical or mobile retailer in their market. Greece

Headline Continued growth of headline EBIT enables the Group to invest in its 2016/17 2015/16 EBIT(2),(3) future and provide a return for shareholders. It is a key measure of £517m £478m progress against our strategic priority to continue to enhance and drive successful and sustainable retail business models in a multi-channel world.

Headline Continued growth of headline profit before tax represents a measure of 2016/17 2015/16 profit before Group performance to external investors and stakeholders against our £501m £457m tax(2),(3) strategic priorities.

Free cash The management of cash usage, in particular working capital employed 2016/17 2015/16 flow(2) in the business, optimises resources available for the Group to invest in £160m £202m its future growth and to generate shareholder value.

Return on ROCE is a key measure of the efficiency of the capital invested by the 2016/17 2015/16 Capital Group and the long-term value created for our stakeholders. 22% 21% Employed (ROCE)‌‌(3)

Shareholder

What we measure(1) Why we measure Our performance

Headline basic The level of growth in EPS provides a suitable measure of the financial 2016/17 2015/16 earnings per health of the Group and its ability to deliver returns to shareholders 33.8p 29.3p share(2),(3) (EPS)‌‌ each year.

(1) Definitions of measurement for Key Performance Indicators are given in the glossary and definitions on pages 156 to 160. (2) Headline performance measures are as defined in the Performance Review on pages 22 to 27. (3) Prior year comparatives restated to remove the impact of businesses to be exited. See notes 1, 4 and 32 to the Group financial statements for details of businesses to be exited and restatement.

Dixons Carphone plc Annual Report and Accounts 2016/17 15 Principal risks to achieving the Group’s objectives

The Group recognises that taking risks is an inherent part of doing business and that competitive advantage can be gained through effectively managing risk. The Group continues to develop robust risk management processes, integrating risk management into business decision-making. The Group’s approach to risk management is set out in the Corporate Governance Report on pages 54 to 56. The principal risks and uncertainties, together with their potential impacts, are set out in the tables below along with an illustration of what is being done to mitigate them. These risks are aggregated by risk Strategic Report category.

Specific risks and potential impacts

Principal risks Specific risks Potential impacts

STRATEGIC RISKS

1. Dependence on • Changes in MNO strategies in relation to the Group, or more • Reduced revenue and profitability networks generally, and / or their performance, could materially affect the • Deteriorating cash flow revenues and profits of the business • Reduced market share

2. Dependence on key • The Group is dependent on relationships with key suppliers to • Reduced revenue and profitability suppliers source products on which availability may be limited • Deteriorating cash flow

• Reduced market share

3. Impact of Brexit • Economic uncertainty and impact on consumer confidence • Reduced revenue and profitability caused by the decision of the UK to leave the European Union • Deteriorating cash flow (‘Brexit’)‌‌ • Further adverse exchange rate volatility • Longer term changes in tax, regulation and other frameworks that may impact our ability to operate across our European businesses

4. Greek business • Economic uncertainty and / or possibility of Greece’s exit from • Reduced revenue and profitability the Euro (‘Grexit’) could lead to a deterioration in consumer • Deteriorating cash flow confidence and disposable income resulting in a significant impact on our Greek business, Kotsovolos

5. Consumer environment • Failure to respond with a business model that enables the • Reduced revenue and profitability and sustainable business to compete against a broad range of competitors on • Deteriorating cash flow business model service, price and / or product range • Reduced market share • Failure to respond effectively to changes in the industry, economic and / or competitor landscape • Failure to accommodate changes in consumer preferences and behaviours

REGULATORY RISKS

6. Non-compliance with • Failure to manage the business of the Group in compliance with • Reputational damage Financial Conduct FCA regulation to which the Group is subject in a number of • Financial penalties Authority (‘FCA’)‌‌ areas including the mobile insurance operations of The Carphone • Reduced revenues and profitability regulation Warehouse Limited and the consumer credit activities of DSG Retail Limited • Deteriorating cash flow • Customer compensation

16 Dixons Carphone plc Annual Report and Accounts 2016/17 Strategic Report

Example mitigating actions and related strategic priorities

Example mitigating actions Change in net risk in 2016/17

• Multi-year commercial agreements are in place with all the major MNOs, which align interests and drive value for both parties This risk has remained stable over 2016/17

• Continuing to leverage the scale of operations to strengthen relationships with key suppliers and maintain a good supply of scarce products This risk has remained stable over 2016/17

• Strategic and business planning takes into account varying economic scenarios, with ongoing monitoring by finance and senior executives • Long-term credit facilities in place The risk has increased in 2016/17 following the decision to leave the • Foreign exchange hedging to mitigate impact of currency fluctuation EU • Long-term contingency planning to address wider regulatory and legislative changes

• Ongoing monitoring of local political and economic developments • Focus on optimising business performance and management of costs This risk has remained stable over • Operation of controls over supplier funding and consumer credit arrangements to reduce risk 2016/17 exposure

• Close scrutiny of product performance, trading results, competitor activity and market share • Use of customer insight / advocacy to monitor success of initiatives and actions This risk has increased in 2016/17 • Continued focus on driving cost improvements through cost-efficiency initiatives as uncertainty caused by the • Ongoing evolution of our multi-channel proposition decision to leave the EU has • Differentiation from competitors through strategic partner relationships, innovative propositions, impacted the financial markets’ and high quality customer service evaluation of the prospects for the • Working to leverage expertise and scale to build partnerships with other retailers and businesses UK economy and in particular the consumer sector • Development of the Services strategy

• Board oversight and risk management structures actively monitor compliance and ensure that the Company’s culture puts customer outcomes first • Approved Persons perform oversight, monitoring of compliance, adherence to policy and This risk has decreased over monitoring of any required mitigating actions 2016/17 due to improvements over the operation and monitoring of a • Internal committees, including a dedicated FCA compliance committee, and control structures comprehensive control environment to ensure appropriate compliance (e.g. undertaking quality assurance procedures for samples of covering all of the Group’s FCA- mobile phone sales)‌‌ and to react swiftly should issues arise regulated activities • Ongoing investment in the compliance team • Continuous review of the operation and effectiveness of compliance standards and controls with the development of control improvement plans where required • New training programmes for colleagues implemented across the retail estate

Dixons Carphone plc Annual Report and Accounts 2016/17 17 Principal risks to achieving the Group’s objectives

Specific risks and potential impacts

Principal risks Specific risks Potential impacts

REGULATORY RISKS continued

Strategic Report 7. Data Protection • Adequacy of internal systems and processes to comply with • Reputational damage requirements of forthcoming EU General Data Protection • Financial penalties Regulation (‘GDPR’)‌‌ which comes into effect in May 2018 • Reduced revenue and profitability • Major loss of customer, colleague, or business sensitive data • Deteriorating cash flow • Loss of competitive advantage

OPERATIONAL RISKS

8. Information security • Vulnerability to attack, malware, and associated cyber risks • Reputational damage • Financial penalties • Reduced revenue and profitability • Deteriorating cash flow • Loss of competitive advantage

9. Health and Safety • Failure to effectively protect customers and / or colleagues and / • Employee / customer injury or loss of or contractors from injury or loss of life life • Reputational damage • Financial penalties • Legal action

10. Business continuity • A major incident impacts the Group’s ability to trade and • Reduced revenue and profitability plans are not effective business continuity plans are not effective resulting in an • Deteriorating cash flow and major incident inadequate incident response • Reputational damage response is inadequate • Loss of competitive advantage

TECHNOLOGY RISKS

11. IT systems and • Failure to appropriately invest in IT systems and infrastructure, • Reduced revenue and profitability infrastructure or an inability to effectively integrate IT assets across the Group • Deteriorating cash flow constrains the Group’s ability to grow and / or adapt quickly. A • Loss of competitive advantage key system becomes unavailable for a period of time • Restricted growth and adaptability • Reputational damage

18 Dixons Carphone plc Annual Report and Accounts 2016/17 Example mitigating actions and related strategic priorities

Example mitigating actions Change in net risk in 2016/17

• A comprehensive GDPR readiness assessment is being conducted across the Group’s operations Strategic Report to benchmark current practices against requirements of new legislation This risk was presented as part • Existing control activities operate over management of customer and employee data in accordance of the information security risk with the Group’s Data Protection policy and processes in 2015/16 and is now shown • Ongoing training programmes for colleagues on requirements for data protection separately to reflect our focus on meeting the requirements of GDPR. The risk has remained stable over 2016/17

• Investment in information security safeguards, IT security controls, monitoring, in-house expertise and resources as part of a managed Information Security Improvement Plan • Information Security and Data Protection Committee comprising senior management in the UK Our overall information security & Ireland, set up with responsibility for oversight, co-ordination and monitoring of information position has improved in 2016/17 security policy and risk following significant and ongoing management effort and investment • Information policy and standards defined and communicated to reduce this risk exposure • Ongoing training and awareness programmes for employees • Audit programme over key suppliers’ information security standards • Ongoing programme of penetration testing

• Group Health and Safety strategy • Group Health and Safety policy This risk has decreased in 2016/17 • Health and Safety management / governance committee as a result of actions initiated • Comprehensive set of policies and standards supporting continued improvement following a comprehensive internal • Head of Health and Safety and operational Health and Safety teams located across business units review of Health and Safety and markets processes conducted in 2015/16 • Risk assessment programme covering retail, support centres, distribution and home services • Health and Safety training and development framework • Health and Safety inspection programme • Audit programme including factory audits for own brand products and third-party supply chains

• Business continuity and crisis management plans in place and tested for key business locations • Disaster recovery plans in place and tested for key IT systems and data centres This risk has remained stable over • Crisis team appointed to manage response to significant events 2016/17 • Major risks insured

• Significant investment being made in IT systems and infrastructure across the Group, supported by rigorous testing processes The risk has remained stable over • Ongoing IT transformation to align IT infrastructure to future needs of the business 2016/17 • Individual system recovery plans in place in the event of failure which are tested regularly, with full recovery infrastructure available for critical systems • Long-term partnerships with ‘tier 1’ application and infrastructure providers established

Dixons Carphone plc Annual Report and Accounts 2016/17 19 Principal risks to achieving the Group’s objectives

Specific risks and potential impacts

Principal risks Specific risks Potential impacts

PEOPLE RISKS

Strategic Report 12. Colleague retention • Failure to attract, develop and retain quality and depth of • Reputational damage and capability necessary leadership, management and colleague talent • Reduced revenue and profitability • Maturing of long term incentive schemes may increase risk of • Deteriorating cash flow higher turnover in senior management population • Loss of competitive advantage

FINANCIAL RISKS

13. Fraud • Payment card fraud • Reduced revenue and profitability • Manipulation or misuse of Electronic Point of Sale system and / • Reputational damage or other payment systems • Customer false identity and other ‘no intention to pay’ frauds in taking out network contracts

20 Dixons Carphone plc Annual Report and Accounts 2016/17 Example mitigating actions and related strategic priorities

Example mitigating actions Change in net risk in 2016/17

• Ongoing review to ensure appropriate and effective roles, responsibilities, and accountabilities Strategic Report • Defined and standardised performance management frameworks in place and reward aligned to attract and retain talent The business is subject to competition to attract and retain • Store structures which provide a clear career path for colleagues, retaining and developing the talent in growth areas of the best retail talent business. Our exposure to this • Bonus plans which include components relating to both business and personal performance risk increased in 2016/17 as we • Continued improvements in the quality of training courses and development programmes with approach the vesting date of specialist focus on core business areas various long term incentive plans • Development of appropriate Board succession planning, as set out in the Nominations Committee Report on pages 59 and 60

• Fraud prevention and detection controls • Real-time transaction monitoring This risk has remained stable over • 24/7 fraud and loss prevention teams 2016/17 • Customer identity verification and credit checks for network contracts • Liaison with banks, card providers and MNOs to identify and mitigate opportunities for fraud • Reporting and oversight by the Audit Committee • Whistleblowing arrangements

Dixons Carphone plc Annual Report and Accounts 2016/17 21 Performance review

Highlights: 12 months to 29 April 2017 • Group‌‌ like-for-like revenue(3)‌‌ up 4%, Statutory revenue up 9%. • Strong profit performance:

(1)‌‌‌‌

Strategic Report —— Headline PBT of £501 million (2015/16: £457 million)‌‌‌‌, up 10% —— Headline‌ basic EPS(1)‌‌‌‌‌‌ 33.8p (2015/16: 30.2p)‌‌‌‌, statutory basic EPS 25.6p (2015/16: 14.0p)‌‌‌‌ —— Total‌‌ statutory profit before tax of £386 million (2015/16: £263 million)‌‌‌‌ after non-headline(1)‌‌ charges of £115 million (2015/16: £194 million)‌‌‌‌ • Free cash flows(8)‌‌‌‌ of £160 million (2015/16: £202 million)‌‌‌‌ and net debt(9) broadly flat year-on-year at £271 million • Final dividend of 7.75p (2015/16: 6.50p)‌‌‌‌ proposed, taking total dividends for the year to 11.25p (2015/16: 9.75p)‌‌‌‌, up 15% year-on-year

Headline‌ results(1)

Headline‌ revenue(1)‌‌‌ Headline profit / (loss)‌‌‌‌(1)‌‌

2015/16 Reported Local Like-for- 2015/16 2016/17 (restated) rate % currency(2)‌‌‌‌ like(3)‌‌‌‌ 2016/17 (restated) Note £million £million change % change % change £million £million UK & Ireland (4)‌‌‌‌ 6,550 6,402 2% 2% 4% 385 371 Nordics (5)‌‌‌‌ 3,156 2,632 20% 5% 1% 89 79 Southern Europe (6)‌‌‌‌ 661 550 20% 4% 6% 22 17 Connected World Services (7)‌‌‌‌ 213 152 41% 37% N/A 21 11 Group 10,580 9,736 9% 3% 4% 517 478 Net finance costs (16)‌‌ (21)‌‌‌‌ Profit before tax 501 457 Tax (112)‌‌ (110)‌‌‌‌ Profit after tax 389 347 Headline basic EPS 33.8p 30.2p – In the UK & Ireland, like-for-like revenues in the full year improved by approximately 3% as a net result of sales successfully transferred from closed stores and sales disruptions Notes. (1) Headline results exclude amortisation of acquisition intangibles, Merger integration and transformation costs, businesses to be exited, property rationalisation costs, acquisition-related costs and other one-off, non-recurring items, net interest on defined benefit pension schemes and discontinued operations. Such excluded items are described as ‘non-headline’. For further details see notes 4 and 25 to the Group financial statements. Comparatives have been restated following the classification of the iD mobile operations in the Republic of Ireland and the Sprint joint venture as businesses to be exited, and therefore included in non-headline results. For further details see note 32 to the Group financial statements. (2)‌‌‌‌ Change in local currency revenue reflects total revenues on a constant currency and period basis. (3)‌‌‌‌ Like-for-like revenue is defined in the glossary on pages 156 to 160. (4)‌‌‌‌ UK & Ireland comprises operations in the UK and Ireland and the Dixons Travel business. (5)‌‌‌‌ Nordics comprises operations in Norway, Sweden, Finland, Denmark, and . (6)‌‌‌‌ Southern Europe comprises operations in Spain and Greece. (7) Connected World Services comprises the Group’s B2B operation which leverages the specialist skills, operating processes and technology of the Group to provide managed services to third parties looking to develop their own connected world solutions. (8) Free Cash Flow comprises cash generated from / (utilised by)‌‌‌‌ continuing operations before special pension contributions, less net finance expense, less income tax paid and net capital expenditure. (9) Net debt is defined in the glossary on pages 156 to 160. See glossary on pages 156 to 160 for further definitions of terms.

Headline results Headline profit before tax was £501 million (2015/16: £457 million)‌‌, with a reduced year-on-year interest charge. The performance review below refers, unless otherwise stated, to headline information for continuing businesses. UK & Ireland Prior year comparatives have been restated to remove the Revenue in the UK & Ireland increased by 2% to results of businesses to be exited as disclosed in note 32 to £6,550 million (2015/16: £6,402 million)‌‌, with like-for-like the Group financial statements. revenue for the year up 4%, benefiting by approximately 3% Group as a net result of sales transferred from closed stores and sales disruption. The electricals business delivered a solid Group headline revenue increased 3% on a local currency result with market share gains across consumer electronics, basis and 9% in Sterling terms to £10,580 million (2015/16: white goods, computing and multiplay. £9,736 million)‌‌. Like-for-like revenue growth was 4%, reflecting growth across all divisions. Headline EBIT was up 8% to £517 million (2015/16: £478 million)‌‌.

22 Dixons Carphone plc Annual Report and Accounts 2016/17 The mobile market was more challenging due to product Southern Europe headline EBIT was £22 million (2015/16: safety and supply issues, limited product innovation, £17 million)‌‌‌‌, up 29% benefiting from the increased revenue delays in product launches and more competitive SIMO noted above and the relative strengthening of the Euro propositions. iD in the UK continues to benefit from its against Sterling. differentiated proposition and innovative tariffs with the Strategic Report number of active customers increasing to more than Connected World Services 600,000 from 325,000 in the prior year. Connected World Services (‘CWS’)‌‌ has continued to grow, delivering revenue of £213 million, up from £152 million Headline EBIT has increased 4% to £385 million. Electricals in the prior year with headline EBIT growth of £10 million profitability growth has reflected revenue growth with to £21 million. Year-on-year revenue and profit growth is margins remaining relatively flat year on year. There has driven by contracts with EE and TalkTalk for mobile phone been an in-year benefit of £28 million from changes in the insurance and the distribution of mobile, TV and broadband cost profile of services provided under long-term customer connectivity, as well as the honeybee platform development support agreements(a). contract with Sprint. Electricals growth has offset lower mobile margin caused On 9 June the Group announced that in light of the by higher handset costs. In addition we have seen lower out changing US mobile market landscape and Sprint’s review of bundle spend (partly due to new EU roaming legislation) of its own distribution strategy, the companies have reached but have experienced higher average customer contract mutual agreement that CWS will focus on the deployment (b) life (net impact positive £21 million; 2015/16: £32 million). of the honeybee platform across the entire Sprint estate Changes in contractual terms for the sale of third party and that Sprint will acquire the CWS 50% share of the insurance contracts have benefited headline EBIT by distribution joint venture. The Group’s share of joint (c) £22 million . venture losses (£17 million, 2015/16: £4 million)‌‌, have been We have made the decision to exit our iD mobile operations classified as non-headline items in accordance with the in the Republic of Ireland. The iD mobile operations in the Group policy for businesses to be exited. Republic of Ireland represent a different business model to We continue to develop the honeybee pipeline, and the UK, as it is a capacity MVNO with options for expanding have signed an agreement with WebHelp, a large French its spectrum. This brings with it excellent control, but that outsourcer, and a pilot call centre agreement with Capita, comes with upfront costs and increased administration, and both of which we anticipate will deliver further agreements we believe the business will flourish faster under dedicated with new customers. ownership. Net finance costs Nordics Headline net finance costs were £16 million (2015/16: The Nordic business delivered 5% revenue growth on £21 million)‌‌‌‌. The reduction in net financing costs reflects a local currency basis with growth across all countries. the full year benefit of lower margin on the revolving credit Reported revenues increased 20% to £3,156 million facility negotiated in October 2015 coupled with reduced (2015/16: £2,632 million)‌‌ benefiting from the weakness of LIBOR rates and finance income received from the loan with Sterling. the Group’s investment in the Unieuro operations. Like-for-like revenue was up 1% with the difference Tax between like-for-like growth and local currency growth The headline effective tax rate for the full year is 22% predominantly reflecting new store openings, FONA store (2015/16: 24%). The rate is higher than the UK statutory rate acquisitions and the contribution of Infocare, which was of 20% due mainly to higher statutory rates in the Nordics, acquired in the prior year. Like-for-like revenue growth certain non-deductible items mainly in the UK and a net was helped by strong audio and mobile sales more than increase in tax related provisions in the year. offsetting a decline in tablet sales. Cash and movement on net debt Headline EBIT in local currency remained broadly flat year on year. Reported headline EBIT growth of 13% to Free Cash Flow £89 million reflects the translation benefit of weaker Sterling. 2016/17 2015/16 £million £million Southern Europe Headline EBIT 517 478 Southern Europe had strong underlying results with like-for- Depreciation and amortisation 152 137 like revenue up 6%, and revenue on a local currency basis Working capital (104)‌‌ (80)‌‌‌‌ up 4%. The increase was driven by the business in Greece Capital expenditure (242)‌‌ (221)‌‌‌‌ which delivered excellent growth. Our Spanish business Taxation (72)‌‌ (56)‌‌‌‌ continues to evolve to offer multi-play, sim-only and Interest (23)‌‌ (31)‌‌‌‌ handset propositions and move to a more flexible franchise Other items 2 18 approach in a changing market. Free cash flow before restructuring 230 245 items – continuing operations (a) See Note 1t) to the Group financial statements (b) See Note 26h) to the Group financial statements Restructuring costs (70)‌‌ (43)‌‌‌‌ (c) See Note 1d) to the Group financial statements Free Cash Flow 160 202

Dixons Carphone plc Annual Report and Accounts 2016/17 23 Performance review

Free Cash Flow before restructuring was an inflow of The increase in pension contributions reflects the agreed £230 million (2015/16: £245 million)‌‌‌‌, a decrease of 6%. deficit reduction plan following the 2016 triennial valuation. Other items primarily relate to foreign exchange movements The Group experienced a working capital outflow of on net debt. £104 million (2015/16: £80 million)‌‌‌‌, largely as a result

Strategic Report of increased receivables balances relating to network commissions in the UK and changes in contractual terms Statutory results for the sale of third party insurance contracts coupled with Income statement – continuing operations lower deferred income as a result of changes to the cost

profile of services provided under long-term customer 2016/17 2015/16 support agreements as discussed earlier in this report. £million £million Capital expenditure in the period was £242 million (2015/16: Revenue 10,585 9,738 £221 million)‌‌‌‌. The year-on-year increase reflected spend EBIT 418 304 on SWAS stores and the refit of the stores as part of the Net finance costs (32)‌‌ (41)‌‌‌‌ property rationalisation programme announced in the prior Profit before tax 386 263 year, together with further investment in IT platforms and Tax (95)‌‌ (84)‌‌‌‌ continued development in both our retail and Connected Profit after tax – continuing operations 291 179 World Services businesses. Profit / (loss)‌‌ after tax – discontinued 4 (18)‌‌ The reduction in interest paid is as a result of facility fees operations that were paid in H1 2015/16 and the reduction in financing Profit after tax for the period 295 161 costs explained above. Basic EPS 25.3p 15.6p Restructuring costs primarily comprise the cash costs Diluted EPS 25.2p 15.1p associated with the Merger, transformation activities and the property rationalisation programme noted below within Revenue increased 9% to £10,585 million due to the non-headline items. reasons discussed earlier in this report. A reconciliation of free cash flow to cash flow from Earnings before interest and tax increased from £304 million operations is presented in note 27c)‌‌ to the Group financial to £418 million in the current period, largely due to the statements. reasons discussed earlier in this report and a reduction in non-headline costs incurred in the current year which are Funding explained later in this report. 2016/17 2015/16 £million £million Net finance costs have decreased by £9 million due to reduced interest on borrowings reflecting the full year Free Cash Flow 160 202 benefit of lower interest rates on amounts drawn under Dividends (115)‌‌ (106)‌‌‌‌ the revolving credit facility as described above and prior Acquisitions and disposals including (25)‌‌ (82)‌‌‌‌ year non-headline costs relating to the write off of deferred discontinued operations facility fees incurred as disclosed below. Pension contributions (43)‌‌ (35)‌‌‌‌ The tax charge increased from £84 million to £95 million Other items 19 14 reflecting higher statutory profit in the year partially offset by Movement in net debt (4)‌‌ (7)‌‌‌‌ the impact of the lower effective tax rate discussed above. Opening net debt (267)‌‌ (260)‌‌‌‌ Tax credits on non-headline items reduced as a result of Closing net debt‌ (271)‌‌ (267)‌‌‌‌ lower non-headline costs incurred in the year. Basic EPS has increased from 15.6p to 25.3p for the period At 29 April 2017 the Group had net debt of £271 million, due to the higher reported profit after tax. Diluted EPS has broadly flat year-on-year to net debt of £267 million in the increased from 15.1p to 25.2p reflecting the increase in the prior year. Free Cash Flow was an inflow of £160 million reported profit after tax and the lower number of potentially (2015/16: £202 million)‌‌‌‌ for the reasons described above. dilutive shares following the post-Brexit decline in the Group Net cash outflows from acquisitions and disposals in the share price. current year represents cash outflows relating to the Sprint joint venture, the acquisition of Simplifydigital and the FONA stores in Denmark, offset by cash receipts in relation to the Group’s previously disposed retail operations in Germany.

24 Dixons Carphone plc Annual Report and Accounts 2016/17 Non-headline items Acquisition-related costs in the prior period related to professional fees incurred as a result of the acquisition of Statutory profit before tax of £386 million (2015/16: Simplifydigital in the UK and Infocare in the Nordics and the £263 million)‌‌‌‌ includes non-headline charges of £115 million revaluation of deferred consideration payable to the former (2015/16: £194 million)‌‌‌‌. These charges are analysed below. shareholders of the Epoq kitchen business in the Nordics. Further details can be found in note 4 to the Group financial Strategic Report statements. As discussed in the Remuneration Committee Chairmen’s statement on page 61, in the event of non-vesting, 2016/17 2015/16 £million £million compensation will be paid to participants of the Share Plan Businesses to be exited (28)‌‌‌‌ (10)‌‌‌‌ for any tax charges arising from taxable benefits from the waiver of any portion of loans granted under the scheme. Merger and transformation-related Based on the current share performance it is considered costs (31)‌‌‌‌ (52)‌‌‌‌‌‌ probable that this liability will crystallise and therefore a Amortisation of acquisition intangibles (34)‌‌‌‌ (40)‌‌‌‌‌‌ provision of £11 million has been made during 2016/17. Property rationalisation costs — (70)‌‌‌‌‌‌ Acquisition-related costs — (6)‌‌‌‌‌‌ Unieuro income relates to a special dividend to the Group to Share plan taxable benefit distribute the proceeds raised through the 31.8% IPO of its compensation (11)‌‌‌‌ — investment in Unieuro on the Milan stock exchange. Unieuro income 5 — Net pension interest was £16 million reflecting the charge Total non-headline items before incurred in relation to the UK pension scheme. interest and tax (99)‌‌‌‌ (178)‌‌‌‌ Discontinued operations Net pension interest (16)‌‌‌‌ (16)‌‌‌‌‌‌ Total non-headline items before tax (115)‌‌‌‌ (194)‌‌‌‌ A loss of £18 million‌ was recognised during the prior year Tax 17 26 in relation to the disposal of the Group’s retail operations in Profit / (loss)‌‌‌‌ after tax – discontinued Germany, the Netherlands and Portugal. In the current year, operations 4 (18)‌‌‌‌ £4 million income principally relates to the write back of the previously impaired loan to Unieuro which was repaid during Total non-headline items (94)‌‌‌‌ (186)‌‌‌‌‌‌ the year. Consistent with the original impairment this income is treated as discontinued operations. Businesses to be exited relates to the trading losses of the iD mobile operations in the Republic of Ireland of £10 million Balance sheet (2015/16: £6 million)‌‌, and the share of trading losses from 2016/17 2015/16 joint ventures of £18 million (2015/16: £4 million)‌‌ (including £million £million segmental allocation of central costs of £1 million (2015/16: Goodwill 3,111 3,054 £nil)‌‌)‌‌ for which an agreement has been reached to sell the Other fixed assets 973 906 Group’s 50% interest to Sprint. Working capital (203)‌‌ (361)‌‌‌‌ Costs incurred in relation to the Merger relate to integration Net debt (271)‌‌ (267)‌‌‌‌ costs of £18 million (2015/16: £48 million)‌‌ and functional Tax, pension & other (555)‌‌ (472)‌‌‌‌ transformation costs of £13 million (2015/16: £nil)‌‌. Integration 3,055 2,860 costs primarily reflect professional fees, employee severance and incentive costs associated with the initial integration The movement in goodwill is primarily due to the of the two merged businesses. During the current period retranslation of currency denominated balances largely in the functional transformation projects have commenced across Nordics. Other fixed assets have increased, with the higher the finance, procurement and human resources functions capital expenditure during the year exceeding amortisation to rationalise shared service centre activities and harmonise and depreciation. Negative working capital has reduced policies and procedures across key support functions of in the year largely as a result of network commission the business. During 2015/16, Merger-related costs also receivables increasing due to favourable assumptions over included the write-off of £4 million deferred facility fees future contractual receipts, increased consumer insurance which were incurred as a result of the Merger and the commission receivables following changes in contractual financing required to facilitate the Merger at short notice. terms for the sale of third party insurance contracts, a reduction in provisions due to utilisation of property The charge for the amortisation of acquisition intangibles related provisions in the year and increases in stock offset was £34 million (2015/16: £40 million)‌‌ with the decrease due by increases in trade payables. Net debt has marginally to some of the acquisition intangibles arising on the CPW increased as described above. Other net liabilities (tax, Europe Acquisition being fully amortised during the prior pension & other) have increased primarily as a result of the period. increase in the IAS 19 accounting deficit described below In the prior year the Group initiated a reorganisation of offset by the increase in carrying value of the joint venture its property portfolio. The costs associated with this and recognition of the investment in the remaining interest in programme recognised in the prior year of £70 million Unieuro. related to committed property exit costs, asset write-downs and operational costs associated with the 3-in-1 store concept roll-out across the UK & Ireland.

Dixons Carphone plc Annual Report and Accounts 2016/17 25 Performance review

Cash flow statement Other matters 2016/17 2015/16 £million £million Pensions EBIT – continuing operations 418 304 EBIT – discontinued operations — (4) The IAS 19 accounting deficit of the defined benefit section Strategic Report Depreciation and amortisation 186 177 of the UK pension scheme of Dixons Retail amounted to Working capital (154)‌‌ (8)‌‌‌‌ £589 million at 29 April 2017 compared to £472 million at 30 April 2016. Contributions during the period under the Other operating cash flows (86)‌‌ (73)‌‌‌‌ terms of the deficit reduction plan amounted to £43 million Cash flows from operating activities 364 396 (2015/16: £35 million)‌‌‌‌. The deficit has increased during the year as a result of changes in financial assumptions, Acquisitions (46)‌‌ (59)‌‌‌‌ primarily the discount and inflation rates, which determine Capital expenditure (242)‌‌ (221)‌‌‌‌ liabilities, partially offset by an increase in underlying asset Other investing cash flows 41 54 values. Cash flows from investing activities (247)‌‌ (226)‌‌‌‌ Dividends Dividends paid (115)‌‌ (106)‌‌‌‌ Other financing cash flows (41)‌‌ (11)‌‌‌‌ The Board declared an interim dividend of 3.5p per share, Cash flows from financing activities (156)‌‌ (117)‌‌‌‌ up from 3.25p per share last year. The interim dividend was paid on 27 January 2017.

(Decrease) / increase in cash and We are proposing a final dividend of 7.75p per share, cash equivalents (39)‌‌ 53 taking the total dividend for the year to 11.25p per share, a 15% increase on the previous year (2015/16: 9.75p)‌‌‌‌. The statutory EBIT increase and working capital outflow The final dividend is subject to shareholder approval at the increase in the year are for those reasons outlined above. Company’s forthcoming Annual General Meeting. The Acquisition cash outflows in the current period of £46 million ex-dividend date is 24 August 2017, with a record date of relate to £29 million further capital injected into the US 25 August 2017 and an intended final dividend payment joint venture with Sprint, £10 million deferred consideration date of 22 September 2017. payment for the prior year acquisition of Simplifydigital, Going concern £2 million in the Nordics in relation to the ‘Epoq’ kitchen business acquired in 2011/12 and £5 million for the A review of the Group’s business activities, together acquisition of ten FONA stores in Denmark. The prior with the factors likely to affect its future development, year reflected the final CPW Europe Acquisition deferred performance and position, are set out within this Strategic payment and the acquisitions of Simplifydigital and Report, including the risk management section. The financial InfoCare. The increase in capital expenditure reflects those position of the Group, its cash flows, liquidity position and reasons outlined above. borrowing facilities are shown in the balance sheet, cash flow statement and accompanying notes to the Annual The increase in other financing outflows is due to interest Report and Accounts. paid on and reduction in year end amounts drawn under the revolving credit facilities. The directors have reviewed the future cash and profit forecasts of the Group, which they consider to be based Comprehensive income / changes in equity on prudent assumptions. Based on these forecasts, the Total equity of the Group has increased from £2,860 million Directors consider that it is appropriate to prepare the to £3,055 million primarily reflecting the total statutory Group financial statements on the going concern basis. profit of £295 million, the gain on retranslation of overseas Viability statement operations of £76 million offset by the payment of dividends of £115 million and actuarial loss (net of taxation)‌‌ relating to In accordance with provision C.2.2 of the UK Corporate the defined benefit pension scheme of £123 million. Governance Code 2014, the Directors have assessed the viability of the Group over a period longer than the 12 months covered by the “Going Concern” provision above. In assessing the viability of the Group, the Directors have considered the Group’s current position and prospects, risk appetite, and those principal risks and mitigating actions as described on pages 16 to 21 of the Strategic Report.

26 Dixons Carphone plc Annual Report and Accounts 2016/17 The Board concluded that a period of three years was appropriate for this assessment as it is consistent with the period of focus of the annual strategic plan and reflects a period of greater certainty over forecasting assumptions.

The strategic plan considers the forecast revenue, EBITDA, Strategic Report working capital, cash flows and funding requirements on a business by business basis as well as the available borrowing facilities to the Group over the assessment period and the financial covenants to which those facilities need to comply. The strategic plan has been subject to robust stress-testing, modelling the impact of a combination of severe but plausible adverse scenarios based on those principal risks facing the group. Examples include the impact of regulation or information security incidents and reduced forecast profitability and cash flow as a result in a significant change in consumer behaviour. The model assumes no further funding facilities are required over and above those currently committed to the Group as disclosed in note 18 to the Annual Report and Accounts. Based on the results of this analysis, the Directors have an expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period of their assessment. In doing so, it is recognised that such future assessments are subject to a level of uncertainty and as such future outcomes cannot be guaranteed or predicted with certainty.

Humphrey Singer Group Finance Director 27 June 2017

Dixons Carphone plc Annual Report and Accounts 2016/17 27 Corporate Responsibility

Dixons Carphone is committed to the highest standards of Management then Board level by the IR, PR and Corporate corporate and social responsibility (CSR) across the Group. Affairs Director, where the Strategy is reviewed annually, with specific issues and activity discussed whenever It is our ambition to understand how technology can be necessary throughout the year. used to tackle social issues and then leverage our skills,

Strategic Report experience and position to support communities, connected homes and the families within them. We will do this by People helping to ensure occupants are properly equipped, safe Our people make us who we are, and as a business we are and confident to explore the connected world. passionate about attracting, recruiting and retaining the best We are building a sustainable, responsible and ethical talent to help drive our growth and keep us at the forefront business by listening to customers, shareholders, of innovation and outstanding customer experience. employees and wider communities to understand In 2016 we launched our Graduate Scheme which saw 15 expectations and make sure they are reflected in our university leavers given the opportunity to establish their business decisions. We recognise good sustainability careers with bespoke training, on-the-job experience and practices make sound business sense, not only to benefit management coaching. The scheme continues in 2017 with the environment, stakeholders and the communities an increased intake of 19 graduates. in which we operate, but also to achieve our strategic priorities. Our Apprentice scheme also goes from strength to strength. This year we recruited 135 new apprentices through learning We are improving the visibility of our work across our CSR providers, colleges and social media. Working across principles of people, connected community, environment different roles, brands and functions our apprentices are and supply chain by enhancing our website, responding providing us with a pipeline of talent and demonstrating again to the CDP Climate Change programme and updating improved rates of retention, engagement and performance. and making available several of our key policies. Apprenticeships Dixons Carphone is a member of the Government’s All Party 2014/15 2015/16 2016/17 2017/18 Corporate Responsibility Group and for 2017/18 we joined 75 75 135 Est. 200 Business in the Community to explore and share the role of business in creating a fairer society and more sustainable future. Investing in colleague expertise We are reviewing our overall long-term commitment to CSR As part of our learning strategy, formal and informal training so we focus on areas where we have the most impact as a and management coaching is available to all employees Group. As part of this review we will be: to help them grow their careers. Training is in line with our business strategy and designed to create reliable experts • Engaging more deeply with stakeholders; our customers can trust. • Benchmarking ourselves against our peers and best All new colleagues follow a 90-day induction plan and practice leaders; every employee has regular one to one meetings with their • Determining what is material to us as a business; and managers, as well as twice yearly formal performance reviews where future development and career plans are • Developing an approach to long term targets, strategy considered. and reporting through a new sustainability programme called Live Earth Neutral. In 2016/17 we recorded over 220,000 learning hours with over 80% of this completed digitally. We also run talent We are committed to creating a great place to work and leadership development programmes to develop high and making a positive social impact, while building trust achievers and hone management leadership skills. and brand loyalty across all our brands. We strive for a sustainable environment, minimal waste and optimum In 2017/18 we will increase volunteering opportunities efficiency and operate an ethical business, valuing rights through an initiative with social housing charity, Abbeyfield, and prosperity across our value chain. so employees so can build their communication and team work skills to benefit local communities. We aim to deliver transformative change through innovation, collaborate with stakeholders as partners, and directly or To strengthen trust we expect high standards in indirectly invest in initiatives which benefit the communities employment practices. We regularly review our in which we operate. comprehensive suite of employment policies and procedures, which includes anti-corruption and bribery, Integrated activity guidance on being family friendly, colleague dispute management, as well as diversity and equal opportunities. Our approach to corporate responsibility means taking All employees are required to read and digitally business decisions guided by our values and code of acknowledge key company policies. ethics. Throughout our business, dedicated personnel drive and deliver our sustainability activities, with our Head of Corporate Responsibility helping to co-ordinate and report on progress while strategising and delivering our social impact agenda. CSR is approved and represented at Senior

28 Dixons Carphone plc Annual Report and Accounts 2016/17 Engaging our colleagues Equal opportunities

We are committed to communicating openly and honestly We are committed to equality of opportunity across all of with colleagues across the Group and listen to their views. our employment practices throughout the Group. We strive All employees are asked to participate in our annual to prevent unlawful discrimination in the workplace on the Strategic Report engagement survey, Make a Difference. Administered grounds of sex, race, disability, sexual orientation, religion externally and in confidence, this balanced scorecard or religious belief, age, marriage and civil partnership, gauges how people feel about working for Dixons Carphone gender reassignment, pregnancy and maternity. We and is used to monitor and improve performance, help us promote an honest and open environment and encourage make decisions, and recognise success. 88% of colleagues colleagues with concerns to report issues to us either gave their feedback in the 2017 survey, an increase of directly through line managers or via an independent, 5 percentage points from 2016. confidential integrity line. Our people have access to innovative information channels, with an emphasis on collaboration and peer-to-peer Rainbow Award (Nordics)‌‌ communication. In 2016/17 we introduced two new HR In the Nordics, we were proud to win the Danish Rainbow platforms and following a successful launch in the Nordics, Awards for supporting LGBT through our Valentines rolled out ‘Workplace’ by Facebook to 12,000 colleagues Campaign. in the UK & Ireland. We are an early adopter of Workplace, which provides colleagues with an intuitive mechanism Diversity to engage and collaborate on projects, partake in social activities and share best practice. We plan to roll-out We value the benefits a diverse workplace brings, and the Workplace across the Group in 2017/18. importance diversity plays in achieving the right mix of skills, knowledge and experience our organisation needs to reach We will also continue to produce 360 Magazine specifically its potential. Diversity in terms of age and gender remains a for Team Knowhow and Connected, a magazine key priority. available online and in hard copy to all colleagues. This communication channel consistently receives positive feedback from recipients and holds the title of ‘Best New Across the Group Publication’ from the Institute of Internal Communications. Work Level All Employees Senior Managers Directors Number % Number % Number % Employee Benefits Male 30,518 69.54 95 74.80 9 69.23 Female 13,365 30.46 32 25.20 4 30.77 Our employee benefits packages are periodically reviewed Total 43,883 127 13 to remain attractive and conducive to the recruitment and retention of talented individuals. Colleagues are encouraged to participate in our SAYE Scheme to build a personal stake Health, Safety and Wellbeing in the business. 25% of our UK & Ireland workforce are Our Group Health and Safety (‘H&S’)‌‌ Policy sets control signed up to this scheme. As part of the harmonisation of standards for key risks as well as responsibilities to our benefits across the organisation, we are implementing a customers, colleagues and other stakeholders (franchisees, new benefits platform during 2017 that all UK colleagues will agency workers, supply chain and contractors)‌‌. This Policy be able to access and see the value of the core company is widely displayed on noticeboards and acknowledged in benefits – such as life assurance - and choose additional our statutory H&S training. Our compliance with this policy benefits suited to their personal needs and lifestyle, such is regularly audited. as childcare vouchers, eye care vouchers, cycle to work scheme and dental plans. Health and Safety Award 2017 We are proud to have received awards from The Minimum Wage Royal Society for the Prevention of Accidents for our We pay a minimum hourly rate of £7 to all colleagues in the management of Retail Health and Safety and Health and United Kingdom under 21 + location allowance + bonus. Safety in our Newark Distribution Centre. Colleagues aged 21 and over in the United Kingdom are paid a minimum hourly rate of £7.50. In addition to basic Through our employee wellbeing strategy, we aim to create pay we pay location allowance, where applicable, and a happier, healthier and more productive workforce, while bonus. reducing time off through sickness and ensuring optimum levels of energy and resilience. Employee turnover across the Group was broadly flat at 29% in 2016/17.

Dixons Carphone plc Annual Report and Accounts 2016/17 29 Corporate Responsibility

Healthy living is encouraged through corporate challenge Mental health management training has been introduced initiatives, while on-site fitness facilities include a gym in for HR Business Partners and all colleagues receive regular our main support centre, shower facilities, secure bicycle updates and information on health, resilience and wellbeing. storage and restaurants offering a balanced menu and In addition, ergonomics advice and equipment is provided range of healthy nutritionist-approved foods. to prevent musculoskeletal injuries, along with training and Strategic Report protective equipment for installers and delivery teams. Dixons Carphone Race to the Stones 2016 Since our initial sponsorship in 2014, we have led the Ultimate Workforce way in the corporate challenge space, collaborating with We gave specialist military units the mission to recruit, organisers, Threshold Sports, to transform the positioning train and up-skill eleven employee volunteers during a and purpose of ultra-events into accessible ultra- cutting-edge wellbeing programme designed to create the experiences, attracting a diverse range of participants: Ultimate Workforce. Run with support from SONYXperia from people who want to get fit, socialise, take on a new and GARMIN, this programme combined latest tech with challenge or strengthen their mental wellbeing, to charities elite military training and insights to equip participants looking for a demanding and rewarding addition to their with key skills such as first aid, influence and persuasion, fundraising portfolio. weightlifting, ergonomics and orienteering. In 2016/17 over 2,500 participants chose to run, trek or As well as the physical health gains (the team lost walk 100 km along the ancient Ridgeway to Avebury Stone 27.9 kg / 18.1% body fat and grew 17.4% muscle)‌‌, Circle, generating over three million Facebook impressions. their strengthened mental resilience has prepared them 130 employees took part, raising over £36,000 for our to be effective in any Volatile, Uncertain, Complex and charity partner, The Mix. Overall, £108,027 was raised Ambiguous (‘VUCA’)‌‌ market place. Feedback from for a variety of good causes and 100% of participating managers and participants has been remarkable, with employees agreed our sponsorship was positive. demonstrable improvements to posture, confidence, overall For 2017 we have donated 100 places to Heads Together, outlook, interaction with stakeholders, team working, providing the opportunity for people affected by mental problem solving and leadership. health issues to benefit from the positive aspects of participating in an endurance challenge. We are also working with our suppliers to further enhance the event Connected community experience through free demonstrations of wellness related Every decision we make is driven by insights and our tech and household health-related electrical items along ambition to provide unparalleled expertise and services to the route. help customers and businesses navigate the digital era, while building brand loyalty and trust. We are committed Average to Awesome 2016 to being a responsible member of every community we This UK wellbeing initiative focused on transforming do business in: whether it’s by match-funding employee employees’ attitude to health and fitness as they prepared fundraising, community initiatives or charity partnerships, for the Dixons Carphone Race to the Stones. Thirteen we implement new ideas to make a positive impact locally. sedentary employee volunteers were given the support of a personal trainer, nutrition plan and Fitbit accessories. Founding Partner of Heads Together After 12 weeks, we recorded their combined weight loss Dixons Carphone is proud to be a Founding Partner of at 104 kg. The team all completed the 100km event and Heads Together, a campaign spearheaded by the Duke developed a strong bond. They continue positive changes and Duchess of Cambridge and Prince Harry. Throughout to their lifestyle habits and there is evidence of wider health 2016/17 Heads Together made ground breaking progress in benefits to families and co-workers. helping to end the stigma around mental health and change the conversation around mental health from fear and shame An Employee Assistance Programme operates 24/7 offering to confidence and support. Our long-term charity partner, support for a range of issues such as stress, smoking The Mix, is one of eight charities that comprise Heads cessation and debt management. Together. We participated in Mercer’s 2016 Britain’s Healthiest Workplace with approximately 500 UK employees responding to this comprehensive company-wide online survey. The results provided a benchmark for improvement for our 2017/18 workplace mental wellbeing strategy and helped us to identify further actions to protect employee welfare and improve our ranking.

30 Dixons Carphone plc Annual Report and Accounts 2016/17 #Thereforme Internet Matters This Dixons Carphone social media initiative paid tribute to We joined forces with the online child safety experts to individuals who had ‘been there’ for people during tough host free advice workshops on how to keep families and emotional times. Co created by Dixons Carphone and children safe on the internet. A series of ‘Digital Drop In’

promoted in-store across the UK, it became of one Heads events for parents were hosted in our top 70 stores and Strategic Report Together’s most successful campaigns, with over 3.5 million 200,000 information leaflets were distributed by our delivery impressions and a ‘sentiment score’ of 99 out of 100. drivers. This activity featured in national and local media including the Evening Standard. , BT, TalkTalk, Sky, Mental Health Marathon BBC and are also partners. 13 Dixons Carphone colleagues completed the London Marathon as part of #TeamHeadsTogether. Led by our Group Finance Director, Humphrey Singer, their efforts Project BluPoint raised £33,783 for The Mix. This groundbreaking solar powered device transmits digital content to areas without reliable or affordable connectivity, #DCTaking Steps on any handset using Wi-Fi, FM Radio or Bluetooth. We To involve all employees in our work with Heads Together, sent two teams of employee volunteers to South Africa to we launched Dixons Carphone Taking Steps, inviting them deploy this new invention in 16 locations where it continues to pledge one positive step towards tackling the wider to make a significant impact on the lives of over 50,000 mental health issue – from identifying when a colleague learners and educators. needs someone to talk to, to volunteering or sponsoring colleagues taking physical steps to help support young The Dixons Carphone Foundation people with mental health issues in corporate challenges. (‘Foundation’)‌‌ Charity partnership The Group operates two charitable foundations, The DSG International Foundation, registered with the Charities We continued our support of The Mix (registered charity Commission, and a Dixons Carphone Foundation number 1048995)‌‌. Just as Dixons Carphone matches fundraising account established under the Charities Aid customers with the most suitable equipment and services Foundation (‘CAF’) for the benefit of the charity or charities for their needs, The Mix supports the physical and mental selected by Dixons Carphone and approved by CAF. The wellbeing of young people under 25 across the UK, Dixons Carphone fundraising account was set up post- whatever their issue, through the technology of their choice. Merger to deliver our ambition of improving lives through technology and facilitates employee match-funding The Mix operates a free, confidential support service, applications and one-off donations to emergencies and available 24/7, 365 days a year, via phone, text, web, social disaster funds. In 2016/17 we donated £15,950 through media and counselling. the Charities Aid Foundation to a variety of causes. We did In 2016/17 we gave a total of £623,723 to The Mix, not transact through the DSG International Foundation in including gift in kind office and helpline accommodation and 2016/17. fundraising through employee events and initiatives such as our charity dinner, treks and challenges and a tennis Kode (Greece)‌‌ tournament held at Queens. Kotsovolos is the first and only Greek retailer to create an online learning platform teaching kids how to code, ‘the Our sixteen-year support of The Mix received recognition in language of today’. With nine out of ten parents wanting April 2017 when we were shortlisted for Charity Partnership their children to study programming, but only one in four of the Year in the Business Charity Awards. Plans to develop schools offering this service, Kotsovolos offers an amazing the partnership in 2017/18 include expanding corporate opportunity for children and teens to learn to code and volunteering opportunities and offering an employee fulfill the growing demand for programmers. assistance programme for colleagues aged 25 and under.

Pennies Other charitable support Pennies is a digital upgrade of the traditional charity collection box which offers customers the opportunity During 2016/17 employees donated £35,281 through Give to make a 25p charitable donation when they pay by As You Earn, benefiting 78 local and national causes. card at point of sale. We successfully trialled this tech Colleagues also raised thousands of pounds for good in 2016/17 and anticipate a wider roll-out in 2017/18. causes via a variety of fundraising events and activities, We conservatively estimate a charitable revenue of which the business supports through match-funding up to £100,000 per annum across 300 stores (Phase 1 roll-out)‌‌ £100 or £300 for teams fundraising for the same event. and £520,000 per annum across 1,000 outlets. Outside the UK, Elkjøp and Lefdal continued to support the Red Cross Water for Life (Vann for Livet)‌‌ project, raising 780,000 NKR (£71,968). In Denmark, 65000 DKK (£8,400) raised during a Christmas Foundation was donated to local organisations chosen by employees.

Dixons Carphone plc Annual Report and Accounts 2016/17 31 Corporate Responsibility

Environment Total company-wide kWh energy consumption is as follows: We are fully committed to meeting our environmental Dixons Carphone – Group Energy Consumption (kWh) responsibilities and limiting the impact of our operations Utility 2016/17 2015/16 Change in a way that is both practically and economically feasible. Electricity 279,189,910 303,551,007 (8.0%)‌‌‌‌ Strategic Report Our environmental policy, endorsed by the Board, covers Gas 30,185,347 36,725,630 (17.8%)‌‌‌‌ material issues including energy consumption, carbon Fuel Oil for emissions, supply chain and operational waste. We conduct heating activities to address each of these areas and our progress purposes 246,555 217,368 13.4% this year is presented below. Total 309,621,812 340,494,005 (9.1%)‌‌‌‌ We have established a formalised enterprise risk To continue to drive down consumption we embrace the management process that operates at business unit and opportunities of improving our efficiency through property Group level and includes climate change as a risk category. development, disposals, acquisitions, our own internal At asset (store)‌‌ level, climate change risks are identified energy efficiency programme and, where financially viable, as part of business contingency / continuity processes – utilising products, equipment and suppliers with the least with the identified risks mainly relating to extreme weather environmental impact. events. In 2015/16 we combined the energy management reporting Energy management platform and processes of the legacy Dixons Retail and Carphone Warehouse businesses which has delivered great We recognise that the operation of our retail stores is one of results for Dixons Carphone through 2016/17. This helps our major environmental impacts and have set ourselves an us manage our energy consumption through the collection

ambitious energy and CO2 reduction target to help mitigate and analysis of half-hourly data at individual site level and this. ensures optimum efficiency with minimal wastage. Through 2016/17 this work has helped mitigate consumption by UK Energy Consumption Reduction target approximately 1,834 MWh. Dixons Carphone has an agreed target of reducing its UK In the UK, part of our programme to drive down energy energy consumption by 30% by 2020, and corresponding consumption in our stores includes the use of energy CO2 emissions by 35%. dashboards at site level. Both our legacy Dixons Retail and (Measured from a 2013/14 baseline, the year prior to the Carphone Warehouse retail sites now have access to energy merger between Dixons Retail and Carphone Warehouse)‌‌ dashboards as a visual display of their consumption profiles. Financial incentives are offered to business unit, facility and As part of our long-term review we are considering what energy managers for meeting their energy consumption our longer term targets will be and whether to adopt a budgets or targets. science-based target. To ensure we meet our reduction Dixons Carphone remains an active member of the Retail target by 2020, Dixons Carphone has a structured energy Energy Forum and the British Retail Consortium engaging management programme within the UK & Ireland that on areas such as enhanced capital allowances for energy- provides an overarching framework of activities and projects efficient technologies and the Government’s Electricity to manage and reduce our consumption while maximising Demand Reduction (‘EDR’) scheme. our efficiency.

The energy consumption and corresponding CO2 emissions Capital Expenditure Projects of our business have reduced year on year. For the UK & Ireland portfolio in isolation, we have achieved a reduction in As with previous years, Dixons Carphone has invested electricity usage of 1.7% on a like-for-like basis and 10.3% significant sums in projects to ultimately reduce our energy on an absolute basis. consumption and improve our efficiency. LED lighting again features heavily in our 2016/17 energy efficiency Dixons Carphone – UK&I Consumption 2015-16 v’s 2016-17 (kWh) programme which has seen c. £2 million invested in this Utility 2016/17 2015/16 Change technology. This year we have converted 42 large stores Electricity 168,599,606 187,930,892 (10.3%)‌‌ to LED lighting alongside a selection of large car parks and Gas 29,882,655 36,724,101 (18.6%)‌‌ Building 2 (750,000 sq ft) of our‌‌ National Distribution Centre Combined 198,482,261 224,654,993 (11.7%)‌‌ in Newark.

At Group level, overall energy consumption has decreased Solar Photovoltaic Schemes by 9.1%, electricity consumption has decreased by 8% and Following last year’s successful installation of two Solar PV natural gas by 17.8%. The UK is the largest kWh contributor schemes at Coventry and , our largest roof- to both these reductions. mounted installation to date was completed in June 2017. A 1 MWp solar scheme (over 3,600 panels)‌‌ will generate approx. 940,000 kWh of electricity for our Newark National

Distribution Centre, reducing the site’s CO2 emissions by over 500 tonnes per annum.

32 Dixons Carphone plc Annual Report and Accounts 2016/17 Water contractor’s responsibility, so have not estimated leakage from other units where no top-ups were carried out. We have merged our water bureau services with energy b. Refrigerant data from the Wednesbury Carphone Warehouse site is not included as the data was not available for 2015/16 throughout the UK & Ireland to increase reporting and 2016/17 (although this is estimated to be significantly less capabilities and facilitate activities surrounding the water than 1% of total emissions for the Group). market deregulation. c. Refrigerant top-ups across the Nordics has been estimated Strategic Report for 2016/17 based on the top-ups reported in 2015/16 as the data was unavailable. Carbon Emissions d. In previous years, some refrigerant charges for new installations were reported as leakage which has been This section provides the emission data and supporting amended for 2016/17 onwards. This accounts for most of the information required by The Companies Act 2006 (Strategic reduction compared to 2015/16. (3) The electricity consumption figure includes Scope 2 generation Report and Directors’ Report)‌‌ Regulations 2013, Part 7: emissions but not Scope 3 transmission and distribution losses. Disclosures Concerning Greenhouse Gas Emissions. (4) Electricity and gas usage is based on supplier bills. Manual gap filling was conducted for April 2017 in the UK & Ireland for smaller This report covers the international operations of the electricity supplies, using an average of the consumption year to Group, including the UK & Ireland, Northern and Southern date. This is because this report was due before some electricity bills had been provided by the suppliers. Europe. Operational control has been used to determine (5) Overall floor area of the Dixons Carphone business is estimated organisational boundary. All scope one and two emissions to be 21,111,540 sq ft. This is split between the Dixons Retail are included except where noted. business which is estimated to be 19,390,570 sq ft and the overall floor area of the Carphone Warehouse business which is Our 2016/17 scope 1 and 2 emissions data has been estimated to be 1,720,970 sq ft. Carphone Warehouse floor space independently assured to ISO 14064-3 standards. now includes back of house areas, contributing to the increase in this division’s floor area of approximately 135,000 sq ft since Overall Group emissions and emissions per sq ft have 2015/16 The calculations use the methodology set out in Defra’s updated decreased by over 15%. greenhouse gas reporting guidance, Environmental Reporting Guidelines (ref. PB 13944), issued in June 2013 and is being The GHG emissions for the Dixons Carphone business are: independently assured. Tonnes Tonnes of Tonnes of of CO2e Increase/ CO2e CO2e Supply Chain emitted (decrease)‌‌ emitted‌ ‌ emitted‌ ‌ Ref Category 2016/17 % 2015/16 2014/15 At Dixons Carphone, we work hard to understand and A Emissions from 21,698 5% 20,614 19,760 manage our impact in our supply chain and customer use of combustion of products. We have a strong focus on ensuring our products fuel(1) are sourced ethically and are taking action to address the B Emissions from 2,399 (14%) 2,797 3,661 risk of modern slavery in our supply chain. the operation of We also see our supply chain as an opportunity to help any facility(2) consumers reduce their environmental footprint, offering C Emissions from 88,496 (19%) 109,534 127,607 energy-saving products such as Hive and Nest. purchase of electricity(3),(4) Total: 112,593 (15%) 132,945 151,028 Ethical sourcing We have an Ethical Sourcing Policy which reflects our Intensity measures commitment to acting ethically and with integrity in all our The emissions per unit area of occupied space are as business relationships. Our Ethical Sourcing Policy is based follows: on the Social Accountability 8000 standard, FTSE4Good Tonnes of Tonnes of Tonnes of criteria and takes into account the Modern Slavery Act. We CO2e CO2e CO2e also work closely with organisations such as SEDEX and emitted per emitted per emitted per 1,000 sq ft 1,000 sq ft 1,000 sq ft the British Retail Consortium to ensure our policies and of floor of floor of floor procedures remain relevant. area(5)‌‌ area area Division 2016/17 2015/16 2014/15 Our Original Equipment Manufacturer (‘OEM’) in Hong Dixons Retail 4.81 5.76 5.73 Kong sources many product types that are sold under our Carphone Warehouse 11.27 13.75 17.41 own or licensed brand names. This part of our operation is Total 5.33 6.36 n/a well established and has been actively engaging in ethical auditing / risk assessment for many years. We require our Notes (1) ‘Emissions from combustion of fuel’ includes a proportion of OEM suppliers to comply with our strict trading terms and private cars being used for business travel, which would be operational procedures, and to implement and enforce classified as Scope 3. It is not practical to exclude this data from effective systems and controls to meet our minimum the company’s expense records so in keeping with the previous standards in respect of Health and Safety, wages, working years it has been included to provide a conservative view of emissions. For a proportion of our company cars, we have moved hours, equal opportunities, freedom of association, from using claimed business mileage to fuel card purchases (litres collective bargaining and disciplinary procedures. It is of fuel) this year. This is more accurate but has led to a small against our terms of operation to employ any forced or child increase in overall emissions. (2) Refrigerant data processing methodology and exclusions: labour. a. Where refrigerant top-ups are reported, we assume this covers all leakage across the area of the estate under that

Dixons Carphone plc Annual Report and Accounts 2016/17 33 Corporate Responsibility

We monitor adherence to our policies by auditing our Product responsibility suppliers prior to selection and on an ongoing basis. Where working practice failures have been identified, we work with We continually pursue ways to help our customers reduce suppliers to help them improve their working practices. their environmental impact through providing low carbon Where this is not possible or no improvements are made, products and offering Waste Electrical and Electronic Strategic Report they will not be approved as a supplier, or will be delisted. Equipment (‘WEEE’) re-use schemes. During the year under review, 15 of the 25 suppliers In 2017/18 we will introduce a new OEM LED light bulb classified as red failed to make improvements and therefore range. LED bulbs use 90% less energy than traditional the Group did not approve them to supply our branded Incandescent bulbs and last up to 15 years so customers products or they were delisted. can save over £100 per year on their energy bills (based on The results of ethical supply chain audits carried out during 2.5 hours’ per day). the period under review are detailed below: Following our acquisition of Simplifydigital we now offer our

Performance indicators 2016/17 customers energy switching services, including our Voltz Delisted/ App, which saves them money and reduces their energy not consumption. We are also collaborating with SSE to support Green Amber Red Total approved the roll-out of their smart metering to six million customers Audit status 33 99 25 157 15 in the UK. We have several schemes in place to encourage and enable Modern Slavery WEEE recycling. Online customers buying white goods Our Board fully supports the aims of the Act and is or a TV larger than 39” are prompted with the option to committed to combatting slavery and human trafficking in have an old appliance collected for recycling. At this point, our business. customers can also click through to our recycling page In the past twelve months we have made progress to map which gives details of our free in-store take back which our own business and key suppliers to identify those more covers smaller electronics too. In store, our sales teams at risk from Modern Slavery, not just in the UK but also in all inform customers about our collection and recycling service. countries where the Company and its subsidiaries conduct This has resulted in WEEE tonnage of 67,000 tonnes being their business. collected in 2016/17 (7.8% increase on 2015/16)‌‌ which is an The Board have also agreed our Modern Slavery Policy and estimated 75,000 tonnes of CO2 saved. the Company have commenced a process to introduce it to We also work with 11 UK charities who select unwanted our businesses, suppliers, agents and partners. WEEE from our Customer Service Centres‌ which they Our Statement and Policy on Modern Slavery can be found repair and reuse to sell. This has helped households save on www.dixonscarphone.com. an estimated £2,342,250 and 1,275 tonnes of CO2 during 2016/17. This translates to a reuse percentage of 8% (1% increase on 2015/16). Waste and recycling In total, over 14,000 tonnes of packaging recycled (3% less We strive to deliver continuous improvements to our than 2015/16, driven by lighter and less packaging used recycling and sustainability programme. All recyclables from around products)‌‌ which is an estimated 16,000 tonnes of our stores are backhauled to our national recycling facility at CO2 saved (figures from our waste management agency Newark. Across our estate, our 16 customer service centre responsible for all cardboard, plastic, polystyrene and wood depots have standardised equipment to deliver consistent recycled across our estate). grades of cardboard, plastic and expanded polystyrene to our recyclers in order to ensure we utilise the transport to a We are also currently working on a project to improve the maximum and obtain the best value we can achieve for our wood recycling process for the business and enable us to material. sell fuel into the UK biomass market. We actively encourage our employees to recycle through Second Home (Greece)‌‌ communication campaigns and the provision of recycling Kotsovolos has launched a successful recycling scheme facilities at all sites. which places unwanted or used electrical appliances and devices in new homes among families who can’t afford to buy new ones. The retailer collects, refurbishes and delivers devices to local authorities who redistribute them to those families in need, recycling any appliances unable to be repaired.

34 Dixons Carphone plc Annual Report and Accounts 2016/17 Re-use Innovation with HM Prisons A three-way partnership between Dixons Carphone, DHL EnviroSolutions and WasteCare in collaboration with National Offenders Management Service (‘NOMS’) sees

unwanted large appliances repaired in a HM Prison within Strategic Report purpose-built rooms. Inmates are trained in the necessary skills and then refurbish the appliances, which are sent for sale to charities and social housing projects. The prisoners are paid a weekly wage to do this. The overall objective will see an increase in the re-use rate of WEEE and reduce reoffending rates by giving inmates purposeful skills which they can use to gain employment upon release.

We actively engage to achieve a more resource-efficient economy. This year we worked with WRAP, the Waste and Resources Action Programme to support their Electrical and Electronic Equipment Sustainability Action Plan to improve business efficiency and gain greater value from re-use and recycling by setting up a WEEE trial in Cardiff. We are also working in collaboration with Axion Consultancy to offer collection points at CurrysPCWorld stores in Stockport, White City, Bury, Bolton and Cheetham Hill. This collection accepts broken or working IT equipment, e.g. laptops, smartphones, desktop PCs, gaming devices and tablets. This is an EU-funded trial to increase the recovery of Critical Raw Materials from WEEE. The information and evidence gathered through the trials will contribute towards the development of a European-wide infrastructure plan and policy recommendations to support the increased recovery of critical and valuable materials from WEEE. This Strategic Report was approved by the Board and signed on its behalf by:

Sebastian James Humphrey Singer Group Chief Executive Group Finance Director 27 June 2017 27 June 2017

Dixons Carphone plc Annual Report and Accounts 2016/17 35 Corporate Governance 36 Key Group plc,andatrusteeofthecharitySaveChildren. Sebastian isalsoanon-executivedirectorofDirectLineInsurance plc. HestartedhiscareeratTheBostonConsultingGroup. Insurance ServicesLimitedandwasstrategydirectoratMothercare joining Dixons,SebastianwaschiefexecutiveofficerofSynergy appointment asgroupchiefexecutiveinFebruary2012.Before held variousroles,includinggroupoperationsdirector,priortohis with CarphoneWarehouse.HejoinedDixonsinApril2008and Carphone on6August2014followingthemergerofDixonsRetail Sebastian JameswasappointedGroupChiefExecutiveofDixons PrimaPrix SL. Kohlberg, Kravis,Roberts&CoL.P.,andanon-executivedirectorof non-executive chairmanofPetsatHomeGroupPlc,senioradviser School andwasawardedaCBEforservicestoretailin2005.Tonyis also beenchairmanoftheadvisoryboardManchesterBusiness MFI FurnitureGroupplc(nowHowdenJoineryPlc).Hehas Group BV,anddeputychairmanseniorindependentdirectorof executive directorofAllianceBootsGmbH,chairmanMaxedaRetail Unilever PLC,L’OréalandPepsiCoInc.Hewasalsopreviouslynon- the fast-movingconsumergoodssectorwithfinancialpositionsin served aschieffinancialofficerofAsdaplc.Hestartedhiscareerin officer ofAsda/WalmartUKfrom2002to2005,havingpreviously Director in2015.Heheldthepositionofpresidentandchiefexecutive joined theBoardasSeniorIndependentDirectorandNon-Executive Committee andamemberoftheNominationsCommittee.Tony Director ofDixonsCarphone.HeisalsoChairmantheRemuneration Tony DeNunzioCBEisDeputyChairmanandSeniorIndependent of BelmondLtdandatrusteeJewishCare. company. HeischairmanofManGroupplc,anon-executivedirector having servedinanumberofrolesovermorethandecadewiththe chief financialofficerofDixonsGroupplcbetween1996and2002, He isacharteredaccountantandpreviouslyheldthepositionof executive officer,BTretailandgroupchieffinancialofficerofBT. officer atBTGroupplcfrom2008to2013.Priorthathewaschief State forTradeandInvestmentfrom2013to2015chiefexecutive and Non-ExecutiveDirectorin2015.HewaspreviouslyMinisterof the NominationsCommittee.HejoinedBoardasDeputyChairman Lord LivingstonofParkheadistheChairmanDixonsCarphoneand Board ofDirectors RemunerationCommittee AuditCommittee NominationsCommittee DisclosureCommittee Dixons Carphone plc Chairman Lord LivingstonofParkhead Group ChiefExecutive Sebastian James Senior IndependentDirector Deputy Chairmanand Tony DeNunzioCBE AnnualReport andAccounts 2016/17 1

with CarphoneWarehouse.Hewasappointedgroupfinance Carphone on6August2014followingthemergerofDixonsRetail Humphrey SingerwasappointedGroupFinanceDirectorofDixons trustee ofTheMix. Andrew isalsoanon-executivedirectorofOcadoGroupplcand Andrew becamegroupchiefexecutiveofCarphoneWarehouse. joint venture.Followingtheconclusionofventurein2013, he wasappointedchiefexecutiveofficeroftheBestBuyEurope the CarphoneWarehouseandPhoneHouseoperationsin2010 operation intheUS.Andrewalsoretainedresponsibilityforboth the TalkTalkbusinessandinexpandingBestBuyMobile with BestBuyin2008.Andrewplayedkeyrolesestablishing in 2006,arolehehelduntiltheformationofjointventure Carphone Warehousesince1995andbecameaplcboardmember with CarphoneWarehouse.Beforethis,Andrewhadbeen Carphone on6August2014followingthemergerofDixonsRetail Andrew HarrisonwasappointedDeputyChiefExecutiveofDixons Energy plc. Katie isalsoanon-executivedirectorofScottishandSouthern included rolesatDysonLimited,PepsiCoInc.andUnileverPLC. director andgroupHRatSomerfieldplc.Herearliercareer Katie wasmanagingdirectorofKwikSaveLimitedandgroupretail director ofmarketing,peopleandpropertyinJune2008.Previously, the chiefexecutiveofUK&IrelandforDixons.ShejoinedDixonsas division. KatiejoinedtheDixonsboardinFebruary2012andwas from 1May2015assumedresponsibilityforthewholeUK&Ireland Executive ofUK&IrelandfortheDixonsbusinessonmergerand with CarphoneWarehouse.SheretainedherresponsibilitiesasChief Carphone on6August2014followingthemergerofDixonsRetail Katie BickerstaffewasappointedanExecutiveDirectorofDixons Taylor Wimpeyplc. director atthelatter.Humphreyisalsoanon-executiveof plc andCoca-ColaEnterprisesUKLimited,includingfinance Dixons, heheldanumberoffinancerolesatCadburySchweppes and financedirectoroftheUK&Irelanddivision.Priortojoining roles, namelyfinancedirectorofCurrys,groupfinancialcontroller, 2011. SincejoiningDixonsin2007,hehasheldanumberoffinance director ofDixonsinSeptember2011,havingjoineditsboardJuly Group FinanceDirector Humphrey Singer Deputy ChiefExecutive Andrew Harrison Chief Executive,UK&Ireland Katie Bickerstaffe 3 2 1 PLC. Holdings PLC,andanon-executivedirectorofBarrattDevelopments Jock isthenon-executivechairmanofEnQuestPLCandHill&Smith council memberoftheInstituteCharteredAccountantsScotland. executive directorofanumbercompanies.Hewaspreviously He retiredfromEYin2009andhassubsequentlyactedasanon- as apartner)forEY(formerlyErnst&Young)intheUKandglobally. He isacharteredaccountantandworkedforover30years(20 joined DixonsRetailasanon-executivedirectoron10January2012. Carphone WarehouseandisChairmanoftheAuditCommittee.Jock Carphone on6August2014followingthemergerofDixonsRetailwith Jock LennoxwasappointedasaNon-ExecutiveDirectorofDixons Foundation Trust,andchairmanofRoys(Wroxham)Limited. director oftheNorfolkandNorwichUniversityHospitalsNHS chairman ofWoburnEnterprisesLimited,seniorindependent plc. Heholdsavarietyofexternalboardpositions,including flotation. Priortothis,hewasmanagingdirectorofBejamGroup business andsubsequentAlternativeInvestmentMarket(‘AIM’) Majestic Wineplc,whereheledthemanagementbuy-outof director ofPeabodyCapitalplc.Timservedaschiefexecutive independent directorofHendersonGroupPLC,andnon-executive and KeelerLimitedEnotriaWineGroupLimited,senior director on9May2012.FormerrolesincludechairmanofRayner director on8September2009andbecameseniorindependent with CarphoneWarehouse.TimjoinedDixonsasanon-executive Carphone on6August2014followingthemergerofDixonsRetail Tim HowwasappointedasaNon-ExecutiveDirectorofDixons Hardie Industriesplc,MrGreen&CoABandBillerudKorsnäsAB. She iscurrentlyanon-executivedirectorofICAGruppenAB,James marketing roleswithProcter&GambleandJohnsonJohnson. and TwentiethCenturyFox.Herearlycareerinvolvedseveralsenior and managingdirector(Nordicregion)ofPanasonic,ChantelleAB Lighthouse Group,chiefexecutiveofBoxerTVAccessABinSweden include chairmanofTeknikmagasinetAB,non-executivedirector as anon-executivedirectoron1March2013.Herformerroles Dixons RetailwithCarphoneWarehouse.Andreajoined of DixonsCarphoneon6August2014followingthemerger Andrea GisleJoosenwasappointedasaNon-ExecutiveDirector election byshareholders. Gerry Murphywasappointed totheRemunerationCommitteeon9 May 2017. Fiona McBainwilljointheAuditCommitteeon 7September2017,subjecttoher Lord LivingstonwasappointedtotheDisclosure Committeeon27June2017. Independent Non-ExecutiveDirector Jock Lennox Independent Non-ExecutiveDirector Tim How Independent Non-ExecutiveDirector Andrea GisleJoosen

Dixons Carphone plc Olympic DeliveryAuthorityandchairofOfsted.Sheiscurrently and Equalities.Herformerrolesalsoincludeboardmemberofthe government relationsat10 DowningStreetandMinisterforWomen with TalkTalk.Priortothis,BaronessMorganwasdirectorof Old CarphoneWarehousefrom2005to2010,priorthedemerger director on28 January2010.Shewasanon-executiveof Carphone andjoinedWarehouseasanon-executive Baroness MorganofHuytonisaNon-ExecutiveDirectorDixons Children, andatrusteeoftheHumanitarianLeadershipAcademy. of ScottishMortgageInvestmentTrustPLC,vicechairSavethe sectors intheUKandthenUS.Fionaisanon-executivedirector Young (nowEY)inLondon,workingacrossanumberofindustry Scottish Amicable.ShequalifiedasacharteredaccountantwithArthur was previouslyengagedinthefinancefunctionsatPrudentialplcand Group untilDecember2016,havingjoinedthecompanyin1998.She 1 March 2017.FionawaschiefexecutiveofficerofScottishFriendly Fiona McBainjoinedtheBoardasaNon-ExecutiveDirectoron Linklaters. International Limited.Hetrainedand qualifiedasasolicitorwith Prior toBT,Nigelwasengagedas legal counselatExxonMobil vice presidentandchiefcounselfor UKandmajortransactions. counsel ofBTconsumer,headcompetition ®ulatorylaw,and Group plcbeforejoiningDixonsCarphone. Theseincludedgeneral international telecomsandheldseveralseniorlegalrolesatBT Secretary inApril2015.HehasastrongbackgroundUKand Nigel PatersonwasappointedGeneralCounselandCompany executive directorofCapital&CountiesPropertiesPLC. executive boardmemberoftheDepartmentHealthandanon- Chartered AccountantsinEnglandandWales.Gerryisanon- also chairmanoftheAudit&AssuranceFacultyInstitute and chairmanofitsauditcommitteeforanumberyears and telecommunications.HewasamemberoftheDeloitteboard experience inconsumerbusiness,retailandtechnology,media leader ofitsProfessionalPracticesGroupwithdirectindustry on 2April2014.HeisaformerDeloitteLLPpartnerandwas and joinedCarphoneWarehouseasanon-executivedirector Gerry MurphyisaNon-ExecutiveDirectorofDixonsCarphone Organisation, andatrusteeofEducationPolicyInstitute. of thechildren’scharityARK,aboardmemberFrontline director ofCountrysidePropertiesPLC,anadvisortotheboard Ambition SchoolLeadership.BaronessMorganisanon-executive chairman ofRoyalBrompton&HarefieldNHSFoundationTrustand AnnualReport andAccounts 2016/17 Independent Non-ExecutiveDirector Fiona McBain General CounselandCompanySecretary Nigel Paterson Independent Non-ExecutiveDirector Gerry Murphy Independent Non-ExecutiveDirector Baroness MorganofHuyton

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Corporate Governance Corporate Governance 38 its dutiesfullyandtochallenge management effectively. possessed thenecessaryskills and experiencetodischarge After thisyear’sreview,itwasagain concludedthattheBoard relating totheEuropeanbusinessenvironment. outside theUKandwhoprovidesstrongsupportonmatters Board hadfourfemaledirectors,oneofwhomisbased international andethnicdiversity.At29April2017,the all formsofdiversity,includinggender,professional, directors duringtheyear.Thatreviewencompasses commitment totheCompanyshownbynon-executive composition oftheBoard,includingindependenceand The NominationsCommitteereviewseachyearthe 37 ofthisReport. The membersoftheBoardareassetoutonpages36and Role andcompositionoftheBoard stage oftheCompany’ssuccess. is suretoprovidecontinuedstrongleadershipforthenext who hasalreadymadeavaluablecontributiontotheBoard, he foundedCarphoneWarehousein1989.TonyDeNunzio, contribution totheBoardandbusinessasawholesince take thisopportunitytothankCharlesforhisenormous as SeniorIndependentDirector.TheBoardwouldliketo of theRemunerationCommittee,inadditiontohisrole DeNunzio CBEbecameDeputyChairmanand of theBoardandNominationsCommittee,Tony the Board.Onsameday,IwasappointedChairman 2017 SirCharlesDunstonesteppeddownasChairmanof his entrepreneurialleadershipandexpertise.On30April the Group’ssoftwaredivision,whichwillbenefitgreatlyfrom the BoardtobecomeChiefExecutiveOfficerofhoneybee, asset totheBoard.On27April2017GrahamStapletonleft her careerinfinancialservicesandwillundoubtedlybean Executive Director.Fionabringsawealthofexperiencefrom On 1March2017FionaMcBainjoinedtheBoardasaNon- Changes totheBoard ‘Code’), ensuringcontinuingalignmentwithbestpractice. against the2016UKCorporateGovernanceCode(the annually. TheBoardhasreviewedourpoliciesandpractices appointments and external advice are reviewed and refreshed Chief ExecutiveandSeniorIndependentDirector,external commitment, theroledescriptionsofChairman,Group best practice.OurBoardpolicies,suchasdiversity,time and proceduresregularlytoensurethattheycomplywith run business.WereviewandupdateourGrouppolicies Good corporategovernanceisattheheartofanywell- Corporate governance shareholder valuecreation. and effectivestewardshipasthefoundationoflong-term is committedtogoodcorporategovernancepractice remain ‘fitforpurpose’.IsetoutbelowhowtheCompany that ourcorporategovernancepracticesandprocedures 2016/17. Wecontinuetodevotetimeandeffortensuring Governance sectionoftheAnnualReportandAccounts I ampleasedtopresentmyintroductiontheCorporate Chairman’s introduction Report Corporate Governance Dixons Carphone plc AnnualReport andAccounts 2016/17 activities, thedirectors’interactionandtheireffectivenessin evaluation involvedanin-depthreviewoftheBoard’s followed byaninternalBoardevaluationthisyear.This The triennialexternalBoardevaluationlastyearwas Board evaluation executives. joining theBoard,includingmeetingswithkeyCompany McBain participatedinatailoredinductionprogrammeupon to storesandfacilities,informaldiscussions.Fiona the businessasawholethroughformalpresentations,visits The directorshavecontinuedtowidentheirknowledgeof Induction leadership andaccountabilityforallaspectsofthebusiness. each other,withtheaimbeingeffectivedecision-making, the directorsworktogethertochallengeaswellsupport the appropriatelevelofscrutinyandoversight.Inthisway, running thebusinessandournon-executives,whoprovide differentiated therolesbetweenexecutivemanagement responsibility forthebusiness’ssuccess.Wehaveclearly so. AsaunitaryBoard,thedirectorsacknowledgetheirjoint to dedicateCompanybusinessandallhaveformallydone were askedtoconfirmthattheycontinuehaveenoughtime As partoftheannualreviews,non-executivedirectors 27 June2017 Chairman Lord LivingstonofParkhead at thisyear’sAnnualGeneralMeetinginSeptember. bring. MyfellowdirectorsandIlookforwardtomeetingyou good platformtograsptheopportunitiesthatfuturewill by soundpoliciesandprocedures.Thisprovidesuswitha We possessastrong,balancedanddiverseBoardsupported Conclusion to theBoardasnecessary. are furthermanagementlevelcommitteeswhichreportback dedicated sectioninthisReport.BeneathBoardlevelthere Nominations andRemunerationcommittees.Eachhasa The maincommitteesoftheBoardareAudit,Disclosure, Committee structure pages 43and60. carrying outtheirroles.Furtherinformationcanbefoundon Annual GeneralMeeting(‘AGM’). and TimHowwillbothbestepping downatthisyear’s and theperiodicrefreshingof Board,BaronessMorgan independence. Nevertheless,as partofsuccessionplanning concluded thattheirlengthsoftenuredonotaffect and theirfellowdirectorsthroughouttheyear,Board and independentstanceintheirdealingswiththebusiness scrutiny. Havingwitnessedtheircontinuingcommitment status ofthesetwodirectorstofurtherandspecific Retail since2009.TheBoardsubjectedtheindependent and TimHowhasbeenanon-executivedirectorofDixons non-executive directorofCarphoneWarehousesince2005 The BoardrecognisesthatBaronessMorganhasbeena accordance withtheCode. Charles Dunstone)areconsideredtobeindependentin (excluding theChairman,whoat29April2017wasSir McBain andGerryMurphy.Morethanhalfthedirectors Livingston ofParkhead,BaronessMorganHuyton,Fiona CBE, AndreaGisleJoosen,TimHow,JockLennox,Lord independent non-executivedirectorsareTonyDeNunzio effective challengetotheBoardandbusiness.These independent incharacterandjudgementwhoprovide directors, eachofwhomisdeterminedbytheBoardtobe Chairman, fourexecutivedirectorsandeightnon-executive At 29April2017,theBoardcomprised13members: Composition oftheBoard assessed andmanaged. to allowthekeyissuesandrisksfacingbusinessbe within aframeworkofefficientandeffectivecontrolssoas entrepreneurial andresponsibleleadershiptotheGroup The overridingresponsibilityoftheBoardistoprovideclear, Board responsibilities www.frc.org.uk. obtained fromtheFinancialReportingCouncil’swebsite, provisions oftheCodeduringyear.Thecanbe Company hasappliedtheprinciplesandcompliedwith Remuneration committeesprovidedetailsofhowthe reports fromtheAudit,Disclosure,Nominationsand This Report,togetherwiththeDirectors’Reportand UK CorporateGovernanceCode(the‘Code’). Accounts, theCompanyhasbeenfullycompliantwithThe April 2017andasatthedateofthisAnnualReport The Boardconfirmsthatthroughouttheyearended29 statement Corporate Governance The BoardandCommitteesStructure Audit Committe e 1 Disclosure Committe Dixons CarphoneBoard 1 2D Audit Committeepages50to57 isclosure Committeepage58 e 2 Dixons Carphone plc as itwasinMay2017.TheChairmanisresponsibleforthe writing andisreviewedbytheBoardonanannualbasis, the GroupChiefExecutiveisformallydefined,setoutin The divisionofresponsibilitybetweentheChairmanand information isshownonpages36and37. election orre-electionattheCompany’sAGM.Biographical exception ofBaronessMorganandTimHow,willstandfor In accordancewiththeCode,alldirectors, conclusion oftheAGM. replace BaronessMorganontheAuditCommitteeat AGM and,subjecttoherelectionbyshareholders,will on 1March2017.Shewillstandforelectionatthisyear’s Fiona McBainwasappointedasaNon-ExecutiveDirector performance review. and todiscusswiththeChairmanresultsoflatter’s they areunabletoraiseissueswiththeChairmandirectly, the Chairman,beavailabletoanyshareholderswhofeel in writingandreviewedannuallybytheBoard,istosupport The roleoftheSeniorIndependentDirector(‘SID’),setout the Group’sstrategicandcommercialobjectives. management oftheGroup’sbusinessandforimplementing The GroupChiefExecutiveisresponsiblefortheexecutive overall operation,leadershipandgovernanceoftheBoard. Nominations

Committee AnnualReport andAccounts 2016/17 4R 3N emuneration Committeepages61to86 o 3 minations Committeepages59and60 Remuneration Committee

39 4

Corporate Governance Corporate Governance 40 • • • • • • • • • reviewed inMarch2017andincludes: formal ScheduleofMattersReservedfortheBoardwaslast Board andmattersdelegatedtocommitteesoftheBoard.The There aredocumentedschedulesofmattersreservedforthe Reserved matters Report Corporate Governance June • • • • • • • • • • • May 2016 Board topicsconsidered throughout thefinancialyear2016/17 • • • • • • • • • • • • approval ofshareholdercommunications. management policies;and approval oftreasury/internalcontrol andrisk approval ofGrouppolicies; approval ofauthoritylevelsforexpenditure; approval ofmajoracquisitionsanddisposals; Secretary andotherseniorexecutives; appointment andremunerationofdirectors,Company approval ofbudgetandGroupstrategyobjectives; final dividends; declaration ofinterimandrecommendation and otherdisclosuresrequiringBoardapproval; approval ofpublishedfinancialstatements,dividendpolicy Committee TermsofReferenceapproval Audit CommitteeandDisclosure Environmental matters Modern slaverystatementapproval Non-executive directorfees Market AbuseRegulationtraining Banking facilities Property rationalisation IT infrastructure,includingcybersecurity Sprint jointventureupdate Final dividendapproval Annual generalmeetingdocuments report andaccounts2015/16 Preliminary announcementandannual Delegation ofAuthorityapproval Annual reviewofconflicts Corporate governancereviewandupdate policies approval Reference, RoleDescriptionsandBoard Nominations CommitteeTermsof Health andSafety compliance Financial ConductAuthority(‘FCA’) Banking facilities honeybee update External Boardeffectivenessreview Budgetary approval Q4 tradingstatement Dixons Carphone plc AnnualReport andAccounts 2016/17 • • • • • • • • December • November • • • • September • • • • • • • July

UK &Irelandstrategysession of Referenceapproval Remuneration CommitteeTerms Group fraudpolicyapproval Pensions strategy Diversity policyandreporting Post-acquisition review Interim dividendapproval Interim announcementapproval Insurance update Banking facilities honeybee update Q1 tradingstatement Annual generalmeeting CWS strategysession Competition lawupdate Pension scheme Brexit Sprint jointventureupdate SSE andTalkTalkcontracts Investor relationsactivities • • • • • • • • • • • Chairman’s responsibilities Board. performance evaluationandsuccession planningofthe oversee theprocessofinduction, developmentand and non-executivedirectors; ensure constructiverelationsbetween theexecutive directors; facilitate effectivecontributionsofthenon-executive standards ofcorporategovernance; promote, withtheCompanySecretary,highest ensure clearandeffectiverunningofthecommittees; ensure Boardeffectivenessinhisrole; and shareholdermeetings; effectively chairBoard,NominationsCommittee seek newbusinessdevelopmentopportunities; performance andprofitabilityoftheGroup; approve Groupstrategy,itsimplementationandthe represent theinterestsofshareholders; manage theBoard; • • • • • March • • • • • • • January 2017 Nordics strategysession the Boardapproval Schedule ofMattersReservedfor iD Irelandupdate appetite review Risk managementandrisk Finance transformation Services strategysession (‘CSR’) update Corporate SocialResponsibility Network relationships planning update Talent reviewandsuccession Three-year plan Q3 tradingstatement Christmas tradingupdate

• • • • • Senior IndependentDirector’s responsibilities • • • • • • • • • • • Group ChiefExecutive’s responsibilities structure; review theeffectivenessofGroup’sorganisational high standard; ensure Grouppoliciesandproceduresconformtoa succession; management andensureeffectiveperformance provide leadershiptotheGroupandsenior deliver Groupprofitability; Chairman) anddevelopGroupobjectives; formulate theGroupstrategyanddirection(with stress. maintain BoardandCompanystabilityinperiodsof shareholders toresolvesignificantissuesand work withtheChairman,otherdirectorsand and support theChairmaninperformanceofhisduties; Chairman; oversee anorderlysuccessionforthepositionof with theBoard; appraise theperformanceofChairmanannually be availabletocommunicatewithshareholders; set standardsofperformancethroughouttheGroup. management andcontrolfunctions; functions includingfinance,humanresources,risk oversee theestablishmentofoperationalandsupport institutions; departments, keystakeholdersandanyotherrelevant represent theCompanyinCity,withgovernment and riskmitigationmeasuresareinplace; manage Groupriskprofileandensureinternalcontrols oversee managementsuccession; other opportunitiesoutsidecoreactivities; identify acquisitionanddisposalopportunities

Dixons Carphone plc Gerry Murphy Baroness Morgan of Fiona McBain Lord Livingstonof Jock Lennox Tim How Andrew Harrison Andrea GisleJoosen Tony DeNunzioCBE Katie Bickerstaffe Sebastian James Sir CharlesDunstone Member since theyearend. during theperiodunderreview.TheBoardhasmettwice four strategysessionsandthreeunscheduledmeetings The Boardattendedeightscheduledmeetingsaswell Board attendance Graham Stapleton Humphrey Singer (2) (1) Huyton Parkhead appointment. before theyjoinedtheBoardandcouldnotbechanged. Board meetingeachduetocommitmentsthatwereplanned Fiona McBain attended the only Board meeting following her Fiona McBainattendedtheonlyBoardmeetingfollowingher Lord LivingstonandTonyDeNunziowereunabletoattendone (1)

(2) AnnualReport andAccounts 2016/17 (1)

1 Mar2017 Appointed 30 Apr2017 27 Apr2017 Resigned Attendance 8 of 8 of 1 of 7 of8 8 of 8 of 8 of 8 of 7 of8 8 of 8 of 8 of 8 of 8 of 41

Corporate Governance Corporate Governance 42 portfolio. of theteam,and tovisitstoresthroughoutthe business’s locations alsoenablestheBoard tomeetothermembers UK andJönköping,Sweden.Visiting ourvariousoperational the Board.Thisyear,Boardmeetings wereheldinSheffield, management acrosstheGroup withtheopportunitytomeet understanding ofthebusiness. Thisalsoprovidessenior locations toassistallBoardmembers ingainingadeeper The BoardholdsmeetingsatavarietyoftheGroup’s business performance. to discuss,amongstothermatters,corporatestrategyand when Boarddinnersareheld.Thisprovidestheopportunity directors, usuallyonaneveningpriortoaBoardmeeting The Chairmanmeetsregularlywithallthenon-executive and committeesattheirnextmeeting. Secretary, and/orhisnominee,approvedbytheBoard and committeemeetingsarepreparedbytheCompany clarity ofcommunication.FormalminutestheBoard a continuallyevolvingprocesstoensurerelevanceand format, contentandtimelyproductionofBoardpapersis for thedirectorstobeabledischargetheirduties.The are sentoutonatimelybasiswithsufficientinformation information totheBoard.AllBoardandcommitteepapers which enablesthesafeandsecuredisseminationofquality The Companyusesanelectronicboardpapersystem that theyhavefullandtimelyaccesstorelevantinformation. are properlybriefedonissuesarisingatBoardmeetingsand The Chairmanisresponsibleforensuringthatalldirectors Board matters governance Report Corporate Governance (5) (4) (3) Gerry Murphy Baroness Morgan ofHuyton Fiona McBain Jock Lennox Tim How Andrea GisleJoosen Tony DeNunzioCBE Lord LivingstonofParkhead Sir CharlesDunstone professional advisorstoundertaketheirduties. provided withsufficientresourcesviatheCompanySecretaryand,wherenecessary,havedirectaccesstoindependent There arefourmainBoardcommittees:Audit,Disclosure,NominationsandRemuneration.Thecommittees Committee members (2) (1) C –Chairman Nigel Paterson Sebastian James Humphrey Singer 27 June 2017. Gerry MurphywasappointedtotheRemunerationCommitteeon9 May2017. Fiona McBainwasappointedtotheBoardon1March2017. Tony DeNunzioCBEsucceededLordLivingstonofParkheadasChairmantheRemunerationCommitteeon30April2017. Lord Livingston of Parkhead became Chairman of the Board on 30 April 2017. He was appointed to the Disclosure Committee on Lord LivingstonofParkheadbecameChairmantheBoardon30April2017.HewasappointedtoDisclosureCommittee Sir CharlesDunstoneresignedfromtheBoardon30April2017. Dixons Carphone plc (4) (5) M –Member (3) (1) AnnualReport andAccounts 2016/17 (2)

(pages 50to57) Audit M M C

Disclosure (page 58) occur. as appropriateforthesetraining andbriefingsessionsto The Boardhassetasidetimeon thecurrentBoardagenda advisors andin-housebriefings fromseniormanagement. knowledge intheformoftraining sessionsfromexternal updates ongovernance,complianceandcompany and totheBoardasawhole.Thereceivesregular training isprovidedasappropriatetoindividualdirectors to regularlyupdateandrefreshtheirskillsknowledge, In accordancewiththeCode’srequirementfordirectors 2017. to herelectionbyshareholdersattheAGMon7September appointment asamemberoftheAuditCommittee,subject board oftheFCA-regulatedentityandhereventual her roleinprovidingregulatoryoversighttotheoperating specific responsibilitiesandpastexperience.Theseinclude was givenanindividualinductionprogrammetailoredtoher As anewlyappointedNon-ExecutiveDirector,FionaMcBain the Group’sauditorandadvisors. operates. Newdirectorsarealsoencouragedtomeetwith operations, systemsandmarketsinwhichtheGroup key sites.Thisenablesfamiliarisationwiththebusinesses, management andstorecolleaguestovisittheGroup’s director isgiventheopportunitytomeetwithsenior appropriate totheirlevelofpreviousexperience.Each induction programme,togetherwithguidanceandtraining New directorsappointedtotheBoardreceiveapersonal M M M C

(pages 59and60) Nominations M M M C

(pages 61to86) Remuneration M M M C

debate. an atmosphereforpositive,challengingandconstructive leading theBoardwasnotimpairedandthathecultivated affected hisperformanceinrole,effectiveness significant commitmentsduringtheyearthatadversely The BoardisoftheopinionthatChairmanhadnoother strategy planning. and themainBoardcommittees,successionplanning its timeandattentionontheroleoffutureChairman timing ofthechangeinChairmanship,Boardfocused culture, strategyandcorporategovernance.Duetothe at meetings,theeffectivenessofeachdirector,leadership, Board, Boardcommittees,preparationforandperformance roles oftheexecutiveandnon-executivedirectors, of theBoardwhichincluded,butwerenotlimitedto, The reportaddressedallmattersrelatingtotheperformance consideration atitsMay2017meeting. report totheChairmanandpresenteditBoardfor report. TheCompanySecretarysubmittedthedraft anonymised comments,wascollatedintoacomprehensive and itscommittees.Asummaryoftheresults,togetherwith responding toquestionnairesaboutthemselves,theBoard, experience oftheBoardwhichinvolvedalldirectors The reviewexaminedthelevelofskills,knowledgeand carried out. had nothelditsfirstmeetingatthetimeevaluationwas Committee becauseitwasestablishedinJune2016and not consideredappropriatetoevaluatetheDisclosure Audit, NominationsandRemunerationcommittees.Itwas internal evaluationofBoardperformanceandthatthe 2015/16. Thisyear,theCompanySecretaryfacilitatedan last externalevaluationoftheBoardwascarriedoutin Board bereviewedexternallyeverythreeyears.The The Coderecommendsthattheperformanceof Performance evaluation meeting. plans forseniormanagementattheJanuary2017Board Board reviewedindetailsuccessionandtalentmanagement appointments totheBoardandseniormanagement.The plans areinplacetoensureanorderlysuccessionof directors endeavourtosatisfythemselvesthatadequate knowledge anddiversityrequiredatBoardlevel,the an optimalbalanceofskills,experience,independence, experience. Planningcontinuesforthefuture.Inseeking new Boardmember,FionaMcBain,withfinancialservices by therefreshingofBoardandappointmenta where greaterfocuswasrequired.Thisaddressed Last year,successionplanningwasidentifiedasanarea Succession planning Dixons Carphone plc part ofit. Governance statementbyreferenceandisdeemedtobe to 49.SuchinformationisincorporatedintothisCorporate statement iscontainedintheDirectors’Reportonpages 47 required tobeincludedinthisCorporateGovernance Information ontheCompany’ssharecapitalandconstitution Capital andconstitutionaldisclosures actions, aresetoutinthetablebelow: further improvement,togetherwithagreedassociated major areasforaction.Someofthethemesidentified The conclusionoftheevaluationwasthattherewereno duties. all necessarymeetingsandtocarryoutotherappropriate commitment totherole,includinghavingtimeattend that alldirectorscontinuetobeeffectiveanddemonstrate Following theresultsofevaluation,Boardconfirms Stakeholder 2. composition, Board 1. oprt Social Corporate 5. 4. 3. Key areas offocus Company visionand Format ofBoard engagement and customer management management planning andtalent succession Responsibility values meetings AnnualReport andAccounts 2016/17 •  •  •  Actions •  •  •  •  discussion to aidandencouragefurther current performanceindicators Considering howbesttoutilise senior management appointments oftheBoard and Reinforcing thepipelineoffuture diversity ofthought in allitsforms,including Continuing tofocusondiversity the Board schedule Greater focusonCSRtopicsin this topic Board discussionsdedicatedto Scheduling more frequent director discussions of informalnon-executive Further increasing thefrequency strategy discussions Committing more timeto 43

Corporate Governance Corporate Governance 44 around aThreeLinesofDefencemodel: The systemofriskmanagementandinternalcontrolisbuilt Our Three LinesofDefence Group RiskManagementStructure • • • its effectiveness. of riskmanagementandinternalcontrolforreviewing The BoardhasoverallresponsibilityfortheGroup’ssystem Committed toeffective riskmanagement controlsRisk andinternal Report Corporate Governance Third Line Second Line First Line structure whichoperatesacrossthebusinesstoenable The Boardestablishesanorganisationandmanagement environment. outlines theexpectationsforoperationofcontrol within whichrisk-baseddecision-makingcanoccurand the organisation.Theriskappetitedefinesboundaries management reviewsandriskmitigationactivitywithin the referencepointagainstwhichtobenchmarkrisk The Boardhasagreedariskappetitethatprovides organisational control. are designedtoenableeffectivedecision-makingand financial authoritiesandoperationalresponsibilities,which The Boardanditsvariouscommitteeshavedefined Assurance provision Dixons Carphone plc Audit Board Group DirectorofRisk across Considers external auditplans Approves theannualinternaland control Reviews theeffecvenessofinternal Defines Dixons Responsible

Commi the Group the internalauditreviews independent assurance Assurance functionsthatprovide compliance specialise inriskmanagementand Central functionsthatoverseeor own andmanagerisk Business unitsandoperationsthat for riskmanagementandinternalcontrol ee Carphone riskappete

AnnualReport andAccounts 2016/17

FCA Complianc Commi ee Risk &ComplianceCommi e risks Considers key risks Monitors themanagementof unit Reviews Groupandbusiness risk profiles Supported by: • • for: the GroupRisk&ComplianceCommittee,areaccountable Carphone’s seniormanagementteam,operatingthrough and engagementacrosstheentirebusiness.Dixons Effective riskmanagementrequirescollectiveresponsibility • • • • First lineofdefence–Businessunitsandoperations new andemerging

misstatement orloss. reasonable butnotabsoluteassuranceagainstmaterial manage ratherthaneliminateriskandcanonlyprovide is exposed.Thecontrolsbytheirnaturearedesignedto to mitigatetheriskswhichtheirareaofbusiness implementing andmonitoringcontrolswhicharedesigned responsibility; and identifying, mitigatingandmanagingriskintheirareasof Code requirements. Board effectivenessisassessedannuallyinlinewiththe The Board’scompositionisreviewedperiodicallyand accordance withtheriskappetite. and operationalcontrolofbusinessactivitiesin the deliveryofproductsandservicestoourcustomers expenditure, treasury,B2B,information systems,stock financial, supplierfunding,purchasing, payroll,capital A minimumcontrolenvironment whichdefinesdetailed the corporateculturalvaluesset bytheBoard. regulatory, Groupandcustomer requirementsinlinewith to operateacontrolenvironmentthatsatisfieslegal, requirements foreachbusinessunittofollow,inorder A ‘HowWeDoBusiness’frameworkthatoutlinesthe conduct. teams againsttheobjectivesandexpectedstandardsof reviews toevaluatetheperformanceofindividualsand Undertakes annualobjectivesettingandperformance

Funconal risk

ex Reviews andapprovesthebusinessriskprofile perts ee

Ex commi ecuve Commi control the operaonofinternal risk managementprocessand and implementaon Accountable forthedesign

Business unitrisk environment ees and champions ee

of the

• • • • • • Second lineofdefence–Centralfunctions • • • • • • • • occurrence (assessedonagross andnetbasis),together business, theirpotentialimpact andlikelihoodof faced byeachofthebusinesses, includingregulated Maintains aGroupriskregister, whichidentifiestherisks Strategic Report. mitigating actionscanbefoundonpages16to21ofthe categories. Detailsoftheprincipalrisksandexamples financial, people,regulatoryandhazard/external identified againststrategic,operational,technological, Risk ManagementandInternalControl.isbroadly Code andFinancialReportingCouncilGuidanceon the Groupinaccordancewithrequirementsof evaluate andmanagethesignificantrisksfacedby Undertakes aformalriskidentificationprocessto management withinthebusiness. which outlinestheprinciplesandapproachtorisk establishes ariskmanagementpolicyandframework Under thedirectionofGroupDirectorRisk, to observe. core compliancepoliciesthatallemployeesarerequired Establishes aGrouppolicyframeworkwhichcontainsthe throughout theGroup. Defines adelegationofauthoritiesthatcascades processes. Undertakes theannualstrategicplanningandbudgeting to coverriskandcomplianceobligations. Appropriate trainingisprovidedtocolleaguesasrequired budget andtheupdatingofafullyearforecast. involves comparisonofactualresultswiththeoriginal and operationalreportingbyeachbusinessunit,which A systemofquarterlybusinessreviewscoveringfinancial responsibility. and internalcontrolmattersfortheirrespectiveareasof Framework. Thesecommitteesmeettoconsiderrisk risk inaccordancewiththeGroupRiskManagement Each businessunithasariskcommitteewhichidentifies are determinedtoenhanceriskmitigationifrequired. Each businessunitmaintainsariskregister.Actionplans standard ofourcustomerandservicedelivery. The operationoftheseprocessesprovidescomfortonthe wholesale, logistics,distributionandserviceoperations. Control processesgoverntheCompany’sretail, to enhanceriskmanagementoverkeyrisks. Additional targetedinternalcontrolimprovementinitiatives operation. underway ineachbusinessunittoenhancecontrol An ongoingprogrammeofcontrolimprovementis policy andprocedures. Operates HealthandSafetystandardsinlinewithGroup controls tobeappliedbyallbusinessoperations. management, merchandiserevenueandservice Dixons Carphone plc • • defence Sources tothethree ofassuranceexternal lines • Third lineofdefence–Assurance • Audit CommitteeandtheBoard. Report andAccounts2016/17 which wasapprovedbythe during theyearanduptodate ofapprovaltheAnnual effectiveness. Thereviewcoveredallmaterialcontrols and has,atleastonceayear,conductedreviewofits Company’s systemofriskmanagementandinternalcontrol out onpages16to21.TheBoardalsomonitoredthe with detailsofhowtheyaremanagedormitigated,isset solvency orliquidity.Adescriptionoftheserisks,together would threatenitsbusinessmodel,futureperformance, principal risksfacingtheCompany,includingthosethat The Boardhascarriedoutarobustassessmentofthe of lawsandregulations. assurance againstmaterialerrors,losses,fraudorbreaches control canonlyprovidereasonableandnotabsolute programme. Thesystemofriskmanagementandinternal operation ofcontrolsthroughthedeliveryitsaudit function whichprovidesanindependentopiniononthe The AuditCommitteeissupportedbytheinternalaudit business andassociatedrisks. refined asnecessarytomeetchangesintheGroup’s and reviewedbytheAuditCommitteesystems The effectivenessofthesesystemsisregularlymonitored approval oftheAnnualReportandAccounts2016/17. throughout theperiodunderreviewanduptodateof described inthisReportwasplaceandeffective The systemofriskmanagementandinternalcontrol controlStatement onriskmanagementandinternal • control byexternalbodiessuchastheFCA. Some oftheGroup’sactivitiesaresubjecttoregulatory many ofitssubsidiaryfinancialstatements. External auditconductsstatutoryauditsoftheGroupand improvement. independent appraisalsandmakingrecommendationsfor effective dischargeofitsresponsibilitiesbycarryingout risks arebeingmanaged,andassistsmanagementinthe of internalcontrol,throughreviewinghoweffectivelykey with anindependentassessmentoftheGroup’ssystem An internalauditfunctionprovidestheAuditCommittee Group andbusinessunitlevel. and tomonitorthestatusofkeyrisksactionsat management ofriskarisingouttheGroup’sactivities the AuditCommitteeandmeetsquarterlytoreview The GroupRisk&ComplianceCommitteereportsto processes establishedtomitigatetheserisks. with anevaluationofthekeycontrolsandmanagement reporting ofbreachesethicalorpolicyrequirements. The operationofa24/7whistleblowinghotlinetoenable AnnualReport andAccounts 2016/17 45

Corporate Governance Corporate Governance 46 conflicts ismaintained. the mainBoardatitsnextmeeting. Aregisterofdirectors’ if authorisationisneededquickly, andthenreportedto approved bytheBoard,ortwo independentdirectors procedures haveoperatedeffectively. Potentialconflictsare authorise andmanageconflicts ofinterest,andthese The Companyhasprocedures in placetoidentify, Authorisation ofconflictsinterest in allrespectsbeeneffectiveduringtheperiodunderreview. Committee concludedthattheinternalauditdepartmenthas and theperceivedimpartialityofauditteamitself.The submitted, thetimelinessofclearanceactionpoints with management,consideringthequalityofreports internal auditdepartmentthroughholdingdiscussions The AuditCommitteeconsideredtheeffectivenessof implemented effectively. that thenewcontrolsand/orprocedureshavebeen and additionalcontrolshavebeenputinplacetoensure and follow-upproceduresareperformedoncetheseactions implementation ofactionplansagreedwithmanagement, internal auditteamtracksandreportsontheprogress the fullreportsavailabletoallmembersonrequest.The receives asummaryofthesereportsateachmeeting,with recommendations forimprovement.TheAuditCommittee its materialfindingsfromtestingperformedandany all reportsfromtheinternalauditdepartmentdetailing The AuditCommitteeChairmanreceivesandreviews principal risksfacedbytheGroup. Committee’s considerationofalignmenttheplanwith of theapprovalprocessthisplaninvolvesAudit procedures aredesignedandoperatingeffectively.Part to testtherobustnessofmitigatingcontrolsandensure three-year rollingassuranceplanisdesignedeachyear with inputfrommanagementandtheAuditCommittee.The account theprincipalrisksacrossGroupandapproved Group’s internalauditplan,whichwaspreparedtakinginto across arangeofareasdocumentedandprioritisedinthe internal auditprogrammefor2016/17consistedofreviews reviews ofselectedbusinessprocesseseachyear.The The Grouphasaninternalauditdepartmentwhichconducts audit Internal foster innovationandgrowthwithinitsbusinesspractices. in itsactivities.Acceptanceofsomeriskisnecessaryto or necessarilydesirabletoeliminatealloftherisksinherent operations. TheCompanyrecognisesthatitisnotpossible objectives whilstaimingtomanageandminimiseriskinits that allowstakingmeasuredriskasitpursuesitsstrategic Dixons Carphone’sgeneralriskappetiteisabalancedone controls requiredtomitigaterisk. effective controlenvironmentthatdetailstheprocessesand these risksthroughintelligentdecision-makingandan performance forthebusinessisachievedbymanaging can arisefromtheoperatingmodel.Successfulfinancial business environmentinwhichitoperatesandtherisksthat Dixons Carphonefacesabroadrangeofrisksreflectingthe Risk appetite Report Corporate Governance Dixons Carphone plc AnnualReport andAccounts 2016/17 of theperformanceCompany.TheChairmanand Board alsoreceivesperiodicreportsoninvestors’views on investorrelationsmattersateachBoardmeeting.The The ChairmanensuresthattheBoardreceivesupdates ensure thatnoprice-sensitiveinformationisreleased. as sell-sideanalysts.Inallsuchdialogue,careistakento institutional shareholdersandpotentialaswell There isafullprogrammeofregulardialoguewithmajor presentations foranalystsandinstitutionalinvestors. relations departmentthat,amongstothermatters,organises investor relations.Heissupportedbyadedicated The GroupChiefExecutivehasprincipalresponsibilityfor publications. announcements), investorpresentationsandCompany to shareholdersarenewsreleases(includingresults principal communicationmediausedtoimpartinformation shareholders andtounderstandshareholderconcerns.The developments andfinancialresultstotheCompany’s It believesthatitisimportanttoexplainbusiness with majorinstitutionalinvestorsandotherstakeholders. the StewardshipCodeandactivelyencouragesengagement The BoardsupportstheinitiativessetoutinCodeand Communication withinvestors 27 June2017 Chairman Lord LivingstonofParkhead Group’s corporatewebsite,www.dixonscarphone.com. Further financialandbusinessinformationisavailableonthe at least20workingdaysinadvanceofthemeeting. Company’s annualgeneralmeetingissenttoshareholders In accordancewiththeCode,formalnotificationof the Boardcommittees,areinattendancetoanswerthem. questions andthedirectors,includingChairmenof business, isgiven.Shareholdersareencouragedtoask last year,alongwithareviewofcurrentissuesfacingthe which anaccountoftheprogressbusinessover which theCompanycommunicateswithshareholders,at The annualgeneralmeetingisanimportantmediumby are otherexternalannouncementsandpressreleases. on theinvestorrelationspartofcorporatewebsite,as and halfyearresultsarepublished.Theseposted communicates formallytoitsmemberswhenfullyear investors, privateoremployeeshareholders.TheCompany communication withallofitsmembers,betheyinstitutional The Companyiscommittedtofosteringeffective with majorshareholdersonmattersofremuneration. Chairman oftheRemunerationCommitteecommunicates shareholders ifsuchmeetingsarerequired,andthe non-executive directorsareavailabletomeetwithmajor the Group. No politicaldonationsweremadeduringtheperiodby Donations deemed toformpartofthisReport. incorporated intothisDirectors’Reportbyreferenceandis Responsibility Reportonpage33.Thisinformationis Company isrequiredtodisclosesetoutintheCorporate The informationongreenhousegasemissionsthatthe gas emissions Information ongreenhouse serving theGroup. and tore-trainanyemployeewhobecomesdisabledwhile endeavour ismadetofindsuitablealternativeemployment making anyreasonablere-adjustmentstotheirroles.Every to retaindisabledcolleaguesinouremploymentincluding considered foreachroletheyapplyfor.Alleffortsaremade who candothejobeffectivelyandcandidateswillbe We encourageapplicationsfromindividualswithdisabilities in recruitment,traininganddevelopment,promotion. The businessiscommittedtoprovidingequalopportunities Employment ofdisabledpeople Report. Group’s shareplansarecontainedintheRemuneration 28 to 35.Detailsoftheemployees’involvementin is includedintheCorporateResponsibilityReportonpages employees. Furtherinformationonemployeeengagement communicates mattersofcurrentinterestandconcernwith internal publications.Themanagementteamregularly formal andinformalmeetingsthroughtheGroup’s are keptinformedofissuesaffectingtheGroupthrough involvement atalllevelsoftheorganisation.Employees The Groupplacessignificantemphasisonitsemployees’ Employee involvement comprise themanagementreport. Directors’ ReportandtheStrategiconpages2to35 For thepurposesofDTR4.1.5R(2)and4.1.8,this Transparency Rules Disclosure Guidanceand part ofthisDirectors’Report. reference intothisDirectors’Reportandisdeemedtoform in theCorporateGovernancestatementisincorporatedby of thisAnnualReportandAccounts.Allinformationdetailed the CorporateGovernancestatementissetoutonpage39 (‘FCA’) DisclosureGuidanceandTransparencyRules(‘DTR’) As requiredbyRule7.2.1oftheFinancialConductAuthority statement Corporate Governance Directors’ Report

Dixons Carphone plc (the ‘Code’),theCompaniesAct2006‘Act’)andrelated Association (‘Articles’),theUKCorporateGovernanceCode directors, theCompanyisgovernedbyitsArticlesof With regardtotheappointmentandreplacementof current BoardofDirectorsareprovidedonpages36and37. The names,biographiesanddatesofappointmentthe General Meeting(‘AGM’)on7September2017. step downfromtheBoardatconclusionofAnnual on 27 June2017.BaronessMorganandTimHowwill Lord LivingstonwasappointedtotheDisclosureCommittee appointed totheRemunerationCommitteeon9May2017. in theappointmentofhissuccessor.GerryMurphywas with bestpractice,SirCharlesDunstonedidnotparticipate his roleasSeniorIndependentDirector.Inaccordance Chairman oftheRemunerationCommittee,inadditionto Tony DeNunzioCBEwasappointedDeputyChairmanand Lord LivingstonofParkheadwasappointedChairmanand Dunstone steppeddownasChairman.Onthesamedate, division, on27April2017.On302017,SirCharles Chief ExecutiveOfficerofhoneybee,theGroup’ssoftware 2017. GrahamStapletonresignedasadirectortobecome Fiona McBainwasappointedasadirectoron1March Directors are providedintheCorporateGovernance Report. a specificschedule,whichisreviewed annuallyanddetails or not.Themattersreservedfor theBoardaredetailedin relating tothemanagementof the businessofCompany which mayexerciseallthepowers oftheCompany,whether business oftheCompanywillbemanagedbyBoard directions givenbytheCompanyspecialresolution, Subject totheCompany’sArticles,Actandany Report. shares oftheCompanyareoutlinedinRemuneration interests, includingthoseofanyconnectedpersons,inthe any contractofsignificancetotheGroup’sbusiness.Their During theyear,nodirectorhadanymaterialinterestin individual directors. of theBoard,itscommittees,andcontribution recommendation followsaninternalperformanceevaluation and contributiontheycanbringtotheBoard.This being unanimouslyrecommendedfortheirskills,experience proposed bytheBoardforeitherelectionorre-electionare appointment fornon-executivedirectors.Allthedirectors service agreementsforexecutivedirectorsandtermsof Remuneration Reportprovidesdetailsofapplicable for electionorre-electiononanannualbasis.The determined thatalldirectorswillretireandofferthemselves In linewithbestpracticeandtheCode,Companyhas where theyshallstandforelectionbyshareholders. will beappointeduntilthenextannualgeneralmeeting set outintheArticles.AnydirectorappointedbyBoard number ofdirectorsshallnotexceedthemaximum15as appoint newdirectorstofillavacancyaslongthetotal resolution oftheshareholders.TheBoardhaspowerto The Articlesthemselvesmaybeamendedbyspecial legislation. AnnualReport andAccounts 2016/17 47

Corporate Governance Corporate Governance 48 review. purchases oftheCompany’ssharesduringyearunder held 461,367shares.TheEBTdidnotundertakeanymarket September 2016respectively.On29April2017theEBT ESOTs wereterminatedon16September2016and28 Dixons RetailESOT,weretransferredintotheEBT.The (‘ESOT’s), beingtheCarphoneWarehouseESOTand held inthetwolegacyEmployeeShareOwnershipTrusts was establishedon12August2016,afterwhichtheassets the DixonsCarphoneplcEmployeeBenefitTrust(‘EBT’) to theGroupfinancialstatements.FollowingMerger, Details ofemployeeshareschemesareprovidedinnote5 Dixons Carphoneholdsnosharesintreasury. are identical,witheachsharecarryingtherighttoonevote. statements. ThevotingrightsofDixonsCarphoneshares the yearareprovidedinnote22toGroupfinancial Details ofthemovementsinissuedsharecapitalduring The Company’sonlyclassofshareisordinaryshares. Capital structure out onpage87. directors’ confirmationsrequiredunderDTR4.1.12areset contained withinthisAnnualReportandAccountsthe The directors’responsibilitiesforthefinancialstatements Directors’ responsibilities required tobedisclosedunderListingRule9.8.4R. of thisDirectors’Report.Thereisnofurtherinformation dividends waivedbyshareholdersaregivenonpage49 Remuneration Reportonpages61to86.Detailsof by ListingRule9.4.3RarelocatedintheDirectors’ Details oflongtermincentiveschemesasrequired Rule 9.8.4R Information required byListing from fraudordishonesty. The insuranceprovideddoesnotextendtoclaimsarising officers forwrongfulactsinconnectionwiththeirpositions. insurance coverforanyclaimbroughtagainstdirectorsor office. TheGroupholdsdirectors’andofficers’liability own fundstocoverliabilitiesincurredasaresultoftheir by law,theCompanymayindemnifyitsdirectorsoutof In accordancewiththeArticles,andtoextentpermitted the dateofthisReport. directors duringtheyear;theseprovisionsremaininforceat provisions (asdefinedintheAct)forbenefitofits The Companyhasmadequalifyingthird-partyindemnity Directors’ indemnitiesandinsurance Directors’ Report Dixons Carphone plc AnnualReport andAccounts 2016/17

under thefacilityagreementineventofachange can requiretheCompanytorepayalloutstandingamounts change ofcontrolclausewherebytheparticipatingbanks The Group’smaincommittedborrowingfacilityhasa event ofachangecontrol. under theseschemestovestandbecomeexercisableinthe provisions whichmaycauseoptionsandawardsgranted All oftheCompany’sshareincentiveschemerulescontain agreements Change ofcontrol –significant Company’s sharecapitalandallissuedsharesarefullypaid. No personhasanyspecialrightsofcontroloverthe restrictions onthetransferofsecuritiesorvotingrights. between holdersoftheCompany’ssharesthatmayresultin legislation. Thedirectorsarenotawareofanyagreements by thegeneralprovisionsofArticlesandprevailing nor onthetransferofshares,whicharebothgoverned There arenospecificrestrictionsonthesizeofaholding of theCompany Restrictions ontransferofsecurities Report onpages74to86. movements thereofaredetailed intheAnnualRemuneration Directors’ interestsintheCompany’ssharesand been notified. At 27June2017,nochangeintheseshareholdingshad Capital Group Newton Investment Legal &GeneralInvestment D PJRoss Lansdowne Partners BlackRock Standard Life Name Company are: the shareholderswith3%ormoreinvotingrightsof At 29April2017,pursuanttoChapter5oftheFCA’sDTR, Significant shareholdings that occursintheeventofatakeoverbid. provide forcompensationlossofofficeoremployment between theCompanyanditsdirectorsoremployeesthat Furthermore, thedirectorsarenotawareofanyagreements alter orterminateuponachangeofcontrolintheCompany. lease arrangementsetc,towhichitisparty,thattakeeffect, agreements, suchascommercialcontractsandproperty control. TheCompanyisnotawareofanyothersignificant Management Management Number ofshares 35,711,000 41,792,133 43,359,831 55,738,699 57,675,527 62,515,960 81,597,144 Percentage of share capital 3.10% 3.62% 3.76% 4.83% 5.00% 5.42% 7.08%

has nocurrentintentiontomakesuchpurchases. usual renewalofthisauthorityattheforthcomingAGMbut prior tothedateofthisReport.TheCompanywillseek 2017. Theauthoritywasnotexercisedduringtheperiodor months oruntiltheconclusionofCompany’sAGMin 115,146,133 shares,suchauthorityremainingvalidfor15 general meetingin2016topurchaseamaximumof Authority wasgivenbytheshareholdersatannual the conclusionofthisyear’sAGM. employee shareschemes.Thisresolutionremainsvaliduntil ordinary shares,otherthanpursuanttoobligationsunder £383,820. Thedirectorshavenopresentintentiontoissue authority toallotsharesupanaggregatenominalvalueof shareholders approvedaresolutiontogivethedirectors Accordingly, attheannualgeneralmeetingin2016 up toonethirdoftheissuedsharecapitalCompany. can authorisethedirectorstoallotsharesinCompany In accordancewithsection551oftheAct,shareholders Issue ofshares 461,367 shares. trustees oftheCompany’sEBToveracombinedholding The righttoreceiveanydividendhasbeenwaivedbythe Total dividends Final dividend Interim dividend the yearareasfollows: 29 April2017.Detailsofthisandotherdividendspaidfor The Boardhasproposedafinaldividendfortheyearended Dividend

29 April2017 Year ended 11.25p 7.75p 3.50p

30 April2016 Year ended 9.75p 6.50p 3.25p

Dixons Carphone plc accordance withtheprovisionsofsection418Act. This confirmationisgivenandshouldbeinterpretedin • • and Accountsconfirmsthat: Each directoratthedateofapprovalthisAnnualReport Auditor to theGroupfinancialstatements. Events afterthebalancesheetdatearedisclosedinnote33 Post-balance sheetdateevents note 26totheGroupfinancialstatements. Information abouttheuseoffinancialinstrumentsisgivenin Use offinancialinstruments 27 June2017 Company Secretary Nigel Paterson By OrderoftheBoard Report maybefoundwithintheStrategicReport. Certain informationrequiredtobeincludedinthisDirectors’ proposed attheforthcomingAGM. office asauditorandaresolutiontore-appointthemwillbe Deloitte LLPhaveexpressedtheirwillingnesstocontinuein that theCompany’sauditorisawareofinformation. aware ofanyrelevantauditinformationandtoestablish have takenasadirectorinordertomakehimself/herself the directorhastakenallstepsthathe/sheoughtto and information ofwhichtheCompany’sauditorisunaware; so farasthedirectorisaware,therenorelevantaudit AnnualReport andAccounts 2016/17 49

Corporate Governance Corporate Governance 50 • • • • • • • • • included: The Committee’swork,carriedoutduringtheyear, Key activities Risk &ComplianceCommittee. considered theTermsofReferenceandworkings footprint andtheriskprofileofGroup.Wehavealso non-regulated andregulatedoperations,theinternational assurance activitiesencompass,inproportionatemeasure, responding tospecificmattersthathavearisen.The the improvementofreportingandcontrolsaswell This yeartheCommitteehascontinuedtooversee appropriate. management systemsofinternalcontrolareeffectiveand ensuring thatDixonsCarphone’sfinancialreportingandrisk out ourkeyareasofactivityindeliveringonobjective for theyearended29April2017.InthiscoveringletterIset I ampleasedtopresenttheReportofAuditCommittee Introduction Chairman’s statement Audit CommitteeReport security capabilities. strategic transformationoftheCompany’sinformation environment anditsvulnerabilities,thelongerterm monitoring therobustnessofinformationsecurity protection, andITstrategygovernance; programme, UK&Irelandvendormanagement,data management onsuchmattersasfinancetransformation receiving presentationsandsubsequentupdatesfrom considering internalauditreports; Compliance Committee(‘FCACC’); the FCA,includingreviewingreportsfromFCA providing oversightofthebusinessesregulatedby on page52; accounts for2014/15.Furtherinformationcanbefound information oncertainaspectsoftheannualreportand Reporting Council(‘FRC’)followingarequestforfurther reviewing allcorrespondencefromandtotheFinancial system andinternalcontrols,operatedbymanagement; reviewing theeffectivenessofriskmanagement balanced andunderstandable; and Accounts2016/17,whentakenasawhole,arefair, considering andrecommendingthattheAnnualReport pages 26and27; statement, moreinformationonwhichcanbefound Group’s goingconcernpositionandlongertermviability judgements, includingtheappropriatenessof considering significantaccountingandreporting application totheAnnualReportandAccounts2016/17; fully consideringtherequirementsofCodeandits Dixons Carphone plc AnnualReport andAccounts 2016/17 (including IT)architecture.Theriskassessmenthasbeen environment, andthechangingshapeofsystems landscape, thedevelopingbusinessmodel,regulatory The workprogrammewillberesponsivetothechangingrisk and controlenvironmentoftheServicesbusiness. and presentitsassessmentofthestructure,governance management andhasrequestedtoprepare key andevolvingareasoffinancialreportingrisk to adaptitsfocusinprovidingsupportandoversight its strategyandbusinessplans,theCommitteecontinues As theGroupcontinuestodevelopbusinessinlinewith welcome Fiona. for hervaluablecontributionstotheAuditCommitteeand Committee. IwantedtotaketheopportunitythankSally 2017, tobesucceededbyFionaontheCompany’sAudit Executive DirectorattheCompany’sAGMinSeptember that BaronessMorganwillbesteppingdownasaNon- and financeexpertise.TheCompanyalsoannounced experience, aswellsignificantgeneralmanagement on page 37,Fionabringsawealthofregulatedsector on 1March2017.Asyouwillnotefromherbiography Fiona McBainwasappointedasaNon-ExecutiveDirector Looking ahead 27 June2017 Chairman oftheAuditCommittee Jock Lennox any questions,pleasedogetintouch. available totalkyouthen.Inthemeantime,ifhave I willbeinattendanceattheforthcomingAGMand the riskappetitestatement. know thatnotallriskscanbeeliminated,asarticulatedin levels. Wearemindfuloftheneedtoremainvigilantaswe prepared andupdatedbytheGroup’smanagementatall Institute ofCharteredAccountants inEnglandandWales. by shareholdersattheAGM.FionaMcBainisamemberof joining theCompany’sAuditCommittee,subjecttoherelection McBain, theCompany’snewNon-ExecutiveDirector,willbe Director attheCompany’sAGMinSeptember2017.Fiona Baroness MorganwillbesteppingdownasaNon-Executive formal meetingsandwithoutmanagementpresent. auditor andtheGroupDirectorofInternalAuditoutside In additiontheChairmanmeetsseparatelywithexternal teams, aswellexternalprofessionaladvicenecessary. Finance Director,theCompanySecretary,andtheirrespective services oftheGroupDirectorInternalAudit, In undertakingitsdutiestheCommitteehasaccessto the externalauditorandGroupDirectorofInternalAudit. a discussionmaybeheldbetweenCommitteemembers, auditor withoutthepresenceofmanagement.Ifappropriate, be heldbetweentheCommitteemembersandexternal auditor maywishtoraise,ateachmeeting,discussion In ordertoallowdiscussionofprivatematters,whichthe to allmembersoftheBoardfollowingapproval. Board meetingandtheminutesofeacharecirculated deliberations arereportedbyitsChairmanatthesubsequent to theCommitteeandattendsallmeetings.TheCommittee’s The CompanySecretary,orhisnominee,actsasSecretary the requirementforrecentandrelevantfinancialexperience. of CharteredAccountantsinEnglandandWales,bothmeet of Scotland,andGerryMurphy,amembertheInstitute Committee, amemberoftheInstituteCharteredAccountants The BoardcontinuestobesatisfiedthattheChairmanof advice whenthe Committeebelievesitnecessary todoso. enable ittotakeindependentlegal, accountingorother The Boardmakesfundsavailable totheCommittee advice External Gerry Murphy Baroness Morgan ofHuyton Jock Lennox(Chairman) Current members Committee meetingsbyinvitation. external auditor(DeloitteLLP)attendedtherelevant management andrepresentativesoftheCompany’s Director, GroupDirectorofInternalAudit,othersenior Committee. TheGroupChiefExecutive,Finance of themeetingsduringwhichtheywereamember two furthermeetings.Alleligiblemembersattendedeach period underreview.Sincetheyearendtherehavebeen The Committeemetfourscheduledtimesduringthe Meetings and 37. details oneachmembercanbefoundpages36 meetings, aresetoutinthetablebelow.Biographical directors, who,alongwiththeirattendanceatscheduled to consistexclusivelyofindependentnon-executive In compliancewiththeCode,Committeecontinues Members Scheduled 4 of 4 of 4 of meetings

Dixons Carphone plc recently published bestpracticeguidance. all therecentlegislative andregulatorychanges aswell www.dixonscarphone.com. The TermsofReferencereflect available ontheGroup’scorporate website, reviewed andadoptedbytheBoard inMay2017andare The TermsofReferencethe Committee werelast The principaldutiesoftheAuditCommitteeare: year askeymattersarise. Reference. Theseitemsaresupplementedthroughoutthe Committee coversfullythoseitemswithinitsTermsof allocated tothemeetingsduringyearensure directors. Thereisanannualscheduleofitemswhichare responsibilities byactingindependentlyfromtheexecutive The CommitteeassiststheBoardinfulfillingitsoversight Responsibilities • • • • • Accounting andfinancialreporting matters • • General matters • • • audit External • • • audit Internal • • controlRisk managementandinternal considering andreviewingthestatementof considering thegoingconcernstatement; understandable; annual reportandaccountsarefair,balanced advising theBoardonwhether,asawhole, and accountingpolicies; reviewing significantfinancialreportingjudgements performance; announcements relatingtotheGroup’sfinancial and annualreportaccountsanyformal monitoring theintegrityofinterimstatement should beaddressedatameeting oftheBoard. referring matterstotheBoardwhich,initsopinion, any specifictopicsasdefinedbytheBoard;and objectivity, effectivenessandtermsofengagement; external auditor,includingtheirindependence, reviewing andmonitoringtherelationshipwith performed bytheexternalauditor; reviewing theresultsandconclusionsofwork and approvingtheirremuneration; appointment totheshareholdersingeneralmeeting considering recommendationoftheexternalauditor’s investigations; considering themajorfindingsofinternal improprieties infinancialreportingorothermatters; employees mayraiseconcernsaboutpossible considering whistleblowingarrangementsbywhich Company’s internalauditfunction; monitoring andreviewingtheeffectivenessof risk appetite; reviewing theGroup’sriskmanagementsystemsand control effectivenessandmaturity; reviewing theGroup’sfinancialcontrolsandinternal Company’s viabilityoveraspecifiedperiod; AnnualReport andAccounts 2016/17

51

Corporate Governance Corporate Governance 52 understandable Fair, balancedand FRC review viability statements and Going concern matters financial reporting Accounting and where significantlevelsofjudgementhavebeenappliedoritemsdiscussedwiththeexternalauditor. consideration wasgiventothesuitabilityandapplicationofGroup’saccountingpoliciespractices,includingareas statement andannualreportaccountsinconjunctionwithseniormanagement.Duringtheyearended29April2017, The Committeeisresponsibleforconsideringreportsfromtheexternalauditorandmonitoringintegrityofinterim Accounting andfinancialreporting matters Key mattersconsidered duringtheyear Audit CommitteeReport Dixons Carphone plc • • • • • • • Matters considered andhowtheCommitteedischargeditsduties • • performance of the underlyingoperationsof Group;theBoardwasadvised oftheconclusion. provide usersof theAnnualReportandAccounts 2016/17withameaningfulassessment ofthe and understandable,thatthe measuresusedanddisclosuresprovidedwereappropriateto The Committeeconcludedthat the AnnualReportandAccounts,takenasawhole,arefair,balanced information onthoseAPMsused bytheGroupprovidedinglossaryonpages156to158. Authority (‘ESMA’)theCommittee consideredtheuseofsuchmeasuresandadditional on AlternativePerformanceMeasures (‘APMs’)issuedbytheEuropeanSecuritiesandMarkets prominence ofstatutoryandnon-statutory performancemeasures.Inresponsetotheguidelines section, includingappropriatedisclosureofmaterialone-offitems, andappropriatebalance assessment ofnarrativereportingwasincludedtoensureconsistency withthefinancialreporting ensure thattheyexplainedtheGroup’sposition,performance, businessmodelandstrategy.An disclosed intheAnnualReportandAccounts2016/17alongwith otherrelevantmattersto In additiontheCommitteegavedueconsiderationtointegrity andsufficiencyofinformation definition ofnon-headlineaswelltheconsistencytreatment ofsuchitemsyearonyear. including taximpactthereon.Theassessmentconsideredwhether itemsfellwithintheGroup’s £115 million pre-taxnon-headlinechargesdisclosedinnote4theGroupfinancialstatements, the classificationofitemsbetweenheadlineandnon-headline, includingconsiderationofthe In ensuringthattheGroup’sreportingisfair,balancedandunderstandable, theCommitteereviewed network commissionreceivableprovidedintheannualreport and accounts2015/16. disclosure inrelationtothejudgements,estimatesandrisksassociatedwithvaluationof Notes 26h),1e)and1t)inthisyear’sAnnualReportAccountsfurtherbuildontheenhanced reconciliations andkeyjudgements,intheannualreportaccounts2015/16. The GroupincludedfurtherinformationinrelationtotheMerger,includingenhancedproforma no changestothereportedresultsorinvaluationtimingofrevenuerecognition. correspondence withtheFRCclosedsatisfactorilyagreementonenhanceddisclosuresbut The AuditCommitteereviewedandapprovedtheGroup’sresponsestoFRC. receivable. Carphone WarehouseinAugust2014andrevenuerecognitionassociatedwithnetworkcommission related tocertainaspectsofaccountinganddisclosurearisingfromtheMergerDixonsRetail a reviewbytheFRCof2014/15annualreportandaccounts.Thequestionsraisedprincipally In March2016theGroupreceivedaletterfromFRCrequestingfurtherinformationfollowing 2016/17 isappropriate.TheBoardwasadvisedaccordingly. three-year periodofassessment,disclosedonpages26and 27theAnnualReportAccounts The Committeeconcurredwithmanagement’sconclusionsthattheviabilitystatement,including — — — In particulartheCommitteeconsidered: longer termviabilitystatementsmadeonpages26and 27oftheAnnualReportAccounts. The Committeereviewedtheprocessesandassumptionsunderlyingbothgoingconcern — — — a resultofsignificantchangeinconsumerbehaviour. regulatory orinformationsecurityincidents,andreducedforecastprofitabilitycashflowas headroom underthecurrentfacilitiesavailable–examplesofwhichincludedimpact Annual ReportandAccounts2016/17,thelatestBoard-approvedbudgets,indicative register, thoseprincipalrisksandmitigatingactionsasdescribedonpages 16to21the the robustnessandseverityofstress-testscenarioswithreferencetoGroup’srisk retail marketwhichtheCompanyoperatesin;and period withtheCompany’sstrategicplanningprocess,aswellshorter-termnatureof the appropriatenessofthree-yeartimeperiodunderassessment,notingalignment financing facilities,facilityheadroomandbankingcovenants; management’s assessmentoftheGroup’sfuturecashforecasts,profitprojections,available AnnualReport andAccounts 2016/17 Taxation testing performed monitored andimpairment Level atwhichgoodwillis Supplier funding Revenue recognition areas ofjudgement Matters ofsignificanceand where appropriate,bytheCommittee.Followingdebate,Committeeconcurredwithmanagement’sconclusions. significant accountingissuesandjudgementsapplicabletothefollowingkeyareas.Thesewerediscussedchallenged, The Committeereceivedreportsandrecommendationsfrommanagementtheexternalauditorsettingout Matters ofsignificanceandareas ofjudgement

• • • • • • • Matters considered andhowtheCommitteedischargeditsduties The Groupoperatesacrossmultipletaxjurisdictions.complex natureoftax balance sheetdate(2015/16:£2,065million). intangibles allocatedtotheUK&IrelandgroupofCGUsamounted£2,066millionat Ireland levelisappropriateforgoodwillimpairmenttestingpurposes.Totaland The CommitteeconcurredwithmanagementthattheaggregationofCGUsatUK& reporting ofresultsformanagementpurposes. operations, theintegrationoffinanceandoperationalmanagement,combined activities withintheUK&IrelandfollowingMerger,roll-outof‘store-within-a-store’ for thechangeincurrentyear,whichincludedimpactofcontinuedintegration Committee reviewedadetailedpaperpreparedbymanagementoutliningtherationale generating units(‘CGUs’)havebeenaggregatedforgoodwillimpairmenttesting.The and thereforeunderIAS36‘ImpairmentofAssets’thelevelatwhichgroupscash related totheUK&IrelandoperationsofCarphoneWarehouseandDixonsismonitored, During theyear,managementhasreassessedlevelatwhichgoodwillpreviously funding canbefoundinnote1d)theGroupfinancialstatements. recognition; nomajorissueswerenoted.Furtherinformationinrelationtosupplier of thecontrolsinplacetomitigateriskmaterialmisstatementsupplierfunding accounting treatment.InadditiontheCommitteecontinuestomonitoreffectiveness and debatewithmanagementitsapproachtosupplierfunding,recognition promotional supportandvolumerebates.TheCommitteehascontinuedtochallenge A numberofarrangementsexistrelatingtosupplierfundingacrosstheGroup,including receivables atthebalancesheetdatewas£1,014million(2015/16:£904million). the Groupfinancialstatements.Thecarryingvalueofongoingnetworkcommission the disclosureofimpactchangesinassumptionsaspresentednote26h) value ofongoingnetworkreceivablesrecognisedtochangesinkeyassumptionsand valuation model,historicalforecastingaccuracyandthesensitivitytocarrying application oftheunderlyingassumptionsused,significantchangesininputsto information receivedfromMNOs.Particularattentionwaspaidtotheconsistencyof to contractualterms,theGroup’shistoricalexperienceofcustomerbehaviourand The Committeereviewedmanagement’sassessmentofthesepolicieswithreference commission receivable. components ofjudgementarelargelyinrelationtotherecognitionnetwork are setoutinnotes1e)and1t)oftheAnnualReportAccounts2016/17.Key Revenue recognitionisconsideredtobeacriticalaccountingpolicyandthejudgements the balancesheetdateamountedto£66million(2015/16:£54 million). where applicableadviceprovidedbyexternaladvisors.Thetotal provisionsrecognisedat exposures, includingprogressmadeonmattersbeingdiscussed withtaxauthoritiesand The Committeereviewedthejudgementsandassumptionsconcerning anysignificanttax legislation incertainjurisdictionscannecessitatetheuseofjudgement. Dixons Carphone plc AnnualReport andAccounts 2016/17 53

Corporate Governance Corporate Governance 54 controlsInternal arrangements Whistleblowing Data protection framework and ITcontrols Information security Regulated activities controland internal Risk management considered bytheCommitteetodischargeitsdutiesaredetailedbelow: of risktopicsscheduledthroughouttheyeartoensuregoodvisibilityanypotentialareasconcern.Specificmatters Committee alsoensuresthatalltopicsareappropriatelycovered,asdefinedbyitsTermsofReference,withdeep-dives controls observationsarisingfromtheannualauditandinterimreviewproceduresperformedbyexternalauditor.The and internalcontrol,resultsofworkperformedbythesecondlinesdefenceaudit, on pages 38to46ofthisAnnualReportandAccounts.TheCommitteereviewedmanagement’sassessmentrisk the overallriskmanagementandgovernancepoliciesproceduresaregiveninCorporateGovernanceReport The CommitteeisresponsibleforreviewingtheGroup’sriskmanagementandinternalcontrolsystems.Detailsof controlRisk managementandinternal Audit CommitteeReport Dixons Carphone plc • • • • • • • • Matters considered andhowtheCommitteedischargeditsduties for 2017/18andagreedthestatementscontainedinAnnual ReportandAccounts2016/17. noted developmentsinthesystemofriskmanagementandinternalcontrol,plans considered areviewofthesystemriskmanagementandinternalcontrol.TheCommittee As pertheobligationsplacedonAuditCommitteeunderCode,formally in aggregate)accordancewiththeGroup’sWhistleblowingPolicy. The Committeeconfirmedthatthecallshadbeenappropriatelydealtwith(bothindividuallyand Group, boththroughtheindependentlyoperatedhotlineandotherchannels. The Committeereviewedtwiceyearlyasummaryofallwhistleblowingcallsreceivedbythe recommendations inthecomingyear. Readiness Assessmentandhasrequestedmanagementtopresenttheirfindings The Committeeconcurredwiththebusiness’splanstoundertakeacomprehensiveGDPR of thenewEUGeneralDataProtectionRegulation(‘GDPR’). The CommitteerevieweddataprotectionthroughouttheGroup,particularlyimplementation requested bytheCommitteein2017/18. actions weretaken.Anupdateoftheprogressmadeagainstthisprogrammehasbeen improvement initiativesprogressedbythemanagementteam,inordertoensurethatappropriate programme andperiodicallyconsidersreviewstheITcontrolsframeworkrelated The Committeeregularlyreviewstheprogressofongoinginformationsecurityimprovement business plansforfurtherinvestmentincentralisedcompliancecapability. the Group,notedcurrentarrangementsatbothGroupandlocallevelsconcurredwith The Committee was reassured that the compliance programme was being embedded throughout compliance monitoring. developments andongoingactivitiesforthecomplianceteaminareasofgovernance,policy and regulatoryreportspreparedbytheFCAComplianceCommitteemonitoredkey effective FCAcomplianceregimeinthebusiness.TheCommitteeconsidered business operationsandthegovernanceoversightarrangementsforoperationofan The Committeereviewedthenatureoffinancialservicesregulatedactivitiesacrossglobal AnnualReport andAccounts 2016/17 resources adequacy ofits auditand internal Effectiveness of programme Assurance significant riskareas Audit reviews of audit Internal and mitigationofrisks,aswellreportingontheeffectivenesssystemsinternalcontroloperatedbymanagement. control, andforthepreventiondetectionofirregularitiesfraud,internalauditsupportsmanagementinassessment Whilst managementisresponsibleforestablishingandmaintaininganappropriatesystemofriskidentificationinternal governance processes. and assisttheorganisation.Itdoesthisbyevaluatingimprovingeffectivenessofriskmanagement,control Committee andseniormanagement.Itsremitistoprovideindependentobjectiveadvicefacilitate,influence Internal auditrepresentsanindependentassurancefunctionwithinDixonsCarphone,providingservicestotheAudit audit Internal • • • • • • • Matters considered andhowtheCommitteedischargeditsduties accordance withitsagreedcharter. The Committeeconcludedthattheinternalauditfunctionwaseffectivelyperformingitsdutiesin resources. Committee alsoformallyreviewedtheeffectivenessofinternalauditandadequacyits Whilst consideringanysignificantissuesarisingfromtheresultsofauditsshownabove, appropriately monitoredandmanaged. operated bymanagement.TheCommitteeconcludedthatthesystemofinternalcontrolswas The Committeeusedtheauditresultstorevieweffectivenessofsysteminternalcontrol — — — — — these areas: financial processestoprovideassurancetheCommitteethatcontrolswereoperatingwithin As partofthethree-yearrollingassuranceprogramme,auditswereperformedoverfollowing and achievable. The Committeeconcurredwithmanagement’sassessmentthattheactionswerebothadequate adequacy ofmanagement’sproposedactionsinrelationtothosefindings. The Committeeconsideredthekeytrendsandmajorfindingsofinternalaudit’swork — — — — audit reviews: During theperiodfollowingsignificantriskareasofbusinesswereincludedwithininternal — — — — — — — — — venture andtheRotterdaminsurancehub. general businesscontrolsintheCarphoneWarehousebusiness,Ireland,Sprintjoint Nordics capitalexpenditurecontrolsandprocesses; UK &IrelandiDrevenuecontrols; purchasing andaccountspayablecontrolsinbothUK&IrelandtheNordics; the Group’streasuryactivities,includingaccountingforforeignexchange; regulatory compliance. IT resilience,integrityanddisasterrecovery; information securityanddataprotection; Health andSafety; Dixons Carphone plc AnnualReport andAccounts 2016/17 55

Corporate Governance Corporate Governance 56 independence Auditor auditor external Effectiveness ofthe audit External associated auditfees.ThekeymattersinrelationtoexternalthatwereconsideredbytheCommitteewere: year. TheCommitteeisresponsibleforoversightoftheexternalauditor,includingapprovingannualauditplanandall disclosures preparedbyGroupmanagement.DeloitteLLPactedastheexternalauditortothroughout The externalauditorisappointedbyshareholderstoprovideanopinionontheannualreportandaccountscertain audit External Audit CommitteeReport

Dixons Carphone plc • • • • • • • Matters considered andhowtheCommitteedischargeditsduties external auditor. The CommitteehasreviewedtheGrouppolicyonemploymentofformeremployees accordance withthepolicyassetoutonfacingpage. to thebalancebetweenauditandnon-auditfeesnatureofundertakenin The Committeeconsideredtheannualauditfeeandfeesfornon-auditservices,withdueregard such declarations. presented intheannualauditplanandfinalreport,thosesafeguardsplacetomake The Committeeconsideredtheexternalauditor’sassessmentofanddeclarationindependence and effectivenessoftheaudit. Following dueconsiderationoftheabove,Committeecontinuestobesatisfiedwithquality constructive relationshipandtheeffectivenessofcommunication. consistent performancenotedforqualityofauditdelivery,integrityandservicetheteam, of theauditprocessandDeloitteLLPasexternalauditor,specificallyinrelationto responsiveness oftheauditorduringauditprocess.Theresultsshowedafavourableview responses werethenconsideredbytheCommitteeinconjunctionwithoutputsreceivedand and seniormanagementwithinthebusinessesviaaspecificallydesignedquestionnaire.The obtained frommembersoftheCommitteeandregularattendees,financeteam Feedback ontheeffectivenessofauditprocessinaddressingareaskeyriskwas and consideredtheauditworkundertaken,levelofchallengequalityreporting. presented byDeloitteinassessingtheGroup’ssignificantaccountingjudgementsandestimates As partofthereportinghalfyearandfullresultsCommitteereviewedreports 94. materiality levelsappliedwhicharedetailedintheIndependentAuditor’sReportonpages88to appropriateness ofthekeyrisksidentifiedandproposedauditwork,scope The Committeereviewedandagreedtheannualauditplan,specificallyconsidering AnnualReport andAccounts 2016/17 allow forasmoothtransition. Audit Committeemeetingsprior tothestartofhisterm Stephen GriggsshadowedJohn Adamandattendedthe with theAuditingPracticesBoardEthicalStandards. year andwassucceededbyStephenGriggs,inaccordance audit partner,JohnAdam,completedhisfive-yeartermlast LLP wasalsotheexternalauditorofDixonsRetail.Thelead Carphone Warehouse’sdemergerfromTalkTalk.Deloitte Company’s externalauditorsinceAugust2002,priorto rotation oftheauditpartner.DeloitteLLPhasbeen of there-appointmentexternalauditor,including The Committeecontinuestoconsidertheappropriateness and independence Consideration ofauditorappointment governing theuseofDeloitteLLPfornon-auditservices. (2015/16: 28%), whichreflectstherestrictivepolicy non-audit feesasapercentageofauditwas17% £1.8 million (2015/16:£1.5million)ofauditfees.The to £0.3 million(2015/16:£0.4million)comparedwith note 3 oftheGroup’sfinancialstatementsandamounted which wasapprovedbytheCommittee,issetoutin The levelofnon-auditfeespaidtotheexternalauditor, for themtoperformtheseservices. external auditor’sindependenceandthatitwasappropriate and issatisfiedthattheseservicesdidnotprejudicethe services performedbytheexternalauditorduringyear certain taxationservices.TheCommitteehasreviewedthe Greek lawfortheexternalauditorofcompanytoprovide interim financialreviewproceduresandtherequirementin performed bytheexternalauditorprimarilyarosefrom During theperiodunderreview,non-auditservices prior approvalmustbeobtainedfromtheCommittee. assignment isexpectedtogeneratefeesofover£100,000, in exceptionalcircumstances.Wherethenon-audit Finance Director,andsuchpermissionisonlygranted Any exceptionsaresubjecttopre-approvalbytheGroup regulation. c) servicesotherwiserequiredoftheauditorbylocallawor prospectuses, comfortlettersandrentcertificates,etc; the Companyuponrequestfromathirdpartysuchas and opinions/auditreportsoninformationprovidedby Company’s consolidatedinterimfinancialstatements, b) audit-relatedservicescomprisingreviewofthe ventures; statutory financialstatementsofsubsidiariesandjoint Company’s consolidatedfinancialstatementsandonthe a) auditservicescomprisingissuingopinionsonthe auditors mayonlyprovideserviceswhichinclude: Under theCompany’spolicyonauditorindependence, auditor services provided bytheexternal Policy onprovision ofnon-audit Dixons Carphone plc partner, andtherebyaffirmedthattheauditprocessesare effectiveness reviewandthenewtenureofleadaudit firm’s internalcontrolprocedures,themostrecentaudit re-appointment thisyear,theCommitteeconsidered In determiningwhethertorecommendtheauditorfor Board itsindependenceasauditoroftheCompany. practice, atyearendDeloitteLLPformallyconfirmedtothe the AccountingPracticesBoard,andasamatterofbest (UK andIreland)260EthicalStandard1issuedby In accordancewithInternationalStandardsonAuditing tender forthisserviceifthecircumstancesso warrant. rotation oftheleadauditpartner,andwillrecommenda performance oftheauditor,inparticularateachfive-year The Committeewillcontinuetoevaluateannuallythe latest periodthatDeloitteLLPmayremainasauditor. a competitiveaudittenderbyJune2023.Thiswillbethe and currentguidance,theCompanyisrequiredtoconduct of theEURegulationsonexternalaudittenderandrotation, Services Order,whichisdesignedtoalignwithprovisions Competition andMarketsAuthority(‘CMA’)StatutoryAudit tender atleastonceeverytenyears.Inaccordancewiththe includes arequirementtoputtheexternalauditout The Company’spolicyistocomplywiththeCode,which 27 June2017 Chairman oftheAuditCommittee Jock endorsed bytheBoard. LLP beproposedatthisyear’sAGM,wasacceptedand recommendation, thataresolutiontore-appointDeloitte the independentauditorofCompany.TheCommittee’s the Company’sshareholderstore-appointDeloitteLLPas Committee concludedthatitwasinthebestinterestsof Services Orderforthefinancialyearunderreviewand complied withtheprovisionsofCMAStatutoryAudit to bemet.Accordingly,theCompanyconfirmsthatit effective andthattheappropriateindependencecontinues Lennox AnnualReport andAccounts 2016/17

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Corporate Governance Corporate Governance 58 27 June2017 Chairman oftheDisclosureCommittee Humphrey Singer below. position intheCompany’sgovernanceframeworkisshown More informationabouttheDisclosureCommitteeandits took placeinJune2017. least onceayear.ThefirstreviewofitsTermsReference Terms ofReferenceandresponsibilitiesperiodically,at The Committeewillreviewitsperformance,constitution, obligations underallrelevantlawswhenitwasestablished. The Committeecarriedoutathoroughassessmentofits of theBoardfollowingapproval. the minutesofeachmeetingarecirculatedtoallmembers reported byitsChairmanatthefollowingBoardmeetingand to theCommittee.TheCommittee’sdeliberationsare The CompanySecretary,orhisnominee,actsasSecretary General CounselandCompanySecretary. Group ChiefExecutive,theFinanceDirectorand The DisclosureCommitteecomprisestheChairman, requirements. that requireddisclosuresmeetalllegalandregulatory and monitoringprocedurescontrols,ensuring inside information,maintaininginsiderlists,implementing (‘MAR’). TheCommittee’sresponsibilitiesincludeidentifying prepare fortheintroductionofMarketAbuseRegulation The DisclosureCommitteewasestablishedinJune2016to Chairman’s overview Disclosure CommitteeReport appropriate and necessary. them toattendallorpartofany meeting,asandwhen Corporate AffairsDirector.The Committeemayinvite other directors,seniormanagement andtheIR,PR The Committeereceivesinputas appropriatefrom 27 June2017,aftertheendof the periodunderreview. Lord LivingstonwasappointedtotheCommitteeon Nigel Paterson Sebastian James Humphrey Singer(Chairman) Current members member canbefoundonpages36and37. for theperiodunderreview.Biographicaldetailsoneach the tablebelowalongwiththeirattendanceatmeetings The membersoftheDisclosureCommitteeareshownin Committee membershipandattendance • • Meetings under review. The DisclosureCommitteemetonceduringtheperiod required, andatleastannually. The DisclosureCommitteemeetsasandwhen Dixons Carphone plc AnnualReport andAccounts 2016/17 Meetings 1 of 1 of 1 of • • • • • • The principaldutiesoftheDisclosureCommitteeareto: Responsibilities members ofseniormanagementasPDMRs. Responsibility (‘PDMRs’)anddesignatedtwoadditional consider thedefinitionofPersonsDischargingManagerial During theyearended29April2017,Committeemetto Key mattersconsidered website, www.dixonscarphone.com. Terms ofReferenceareavailableontheGroup’scorporate and approvedbytheBoardinJune2017.TheCommittee’s The Committee’sTermsofReferencewerelastreviewed • inside information;and information, substantivemarketrumours,andleaksof including inrelationtothedelayeddisclosureofinside consider generallytherequirementforannouncements, any proposedresponses; body inrelationtotheconductofGroup,andreview monitor communicationsreceivedfromanyregulatory ongoing assessmentandrecordingofthedelay; disclosure orcanbelegitimatelydelayed,subjectto determine whetherinsideinformationrequiresimmediate insider lists; identify insideinformationforthepurposesofmaintaining including arrangingtrainingwhereappropriate; implement andmonitorcompliancewiththepolicies, information; the timelyandaccurateidentificationdisclosureofall comply withitslegalandregulatoryobligationsregarding systems andcontrolstoenabletheCompanyfully establish andmaintainadequateprocedures,policies, applicable requirements. the Company,andensurethatthesecomplywithall prospectuses, andanyotherdocumentsissuedby announcements, transactionalshareholdercirculars, review thecontentofallmaterialregulatory 27 June2017 Chairman oftheNominationsCommittee Lord LivingstonofParkhead on theright. position intheCompany’sgovernanceframeworkisshown More informationabouttheNominationsCommitteeandits the financialyearto10 membersfollowingAGM. expected toreduceinsizefrom13 membersattheendof 27 April2017.Asaresultofthesechanges,theBoardis Officer ofhoneybee,theGroup’ssoftwaredivision,on Stapleton resignedasadirectortobecomeChiefExecutive will bejoiningtheCompany’sAuditCommittee.Graham Company’s AGMinSeptember2017,whenFionaMcBain will besteppingdownasNon-ExecutiveDirectorsatthe also announcedthatTimHowandBaronessMorgan Fiona McBainasNon-ExecutiveDirector.TheCompany also significantlystrengthenedbytheappointmentof On 1March2017theleadershipofbusinesswas support. Company willcontinuetobenefitfromhisexperienceand remain connectedtothebusinessasasenioradvisor.The Independent Director.WearedelightedthatCharleswill 30 April2017,inadditiontohispreviousroleasSenior of theRemunerationCommittee,alsowitheffectfrom DeNunzio CBEbecameDeputyChairman,andChairman and ChairmanoftheRemunerationCommittee.Tony 30 April 2017frommypreviousroleasDeputyChairman, that IwouldbeappointedasChairmanwitheffectfrom Charles DunstonewassteppingdownasChairman,and The CompanyannouncedinearlyFebruary2017thatSir Terms ofReference. director independenceandareviewoftheCommittee’s composition, diversity,timecommitmentsofeachdirector, 2017, whichincludedanappraisalofBoardexperience, governance guidelines;thelastreviewwasinMay The Committeeregularlyreviewsitsobligationsunder to ensuresuccessionplanningobligationsaremet. continuity ofpurposeandeffectiveleadership,itisimportant right talentandexperienceisavailable.Inordertoensure required toleadthebusinesseffectivelyandensuring Dixons Carphonegovernancestructure,evaluatingtheskills The NominationsCommitteehasanimportantroleinthe Chairman’s overview Nominations CommitteeReport Dixons Carphone plc • • • • • • • The principaldutiesoftheNominationsCommitteeareto: Responsibilities of theBoardfollowingapproval. the minutesofeachmeetingarecirculatedtoallmembers reported byitsChairmanatthefollowingBoardmeetingand to theCommittee.TheCommittee’sdeliberationsare The CompanySecretary,orhisnominee,actsasSecretary Sir CharlesDunstone Former member Andrea GisleJoosen Tony DeNunzioCBE Lord LivingstonofParkhead(Chairman) Current members pages 36and37. Biographical detailsoneachmembercanbefound at scheduledmeetingsfortheperiodunderreview. shown inthetablebelowalongwiththeirattendance The membersoftheNominationsCommitteeare Committee membershipandattendance • • Meetings Chairman. be invitedtoattendmeetingsattherequestof members oftheBoardorseniormanagementmay non‑executive directorsasrequiredbyCode.Other The majorityofthemembersareindependent (1) specified terms ofappointment. continuation inofficeofadirector upontheexpiryofany make recommendationstothe Boardregardingthe time requiredforthemtofulfiltheir duties;and consider othercommitmentsof directorsrelativetothe performance evaluation; Board includingreviewingtheresultsofany evaluate theskills,knowledgeandexperienceof carry outaformalselectionprocessofcandidates; effectively andberesponsibleforsuccessionplanning; the continuedabilityoforganisationtocompete review theleadershiprequirementswithaviewtoensuring vacancies ontheBoard; identify, evaluateandnominatecandidatestofill and recommendchangesasnecessary; review thestructure,sizeandcompositionofBoard, year end. March 2017toMay2017,shortlyafterthefinancial A secondscheduledmeetingwaspostponedfrom unscheduled meetingduringtheperiodunderreview. The Committeeheldonescheduledand required andatleasttwiceayear. The NominationsCommitteemeetsasandwhen held beforehisresignationasChairmanon30April2017. Sir Charles Dunstone attended the one scheduled meeting Sir CharlesDunstoneattendedtheonescheduledmeeting AnnualReport andAccounts 2016/17 (1) Scheduled meetings 1 of 1 of 1 of 1 of

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Corporate Governance Corporate Governance 60 firm toconduct an extendedsearchforthenew non- additional expenseinappointing aglobalexecutivesearch agreed thattherewasnofurther needtoundertake specific candidateprofileandcriteria set.TheCommittee considered andrecognisedthat shewastherightfitfor candidates. AfterinterviewingFiona McBain,theCommittee services experience,therewas onlyaveryselectfieldof the specificsetofrequirements,includingFCAandfinancial search processforthemostappropriatecandidates.Given candidate profiledeveloped.TheCommitteeundertooka The Committee,ledbytheChairman,reliedonspecific into accounttheBoard’sexistingcompositionandskillsets. knowledge andexperiencerequiredforeachrole,taking Candidate profilesweredevelopedindicatingtheskills, executive directors. consultancies areusuallyretainedwhenrecruitingnon- the leadershipneedsofCompany.Externalsearch criteria andwithdueregardtothebenefitsofdiversity Appointments aremadetotheBoardbasedonobjective procedure fortheappointmentofnewdirectors. The Committeehasaformal,rigorousandtransparent Appointments totheBoard details oftheevaluationprocesscanbefoundonpage43. all aspectsoftheBoard’sproceduresandactivities.Further Nominations andRemunerationcommitteesexamined internal reviewincludedtheBoardandAudit,Disclosure, undertaken byanindependentexternalcompany.The internally followingthe2015/16reviewwhichwas During 2016/17theBoardevaluationwasconducted Board evaluation • • • • • • The Committeealsoconsidersthesemattersperiodically: How, BaronessMorganandGrahamStapleton. McBain, andtheresignationsofSirCharlesDunstone,Tim appointments ofLordLivingston,TonyDeNunzioandFiona appointment wasbeingdiscussed)alsoconsideredthe Committee (excludinganymemberwhosepotential In additiontotheprincipaldutiesnotedabove, Key mattersconsidered Group’s corporatewebsite,www.dixonscarphone.com. The Committee’sTermsofReferenceareavailableonthe of ReferenceweresubsequentlyapprovedbytheBoard. annually. ThelastreviewwasinMay2017andtheTerms The Committee’sTermsofReferencearereviewed Nominations CommitteeReport Independent DirectorandtheGroupChiefExecutive. a reviewoftheroledescriptionsChairman,Senior and the Committee’sperformanceandTermsofReference; the externalappointmentspolicy; time commitmentsofthedirectors; the Company’sdiversitypolicy; Board anditscommittees; an evaluationofthesize,compositionandstructure Dixons Carphone plc AnnualReport andAccounts 2016/17 Diversity complex businessenvironment. appropriate skill-setstomeetthedemandsofanevermore wider, withalongerhorizon,forpotentialdirectorsthe the organisation,identifyingnewtalentandcastingnet deeper intothepooloftalentthatcurrentlyexistswithin long-term prosperityofthebusiness,Boardmustlook and widerfortheleadersoffuture.Insecuring priority, astheBoardisconsciousthatitmustlookfurther tenures. Boardsuccessionandcompositionwillremaina time butremainsmindfulofeachtheBoardmembers’ considers noadditionalappointmentisnecessaryatthis with FionaMcBain’sappointmentinMarch2017.TheBoard emphasis onsuccessionplanningandBoardcomposition DeNunzio steppinguptotheirnewrolesandplacedfurther previous successionplanningwithLordLivingstonandTony experience andexpertise.Thisyear,theBoardhasreliedon The businessrequiresatalentedBoardwithappropriate Succession planning unanimous intheirdecisionstoappointher. executive appointment.TheCommitteeandtheBoardwere commitment totheirrole. and industryexperience,continued effectivenessand to theirexperience,knowledge andwidermanagement recommended bytheothermembersofBoarddue or re-election.Eachofthedirectorsisbeingunanimously and BaronessMorgan,willpresentthemselvesforelection At theforthcomingAGM,alldirectors,exceptTimHow Election andre-election knowledge oftheseinternationalmarkets. Swedish Non-ExecutiveDirectorontheBoardtoprovide large proportionofthebusinessinNordics,wehavea other aspectsofdiversityrelevanttotheGroup.Witha In performingitsannualreviewtheBoardalsolookedat employee diversitycanbefoundonpage29. to thesefactorsinfutureappointments.Moreinformationon thought. TheBoardisconsciousoftheneedtogiveweight but alsoencompassesage,backgroundanddiversityof diversity, whichisnotjustgenderorethnicity-specific on merit.OurBoardsupportsthebenefitsofgreater ethnicity asitbelievesthatcandidatesshouldbeappointed Board doesnotestablishtargetsongenderbalanceor Whilst notingtherecommendationsofReview, female. Board, and25%oftheGroupseniormanagementteam,are in FTSE350companiesby2020.Currently33%ofthe recommends avoluntarytargetof33%femaledirectors Review onFTSEWomenLeaders(‘Review’),which acknowledges theNovember2016Hampton-Alexander to helptheorganisationreachitsfullpotential.TheBoard achieving therightmixofskills,knowledgeandexperience The Boardrecognisestheimportanceofdiversityin concluded that the satisfactionbyGroupof theloans the performanceconditionswere notmet.Thatadvice the yearonpositionofCompany intheeventthat Hewitt andFreshfieldsBruckhaus DeringerLLPduring The Committeetookdetailedadvice frombothAon individual’s award. interest), thepercentagedependantontermsof be theremaining10%or20%ofloan(plusaccrued that theindividualparticipantswouldhavetorepay not theindividualparticipants).Themaximumloanamount Carphone awardswouldbeanobligationoftheGroup(and awards and80%oftheloan(plusaccruedinterest)for of 90%theloan(plusaccruedinterest)forDixons would berepayable.UndertheSharePlanrules,repayment to purchaseparticipationsharesinasubsidiarycompany that wereprovidedbytheGrouptoparticipantsinorder either orbothawardsmaynotvest.Inthisevent,theloans Brexit referendum,ithasbecomeincreasinglylikelythat 12 months, particularlythefallwhichoccurredafter Given theperformanceofsharepriceoverlast with theremaining40%vesting12 monthslater. of theperformanceconditions,60%shareswillvest, measured inJulythisyearwhen,subjecttothesatisfaction businesses. TheperformanceoftheSharePlanisduetobe returns throughtheMergerandintegrationofourtwo to incentivisemanagementdeliversuperiorshareholder element ofthepreviousremunerationpolicywhichsought The previouslongtermplan(the‘SharePlan’)wasamajor The Share Plan Remuneration Reportonpages 76and81. relative TSRandadjustedEPS,arecontainedintheAnnual and thetargetsfor2017awards,basedonceagainon results for2016/17.Fulldetailsoftheawardsmadein2016 this year,followingtheannouncementofpreliminary in 2016andweplantomakeafurthersetofawardsJune Term IncentivePlanshortlyaftertheannualgeneralmeeting our proposals.FirstawardsweremadeunderthenewLong shareholders andthevaluablefeedbacktheyprovidedon the consultationprocessthatwewentthroughwith that weputforwardandrecognisetheimportanceof that shareholdersfeltpositivelyabouttheproposals 99.2% ofvotesinfavour,respectively.Wewerepleased and ournewLongTermIncentivePlanwith98.9% shareholders approvedbothournewRemunerationPolicy At theannualgeneralmeetinginSeptember2016, Policy review financial year,andTony,asthenewCommitteeChairman. the RemunerationCommitteeChairmanfor2016/17 chosen thatthisstatementshouldbefrombothIan,as for thelastfinancialyearandalsoforward,wehave Report looksbothbackattheactivitiesofCommittee financial yearended29April2017.AsthisRemuneration with theactivitiesofRemunerationCommitteeforthis philosophy andpolicyfordirectors’remuneration,together 2016/17 Directors’RemunerationReportwhichsetsoutour On behalfoftheBoard,wearepleasedtopresent Chairmen’s statement Remuneration Report Dixons Carphone plc is morecloselyalignedwithmarketpractice,bymakingan The newLongTermIncentivePlanoperatesonabasisthat Accounts. after thelatestpracticabledateforthisAnnualReportand in nextyear’sRemunerationReport,asthevestingdateis Information onthevestingofawardswillbeprovided awards). the caseofDixonsawardsand20%forCarphone required topaybacktheremainderofloans(10%in Directors whoparticipateintheSharePlanwouldstillbe likelihood ofsuccess. which accordingtothelegaladvicewouldhaveastrong losses arisingoutofthisunforeseensetcircumstances, Otherwise participantscouldclaimagainsttheGroupfor them foranytaxchargeandsocialsecuritycontributions. (plus accruedinterest),theCompanyshouldcompensate they wouldhavetorepaybe10%or20%oftheloan were takenout,andastheyadvisedthatthemaximum informed ofthispossibleoutcomeatthetimeloans on thebasisofthisadvice,thatasparticipantswerenot the loanmetbyGroup.TheCommitteehasdetermined, security contributionsfortheparticipantsonportionof would triggerabenefitinkindincometaxchargeandsocial appointment to the BoardinDecember2015, as thishas having servedasamemberof the Committeesincehis from IanasChairmanoftheRemuneration Committee, We arepleasedthatTonyhasbeen abletotakeover valuable business. of ourmostentrepreneurialsenior leaderstoseekbuilda him tofocusonthisresponsibilityalone,wewillallowone development ofourhoneybeebusinessandbyenabling Graham hastakenuptheveryimportantroleofleading in thisReportasheresignedadirectoron27April2017. Graham Stapleton’sremunerationfor2016/17isincluded Other matters 2014. plans havebeenmadetoDirectorssincetheMergerin pages 81 to82.Nopaymentsrelatinglongtermincentive are providedintheAnnualRemunerationReporton details oftheperformancetargetsandactual being 82.9%ofmaximumopportunityreflectingthis.Full approved annualbonuspaymentsof103.6%basesalary, delivered astrongperformanceandtheCommitteehas wider workforce.Inspiteofthechallenges,Grouphas for 2017theexecutivedirectorswillbeinlinewith executive remuneration.Consequently,basepayincreases Committee isalsomindfulofthecurrentenvironmentin to thededicationandhardworkofallouremployees.The very awarethatmuchofthesuccessGroupisdue both economicandpoliticaluncertainty.TheCommitteeis This hasbeenachallengingyearforthebusinesswith Pay andperformancefor2016/17 business andonshareholdervaluecreation. measures thatfocusonthelong-termgrowthof the introductionofamoretypicalplan,withperformance consultation processlastyearthatshareholderswelcomed annual awardofnil-pricedoptions.Itwasclearfromthe AnnualReport andAccounts 2016/17 61

Corporate Governance Corporate Governance 62 27 June2017 Chairman oftheRemunerationCommittee Tony DeNunzio Chairman ofDixonsCarphoneplc Ian Livingston the experienceoflong-termshareholders. that rewardstotheseniorleadershipteamarealignedwith committed totheprincipleofpayforperformance,ensuring on thisReport.TheRemunerationCommitteeremainsfirmly As always,wewouldwelcomeanyfeedbackorcomments has joinedtheCommitteeinhisplace. he stepsdownfromtheBoardinSeptember,GerryMurphy Executive Director.WithTimleavingtheCommittee,when How forhisserviceontheCommitteeandasaNon- ensured asmoothtransition.WewouldliketothankTim Remuneration Report Dixons Carphone plc

AnnualReport andAccounts 2016/17 practice guidance. and regulatorychangesaswell asrecentlypublishedbest The TermsofReferencereflect alltherecentlegislative the Group’scorporatewebsite, www.dixonscarphone.com. adopted bytheBoardinJune2017 andareavailableon of ReferencetheCommitteewerelastreviewedand share-based employeeincentiveschemes.TheTerms employment inadditiontotheoperationofGroup’s This delegationincludestheirtermsandconditionsof for executivedirectorsandotherseniormanagement. determining policyinrelationtotheremunerationpackages The BoardhasdelegatedtotheCommitteeresponsibilityfor Remuneration Committeeobjectives Policy mayremaininforceforuptothreeyears. 2016. Inlinewiththeauthoritygivenbyshareholders, shareholders attheannualgeneralmeetingon8September The RemunerationPolicywasapprovedoverwhelminglyby unaudited information Remuneration Policy– share awards,optionsandpensionarrangements. the directors’andformerfixedvariablepay, Remuneration Report(elementsofwhichareaudited)details principles ofremunerationandothermatters.TheAnnual not subjecttoaudit)detailstheroleofCommittee, Conduct Authority.TheRemunerationPolicy(whichis 2008 (asamended)andtheListingRulesofFinancial Companies andGroups(AccountsReports)Regulations Act 2006,Schedule8totheLargeandMedium-sized behalf oftheBoardinaccordancewithCompanies These reportshavebeenpreparedbytheCommitteeon review. and hascompliedwiththoseprinciplesintheyearunder in sectionDoftheCorporateGovernanceCode(the‘Code’) governance relatingtodirectors’remunerationasenshrined The Committeehasadoptedtheprinciplesofgood our shareholders. experience anddedicationtodeliveroutstandingreturnsfor attraction andretentionofexecutiveswhohavetheability, promotes thelong-termsuccessofbusinessthrough for executivedirectorsandseniormanagementwhich is todetermineonbehalfoftheBoardaremunerationpolicy The roleoftheRemunerationCommittee(the‘Committee’) Annual GeneralMeetingon7September2017. Remuneration Reportwillbeputtoanadvisoryvoteatthe 2016 andwaseffectivefromthatdate.TheAnnual shareholders attheannualgeneralmeetingon8September The currentRemunerationPolicywasapprovedby • • 29 April2017.ThisReportisdividedintotwosections: Company’s directors’remunerationfortheyearended The purposeofthisReportistoinformshareholdersthe Introduction Remuneration Report–Policy the AnnualRemunerationReport. the RemunerationPolicy;and

Dixons Carphone plc • • • • • • The objectivesofourremunerationstrategyareto: high-performing peopletodeliverourbusinessstrategy. Our remunerationstrategyisthereforedesignedtomotivate shareholders andthekeytoachievingthisisourpeople. Put simply,ouraimistogeneratesuperiorreturnsfor Remuneration strategy management. inappropriate risk-takingbyanymemberofsenior no elementoftheremunerationpackagewillencourage or recklessbehaviour.TheCommitteeconsidersthat governance risksbyinadvertentlymotivatingirresponsible executive directorsdonotraiseanyenvironmental,socialor satisfied thattheincentivestructureandtargetsfor responsible investmentdisclosure,theCommitteeis In linewiththeInvestmentAssociationGuidelineson Guidelines onresponsible investmentdisclosure • • • • • In developingitspolicytheCommitteehasregardto: • recognise theimportanceofdeliveringacrossabalanced alignment andteamwork; apply policiesconsistentlyacrosstheGrouptopromote performance againstchallengingtargets; ensure thatsuperiorrewardsareonlypaidforexceptional discouraging inappropriaterisk-taking; outperformance particularlyoverthelongtermwhilst weight remunerationtovariablepaythatincentivises business; significant personalstakeinthelong-termsuccessof shareholders, byencouragingmanagementtohavea management andexecutivedirectorswiththoseof be transparentandaligntheinterestsofsenior attract, motivateandretainhighqualitytalent; good corporategovernancepractice. the Company;and the economicenvironmentandfinancialperformanceof sources; information andsurveysfrominternalindependent workforce; levels, includingaveragebasesalaryincreasesacrossthe arrangements whichapplybelowseniormanagement executive directorormemberofseniormanagement; the performance,rolesandresponsibilitiesofeach avoid rewardingfailure. and thelong-termhealthofbusinessisprotected; set ofmetricstoensuretherightbehavioursareadopted AnnualReport andAccounts 2016/17

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Corporate Governance Corporate Governance 64 • • • • Benefits (fixedpay) • • • • Base salary(fixedpay) The individualelementsoftheremunerationpackagesofferedtoexecutivedirectorsaresummarisedinfollowingtable: Remuneration Policytable Remuneration Policy Purpose andlinktostrategy Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy Performance assessment/targets Maximum opportunity Operation Dixons Carphone plc AnnualReport andAccounts 2016/17 • • • • • • not limitedto: Executive directorsareentitledtoacombinationofbenefitswhichinclude,but appointment orrelocationofadirector. Provision ofrelocationorotherrelatedassistancemaybeprovidedtosupportthe Benefits mayvarybasedonthepersonalchoicesofdirector. that incentivisesoutperformance,amodestrangeofbenefitsisprovided. In linewiththeCompany’sstrategytokeepremunerationweightedvariablepay value tothebusiness. meeting havingdueregardtotheindividual’sexperience,performanceandadded Salaries arenormallyreviewedannuallybytheCommitteeatappropriate Salary levelsforcurrentdirectorsareshownintheAnnualRemunerationReport. and significantincreasesinthesize,complexityorvalueofGroup. certain circumstancessuchaschangesinresponsibilities,progressiontherole the Group.IncreasesbeyondthosegrantedacrossGroupmaybeawardedin Ordinarily, increasesforexecutivedirectorswillbeinlinewithacross generally basedonapercentageofsalary. package asawhole,otherelementsofpay(suchpensioncontributions)are The Committeetakesintoconsiderationtheimpactofbasesalaryincreaseson the RecruitmentPolicysetoutonpages 70to71ofthisRemunerationPolicy. Salaries fornewappointmentsasexecutivedirectorswillbesetinaccordancewith noted, isnormallytotargetsalariesupthemid-marketlevel. external marketdataandcost.Ouroverallpolicy,havingdueregardtothefactors The reviewreflectsarangeoffactorsincludingmeritlevels,internalrelativity, Normally reviewedannually. To reflecttheirskills,experienceandimportancetothebusiness. To aidtherecruitment,retentionandmotivationofhigh-performingpeople. Not applicable. review. accordance withthecostofproviding suchbenefits,whichiskeptunderregular The costtotheGroupofproviding suchbenefitswillvaryfromyeartoin and otherrelocationcosts,tax equalisation, taxadviceandaccommodationcosts. Relocation orotherrelatedassistancecouldinclude,butisnot limitedto,removal residence and/orreflectlocalmarketlegislation. benefits maybedeterminedbythosetypicallyprovidedinthe normalcountryof Should anexecutivedirectorberecruitedfromorbasedin anon-UKlocation, reimbursed ifdeterminedtobeataxablebenefit. Any reasonablebusiness-relatedexpenses(includingthetax thereon) canbe wider workforceonbroadlysimilarterms. Executive directorswillbeeligibleforotherbenefitswhichare introducedforthe a rangeofvoluntarybenefitsincludingthepurchaseadditional holiday. holiday andsickpay; life assurance; long-term incapacitycover; private medicalcover; car allowance; • • • • Annual performancebonus(variablepay) • • • • Pension (fixedpay) Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy Recovery andwithholdingprovisionsapplyformaterialmisstatement, misconduct the Companyanditsshareholders. a paymentofbonusatlevelwhichwouldnotbeconsistentwiththeinterests adjust downwardsbonuspaymentswhereachievementoftargetswouldresultin to assesstheachievementoftargets.TheCommitteeretainsdiscretion Performance isreviewedbytheCommitteeusingitsjudgementwherenecessary which couldbedeferred,atthediscretionofRemunerationCommittee. The annualbonuscaninsteadbesettledinsharesoramixtureofcashand based ontheauditedperformanceoverpreviousfinancialyear. The annualbonusistypicallypaidinJuly/Augustcashandnon-pensionable, payable. A slidingscaledeterminespaymentbetweentheminimumandmaximumbonus For thresholdlevelofperformanceabonusupto25%basesalaryispayable. threshold beingachievedbeforepaymentisdue. Bonus paymentsaredeterminedaftertheyearendandsubjecttoaminimumprofit adopted andencouragingalonger-termfocus. They arebasedonabalancedapproachensuringappropriatebehaviours alignment toacommonvisionandstrategy. The principlesandapproachareconsistentlyappliedacrosstheGroupensuring creation offurthershareholdervalue. These bonusesprovideastronglinkbetweenrewardandperformancedrivethe near-term businesstargetsbasedonourstrategy. Annual performancebonusesareinplacetoincentivisethedeliveryofstretching, representing thebalance. cash) willrepresentthemajority ofthebonusopportunity,withothermeasures determined bytheCommitteeeach year.Financialmeasures(suchasprofitand employee, customerandstrategic measures.Theweightingofmeasureswillbe scorecard mayincludebothfinancialandnon-financialmeasures, suchas The bonusschemehastargetsbasedonabalancedscorecard. Thebalanced the financialyearwithaviewtosupportingachievementof theGroupstrategy. All measuresandtargetsarereviewedsetbytheCommittee atthebeginningof No bonusispayableiftheminimumprofitthresholdnotachieved. Maximum annualbonuspotentialforallexecutivedirectorsis 125%ofbasesalary. sums alreadypaid.Theseprovisionswillapplyforuptothree yearsafterpayment. and reputationaldamageenablingperformanceadjustments /orrecoveryof A pensionisprovidedwhichconsistentwiththattomanagersacrossthe Not applicable. executive director. contribution ofupto20%maybemadewherenecessaryrecruitorretainan taken inwholeorpartasacashallowancelieuofpension.However,greater Normal Companypensioncontributionofupto10%basesalary,whichcanbe contributions. Executive directorsmaychoosetoreceiveacashallowanceinlieuofpension closed tonewparticipantsandfutureaccrual. plan continuesinoperationforDixons’longer-servingemployees,whichisnow Defined contributionplansareofferedtoallemployees.Adefinedbenefitpension that incentivisesoutperformance. Group andinlinewithourstrategytokeepremunerationweightedvariablepay Dixons Carphone plc AnnualReport andAccounts 2016/17

65

Corporate Governance Corporate Governance 66 • • • • Long termincentivescheme(variablepay):TermIncentivePlan(‘LTIP’) Remuneration Policy Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy Dixons Carphone plc AnnualReport andAccounts 2016/17 interests ofshareholdersoverthelongterm. Long termincentiveschemesaretransparentanddemonstrablyalignedwiththe financial metricssuchasEPS.TheCommitteeretainstheflexibility tointroduce not limitedto,market-basedperformancemeasuressuchasTSR andinternal The Committeedeterminesthemetricsfromarangeofmeasures,includingbut to reflectthekeyprioritiesofbusinessatthattime. Performance targetsarereviewedbytheCommitteepriortoeachgrantandset in theAnnualRemunerationReportonpage 76. More detailsontheawardlevelsforexecutivedirectorsin2017/18aresetout e.g. recruitment. value of275%basesalary,withupto375%inexceptionalcircumstances, The normalmaximumgrantperparticipantinanyfinancialyearwillbeamarket Grants undertheLTIParesubjecttooveralldilutionlimits. apportioned basis. subject tosatisfactionofperformanceconditionsandreductiononatime- In theeventofachangecontrol,anyunvestedawardswillvestimmediately, circumstances. an awardincash.Fortheexecutivedirectorsthiswouldonlybeusedexceptional The Committeehasthediscretionincertaincircumstancestograntand/orsettle unless theCommitteeexercisesitsdiscretion. If employmentceasesduringthevestingperiod,awardswillordinarilylapseinfull, up tothreeyearsaftervesting. adjustments and/orrecoveryofsumsalreadypaid.Theseprovisionswillapplyfor misstatement, misconductandreputationaldamageenablingperformance Awards willbesubjecttorecoveryandwithholdingprovisionsformaterial Dividend equivalentsmaybeaccruedonthesharesearnedfromanyaward. circumstances andwiththeCommittee’spermission. year holdingperiod,duringwhichtheycannotbesold,unlessinexceptional The post-taxnumberofshareawardsvestingwillbesubjecttoafurthertwo over athree-yearperiod. The levelofvestingisdependentonachievementperformancetargets,usually continued serviceandtheachievementofperformanceconditions. Awards willbegrantedannuallyandusuallyvestafterthreeyearssubjectto over DixonsCarphoneshares. Discretionary awardsofnil-pricedoptionsorconditionalsharearegranted significant shareholdervalue. aligning anindividual’sinterestswiththoseofshareholdersandinturndelivering The LTIPisdesignedtorewardandretainexecutivesoverthelongertermwhilst The actualmetricsforawardswillbesetoutintheAnnualRemuneration Report. changes willbesubjecttoconsultationwithmajorshareholders. although TSRwillnotbeweightedanylessthan40%ofthetotal award.Material new measuresinthefutureifconsideredappropriategiven businesscontext,

Details ofthedirectors’shareholdingsareshownintableonpage 85. • • • • Share ownershipguidelines • • • • All employeeshareplans Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy and thereforebealignedtothelong-termsuccessofCompany. Encourages employeestomakealong-terminvestmentintheCompany’sshares Company’s shares. The Companyrequiresallexecutivedirectorstoretain200%ofbasesalaryinthe Not applicable. (both directlyandindirectly). The shareswhichcounttowardsthisrequirementarebeneficially-owned these limits. salary intheCompany’sshares.Executivedirectorshaveafive-yearperiodtoreach The Companyrequiresexecutivedirectorstoretainacertainpercentageofbase and shareholdersintermsoftheCompany’slong-termsuccess. Provides closealignmentbetweenthelonger-terminterestsofexecutivedirectors The SAYEschemeisnotsubjecttoanyperformanceconditions. accordance withthestatutorylimitsinplacefromtimetotime. The Committeereservestherighttoincreasethissavingslimitforfutureschemesin the timeofinvitation. return receiveashareoptiongrantedatupto20%discountthemarketprice Participants cansaveupto£500permonthforeitherthreeorfiveyears,andin SAYE scheme,subjecttothree-orfive-yearvestingperiods. Currently shareoptionsaregrantedundertheDixonsCarphoneHMRC-approved terms asothereligibleemployees. operated bytheCompanywhichhavebeenapprovedshareholdersonsame Executive directorsareeligibletoparticipateinanyallemployeeshareplans Dixons Carphone plc AnnualReport andAccounts 2016/17

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Corporate Governance Corporate Governance 68 (1) Notes: • • • • Non-executive directorsandChairman/Deputyfees Remuneration Policy Performance assessment/targets Maximum opportunity Operation Purpose andlinktostrategy Plan. Detailsoftheseawardsforexecutivedirectorsaresetoutonpages 82to83. and conditionsofoutstandinglongtermincentivessuchasthosepreviouslyapprovedbyshareholdersundertheDixonsCarphoneShare terms The Committeeintendstohonourallcommitmentspreviouslyprovidedexecutivedirectorsandcurrentemployees,includingtheterms Dixons Carphone plc AnnualReport andAccounts 2016/17 sufficient toattracthighcalibreindividualstherole. To provideacompetitivefeefortheperformanceofnon-executivedirectorduties, Not applicable. Deputy Chairman,SeniorIndependentDirectororCommitteeChairfees). directors’ fees(notincludinginrelationtoanyexecutiveofficeorChairman, Aggregate annuallimitof£2,000,000imposedbytheArticlesAssociationfor fees onapro-ratedbasistoreflectadditionalworkload. For material,unexpectedincreasesintimecommitments,theBoardmaypayextra reimbursed ifdeterminedtobeataxablebenefit. Any reasonablebusiness-relatedexpenses(includingthetaxthereon)canbe long termincentiveplansorpensionarrangements. Non-executive directorsdonotparticipateintheannualperformancebonusor Committee. for actingasChairofanyBoardcommittee,andmembershipa Additional feesarepayableforactingastheSeniorIndependentDirectoror consideration includetheexpectedtimecommitmentandspecificexperience. market rates,andarenormallyreviewedonanannualbasis.Factorstakeninto The feesaresettoalignwiththedutiesundertaken,takingintoaccount (3) (2) (1) Notes: Remuneration Policyscenariochart maximum. executive directorscouldreceiveundertheRemunerationPolicyatthreelevelsofperformance:minimum,targetand The RemunerationPolicyscenariochartbelowillustratesthelevelandmixofpotentialtotalremunerationcurrent Illustration ofRemunerationPolicy £000s of salary. level. Targetperformanceassumesavestingof151%salary(i.e.55%maximumaward)and275% illustrative amountsandtheactualoutcomesmaydifferdependingonsharepricegrowth.Noawardsvestatminimumperformance assumes apaymentof75%salary(i.e.60%maximum)andatmaximumperformance125%basesalary. hese are Long termincentivesrelatetotheTermIncentivePlan,inwhichexecutivedirectorsstartedparticipate2016.Theseare Annual variablepayrepresentstheannualbonusentitlement.Noisassumedatminimumperformancelevel.Targetperformance Fixed payisbasedonthebasicsalarypayableasatstartofcurrentyear,taxablebenefitsandpensioncontributions.

£1,000 £1,500 £2,000 £2,500 £3,000 £3,500 £4,000 £4,500

£500

£-

Ta Below £933 100% rget

Sebastian £2,824 Ta 22% 45% 33% rget James

Ma £4,277 24% 54% 22% xi mum Ta Below 100% £602 rget

Andrew Ta £1,871 22% 45% 32% Ha rget Fixed Pay rrison

Ma £2,846 54% 21% 25% xi Dixons Carphone plc mum

Bonus Ta Below 100% £547 rget

Humphrey LT IP £1,644 Ta

45% 33% 22% rget AnnualReport andAccounts 2016/17 Singer Ma £2,487 54% 22% 24% xi mum

Ta £572 Below 100% rget

Katie £1,726 Ta Bickerstaffe 45% 33% 22% rget

Ma

£2,612 54% 22% 24% xi mum

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Corporate Governance Corporate Governance 70 setting thepolicyforexecutive directors theCommittee performance andothermarket metrics asnecessary.When workforce, theCompanytakes intoconsiderationCompany In determiningsalaryincreases toapplyacrossthewider and legislation. including theimpactonbusiness,localpractice,custom groups. Rewardpackagesdifferforavarietyofreasons to suittheneedsofdifferentbusinessesandemployee around asetofcommonprincipleswithadjustmentsmade different countries.Ourrewardframeworkisstructured Dixons Carphoneemploysalargenumberofpeopleacross Remuneration policyforthewiderworkforce the Group,includingannualpayreviewoutcomes. is keptinformedofgeneralemploymentconditionsacross employee surveysthroughoutthebusiness.TheCommittee our strategyexecution.TheCompanyalsoconductsregular ensure employeefeedbackingeneralisconsideredall our employeediscussionboardsandforumsto such areabletoexercisetheirinfluence.Wealsomonitor remuneration, anumberofthemareshareholdersandas Whilst employeesarenotformallyconsultedonexecutive remuneration assetoutintheCode. the principlesofgoodgovernancerelatingtodirectors’ guidance issuedbylargeinvestorbodies,inadditionto The Committeealsotakesintoconsiderationremuneration proposed newLongTermIncentivePlan. major shareholderslastyearinrelationtotheCommittee’s future policy.Forexample,consultationtookplacewith received istakenintoconsiderationwhendetermining the RemunerationPolicyofCompany.Anyfeedback shareholders whenmakinganysignificantchangesto The Committeehasapolicytoconsultwithitsmajor Shareholder andemployeeconsultation • • • • • • • plans. Theseincludebutarenotlimitedto: of areasrelatingtotheoperationandadministrationthese discretion, consistentwithmarketpractice,overanumber overseas equivalent)whererelevant.TheCommitteeretains respective rules,theListingRulesandHMRCrules(or incentive andall-employeeplansinaccordancewiththeir The Committeeoperatestheannualbonusplan,longterm Remuneration Committeediscretions Remuneration Policy the applicationofrecoveryandwithholdingprovisions. significant eventsorexceptionalcircumstances;and any adjustmenttoawardsorperformanceconditionsfor control; conditions andpro-ratingintheeventofachange discretion astothemeasurementofperformance plan; and theappropriatetreatmentbasedonrulesofeach determination ofagoodleaverforincentiveplanpurposes plans andtheapprovedpolicy); size ofawardand/orpayment(withintherules when awardsorpaymentsaretobemade; entitlement toparticipateintheplan; Dixons Carphone plc AnnualReport andAccounts 2016/17 Other elementsofannualremunerationwillbeinlinewith Remuneration Reportfollowinganindividual’sappointment. intends torelyonthisdiscretion,itwillbenotedinthefirst annualised increaseaboveordinarylevels.IftheCommittee individual performance,whichmayresultinahigherrateof re-align basesalaryoveronetothreeyears,contingenton market positioning,theCommitteeretainsdiscretionto individual isappointedonabasesalarybelowthedesired levels, experience,internalrelativitiesandcost.Ifan set takingintoaccountarangeoffactorsincludingmarket On appointmentorpromotion,basesalarylevelswillbe Recruitment orpromotion policy UK &IrelandapprovedSAYE. the eligibilitycriteria,arealsoinvitedtojoinCompany’s and assuchtheGroup’sUK&Irishemployees,whomeet The Companyencourageswideemployeeshareownership, Company tocontinuegrow. retain theseemployeesoverthelongerterminorderfor the Companyfeelsthatitisimportanttoincentiviseand management andotherkeymembersoftheworkforce,as Discretionary shareplansareextendedtobothsenior Company, asawhole. takes intoconsiderationsalaryincreasesthroughoutthe • • • • • The followingexceptionswillapply: table. variable remunerationwillbecappedassetoutinthePolicy the policysetoutinRemunerationPolicytable.Assuch, Company. account thestrategyandbusiness circumstancesofthe apply tosuchawardsatthetime ofaward,takinginto the performanceconditionsand timehorizonthatwould The Committeewilldeterminethe leveloftheaward, by theCompanywithapproval ofitsshareholders. schemes orsuchfuture asmaybeintroduced the PolicyTableunderitsexistinglongtermincentive thereafter ifinaprohibitedperiod)accordancewith a longtermincentiveawardonrecruitment(orshortly immediate interestinCompanyperformancebymaking the Committeeretainsdiscretiontoprovidean circumstances andtimingoftheappointment; bonus performanceperiod,takingintoaccountthe conditions fortheremainderofinitialannual the Committeemaysetalternativeperformance relevant legislation; provisions whichreflectlocalmarketpracticeand discretion tooffercost-effectivebenefitsandpension for anoverseasappointment,theCommitteewillhave any taxthereon); make additionalpaymentslinkedtorelocation(including appointment, theCommitteeretainsdiscretionto as deemednecessaryandappropriatetosecurean pension contributionsandtheprovisionofbenefits; continue withexistingremunerationprovisions,including reorganisation, theCommitteeretainsdiscretionto of anundertaking,merger,reconstructionorsimilar an executivedirectorjoinsasaresultoftransfer in theeventthataninternalappointmentismadeor

Annual remuneration provisions incentive plan Service contractand Area Recruitment table shareholding policy. to purchasesharesintheCompanyaccordancewithits appropriate. TheCommitteemayalsorequiretheappointee to makeanypaymentorawarddeemednecessaryand with anyforfeitedawards,whileretainingthediscretion time horizons,valueandperformancetargetsassociated If made,theCommitteewillbeinformedbystructure, to 375%ofbasesalarywithintheLongTermIncentivePlan. on ListingRule9.4.2(2)orexceptionallimitsofawardsup appointment. TheCommitteewillhavetheauthoritytorely individual forfeitsfromapreviousemployerinacceptingthe for-like basis,bonusesand/orincentiveawardsthatan above, theCommitteemayconsiderbuyingout,onalike- In additiontotheannualremunerationelementsnoted terms andbenefits,suchastaxequalisationadvice. allowance, aswellotherassociatedinternationalmobility authorise thepaymentofarelocationand/orrepatriation the recruitmenttablebelow.However,Committeemay those fortheexistingexecutivedirectors,summarisedin Service contractswillbeenteredintoontermssimilarto

Benefits andallowances Salary progression Salary Variable elements Restrictive covenants Entitlements ontermination Notice period Feature

Policy • • • • • • • • • • • and costoflivingallowances(including anytaxthereon). not restrictedto,relocationpayments, housingallowances benefits asreasonablyrequired.Thesemayinclude,butare The Committeeretainsthediscretiontoprovideadditional Report followingappointment. to performance)willbedisclosedinthefirstRemuneration above thestandardrateofincreaseinPolicytable(subject This initialmarketpositioningandintentiontoincreasepay the discretiontomakeincreasesaboveordinarylevels. performance inrole.Inthissituation,theCommitteereserves aligned overthesubsequentonetothreeyearssubject If appointedatbelowmarketlevels,salarymaybere- cost. including marketlevels,experience,internalrelativitiesand To bedeterminedonappointment,takingintoaccountfactors year ofappointment. appropriate bonusperformancetargetsifparticipatinginthe The Committeeshallhavethediscretiontodetermine appointment. an individualshallparticipateinanyincentivetheyearof The Committeehasthediscretiontodeterminewhether provisions. Non-compete, non-solicitation,non-dealingandconfidentiality Gardening leaveprovisions. Provisions formitigationandpaymentinlieuofnotice. As summarisedinthePolicyonlossofoffice. Up to12monthsfromeitherside. Dixons Carphone plc corporate website. regulatory newsservicesandpostedontheCompany’s appointment andremunerationwillbemadetothe A timelyannouncementwithrespecttoanydirector’s the Recruitmenttablebelow. Elements ofremunerationonappointmentaresetoutin considered. payments relatingtorelocationand/orhousingmaybe the appointmentofanewChairmannotbasedinUK, policy atthetimeofappointment.Ifnecessary,tosecure to non-executivedirectors,feeswillbeconsistentwiththe considered andassuchnomaximumapplies.Withrespect with thosecurrentlyadopted.Variablepaywillnotbe executive director,termsofappointmentwillbeconsistent With respecttotheappointmentofanewChairmanornon- AnnualReport andAccounts 2016/17

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Corporate Governance Corporate Governance 72 the particularcircumstances. to alesserextent)ifitregardsasappropriatedosoin Committee candecidenottopro-rateanaward(or subject toperformanceandtimepro-rating.Although,the on cessation,orthenormalvestingdate,inbothcases the Committee’sdiscretion)wherebyawardsmayvest of theGrouporretirementanyothercircumstancesat disability, redundancy,transferofanundertakingoutside leaver circumstancesexist(e.g.death,ill-health,injury, on terminationofemployment,exceptwherecertaingood of theLongTermIncentivePlanisthatawardswilllapse and thebestinterestsofCompany.Thedefaultposition lapsing dependingonthecircumstancesofdeparture Committee retainsthediscretiontopreventawardsfrom exercises thediscretionsetoutinschemerules.The on theterminationofemploymentunlessCommittee the DixonsCarphoneSharePlanisthatawardswilllapse the rulesofrelevantscheme.Thedefaultpositionunder operated bytheCompanyshallbedeterminedbasedon Any entitlementsunderlongtermincentiveschemes of theCompany. circumstances ofthedepartureandbestinterests contribution ofthedirectorduringfinancialyear, it wouldbeappropriatetodosohavingregardthe to makeapro-ratedbonuspaymentincircumstanceswhere for thatfinancialyear.TheCommitteeshallretaindiscretion annual bonuspaymentdate,ordinarilynoispayable If adirector’semploymentterminatespriortotherelevant redundancy andmayincludemodestoutplacementcosts. for allemployeesintherelevantcountryattimeof by referencetotheredundancypaymentpolicyinforce payments. Anyredundancypaymentshallbecalculated they satisfythestatutorytestsgoverningredundancy in circumstanceswherethejudgementofCommittee A directorshallbeentitledtoreceivearedundancypayment for statutoryentitlements. on termination.Nocompensationispaidfordismissal,save accrued butuntakenholidayandanystatutoryentitlements A directorshallalsobeentitledtoapaymentinrespectof compensation payabletoanydepartingdirector. account whendeterminingtheamountandtimingofany The Committeewilltakesuchmitigationobligationinto may sufferiftheCompanyterminatestheirservicecontract. an obligationondirectorstomitigateanylosswhichthey any unexpirednoticetothedateoftermination.Thereis part waythroughthenoticeperiod,amountrelatingto director’s contractualperiodofnoticeor,ifterminationis car allowanceandpensioncontributions,onlyforthe lieu ofnoticeinrespectbasicsalary,benefits,including The Companyshallhavearighttomakepaymentin a changeofcontrolclause. Service contractscontainneitheraliquidateddamagesnor Policy onlossofoffice Remuneration Policy Dixons Carphone plc AnnualReport andAccounts 2016/17

• • provides for: Each oftheexecutivedirectors’serviceagreements forexecutivedirectors agreements Service Service agreements website. news serviceandpostedontheCompany’scorporate any director’sappointmentwillbemadetotheregulatory A timelyannouncementwithrespecttotheterminationof disclosed inthefollowingAnnualRemunerationReport. termination foranexecutivedirector,thiswillbefully In theeventthatanypaymentismadeinrelationto in theinterestsofCompanyanditsshareholders. contract anddiscrimination,whereitisappropriatetodoso not limitedtowrongfuldismissal,unfairbreachof with regardtosettlementofpotentialclaims,includingbut The Committeeshallbeentitledtoexerciseitsjudgement • • such as: payments wheresucharemadeingoodfaith, the Committeereservesrighttomakeadditionalexit In situationswhereanexecutivedirectorisdismissed, • • equivalent); 27daysforAndrewHarrison; Humphrey SingerandKatieBickerstaffe(fulltime 25 days’paidholidayeachyearforSebastianJames, director inperformanceoftheirduties; the reimbursementofexpensesincurredbyexecutive and employment. in connectionwiththeterminationofdirector’soffice by wayofsettlementorcompromiseanyclaimarising in dischargeofalegalobligation;and 12 months fromeitherparty. the director.AndrewHarrisonhasanoticeperiodof of 12monthsfromtheCompanyandsix Singer andKatieBickerstaffeeachhaveanoticeperiod notice periodswherebySebastianJames,Humphrey sick pay;and

or formerdirectors. commitments previouslyenteredintowiththecurrent Policy, authorityisgiventotheCompanyhonourany For theavoidanceofdoubt,inapprovingRemuneration Legacy arrangements 15 minutespriortoandduringthemeeting. Company’s registeredofficeandatthevenueforAGM, are availableforinspectionduringbusinesshoursatthe the lettersofappointmentsfornon-executivedirectors The serviceagreementsfortheexecutivedirectorsand Availability forinspection found intheAnnualRemunerationReportonpage 75. details oncurrentexternaldirectorshipsandfeescanbe may retaintheirfeesfromonesuchappointment.Further development, andhasagreedthattheexecutivedirectors executive directorshipsasapartoftheircontinuing The Boardsupportsexecutivedirectorstakingnon- appointments External accordingly. Committee andrecommendationsmadetotheBoard Appointments arereviewedannuallybytheNominations of threemonthsfromeitherparty. and theothernon-executivedirectorshaveanoticeperiod to non-executivedirectors.TheChairman,DeputyChairman Company policynottograntshareoptionsorawards an executivedirectorbecomesanon-executivedirector.Itis pension contributionsandtheprovisionofbenefits,where continue withexistingremunerationprovisions,including office, exceptthattheCommitteeretainsdiscretionto Non-executive directorsderivenootherbenefitfromtheir appointment. TheCompanyhasnoagelimitfordirectors. Each ofthenon-executivedirectorshasaletter Letters ofappointment

Dixons Carphone plc limit of5%). 10%) and1%fortheLongTermIncentivePlan(againsta current Guidelines,was2.5%forallplans(againstalimitof Company’s dilutionposition,whichremainswithinthe excluded fromsuchcalculations.Asat27June2017,the which willbesatisfiedbymarketpurchasesharesare ensures thatitwillremainwithintheselimits.Anyawards the positionandpriortomakinganyawardCompany discretionary awards).TheCompanyregularlymonitors with a5%inten-yeardilutionlimit(excludinghistoric shares). Inaddition,theLongTermIncentivePlanoperates Company’s issuedsharecapital(orreissueoftreasury not exceed10%overaten-yearperiodinrelationtothe which providethatoveralldilutionunderallplansshould Management Guidelines(‘Guidelines’)onheadroom the currentInvestmentAssociationShareCapital All theCompany’sequity-basedincentiveplansincorporate Dilution Limits AnnualReport andAccounts 2016/17 73

Corporate Governance Corporate Governance 74 Gerry Murphy Baroness Morgan ofHuyton Fiona McBain Lord LivingstonofParkhead Jock Lennox Tim How Andrea GisleJoosen Tony DeNunzio Sir CharlesDunstone The dateofthelettersappointmentareshownbelow: notice. Company orthedirector,givingnotlessthanthreemonths’ directors’ servicescanbeterminatedbyeitherparty,the the Chairman’s,DeputyChairman’sandnon-executive to theBoardaccordingly.Thecontractsinrespectof the NominationsCommitteeandrecommendationsmade considerations. Appointmentsarereviewedannuallyby depending onlengthofserviceandsuccessionplanning general meetings,althoughappointmentsmayvary year terms,subjecttoannualre-electionatthe Non-executive directorsarenormallyappointedforthree- Letter ofappointment remuneration tablesonpages 79to80. More detailsaresetoutinthesinglefigureofdirectors’ executive directorwitheffectfrom27April2017. Graham StapletonsteppeddownfromtheBoardasan 2010. prior tothecreationofDixonsCarphoneplc,since25March director ofCarphoneWarehouseGroupPlc,thelistedentity 6 executive directorswereappointedtotheBoardon With theexceptionofAndrewHarrison,allabove Katie Bickerstaffe Humphrey Singer Andrew Harrison Sebastian James contracts inplacewiththeexecutivedirectors: The followingtablesummariseskeytermsoftheservice contracts Service Service agreements implemented forthefollowingyear. Policy wasimplementedduring2016/17andhowitwillbe The followingsectionssetouthowtheRemuneration vote attheAnnualGeneralMeetingon7September2017. This AnnualRemunerationReportwillbeputtoanadvisory section 9.8.6Randstipulatedin9.8.8oftheListingRules. 2008 (asamended) Companies andGroups(AccountsReports) with Part3ofSchedule8totheLargeandMedium- This partoftheReporthasbeenpreparedinaccordance Introduction Remuneration Report–Annual

August 2014.AndrewHarrisonhadpreviouslybeena Dixons Carphone plc ‌‌ , andcontainthoseelementsrequiredby AnnualReport andAccounts 2016/17

Date ofcontract ‌‌ Regulations 16 Dec15 16 Dec15 29 Mar12 17 Jun14 29 Oct13 29 Mar12 6 Aug14 6 Aug14 6 Aug14 6 Aug14 2 Sep11 appointment 1 Mar17 6 Aug14 s Letters of ized Remuneration Committeemembershipandattendance remuneration tablesonpages 79to80. More detailsaresetoutinthesinglefigureofdirectors’ 2017. Charles DunstonesteppeddownfromtheBoardon30April Fiona McBainwasappointedtotheBoardon1March2017. • • Remuneration Committeehasthefollowingprincipalduties: remuneration policyfortheGrouplieswithBoard.The Responsibility fortheestablishmentofanoverall Responsibilities remuneration. No directorparticipatesindiscussionsabouttheirown Human ResourcesDirectorandGroupRewardDirector. Committee secretary) by theCompanySecretary(whoactsasRemuneration advisory capacityonly.Meetingsarealsoregularlyattended management) Executive andGroupFinanceDirector(orothersenior entitled toattendCommitteemeetingsbuttheGroupChief Only membersoftheRemunerationCommitteeare Tim How Andrea GisleJoosen Current members pages 36 to37. Biographical detailsoneachmembercanbefound at scheduledmeetingsfortheperiodunderreview. shown inthetablebelowalongwiththeirattendance The membersoftheRemunerationCommitteeare Committee membershipandattendance Members • • • Meetings Tony DeNunzioCBE(Chairman) Lord LivingstonofParkhead Former member (2) (1) Chairman; determining thefeesofChairman andDeputy framework ofexecutiveremuneration; making recommendationstotheBoardonCompany’s The Committeehasmettwicesincetheyearend. during theperiodunderreview. The Committeeattendedfivescheduledmeetings required andatleasttwiceayear. The RemunerationCommitteemeetsasandwhen Remuneration Committeeuntil30April2017. Ian LivingstonwasamemberandChairmanofthe joined theBoardandcouldnotbechanged. one meetingduetoacommitmentthatwasplannedbeforehe served asamember.TonyDeNunziowasunabletoattend Remuneration Committeeon30April2017,havingpreviously Tony DeNunziosucceededIanLivingstonasChairmanofthe ‌‌ mayattendmeetingsbyinvitationinan ‌‌ , DeputyCompanySecretary,Group (2) (1) ‌‌

Scheduled meetings 5 of 5 of 4 of5 5 of the Committee. continues toprovideindependent andobjectiveadviceto business, buttheCommitteeis satisfiedthatAonHewitt Company inrespectofremuneration forthehoneybee the SharePlan. Bruckhaus DeringerLLPwithrespecttotheawardsunder took externallegaladvicefromAonHewittandFreshfields those services.Inaddition,duringtheyear,Committee £26,000 toTowersWatson)inrelationtheprovisionof the Group.AonHewittreceivedfeesof£92,000(2015/16: during 2016/17forallremunerationservicesprovidedto the UKandhaveconfirmedthattheyadheredtoCode relation totheprovisionofexecutiveremunerationadvicein Consultants Groupandoperateunderitscodeofconductin term incentives.TheyaremembersoftheRemuneration relating totheGroup’sexecutiveremunerationanditslong Committee andtoworkwiththedirectorsonmatters to this.AonHewittisengagedprovideadvicethe independent advisors,havingusedTowersWatsonprior The CommitteeappointedAonHewittinApril2016as Advice • • • • • • • • included: The principalactivitiesoftheCommitteeduring2016/17 Activities duringtheyear • • • • noting remunerationpracticesacrosstheGroup. environment andinvestorexpectations; monitoring thedevelopmentsincorporategovernance Share Plandonotvestin2017; actions totakeintheeventthatawardsunder reviewing thecurrentSharePlanandagreeingwhat performance measuresandtargets; agreeing designof and approvingthepayments; pre-determined targetssetforthe2015/16annualbonus assessing theperformanceofexecutivedirectorsagainst approving theSharesavegrant; approved theplanatannualgeneralmeetingin2016; the newLongTermIncentivePlanaftershareholdershad approving shareawardstoseniormanagementunder Report; reviewing andapprovingtheDirectors’Remuneration conditions andtargets. incentive schemesandassociatedperformance approving andoperatingemployeeshare-based and Policy ormajorchangestoemployeebenefitstructures; considering andagreeingchangestotheRemuneration termination periods; thresholds oftotalremunerationorhaveunusualterms approving contractsofemploymentwhichexceeddefined management relativetoperformanceandmarketdata; on theremunerationofexecutivedirectorsandsenior considering andmakingrecommendationstotheBoard

Aon Hewittalsoprovidedadvice tothe the 2016/17 annualbonusincluding

Dixons Carphone plc Remuneration Report. performance againstthemwillbeprovidedinnextyear’s be disclosed.Retrospectivedisclosureofthetargetsand are currentlycommerciallysensitiveandassuchwillnot specific targetsrelatingtothe2017/18bonusscheme relative tothebusinessplan.TheCommitteefeelsthat target levelsfortheyearhavebeensettobechallenging be achievedbeforeanybonusispaidout.Theproposed balanced scorecard,withaminimumprofitgatethatmust the Group’skeyobjectivesandarealignedto previous year.Themeasureshavebeenselectedtoreflect base salaryandwilloperateonasimilarbasisasinthe The maximumannualbonusfor2017/18willbe125%of iii) and 5%forAndrewHarrison. Sebastian James,HumphreySingerandKatieBickerstaffe continue in2017/18attheircurrentlevelsof10%for Company pensioncontributionsorallowanceinlieuwill ii) Katie Bickerstaffe Humphrey Singer Andrew Harrison Sebastian James Current directors The followingsalarieswillapplyduringthe2017/18financial i) Executive directors How theRemunerationPolicywillbeappliedin2017/18 • • • • directors: were undertakenandthefeesretainedbyexecutive Remuneration Policy;thefollowingexternaldirectorships The policyrelatingtoexternaldirectorshipsisoutlinedinthe directorships External year, witheffectfrom29April2017: ae Salary Base ‌‌ eso Contributions Pension ‌‌ ‌‌ Annualperformancebonus a feeof£59,000fortheyearto29April2017. of TaylorWimpeyplcduring2016/17andwaspaid Humphrey Singerhasbeenanon-executivedirector was paidafeeof£79,500fortheyearto29April2017. Scottish andSouthernEnergyplcduring2016/17 Katie Bickerstaffehasbeenanon-executivedirectorof paid afeeof£90,000fortheyearto29April2017. Direct LineInsuranceGroupplcduring2016/17andwas Sebastian Jameshasbeenanon-executivedirectorof £50,000 fortheyearto29April2017. of OcadoGroupplcduring2016/17andwaspaidafee Andrew Harrisonhasbeenanon-executivedirector AnnualReport andAccounts 2016/17

Salary at 29 April £’000 510 485 561 836 2017

in 2017/18 Increase in salary £’000 10 11 17 9 1 August Salary at

£’000 520 494 572 853 2017 75

Corporate Governance Corporate Governance 76 achievement ofadjustedEPSgrowthtargets. The remaininghalfoftheawardswillbesubjectto ranked FTSE51-150atthestartofperformanceperiod. performance condition,measuredagainstthecompanies will besubjecttotheachievementofarelativeTSR weighted performanceconditions.Halfoftheawards For 2017/18theseawardswillbesubjecttotwoequally required tosettleanytaxobligations. is notpermittedtosellanysharesvesting,otherthanthose vesting holdingperiod,duringwhichtheexecutivedirector These awardswillbesubjecttoafurthertwo-yearpost noted below. service andtheachievementofperformancemeasures These awardswillvestafterthreeyearsbasedoncontinued announcement oftheresultsfor2016/17financialyear. salary toeachoftheexecutivedirectorsshortlyafter Committee intendstomakeanawardof275%base at theannualgeneralmeetingon8September2016, In linewiththenewLTIPasapprovedbyshareholders iv) three yearsafterpayment. sums alreadypaid.Theseprovisionswillapplyforupto enabling performanceadjustmentsand/orrecoveryof misstatement, misconductandreputationaldamage Recovery andwithholdingprovisionsapplyformaterial Employee engagement Customer NetPromoter Score ROCE Net debt EBIT are showninthetablebelow: The performancemetricsandtheirweightingsfor2017/18 Annual RemunerationReport LTIP ‌‌ Dixons Carphone plc AnnualReport andAccounts 2016/17

Weighting (asapercentage of maximum bonus opportunity) 10% 10% 10% 10% 60% ‌‌

inputs includingmarketconsensusatthetimeofaward, The EPSgrowth targets take intoaccountanumberof 20% orabove Between 7.5%and20% 7.5% Below 7.5% the 2019/20financialyear Three-year adjustedEPSgrowth totheendof vesting tobedeterminedasfollows: EPS growthwillbeassessedoverathree-yearperiodwith Upper Quartileorabove Between MedianandUpper- Median Below Median Group TSR Rank ofCompanyTSRagainstComparator year period,withvestingdeterminedasfollows: The relativeTSRconditionwillbeassessedoverathree- set outonpage 82. Further informationregardingnon-executivedirectorfeesis as SeniorIndependentDirector. a feeof£140,000.Heretained,inaddition,hisresponsibility Chairman andoftheRemunerationCommitteeon Tony DeNunziowasappointedonthesamedateasDeputy Committee. fee isinclusiveofhisChairmanshiptheNominations on 30April2017afeeof£300,000perannum.This Ian LivingstonwasappointedChairmanoftheBoard Non-Executive Directors apply foruptothreeyearsaftervesting. / orrecoveryofsumsalreadypaid.Theseprovisionswill reputational damageenablingperformanceadjustmentsand provisions formaterialmisstatement,misconductand Awards willbesubjecttorecoveryandwithholding definitions attheendofperformanceperiod. levels ofperformance,asdeterminedbytheabove Remuneration Report,togetherwithdetailsoftheachieved clear disclosureofanysuchadjustmentsintheDirectors’ occur duringtheperformanceperiodandwillmakefull will retaindiscretiontoadjustformaterialeventswhich performed andapprovedbytheCommittee.TheCommittee the achievementagainsttargetswillbeindependently higher startingEPSthantheprevious award. Calculations of the marketwithinwhichCompanyisoperatingand Quartile 100% line basis and 100%onastraight- Pro ratabetween25% 25% 0% % ofEPSelementvesting 100% line basis and 100%onastraight- Pro ratabetween25% 25% 0% % ofTSRelementvesting Warehouse Groupplc. Stock ExchangeofDixonsCarphone,previouslycalledCarphone Start dateofthegraphreflectsadmittancetoLondon year ends. The otherpointsplottedarethevaluesatinterveningfinancial invested intheFTSE350Indexonsamedate. Dixons Carphoneon29March2010,comparedwiththevalueof£100 This graphshowsthevalue,by29April2017,of£100investedin Source: Datastream(ThomsonReuters) Total shareholderreturn includes theCompanyandanumberofitscompetitors. The FTSE350hasbeenusedasitisabroadmarketwhich compared withtheFTSE350Index,since29March2010. through TSRonaholdingof£100intheCompany’sshares, The graphbelowshowstheGroup’sperformancemeasured Performance graph Remuneration detailsfor2016/17 (rebased) Val 100 200 300 400 500 600 700 ue (£) 0 29 Mar 2010 FTSE 350Index Dixons Carphoneplc 31 Mar 2011 31 Mar 2012 31 Mar 2013 29 Mar 2014 02 May 2015 30 Apr 2016

29 Apr 2017

Dixons Carphone plc 2015/16 2016/17 Year have vestedwhereapplicable. percentage ofthemaximumnumbersharesthatcould possible, andthevestingoflongtermawardsasa earned asapercentageofthemaximumremuneration single totalfigureofremuneration,theamountbonus as theperformancegraph,GroupChiefExecutive’s The followingtableshows,overthesamesevenyearperiod Group ChiefExecutivepay

2014/15

2013/14 2011/12 2012/13 2010/11 (2) (1)

Roger Taylor waived a bonus of 25% maximum potential and Roger Taylorwaivedabonusof25%maximumpotentialand Excludes remunerationreceivedfromlongtermincentive instead choseforittobepaiddirectlycharity. current Groupwhentheyhavevested. Future reportswillincludelongtermincentivesoperatedbythe company’s annualreportfortheyearended31March2012. Carphone Warehouseincentiveschemeswereprovidedinthat the currentGroup.DetailsofremunerationassociatedwithOld demerger fromTalkTalkbecausethatcompanyisnotpartof schemes establishedbyOldCarphoneWarehousepriortothe Sebastian James Sebastian James Andrew Harrison Sebastian James Total Roger Taylor Andrew Harrison Total Roger Taylor Roger Taylor Roger Taylor AnnualReport andAccounts 2016/17 remuneration CEO single figure of 1,616 1,795 1,687 2,107 1,193 420 679 159 838 474 958 £’000 (1)

maximum 100% 100% against Annual payout 68% 83% 54% 55% 82% 0% bonus n/a %

(2) ‌‌

opportunity Long term maximum incentive against vesting rates n/a n/a n/a n/a n/a n/a n/a n/a n/a %

77

Corporate Governance Corporate Governance 78 (2) (1) Average employeenumbers–continuingoperations Total‌ staff costs–continuingoperations Headline EBIT Dividends paid profits distributedfor2016/17andtheprioryear. The followingtablesetsoutboththetotalcostofremunerationforGroupcomparedwithproformaHeadlineEBITand Relative importanceofspendonpay (2) (1) Annual bonuses Taxable‌ benefits Salary andfees the widerGroup. Changes insalaryrelatingtochangesrolesand/orresponsibilitieshavebeenexcludedfromtheincreasepresentedfor of thatbusiness,whichfor2016/17hadalowerlevelpayoutcomparedwiththosebonusedonGroupperformance. UK headoffice-basedemployees(c. 94%)workforthe&Irelandbusinessandarebonusedagainstperformance change forallUKheadoffice-basedemployeesasthisgroupprovidesthebestlike-for-likecomparison.Themajorityof The tablebelowprovidesthepercentagechangeinremunerationforGroupChiefExecutiveand Percentage changeinremuneration Annual RemunerationReport ‌‌ ‌‌ ‌‌ Extracted fromnote5totheGroupfinancialstatements. Extracted fromnote23totheGroupfinancialstatements. The percentagechangeintaxablebenefitsisconsideredtobe0%sincetherehavebeennomaterialchangesGroupbenefits. compared withGroup. ayout A largeproportionoftheUKheadoffice-basedpopulationworkfor&Irelandbusinesswhichhadalowerlevelbonuspayout Dixons Carphone plc (1) (2) ‌‌ (1)‌ AnnualReport andAccounts 2016/17 (2) (2) ‌‌

45,461 2016/17 £million Number 1,165 517 115

Group Chief 23.62% Executive 45,202 2015/16 Number 1,061 £million 478 106 0% 2%

(37.20)% employees Change % Change % 8.16% 8.49% 0.57% 9.80% UK head office 0% 2% Sir CharlesDunstone Current directors Non-executive Graham Stapleton Katie Bickerstaffe‌ Humphrey Singer Andrew Harrison Sebastian James Current directors Single figure ofdirectors’ remuneration fortheyearended29April2017 Audited information (8) (7) (6) (5) (4) (3) (2) (1) Fiona McBain‌ Gerry Murphy Baroness Morgan ofHuyton Lord‌ LivingstonofParkhead Jock Lennox Tim How Andrea GisleJoosen Tony DeNunzio Executive ‌‌ ‌‌ ‌‌ ‌‌ No paymentsweremadetoformerdirectorsandnopaymentforlossofofficewasduringtheyear. Ian LivingstonhasadeferredpensionintheDixonsRetirementandEmployeeSecurityScheme. LTIP paymentswouldcompriseamountsundertheSharePlan;however,performanceperioddoesnotenduntilJuly2017.Further Taxable benefitsforGrahamStapletonincludeexpensesof£63,000paidbytheCompanyinrelationtospousalandfamilytravel. Taxable benefitsincludeprivatemedicalinsuranceandcarallowances. Pension contributionscomprisetheCompany’scontributionorallowanceinlieutogetherwithsalarysupplementwhichisbasedon Katie BickerstaffepurchasedannualleaveundertheGroup’sholidaypurchasescheme,reducinghersalaryby£10,000in2016/17. Remuneration isshownfortheperiodservedonBoard.FionaMcBainwasappointedtoBoard1March2017andfees information hasbeensetoutonpages 82to83. Sebastian James,HumphreySingerandKatieBickerstaffe5%forAndrewHarrisonGrahamStapleton. the differencebetweenbasicsalaryandschemeearningscapsetbyCompany.Thecontributionamountwas10%offor down fromtheBoardon30April2017. were fromappointmentto29April2017.GrahamStapletonsteppeddowntheBoardon27CharlesDunstone (1)‌ (2) (1) ‌‌(5) ‌‌ (1) (7)‌

Basic salary and fees 2,837 3,698 £’000 280 467 498 482 558 832 861 140 75 65 70 90 65 65 11

contributions Pension £’000 233 233 Dixons Carphone plc 23 51 48 28 83 — — — — — — — — — —

(3)

‌‌

2,964 2,964 Annual bonus £’000 486 528 502 581 867 — — — — — — — — — —

benefits‌ AnnualReport andAccounts 2016/17 Taxable £’000 126 126 76 11 13 13 13 — — — — — — — — — —

(4)‌

emoluments 6,160 1,052 1,088 1,045 1,180 1,795 7,021 £’000 280 861 140 Total 75 65 70 90 65 65 11

payments‌ £’000 LTIP — — — — — — — — — — — — — — — — —

(6)‌

remuneration 2016/17 6,160 1,052 1,088 1,045 1,180 1,795 7,021 £’000 861 140 280 Total 65 65 75 65 70 90 11

79

Corporate Governance Corporate Governance (9) (8) (7) (6) (5) (4) (3) (2) (1) 80 Roger Taylor John Gildersleeve Former directors Gerry Murphy Baroness Morgan ofHuyton Lord LivingstonofParkhead Jock Lennox Tim How Andrea GisleJoosen Tony‌ DeNunzio Sir CharlesDunstone Current directors Non-executive Graham Stapleton Katie Bickerstaffe Humphrey Singer Andrew Harrison Sebastian James Current directors Executive Single figure ofdirectors’ remuneration fortheyearended30April2016 Annual RemunerationReport ‌‌ ‌‌ ‌‌ ‌‌ Ian LivingstonhasadeferredpensionintheDixonsRetirementandEmployee SecurityScheme. No paymentsweremadetoformerdirectorsandnopaymentforlossof officewasmadeduringtheyear. Roger Taylorcontinuedtoreceiveprivatemedicalinsurancebenefitsuntil 16December2016whenhesteppeddownfromtheBoard. LTIP paymentswouldcompriseamountsundertheSharePlan,however, theperformanceperiodendsinJuly2017. The taxablebenefitsofGrahamStapletonincludesthewaiveraloan,togetherwithaccruedinterest,£880,268relatingtolongterm Taxable benefitsincludeprivatemedicalinsuranceandcarallowances. Pension contributionscomprisetheCompany’scontributionorallowanceinlieutogetherwithsalarysupplementwhichisbasedon Katie BickerstaffepurchasedannualleaveundertheGroup’sholidaypurchasescheme,reducinghersalaryby£10,000in2015/16. Remuneration isshownfortheperiodservedonBoard.TonyDeNunzioandIanLivingstonwereappointedtoBoard Stapleton wasappointedtotheBoard. participants ofthisplanandthepastpracticeusedbyCarphoneWarehouse. Thisisalegacy,pre-MergerobligationmadebeforeGraham and atthattimetheCompanyconfirmedwritingoffofoutstanding loan.Thisdecisionreflectedthetreatmentaffordedtoother loan tobeusedsettletheoutstandingtaxliabilitiesthatwerecreated at thepointofexercise.During2015,salesrestrictionselapsed a salesrestrictionuntil2015.AtthetimeofexerciseGrahamStapleton,alongwithotherparticipants,wasprovidedcompany following thesaleofBestBuyEuropebusinessandawardsbecameexercisableduring2013,butallsharesawardedweresubjectto incentive schemeofCarphoneWarehousethathetookpartinpriortohimbecomingadirectortheCompany.Thevested Sebastian James,HumphreySingerandKatieBickerstaffe5%forAndrewHarrisonGrahamStapleton. the differencebetweenbasicsalaryandschemeearningscapsetbyCompany.Thecontributionamountwas10%offor Board on16December2015andfeesarefrom3Maytodateofleaving. 16 December 2015andthefeesshownwerefromappointmentto30April2016.JohnGildersleeveRogerTaylorresigned Dixons Carphone plc (1)(7) (1)‌ (2) (1) (5) ‌‌ AnnualReport andAccounts 2016/17 (1) ‌ (9)

Basic salary and fees 3,653 2,795 £’000 858 280 490 475 550 820 460 97 53 65 65 54 75 65 70 34

contributions Pension £’000 231 231 50 48 28 82 23 — — — — — — — — — — —

(3)

2,398 2,398 Annual bonus £’000 428 406 470 701 393 — — — — — — — — — — —

benefits Taxable £’000 941 940 892 — 11 13 11 13 — — — — — — — — 1 1

(4)

emoluments 6,364 1,059 1,616 7,223 1,768 £’000 280 979 942 859 Total 65 54 75 65 70 34 98 53 65

payments £’000 LTIP — — — — — — — — — — — — — — — — — —

(6)

remuneration 2015/16 6,364 1,059 1,616 7,223 1,768 £’000 280 979 942 859 Total 65 54 75 65 70 34 98 53 65

retrospective basisandtheactualperformanceagainstthese. the detrimentofbusinessperformance.TheCommitteehas,however, disclosedinthetableoverleaftargetsona were setwithinthecontextofalongertermbusinessplanand thisdisclosurecouldgiveinformationtocompetitors sensitive andthereforethesewerenotdisclosedinlastyear’s directors’remunerationreport.Thiswasbecausetargets The Committeedeterminedatthebeginningofyearthat disclosureofperformancetargetswerecommercially period totheendoffinancialyear. The maximumbonusopportunityforallexecutivedirectorsis 125% ofbasesalarybasedonperformanceinthe12-month Annual bonusfor2016/17 (2) (1) Graham Stapleton Katie Bickerstaffe Humphrey Singer Andrew Harrison Sebastian James The tablebelowsetsouttheLTIPawardsmadetoexecutivedirectorson9September2016: 30% orabove Between 10%and30% 10% Below 10% 2018/19 financialyear Three-year adjustedEPSgrowth totheendof The vestingleveloftheEPSconditionwillbedeterminedasfollows: Upper Quartileorabove Between MedianandUpperQuartile Median Below Median Rank ofCompanyTSRagainstComparatorGroup TSR The vestingleveloftherelativeTSRconditionwillbedeterminedasfollows: remaining halfofeachawardwillbesubjecttotheachievementadjustedEPSgrowthtargets. performance condition,measuredagainstthecompaniesrankedFTSE 51-150atstartofperiod.The by shareholdersattheannualgeneralmeeting.HalfofeachawardissubjecttoachievementarelativeTSR Nil costoptionawardsweremadetoexecutivedirectorsinSeptember2016followingapprovalofthenewLTIP LTIP Awardsmadeduring2016/17 taken intheeventthateitherorbothawardsdonotvest. Plan aredetailedlaterinthisReport.TheChairmen’sStatementatthestartofReportexplainsstepsthatwillbe Details oftheawardsmadeandloansgrantedtodirectorsenablethemsubscribeforsharesunderShare conditions performance Awards madeunderthelegacySharePlanwillvestinJuly2017(60%) Long termincentiveplans(LTIP) Graham StapletonsteppeddownfromtheBoardon27April2017. The facevalueiscalculatedbasedonthenumberofoptionsawardedmultiplied bythesharepriceatdateofaward. (2) ‌‌.

Nil CostOptions ‌‌ 331,696 360,538 342,512 396,592 591,284 awarded 100% basis 100% onastraight-line Pro ratabetween25%and 25% 0% % ofEPSelementvesting 100% basis 100% onastraight-line Pro ratabetween25%and 25% 0% % ofTSRelementvesting Share Priceat date ofaward 3.89 3.89 3.89 3.89 3.89 Dixons Carphone plc £

‌‌ andJuly2018(40%),subjecttosatisfactionof

1,290,297 1,402,493 1,332,372 1,542,743 2,300,094 Face Value £ (1) AnnualReport andAccounts 2016/17

End ofPerformance 30 Apr2019 30 Apr2019 30 Apr2019 30 Apr2019 30 Apr2019 Period

9 Sep2019 9 Sep2019 9 Sep2019 9 Sep2019 9 Sep2019 Vesting Date 81

Corporate Governance Corporate Governance 82 Company. and oneforthesecondgrantin October2014,eachbeingsubjecttoacapof2%thetotal issuedsharecapitalofthe on themeasurementdate.Under theSharePlantherearenowtwopools,onefororiginal grantinDecember2013 The totalpoolfordistributionto participantsissubjecttoacapof4%thetotalissuedshare capitaloftheCompany for cashand/ortheCompany’s ordinaryshares. valuation togetherwiththeminimum returnoninvestedcapital.Theseshareswouldthenbe purchasedbytheCompany the sharesheldbyparticipantswillbebasedonincremental value(ifany) of theperformanceconditions,60%sharesvest,with40% deferredforafurtheryear.Iftheawardsvest,valueof The performanceoftheplanwillbemeasuredatend performanceperiodinJuly2017andsubjecttosatisfaction commercial rateofinteresttoacquiretheshares.Loansareordinarily repayableinfullifperformanceconditionsaremet. that holdstheCompany’sinterestsinGroup’smainoperating businesses.TheGroupgrantedloanstoparticipantsata by CarphoneWarehouseshareholders.Participantsacquired at marketvalueparticipationsharesinasubsidiarycompany The executivedirectorsparticipateintheDixonsCarphone(formerly CarphoneWarehouseGroupplc) Directors’ interests intheShare Plan (5) (4) (3) (2) (1) Member ofRemunerationCommittee Member ofNominationsCommittee Member ofAuditCommittee Chair ofAuditCommittee Senior IndependentDirector Deputy Chairman Chairman increase infeefortheChairmanasdetailedearlierthisReport. out inthetablebelowforchairingormembershipofcommittees.Feeswillremainunchanged2017/18,otherthan Other independentnon-executivedirectorsreceivedabasicfeeof£60,000(2015/16:£60,000) The Chairman,andDeputyChairmanSeniorIndependentDirectorreceiveall-inclusivefeesreflectingtheirduties. director andbenefitpensionarrangementscontinue. variable payandreceivenoadditionalbenefits,exceptinsituationswhereanexecutivedirectorbecomesanon-executive setting ofhisownsalarywhichisdealtwithbytheRemunerationCommitteeannually.Non-executivedirectorsreceiveno fee ispayableandadditionalfeesarepaidforchairingmembershipofcommittees.TheChairmannotinvolvedinthe Factors takenintoconsiderationincludetherequiredtimecommitment,specificexperienceand/orqualifications.Abase (excluding non-executivedirectors) The feesfortheindependentnon-executivedirectors,includingDeputyChairman,aredeterminedbyBoard Non-executive directors’ andChairman’s fees figure ofdirectors’remunerationtableonpage 79. year underreview.Thebonusamountstobepaidtheexecutivedirectorsinrespectof2016/17aresetoutsingle paid incash.TheCommitteeiscomfortablethattheresultanappropriatereflectionofoverallperformanceduring Overall bonuspaymentsreflectstrongbusinessperformancepayingoutat82.9%ofmaximumopportunityandwillbe Employee engagementscore Customer NetPromoter Score onCapitalEmployed Return Average net(debt) Headline EBIT Measure on achievementofthresholdperformanceand75%basesalarytargetperformance. The maximumannualbonusof125%basesalaryispayableatthelevelperformance,25% Annual RemunerationReport ‌‌ ‌‌ ‌‌ vs budget The SeniorIndependentDirector’sfeeincludesmembershipoftheNominations andRemunerationcommittees. On 30April2017,TonyDeNunziowasappointedasDeputyChairmanand ChairmanoftheRemunerationCommitteeinadditiontohis The DeputyChairman’sfeeincludesChairmanshipoftheRemuneration CommitteeandmembershipoftheNominationsCommittee. Ian LivingstonwasappointedChairmanoftheBoardon30April2017afee£300,000,inclusivehisChairmanship The Chairman’sfeeincludesChairmanshipoftheNominationsCommittee. Senior IndependentDirector’srole. Nominations Committee. Dixons Carphone plc (1) ‌‌(2) ‌‌ (3) ‌‌ /funds–variance ‌‌(4) ‌‌ AnnualReport andAccounts 2016/17 (5) ‌‌

He waspaidaninclusivefeeof£140,000forallroles. ‌‌ afterconsideringexternalmarketresearchandarereviewedonanannualbasis. As apercentage of maximum opportunity 10% 10% 10% 10% 60% bonus £481.5 million £(50) million ‌‌ Threshold 21.1% Improvement overprioryear Improvement overprioryear £506.5 million Budget 21.6% ‌‌ ofDixonsCarphoneinexcesstheopening Target £531.5 million £50 million Maximum 22.1% ‌‌ andadditionalfeesasset

£517 million £53 million ‌‌ SharePlanapproved 2016/17 21.7% Better Better £’000 140 280 Actual 15 90 5 5 5

2015/16 Payout 10% 10% 10% 46% £’000 140 280 7% 15 90 5 5 5

(1) 2016 LTIP Graham Stapleton 2016 LTIP Katie Bickerstaffe 2016 LTIP Humphrey Singer 2016 LTIP Andrew Harrison 2016 LTIP Sebastian James Directors’ interests inLTIP (4) (3) (2) (1) Graham Stapleton Katie Bickerstaffe Humphrey Singer Andrew Harrison Sebastian James Current directors issued toenablethedirectorssubscribeforparticipationshares. Holdings Limited(previouslyknownasNewCPWLimited) The tablebelowshowstheallocationtoexecutivedirectorsofparticipationsharesinsubsidiary,DixonsCarphone constituents oftheFTSE250Index. is alsounderpinnedbyaminimumannualcompoundTSRgrowthof5%andoutperformancethemedian valuation (assessedoveranappropriateperiod) The SharePlanisdesignedtoshare10%oftheincrementalvaluecreatedinDixonsCarphoneexcessanopening

he B ordinary The amountoftheloanisrestatedfromfiguresin2015/16remunerationreportfollowingfinalisationvaluetheBordinary Allocation relatestothepost-MergerpoolinrespectofBordinaryshares.FacevalueisnotincludedasduestructureShare Allocation relatestothepre-MergerpoolinrespectofAordinaryshares.FacevalueisnotincludedasduestructureofSharePlan shares. Plan itisnotconsideredarepresentativefigure. it isnotconsideredarepresentativefigure. Graham StapletonsteppeddownfromtheBoardon27April2017. Graham StapletonsteppeddownfromtheBoardon27April2017. (4) (1)

A ordinary subsidiary 9 Sep2016 9 Sep2016 9 Sep2016 9 Sep2016 9 Sep2016 allocated shares in Number Date ofgrant 30 April 2016 600 700 as at — — — (1)

B ordinary subsidiary allocated shares in Number 1,100 30 April 2016 100 700 700 200 30 April as at 2016 (2)

— — — — — At A ordinary subsidiary

allocated shares in ‌‌ andbeyondanannualrateofreturn7%oninvestedcapital.Theplan Number 331,696 360,538 342,512 396,592 591,284 29 April 2017 Awarded 600 700 as at — — — in the (1) year

B ordinary subsidiary

allocated shares in Number ‌‌ forfeited in 29 April 1,100 , inrelationtotheSharePlan,togetherwithdetailsofloans Lapsed or 2017 the year 100 700 700 200 as at Dixons Carphone plc (2)

— — — — — Allocation of Apool Exercised 30 April 2016 6% 7% as at in the — — — year % (1) — — — — —

Allocation 331,696 360,538 342,512 396,592 591,284 of Bpool 30 April 2016 11% 29April 1% 7% 7% 2% as at 2017 % (2) AnnualReport andAccounts 2016/17 At

Allocation Date from which of Apool first exercisable 9 Sep2019 9 Sep2019 9 Sep2019 9 Sep2019 9 Sep2019 29 April 2017 6% 7% as at — — — % (1)

Allocation of Bpool 29 April 11% 2017 1% 7% 7% 2% as at % exercise period 9 Sep2026 9 Sep2026 9 Sep2026 9 Sep2026 9 Sep2026 (2)

Expiry ofthe outstanding outstanding 1,467 1,467 2,306 30 April 565 834 £’000 Loan Loan as at 2016

outstanding outstanding Exercise rc (p) Price 1,292 1,292 2,030 29 April 2017 551 796 £’000 Loan Loan as at — — — — — (3) 83

‌‌

Corporate Governance Corporate Governance 84 vested. options ownedbythedirectorsoverCompany,areshownintablebelow.Thesepre-Mergerawardshavenowall Sharesave awardsintooptionsoverDixonsCarphone.Thoserolledbythedirectors,inadditiontoother As partoftheMerger,participantsDixonsRetailSharesavePlanwereofferedopportunitytorollovertheir Directors’ interests inSharesave Annual RemunerationReport Sebastian James Andrew Harrison Sharesave Humphrey Singer Sharesave Sharesave Katie Bickerstaffe Sharesave (4) (3) (2) (1) ‌‌ ‌‌ ‌‌

inger, The facevalueofawardsgrantedon22February2017fortheexecutivedirectorswas£22,497SebastianJamesandHumphreySinger, £3.15. and £1,575forKatieBickerstaffe.Theexercisepricewassetata20%discounttothemid-marketclosingshare24January2017of and HumphreySingerwas£971,£792bySebastianJames. and £3.41fortheoptionsexercisedbySebastianJameson7October2016.ThegainmadedateofexerciseKatieBickerstaffe The exercisepriceshownistherolloverDixonsCarphoneshares. Sebastian JamesandHumphrey SingercancelledprioryearSharesave contractsinorder toparticipateinthe2017award. The optionsexercisedbyKatieBickerstaffeandHumphreySingeron3October2016hadamarketpriceof£3.71thedateexercise Share optionsthatweregrantedundertheDixonsRetailSharesavePlanandrolledoverintoCarphoneshares. Dixons Carphone plc

23 Jul2013 23 Jul2013 23 Jul2013 22 Feb2017 26 Feb2015 22 Feb2017 25 Feb2016 26 Feb2015 22 Feb2017 25 Feb2016 26 Feb2015 10 Jan2014 Date ofgrant AnnualReport andAccounts 2016/17 (1) (1) (1)

209.35 252.00 344.00 224.00 252.00 377.00 344.00 209.35 252.00 377.00 344.00 209.35 Exercise rc (p) price

‌‌ 30 April 5,467 4,866 4,017 4,017 5,435 4,500 5,435 4,500 601 334 601 334 601 2016 — — — At

Awarded 7,142 7,142 7,142 7,142 year in the 500 500 — — — — — — — — — — (4)

cancelled in the year Lapsed or (4,866) (4,866) (4,834) (4,500) (334) — — — — — — — — — — — (3) ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Exercised in theyear (601) (601) (601) (601) (601) (601) — — — — — — — — — — (2)

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ 29April 7,142 7,142 4,017 4,017 7,142 7,142 5,334 4,500 500 334 2017 — — — — — — At

Date from which first exercisable 1 Mar2017 1 Oct2016 1 Oct2016 1 Oct2016 1 Apr2020 1 Apr2018 1 Apr2020 1 Apr2019 1 Apr2018 1 Apr2020 1 Apr2019 1 Apr2018

30 Sep2021 30 Sep2018 31 Aug2017 30 Sep2021 30 Sep2019 30 Sep2018 30 Sep2021 30 Sep2019 30 Sep2018 31 Mar2017 31 Mar2017 31 Mar2017 exercise period Expiry of the Expiry ofthe

Details ofdirectors’interestsinsharestheCompanyareshownfollowingtable: Directors’ shareholding this Report. There werenochangesinthedirectors’restrictedorunrestrictedshareinterestsbetween29April2017anddateof (8) (7) (6) (5) (4) (3) (2) (1) Fiona McBain Gerry Murphy Baroness Morgan ofHuyton Lord LivingstonofParkhead Jock Lennox Tim How Andrea GisleJoosen Tony DeNunzio Sir CharlesDunstone Current directors Non-executive directors Graham Stapleton Katie Bickerstaffe Humphrey Singer Andrew Harrison Sebastian James Current directors Executive directors ‌‌ ‌‌

On 5 July 2016, Andrea Gisle Joosen purchased 3,000 shares. The share price on 5 July 2016 was £2.99. On 5July2016,AndreaGisleJoosenpurchased3,000shares.Thesharepriceon2016was£2.99. Date ofappointment,iflater. price on 14 July 2016 was £3.30. On 12 October 2016 the share price was £3.41 and £3.11 on 13 February 2017. price on14July2016was£3.30.On12Octobertheshare£3.41and£3.1113February2017. £3.26 and£2.98on6February2017. and GrahamStapletonsold182,500shares,atapriceof£3.15pershare. ares On 2February2017,SebastianJamessold302,000shares,HumphreySinger200,000KatieBickerstaffe50,000shares Charles DunstonesteppeddownfromtheBoardon30April2017. Graham StapletonsteppeddownfromtheBoardon27April2017. The percentageisbasedonbasesalaryasat29April2017andanaveragesharepriceoverthemonthtoof£3.19. On 14July2016,12October2016and13February2017,BaronessMorganpurchased7,000,11973sharesrespectively.Theshare On 1July2016and6February2017,IanLivingstonpurchased15,23616,653sharesrespectively.Thesharepriceon2016was (2) (2) (2) (2) (7) (3) (8) (5) (4) Dixons Carphone plc

134,758,481 5,000,000 307,534 359,568 419,748 606,835 31,889 11,625 12,400 50,000 20,000 29 April 9,076 8,183 2017 —

134,758,481 AnnualReport andAccounts 2016/17 5,000,000 490,034 408,967 619,147 908,234 11,625 12,400 50,000 20,000 6,076 30 April 2016 991 — — (1)

share ownership Total beneficial interests under 5,000,000 307,534 359,568 419,748 606,835 guidelines 29 April 2017 — — — — — — — — —

Total beneficial share interests 2,843% 209% 225% 276% 231% 29 April salary 2017 asa % of — — — — — — — — — (6) 85

Corporate Governance Corporate Governance 86 27 June2017 Chairman oftheRemunerationCommittee Tony DeNunzio Meeting on7September2017. As requiredbytheRegulations,aresolutiontoapprovethisRemunerationReportwillbeproposedatAnnualGeneral Compliance Approval oftheLongTerm Incentive Plan2016 Approval ofannualremuneration report Approval ofRemunerationPolicy Resolution The followingtablessetoutthevotingresultsinrelationtoresolutionsput2016annualgeneralmeeting: resolutions, explanatoryreasonswillbesought,andanyactionsinresponsecommunicatedtoshareholders. being puttothevoteatannualgeneralmeetinginSeptember2016.Wheretherearesubstantialvotesagainst interest invotingoutcomes The Companyiscommittedtoongoingshareholderdialogueinrespectofdirectors’remuneration,andtakesanactive Statement ofvotingatshareholder meetings(notaudited) Annual RemunerationReport Dixons Carphone plc

. AnnualReport andAccounts 2016/17

I n particularweconsultedin2016withourshareholdersonthenewRemunerationPolicy

878,422,918 835,264,767 880,154,462 Votes for ‌‌ 99.20 94.28 98.86 % 50,721,166 10,177,401 7,119,656 Votes against 0.80 5.72 1.14 % 6,368,187 5,925,578 1,579,648 Withheld 27 June2017 Group ChiefExecutive Sebastian James By OrderoftheBoard • • • We confirmthattothebestofourknowledge: Responsibility statement may differfromlegislationinotherjurisdictions. Group’s website.LegislationintheUnitedKingdomgoverningpreparationanddisseminationoffinancialstatements The directorsareresponsibleforthemaintenanceandintegrityofcorporatefinancialinformationincludedon prevention anddetectionoffraudotherirregularities. responsible forsafeguardingtheassetsofCompanyandGrouphencetakingreasonablesteps the GroupandenablethemtoensurethatfinancialstatementscomplywithCompaniesAct2006.Theyarealso Company’s transactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionofCompany The directorsareresponsibleforkeepingadequateaccountingrecordsthatsufficienttoshowandexplainthe • • • • In preparingtheconsolidatedfinancialstatements,IAS1‘PresentationofFinancialStatements’requiresthatdirectors: • • • • In preparingtheCompanyfinancialstatements,directorsarerequiredto: profit orlossoftheCompanyandGroupforthatperiod. unless theyaresatisfiedthatgiveatrueandfairviewofthestateaffairsCompanyGroup Reporting Standard101ReducedDisclosureFramework.Undercompanylawthedirectorsmustnotapproveaccounts Article 4oftheIASRegulationandhaveelectedtoprepareCompanyfinancialstatementsinaccordancewithFinancial required topreparetheconsolidatedfinancialstatementsinaccordancewithIFRSasadoptedbyEuropeanUnionand Company lawrequiresthedirectorstopreparefinancialstatementsforeachyear.Underthatare law andregulations. The directorsareresponsibleforpreparingtheannualreportandfinancialstatementsinaccordancewithapplicable Statement ofDirectors’ responsibilities strategy. information necessaryforshareholderstoassesstheGroupand theCompany’sperformance,businessmodeland the annualreportandfinancialstatements,takenasawhole, are fair,balancedandunderstandableprovidethe principal risksanduncertaintiesthattheyface; the Companyandundertakingsincludedinconsolidation takenasawhole,togetherwithdescriptionofthe the StrategicReportincludesafairreviewofdevelopment andperformanceofthebusinessposition consolidation takenasawhole; view oftheassets,liabilities,financialpositionandprofitorlossCompanyundertakingsincludedin the financialstatements,preparedinaccordancewithrelevantreportingframework,giveatrueandfair make anassessmentoftheGroup’sabilitytocontinueasagoingconcern. financial performance;and to understandtheimpactofparticulartransactions,othereventsandconditionsonGroup’sfinancialposition provide additionaldisclosureswhencompliancewiththespecificrequirementsinIFRSareinsufficienttoenableusers understandable information; present information,includingaccountingpolicies,inamannerthatprovidesrelevant,reliable,comparableand properly selectandapplyaccountingpolicies; continue inbusiness. prepare thefinancialstatementsongoingconcernbasisunlessitisinappropriatetopresumethatCompanywill material departuresdisclosedandexplainedinthefinancialstatements; state whetherFinancialReportingStandard101‘ReducedDisclosureFramework’hasbeenfollowed,subjecttoany make judgementsandaccountingestimatesthatarereasonableprudent; select suitableaccountingpoliciesandthenapplythemconsistently;

27 June2017 Group FinanceDirector Humphrey Singer Dixons Carphone plc

AnnualReport andAccounts 2016/17 87

Corporate Governance Financial Statements 88 (‘IASB’) Board as adoptedbytheEuropeanUnion, theGrouphasalsoappliedIFRSsasissuedbyInternational AccountingStandards As explainedinnote1a) Separate opinioninrelation toIFRSsasissuedbythe IASB our auditapproach Significant changein Scoping Materiality Key risks Summary ofourauditapproach (United KingdomGenerallyAcceptedAccountingPractice) preparation oftheparentcompanyfinancialstatementsisapplicablelawandUnitedKingdomAccountingStandards law andIFRSsasadoptedbytheEuropeanUnion.Thefinancialreportingframeworkthathasbeenappliedin The financialreportingframeworkthathasbeenappliedinthepreparationofGroupstatementsisapplicable • • • • • • • The financialstatementscomprise: • • • • In ouropinion, Opinion onthefinancialstatementsofDixonsCarphoneplc Independent Auditor’s report the relatednotes1to33andC1C10. the Companybalancesheet,statementofchangesinequity;and the Consolidatedcashflowstatement, the Consolidatedstatementofchangesinequity, the Consolidatedbalancesheet, the Consolidatedstatementofcomprehensiveincome, the Consolidatedincomestatement; regards theGroupfinancialstatements,Article4ofIASRegulation. the financialstatementshavebeenpreparedinaccordancewithrequirementsofCompaniesAct2006and,as Accepted AccountingPractice,includingFRS101‘ReducedDisclosureFramework’;and the parentcompanyfinancialstatementshavebeenproperlypreparedinaccordancewithUnitedKingdomGenerally Standards (‘IFRSs’) the GroupfinancialstatementshavebeenproperlypreparedinaccordancewithInternationalFinancialReporting 29 April 2017andoftheGroup’sprofitforyearthenended; the financialstatementsgiveatrueandfairviewofstateGroup’sparentcompany’saffairsasat Dixons Carphone plc ‌‌. ‌‌ asadoptedbytheEuropeanUnion; ‌‌ totheGroupfinancialstatements, inadditiontocomplyingwithitslegalobligationapply IFRSs AnnualReport andAccounts 2016/17 as mentionedinthekeyriskssectionabove. the removalofpropertyrationalisationprovisioningriskandaddition oftaxprovisioningrisk There havebeennosignificantchangesinourauditapproach inthecurrentyearotherthan of profitbeforetax. retail operationsintheUKandNordics,representing90%of Group’srevenueand85% Our fullscopeauditproceduresprovidedcoverageattheGroup’s keylocations,beingthe the basisof5%adjustedheadlineprofitbeforetax,consistent withthepreviousyear. The materialitythatweusedinthecurrentyearwas£21.5million whichwasdeterminedon the increaseinquantumofprovisionforuncertaintaxpositions intheyear. approach. Wehaveincludedanadditionalriskthisyearinrelation totaxprovisioninggiven no equivalentrestructuringchargeinthecurrentyear,islongersignificanttoouraudit provisioning. Thisrelatedtoanon-recurringchargeintheprioryear,and,astherehasbeen Last yearourreportincludedanadditionalriskinrelationtopropertyrationalisation • • • • • The keyrisksthatweidentifiedinthecurrentyearwere: tax provisioning. inventory provisioning;and UK supplierfunding; revenue recognition–UKnetworkcommissions; impairment ofgoodwillandotherintangibleassets; ‌‌ , includingFRS101‘ReducedDisclosureFramework’.

the allocationofresourcesinauditanddirectingefforts oftheengagementteam. The assessedrisksofmaterialmisstatementdescribedbelow arethosethathadthegreatesteffectonourauditstrategy, Our assessmentoftherisksmaterialmisstatement those standards. and wehavefulfilledourotherethicalresponsibilitiesinaccordancewith Standards forAuditorsandconfirmthatweareindependentoftheGroup We arerequiredtocomplywiththeFinancialReportingCouncil’sEthical Independence • • • • attention toinrelationto: We arerequiredtostatewhetherwehaveanythingmaterialaddordraw strategic report. statement onthelonger-termviabilityofGroupcontainedwithin contained withinnote1a) regarding theappropriatenessofgoingconcernbasisaccounting As requiredbytheListingRuleswehaverevieweddirectors’statement Going Concern In ouropiniontheGroupfinancialstatementscomplywithIFRSsasissuedbyIASB. attention toanynecessaryqualificationsorassumptions. period oftheirassessment,includinganyrelateddisclosuresdrawing to continueinoperationandmeetitsliabilitiesastheyfalldueoverthe whether theyhaveareasonableexpectationthattheGroupwillbeable they considerthatperiodtobeappropriate,andtheirstatementas the prospectsofGroup,overwhatperiodtheyhavedonesoandwhy the directors’explanationonpages26-27astohowtheyhaveassessed statements; and of atleasttwelvemonthsfromthedateapprovalfinancial uncertainties totheGroup’sabilitycontinuedosooveraperiod of accountinginpreparingthemandtheiridentificationanymaterial whether theyconsidereditappropriatetoadoptthegoingconcernbasis the directors’statementinnote1a) how theyarebeingmanagedormitigated; the disclosuresonpages16-21thatdescribethoserisksandexplain liquidity; would threatenitsbusinessmodel,futureperformance,solvencyor assessment oftheprincipalrisksfacingGroup,includingthosethat the directors’confirmationonpage45thattheyhavecarriedoutarobust ‌‌ tothefinancialstatementsanddirectors’ ‌‌ tothefinancialstatementsabout Dixons Carphone plc concern. Group’s abilitytocontinueasagoing statement isnotaguaranteeastothe or conditionscanbepredicted,this However, becausenotallfutureevents any suchmaterialuncertainties. of accountingandwedidnotidentify adoption ofthegoingconcernbasis We agreedwiththedirectors’ respect ofthesematters. material toaddordrawattentionin We confirmthatwehavenothing referred tointhosestandards. of theprohibitednon-auditservices also confirmwehavenotprovidedany accordance withthosestandards.We our otherethicalresponsibilitiesin of theGroupandwehavefulfilled We confirmthatweareindependent AnnualReport andAccounts 2016/17 89

Financial Statements Financial Statements 90 statements. 1t) and26h)totheGroupfinancial Committee reportandinnotes 1e), described inmoredetailtheAudit judgements andestimatesinvolvedare to bereliablymeasurable.Thekey commissions whentheyareconsidered contract periodandrecognisenetwork consumer behaviourbeyondtheinitial levels ofconsumerspendand period, consumerrenewals,expected consumer defaultwithinthecontract judgement inrespectofthelevel is thereforerequiredtoexercise beyond thepointofsale.Management is dependentonconsumerbehaviour no ongoingperformanceobligations, already made,andforwhichthereare based onmobilephoneconnections which thereisacontractualentitlement 29 April 2017) receivable onsales(£1,014 millionat The monetaryvalueofcommission commissions Revenue recognition–UKnetwork and 9totheGroupfinancialstatements. Committee reportandinnotes1k),1l) described inmoredetailtheAudit judgements andestimatesinvolvedare performance andprospects.Thekey projections offuturebusiness growth ratesbasedonmanagement’s flows andassociateddiscountrates estimates concerningthefuturecash a judgementalprocesswhichrequires acquisition relatedintangibleassetsis Group’s assessmentofimpairment acquisitions inpreviousyears.The CPW EuropeandDixonsRetailplc intangibles) goodwill and£322millionofacquisition 2017 comprising£3,111millionof goodwill, (£3,433millionat29April related intangibleassets,including The Grouphassignificantacquisition acquisition intangibles Impairment ofgoodwillandother Risk positions intheyear.Theotherriskssetoutbelowareconsistentwiththoseidentifiedprevious an additionalriskthisyearinrelationtotaxprovisioninggiventheincreasequantumofprovisionforuncertain and commencedinthatyearisnolongersignificanttoourauditapproachthecurrentyear.Wehaveincluded Last yearourreportincludedanadditionalriskinrelationtopropertyrationalisationprovisioningwhichwasannounced Independent Auditor’s report Dixons Carphone plc ‌‌ primarilyrelatedtothe ‌‌ , beingcommissionfor AnnualReport andAccounts 2016/17 the accuracyofhistoricalestimatesagainst We reviewedmanagement’sassessmentof receipts. received fromnetworksandtestingofcash including tenure,linerental,andchurntodata substantive testingofmanagementassumptions through reviewofthecontractualarrangements, We testedthevaluationofrevenuerecognised operating effectivelythroughouttheperiod. addition wetestedwhetherthesecontrolswere to assistwithtestingofautomatedcontrols.In of commissionreceivable,utilisingITspecialists over therevenuerecognitionprocessinrespect both therelevantmanualandautomatedcontrols We evaluatedthedesignandimplementationof models preparedbymanagement. We auditedthemechanicsofimpairment sensitivities appliedbymanagement. We alsoconsideredtheappropriatenessof the yearend. business andcomparisonagainstmarketratesat understanding ofthefutureprospects rates usedagainsthistoricalperformance,our valuation specialists) discount rates(utilisingtheassistanceofour including specificallythecashflowprojections, goodwill andacquisitionrelatedintangibleassets, management intheimpairmentmodelsfor We assessedtheassumptionsusedby monitored. generating unitsatwhichthelevelofgoodwillis assessed theidentificationofgroup’scash models preparedbymanagement.Wealso controls aroundthepreparationofimpairment We evaluatedthedesignandimplementationof How thescopeofourauditrespondedtorisk movement inkeyassumptions. to theprioryearandreviewedon assessed anychangesinestimatecomparison measure ofexpectedfuturebehaviours.Wealso appropriateness ofthehistoricaldataasa subsequent cashreceivedtoconsiderthe ‌‌ , andlongtermgrowth these sensitivities. following theapplicationof that headroomremains management andconcur sensitivities appliedby We aresatisfiedwiththe within anacceptablerange. the impairmentmodelare that theassumptionsin intangibles andaresatisfied and otheracquisition to theimpairmentofgoodwill treatment adoptedinrelation We concurwiththe Key observations management. of theestimatestakenby appropriate understanding £21 million, providean made duringtheyearof the changeinestimate including disclosureof to networkcommissions, that thedisclosuresrelating measurable. Wealsoagree requirement ofbeingreliably meets theIAS 18Revenue that therevenuerecognised and, asaresult,weconsider of expectedfuturetrends the directors’bestestimate that historicaldatareflects assessment andourtesting, based onmanagement’s particular wearesatisfied, to beappropriate.In management areconsidered the assumptionsappliedby network commissionsand to revenuerecognitionofUK treatment adoptedinrelation We concurwiththe financial statements. discussed innote 1p)totheGroup information inrelationtothisareais within eachpartoftheGroup.Further significance oftheinventorybalances only, giventhenatureandrelative electronics sideofthebusiness the engagementteaminconsumer the auditanddirectingeffortsof strategy, theallocationofresourcesin has asignificanteffectonouraudit and shrinkageprovisioning.Thisrisk estimates includingobsolescence areas aroundvaluationbasedon and thereareanumberofjudgemental Group (£1,101millionat29April2017) Inventory isasignificantbalanceforthe Inventory provisioning report. more detailintheAuditCommittee estimates involvedaredescribedin recognition. Thekeyjudgementsand there issufficientevidencejustifying end anditisnecessarytoensure target achievementsspanstheyear where thetargetperiodformeasuring sometimes judgemental,inparticular timing ofrecognitionthisincomeis mix ofquarterlyandannualtargets.The up front.Thesetargetsaregenerallya fixed percentageoftargetpurchases and aremostcommonlyagreedasa targets, forbothpurchasesandsales, predominantly onvolumerelated relation tosupplierfundingarebased UK retailoperations.Agreementsin suppliers, primarilyrelatingtothe significant fundingarrangementswith The Groupholdsanumberof UK supplierfunding Risk ‌‌

We updatedourunderstandingoftheGroup’s How thescopeofourauditrespondedtorisk required provisioncalculation. other specificknownareasofoverstockonthe also consideredtheimpactofrangechangesand as apercentageofgrossstockyear-on-year.We end performanceandareviewoftheprovision to inventoryageing,bothhistoricalandpostyear appropriateness ofprovisioningwithreference reasonableness, includingchallengingthe and assessedtheinventoryprovisioningfor net realisablevalue.Wereviewed,recalculated whether itisvaluedatthelowerofcostand We verifiedasampleofinventorytoassess for monitoringinventory. enables ustoassessmanagement’sprocesses centre inNewarkon5 separateoccasions,which including visitingtheGroup’smaindistribution UK andNordicsconsumerelectricalsbusinesses, 35 stores andthedistributioncentresacross and attendedasampleofinventorycountsat of controlsaroundtheinventorybusinesscycle performed testingoftheoperatingeffectiveness, We evaluatedthedesignandimplementation, financial statements. funding relateddisclosurewithintheGroup’s We alsoconsideredtheadequacyofsupplier signed suppliercontracts. and recalculatingamountswithreferenceto obtaining confirmationsdirectlyfromsuppliers procedures havecomprisedamixtureof the recognitionofsupplierfunding,oursample To ensurethereissufficientevidencetosupport current yeartohistoricaltrends. of movementsinsupplierfundingthroughoutthe addition, weperformedananalyticalassessment effectiveness ofthesethroughouttheyear.In for certainkeycontrols,testedtheoperating recognition forsupplierfundingbalances,and, those thatdeterminetheappropriatetimingof key controlsinoperation,principallyfocusedon evaluated thedesignandimplementationof for thesupplierfundingaccountingprocess,we this, wemetwiththekeyindividualsresponsible key supplierfundingarrangements.Aspartof Dixons Carphone plc AnnualReport andAccounts 2016/17 2017. balance sheetasat29April the impactonGroup’s of incomereceivedand understanding ofthetypes provides anappropriate respect tosupplierfunding the disclosureprovidedwith funding. Weconsiderthat relation toUKsupplier amounts recognisedin treatment adoptedand We concurwiththe Key observations inventory value. recoverable amountofthe of inventoryandthe consideration oftheageing includes areasonable provision methodology that management’sinventory provisioning, andbelieve relation toinventory treatment adoptedin We concurwiththe 91

Financial Statements Financial Statements 92 which werelower thangroupmaterialityandranged from£11.8 millionto£12.9 million (2015/16:to£10 £3 million) identified above.Ourauditwork attheselocationswasexecutedlevelsofmaterialityapplicable toeachindividualentity was selectedtoprovideanappropriate basisforundertakingauditworktoaddresstherisks ofmaterialmisstatement continuing operations(2015/16: 94%) These locationsrepresenttheprincipal businessunitsandaccountforapproximately90%of theGroup’srevenuefrom the previousyear.Eachofthese componentsrequiresalocalstatutoryaudit. Group auditscopeprimarilyontheworkofretailoperations intheUKandNordics,whichisconsistentwith controls, andassessingtherisksofmaterialmisstatementat Grouplevel.Basedonthatassessment,wefocusedour Our Groupauditwasscopedbyobtaininganunderstandingof theGroupanditsenvironment,includingGroup-wide An overviewofthescopeouraudit presentation ofthefinancialstatements. grounds. WealsoreporttotheAuditCommitteeondisclosure mattersthatweidentifiedwhenassessingtheoverall (2015/16: £0.6million) We agreedwiththeAuditCommitteethatwewouldreportto the Committeeallauditdifferencesinexcessof£1.0million our auditapproach Significant changein benchmark applied Rationale forthe materiality Basis fordetermining Group materiality determined materialityforthefinancialstatementsasawholefollows: planning thescopeofourauditworkandinevaluatingresultswork.Basedonprofessionaljudgement,we economic decisionsofareasonablyknowledgeablepersonwouldbechangedorinfluenced.Weusematerialitybothin We definematerialityasthemagnitudeofmisstatementinfinancialstatementsthatmakesitprobable Our applicationofmateriality thereon, andwedonotprovideaseparateopiniononthesematters. These matterswereaddressedinthecontextofourauditfinancialstatementsasawhole,andformingopinion statements. report andinnote 1t)tothefinancial discussed intheAuditCommittee Further informationinthisareais £66 million at29April2017. relation touncertaintaxpositionsof Group hasrecognisedprovisionsin by therelevanttaxauthorities.The which maybesubsequentlychallenged the useofestimatesandassumptions to transferpricing,therebyrequiring tax treatments,includingwithrespect transactions cangiverisetouncertain of theGroup’soperationsandrelated different taxjurisdictions.Thenature The Groupoperatesinanumberof Tax provisioning Risk Independent Auditor’s report Dixons Carphone plc ‌‌ , aswelldifferencesbelowthatthresholdthat,inourview, warranted reportingonqualitative AnnualReport andAccounts 2016/17 above. the removalofpropertyrationalisationprovisioningriskasmentioned inthekeyriskssection There havebeennosignificantchangesinourauditapproachthecurrentyearotherthan communicate thistoshareholders. main measurewhichmanagementusestomonitortheperformanceofbusinessand a keydriverofbusinessvalue,iscriticalcomponentthefinancialstatements,and We haveassessedtheuseofaheadlinemeasuretobeappropriateasthiscontinues due totheincreaseinGroup’sheadlineprofitbeforetax. consistent basiswiththepreviousyearandincreaseinmaterialitycurrentis and pensionfinancecostsduetotheirrecurringnature.Wehavecalculatedmaterialityona results innote1a)andadjustedthistoaddbacktheamortisationofacquisitionintangibles using adjustedheadlineprofitbeforetaxwehavefollowedtheGroup’sdefinitionof We havedeterminedmaterialityonthebasisof5%adjustedheadlineprofitbeforetax.In £21.5 million(2015/16:£17.5million) ‌‌ and87%oftheGroup’sheadline profitbeforetax(2015/16:84%) We usedourinternaltaxspecialiststoevaluate How thescopeofourauditrespondedtorisk provisions. which managementhasutilisedincalculatingthe or othersupportreceivedfromexternaladvisors tax authoritiesaswellreviewingtheopinions Our taxspecialistsreviewedcorrespondencewith of mattersbeingdiscussedwithtaxauthorities. the outcomeofpastsettlementsandstatus the taxenvironmentinwhichGroupoperates, In assessingtheprovisionswehaveconsidered supporting documentation. against localtaxlegislationandreviewof of taxrelatedprovisions,includingassessment and testmanagement’sassumptionsinrespect ‌‌ positions. consideration ofalluncertain includes areasonable provisioning methodology that management’s provisioning, andbelieve in relationtotaxation amounts recognised treatment adoptedand We concurwiththe Key observations ‌‌ . Eachlocation ‌‌ . which weconsidershouldhave beendisclosed. report appropriatelydisclosesthose mattersthatwecommunicatedtotheauditcommittee consider theannualreportisfair, balancedandunderstandablewhethertheannual between ourknowledgeacquiredduringtheauditanddirectors’ statementthatthey In particular,wearerequiredtoconsiderwhetherhaveidentified anyinconsistencies • • • if, inouropinion,informationtheannualreportis: Under InternationalStandardsonAuditing(UKandIreland) intheAnnualReport otherinformation Our dutytoread Governance Code. Statement relatingtotheCompany’scompliancewithcertainprovisionsofUKCorporate Under theListingRuleswearealsorequiredtoreviewpartofCorporateGovernance Statement Corporate Governance returns. Remuneration Reporttobeauditedisnotinagreementwiththeaccountingrecordsand disclosures ofdirectors’remunerationhavenotbeenmadeorthepartDirectors’ Under theCompaniesAct2006wearealsorequiredtoreportifinouropinioncertain remuneration Directors’ • • • Under theCompaniesAct2006wearerequiredtoreportyouif,inouropinion: andaccounting records Adequacy ofexplanationsreceived Matters onwhichweare required toreport byexception we havenotidentifiedanymaterialmisstatementsintheStrategicReportandDirectors’Report. In thelightofknowledgeandunderstandingCompanyitsenvironmentobtainedincourseaudit, • • • In ouropinion: Opinion onothermattersprescribed bytheCompaniesAct2006 auditor, visitedNorway,wheretheNordicsheadofficeislocatedandasubconsolidationperformed,ontwooccasions. once eachyear.Fortheyearended29April2017,seniormembersofGroupauditteam,includingstatutory member ofthegroupauditteamvisitsmostsignificantlocationswhereGroupscopewasfocusedatleast continued tofollowaprogrammeofplannedvisitsoverseascomponentsthathasbeendesignedsosenior throughout theyearincludingattendanceatkeyauditplanningandclosingmeetings.Inaddition,Groupteam The GroupauditteamiscloselyinvolvedintheofUKcomponents,beinglargestpartGroup, financial informationoftheremainingcomponentsnotsubjecttoauditorspecifiedaccountbalances. procedures toconfirmourconclusionthattherewerenosignificantrisksofmaterialmisstatementtheaggregated At theDixonsCarphoneplcparententitylevelwealsotestedconsolidationprocessandcarriedoutanalytical otherwise misleading. the Groupacquiredincourseofperformingouraudit;or apparently materiallyincorrectbasedon,orinconsistent with,ourknowledgeof materially inconsistentwiththeinformationinauditedfinancial statements;or and returns. the parentcompanyfinancialstatementsarenotinagreementwithaccountingrecords adequate forouraudithavenotbeenreceivedfrombranchesvisitedbyus;or adequate accountingrecordshavenotbeenkeptbytheparentcompany,orreturns we havenotreceivedalltheinformationandexplanationsrequireforouraudit;or the StrategicReportandDirectors’havebeenpreparedinaccordancewithapplicablelegalrequirements. statements arepreparedisconsistentwiththefinancialstatements;and the informationgiveninStrategicReportandDirectors’forfinancialyearwhich Companies Act2006; the partofDirectors’RemunerationReporttobeauditedhasbeenproperlypreparedinaccordancewith ‌‌ , wearerequiredtoreportyou Dixons Carphone plc AnnualReport andAccounts 2016/17 misleading information. such inconsistenciesor have notidentifiedany We confirmthatwe review. report arisingfromour We havenothingto these matters. report arisingfrom We havenothingto these matters. report inrespectof We havenothingto 93

Financial Statements Financial Statements 94 27 June2017 London, UnitedKingdom Statutory Auditors for andonbehalfofDeloitteLLP Stephen Griggs(SeniorStatutoryAuditor) misstatements orinconsistenciesweconsidertheimplicationsforourreport. with, theknowledgeacquiredbyusincourseofperformingaudit.Ifwebecomeawareanyapparentmaterial statements andtoidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,orinconsistent financial andnon-financialinformationintheannualreporttoidentifymaterialinconsistencieswithaudited estimates madebythedirectors;andoverallpresentationoffinancialstatements.Inaddition,wereadall circumstances andhavebeenconsistentlyappliedadequatelydisclosed;thereasonablenessofsignificantaccounting This includesanassessmentof:whethertheaccountingpoliciesareappropriatetoGroup’sandparentcompany’s reasonable assurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror. An auditinvolvesobtainingevidenceabouttheamountsanddisclosuresinfinancialstatementssufficienttogive Scope oftheauditfinancialstatements body, forourauditwork,thisreport,ortheopinionswehaveformed. by law,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandCompany’smembersasa matters wearerequiredtostatetheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermitted Companies Act2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthose This reportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter 3ofPart16 systems includeourdedicatedprofessionalstandardsreviewteamandindependentpartnerreviews. tools aimtoensurethatourqualitycontrolproceduresareeffective,understoodandapplied.Ourcontrols Ireland) an opiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsAuditing(UK financial statementsandforbeingsatisfiedthattheygiveatruefairview.Ourresponsibilityistoauditexpress As explainedmorefullyintheDirectors’ResponsibilitiesStatement,directorsareresponsibleforpreparationof andauditor ofdirectors Respective responsibilities Independent Auditor’s report ‌‌ . WealsocomplywithInternationalStandardonQualityControl 1(UKandIreland) Dixons Carphone plc

AnnualReport andAccounts 2016/17 ‌‌

‌‌ . Ourauditmethodologyand Finance income Consolidated incomestatement * Diluted –total Basic –total Diluted –continuingoperations Basic –continuingoperations pershareEarnings (pence) Profit /(loss) Profit /(loss)aftertax–discontinuedoperations Profit /(loss) Income tax(expense) Profit /(loss) Net financecosts Finance costs Profit /(loss) Share ofresults ofjointventures Profit /(loss) Revenue Continuing operations results ofjointventures be exitedasdiscussedinnote4and32. to reflectthecurrentyearclassificationofiDmobileoperationsinRepublicIrelandandSprintJVasbusinesses excluded itemsaredescribedas‘non-headline’.Theheadlineandnon-headlineresultshavebeenrestatedfortheyearended30 April2016 acquisition relatedcosts,netinterestondefinedbenefitpensionschemes,businessestobeexitedanddiscontinuedoperations.Such lisation costs, Headline resultsexcludeamortisationofacquisitionintangibles,Mergerintegrationandtransformationcosts,propertyrationalisation ‌‌ aftertax–continuingoperations ‌‌ ‌‌ ‌‌ ‌‌ before tax from operationsbefore share of aftertaxfortheperiod before interest andtax ‌‌ /credit ‌‌

Note 2,3 25 12

7 6 2 2 8

Headline* Dixons Carphone plc 10,580 £million 33.7p 33.8p (112) 517 389 501 517 389 (16) (33) 17 — —

‌‌ ‌‌ ‌‌ Year ended29April2017 headline* £million (115) Non- (16) (16) (99) (98) (17) (82) (94) 17 — 4 5

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ AnnualReport andAccounts 2016/17 10,585 £million 25.5p 25.6p 25.2p 25.3p 418 291 386 435 295 Total (95) (32) (49) (17) 17 4

‌‌ ‌‌ ‌‌ ‌‌ (restated) Headline 29.2p 30.2p 9,736 £million (110) 347 457 478 478 347 (21) (38) 17 — —

‌‌* ‌‌ ‌‌ ‌‌

Year ended30April2016 (restated) headline £million (174) (168) (194) (186) (170) Non- (18) (20) (20) 26 — (4) 2

‌‌* ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌‌‌ 13.6p 14.0p 15.1p 15.6p 9,738 £million 304 161 179 263 308 Total (18) (84) (41) (58) 17 (4)

95 ‌‌

‌‌‌‌ ‌‌‌‌ ‌‌‌‌ ‌‌‌‌

Financial statements Financial statements Total comprehensive incomefortheperiod Other comprehensive (expense) 96 Tax onactuarialgains/(losses) Actuarial (losses) totheincomestatementinsubsequentyears: Items thatwillnotbereclassified Tax onitemsthatmaybesubsequentlyreclassified toprofit orloss Other foreign exchangedifferences Exchange gainarisingontranslationofforeign operations Available-for-sale financialassets Cash flowhedges totheincomestatementinsubsequentyears: Items thatmaybereclassified Profit aftertaxfortheperiod Consolidated statementofcomprehensive income Gains arisingduringtheperiod Amount recognised ininventories Reclassified andreported inincomestatement‌ Fair valuemovementsrecognised inothercomprehensive income Dixons Carphone plc

‌‌ ondefinedbenefitpensionschemes–UK AnnualReport andAccounts 2016/17 ‌‌ ondefinedbenefitpensionschemes ‌‌ /income ‌‌ fortheperiod(takentoequity) – Overseas ‌‌ ‌‌ Notes 21 21 12 26 7

Year ended 29April £million (123) (144) 2017 (18) 116 295 288 21 76 19 22 20 — — (7) (3)

‌‌ ‌‌ ‌‌ ‌‌ Year ended £million 30 April 2016 205 161 (12) (35) (23) 56 66 46‌ 44 — — (9) (5) 2 2 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Group ChiefExecutive Sebastian James, The financialstatementswereapprovedbythedirectorson27 June2017andsignedontheirbehalfby: Equity attributabletoequityholdersoftheparent company Demerger reserve Translation reserve Accumulated profits Share premium reserve Share capital Capital andreserves Net assets Total liabilities Provisions Deferred taxliabilities Retirement benefitobligations Finance leaseobligations Loans andotherborrowings Deferred andcontingentconsideration Trade andotherpayables Non-current liabilities Provisions Finance leaseobligations Loans andotherborrowings Income taxpayable Deferred andcontingentconsideration Derivative liabilities Trade andotherpayables Inventory Trade andotherreceivables Interests injointventures andassociates Intangible assets Goodwill Current liabilities Total assets Cash andcashequivalents Derivative assets Trade andotherreceivables Current assets Deferred taxassets Investments Property, plant&equipment Non-current assets Consolidated balancesheet

Group FinanceDirector Humphrey Singer, Dixons Carphone plc AnnualReport andAccounts 2016/17 Note 22 20 21 19 18 17 16 20 19 26 16 15 26 14 13 14 12 12 11 10 18 17 7 7 9 (4,313) (1,599) (2,714) (2,502) £million 29 April 3,055 1,513 2,260 3,055 7,368 2,463 1,136 1,101 4,905 3,111 (750) (138) (591) (381) (368) 2017 209 253 531 420 553 (21) (86) (14) (13) (84) (10) (94) 31 17 18 19 (3) (8) 1

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ (4,069) (1,578) (2,491) (2,268) 2,860 1,398 2,256 2,860 6,929 2,322 1,113 4,607 3,054 £million 30 April (750) (115) (474) (409) (423) 233 958 234 408 366 540 2016 (45) (47) (89) (21) (78) (89) (12) (42) 18 — — (2) 1 5 97 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements At 29April2017 Equity dividends 98 Tax onitemsrecognised directly inreserves Net movementinrelation toshare schemes Ordinary shares issued Total comprehensive incomeandexpense Other comprehensive incomeandexpense Profit fortheperiod At 30April2016 Tax onitemsrecognised directly inreserves Net movementinrelation toshare schemes Equity dividends Net purchase ofownshares Total comprehensive income and expense Other comprehensive incomeandexpense Profit fortheperiod At 2May2015 Consolidated statementofchangesinequity for theperiod recognised directly inequity for theperiod recognised directly inequity Dixons Carphone plc AnnualReport andAccounts 2016/17

Note 23 23

£million capital Share — — — — — — — — — — — — — — 1 1 1

premium £million 2,256 2,256 2,260 reserve Share — — — — — — — — — — — — — 4

Accumulated £million 1,398 1,369 1,513 profits (115) (106) 212 295 137 161 (83) (24) 10 17 — (7) (5) 1 ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ Translation £million reserve (113) (45) 76 76 68 68 31 — — — — — — — — — — ‌‌

‌‌‌‌ Demerger £million reserve (750) (750) (750) — — — — — — — — — — — — — — ‌‌ ‌‌

‌‌ Total equity £million 2,860 2,763 3,055 (115) (106) 288 295 205 161 10 44 17 (7) (7) (5) 1 4 ‌‌ ‌‌ ‌‌ ‌‌‌‌ ‌‌‌‌

Acquisition ofproperty, plant&equipmentandotherintangibles Cash andcashequivalentsatbeginningoftheperiod Equity dividendspaid Issue ofordinary shares Net purchase ofownshares Repayment ofobligationsunderfinanceleases Interest paid Financing activities Net cashflowsfrom investingactivities Investment injointventures Dividends received from available-for-sale investments Proceeds onsaleofbusiness Proceeds from disposalofproperty, plant&equipment Net cashoutflowarisingfrom acquisitions Interest received Investing activities Net cashflowsfrom operatingactivities Income taxpaid Special contributionstodefinedbenefitpensionscheme Cash generatedfrom operations Operating activities Consolidated cashflowstatement Cash andcashequivalentsatendoftheperiod Currency translationdifferences (Decrease) Net cashflowsfrom financingactivities Facility arrangementfeespaid (Decrease) ‌‌ /increase inborrowings ‌‌ /increase incashandequivalents Dixons Carphone plc AnnualReport andAccounts 2016/17 Note 27 27

Year ended 29April £million (242) (247) (115) (156) 2017 479 364 209 233 (17) (29) (17) (72) (43) (39) (18) 22 15 — (8) (2) 8 9 2 4

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ £million 30 April (221) (106) (226) (117) ended 2016 233 163 396 487 (20) (50) (56) (35) Year 30 24 17 53 25 — — — (9) (5) (6) (5)

99 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌‌‌ ‌‌‌‌ ‌‌‌‌

Financial statements Financial statements 100 of theGlossary. outlined inthe‘AlternativePerformance Measures’section The accountingpolicyfortheuse ofthesemeasuresis measures usedbyothercompanies. similarly titledmeasuresor‘adjusted’ revenueorprofit measures maynotbedirectlycomparablewithother performance measuresandnon-headline or one-offtypeactivitiesdescribedabove.Headline to thenextdependingonnatureofexceptionalitems from headlineresultscanevolveonefinancialyear total profitsandlossesisshowninnote2.Itemsexcluded operations. Areconciliationofheadlineprofitandlossesto pension schemes,shareplantaxclaimsanddiscontinued acquisition relatedcosts,netinterestondefinedbenefit transformation costs,propertyrationalisation of acquisitionintangibles,Mergerintegrationand comprise businessestobeexited,amortisation Non-headline itemsinthecurrentandpriorperiods Group. by IFRSandarematerialtotheresultsoperationsof meet thedefinitionofdiscontinuedoperationsasstipulated commenced toexitthroughdisposalorclosurebutdonot are thosewhichtheGrouphasexitedorcommittedto pension interestcosts.Businessesexitedortobe income frompreviouslydisposedoperationsandnet rationalisation costsandothernon-recurringcharges) as reorganisationcosts,impairmentcharges,property material thattheydistortunderlyingperformance(such costs, anyexceptionalitemsconsideredsoone-offand amortisation ofacquisitionintangibles,related discontinued operationsorexited/tobebusinesses, Headline resultsarestatedbeforetheof performance ismeasuredinternally. Group’s performanceandareconsistentwithhowbusiness additional usefulinformationforshareholdersonthe of theGroupandbelievethatthesemeasuresprovide additional measureoftheongoingtradingperformance ‘headline’ performancemeasurestobeaninformative to totalperformancemeasures.Thedirectorsconsider items. Headlineperformancemeasuresreflectadjustments identify separatelyheadlineperformanceandnon-headline The Group’sincomestatementandsegmentalanalysis out below. stated. Theprincipalaccountingpoliciesadoptedareset been roundedtothenearest£1million,unlessotherwise financial instruments,asexplainedbelow.Allamountshave the historicalcostbasisexceptforrevaluationofcertain Sterling, thefunctionalcurrencyofCompany,andon The financialstatementshavebeenpresentedinUK IFRS andArticle4oftheIASRegulation. Act 2006applicabletothosecompaniesreportingunder Accounting StandardsBoard,thosepartsoftheCompanies adopted bytheEU,IFRSissuedInternational on agoingconcernbasisinaccordancewithIFRSas The consolidatedfinancialstatementshavebeenprepared a) 1 Accountingpolicies Notes totheGroup financialstatements ‌‌ Basisofpreparation Dixons Carphone plc AnnualReport andAccounts 2016/17 ‌‌ , The principalaccountingpoliciesaresetoutbelow. concern basisinthepreparationoffinancialstatements. consequently thedirectorscontinuetoapplygoing to continueinoperationfortheforeseeablefutureand that theCompanyandGrouphaveadequateresources Accordingly thedirectorshaveareasonableexpectation robust policytowardsliquidityandcashflowmanagement. to theGroupfinancialstatementsandthathasa the levelofborrowingsandfacilitiesassetoutinnote18 adequate financialresources,thedirectorsweremindfulof future. InarrivingattheirconclusionthattheGrouphas and complywithitsbankingcovenantsfortheforeseeable that theGroupisabletooperatewithinitscurrentfacilities reasonably possiblechangesintradingperformance,show Group’s forecastsandprojections,whichtakeintoaccount past experience.Thedirectorsareoftheopinionthat profit projections,whicharebasedonmarketdataand have reviewedtheGroup’sfuturecashforecastsand In theirconsiderationofgoingconcern,thedirectors 18 and26. managing itsexposuretoliquidityriskaresetoutinnotes The Group’sfundingarrangementsandprocessesfor Going concern or lossinrespectoffairvaluehedges. reserves inrespectofcashflow hedges,andthroughprofit the balancesheetdateandrecognising thegainorlossin marking tomarkettherelevant financial instrumentsat Recognition andMeasurement’ hasbeenappliedby accounting asdefinedbyIAS39 ‘FinancialInstruments: and areretranslatedateachbalancesheetdate.Hedge exchange contractstocreatematchingliabilitiesandassets, foreign currenciesarehedged,mainlyusingforward Material monetaryassetsandliabilitiesdenominatedin at theexchangerateondateoftransaction. rates thusobtained.Unhedgedtransactionsarerecorded are recognisedinthefinancialstatementsatexchange forward purchasesorsalesoftherelevantcurrenciesand Material transactionsinforeigncurrenciesarehedgedusing c) and balancesareeliminatedonconsolidation. with thoseusedbytheGroup.All intercompany transactions subsidiaries tobringtheaccountingpoliciesusedintoline adjustments aremadetothefinancialstatementsof from whichthepowertocontrolpasses.Wherenecessary, effective dateofdisposalasappropriate,whichisthe statement fromtheeffectivedateofacquisitionorupto sold duringtheyearareincludedinconsolidatedincome The resultsofsubsidiariesandjointventuresacquiredor returns. the investee;andhasabilitytouseitspoweraffect or hasrights,tovariablereturnfromitsinvolvementwith the Companyhaspoweroverinvestee;isexposed, by theCompany(itssubsidiaries) financial statementsoftheCompanyandentitiescontrolled The consolidatedfinancialstatementsincorporatethe b) ‌‌ ‌‌ Foreign currency translationandtransactions Accountingconventionandbasisofconsolidation ‌‌ . Controlisachievedwhere • • • Group isengaged: to theprincipalrevenuegeneratingactivitiesinwhich sales taxes.Thefollowingaccountingpoliciesareapplied Revenue comprisessalesofgoodsandservicesexcluding Revenue d) US Dollar Swedish Krona Norwegian Krone Euro financial statementsareasfollows: principal exchangeratesagainstUKSterlingusedinthese differences thatareattributabletotheoperation.The taking intoaccountthecumulativecurrencytranslation on disposalrecognisedinprofitorlossisdeterminedafter Where aforeignoperationisdisposedof,thegainorloss recognised inprofitorloss. to profitorlossintheperiodswhenhedgeditemis Amounts previouslyrecognisedinequityarereclassified to theineffectiveportionisrecognisedinprofitorloss. in othercomprehensiveincome.Thegainorlossrelating that aredesignatedascashflowhedgesisrecognised portion ofchangesinthefairvaluefinancialinstruments Recognition andMeasurement’isapplied.Theeffective accounting asdefinedbyIAS39‘FinancialInstruments: in foreigncurrenciesascashflowhedges,hedge exposures thatresultfrommaterialtransactionsundertaken held forthepurposeofhedgingforeigncurrency except wheretheGroupdesignatesfinancialinstruments included inprofitorlosstheyearwhichtheyarise translation reserve.Allotherexchangedifferencesare and resultsofoverseasoperationsarerecognisedinthe differences arisingonthetranslationofnetassets,goodwill currency oftheoperationtowhichtheyrelate.Exchange Goodwill andacquisitionintangibleassetsareheldinthe translated attheratesprevailingbalancesheetdate. month atthemonthlyrate,andtheirbalancesheetsare The resultsofoverseasoperationsaretranslatedeach ‌‌ Revenueandsupplierincome historical claims data.Relianceonhistoricaldata assumes agreements, determinedbyreference toextensive of fulfillingtheGroup’stotalobligations underthe with referencetotheproportion oftheexpectedcosts balance sheetdate.Thestage of completionisestimated the stageofcompletion contractual termsatthe Revenue inanyoneyearisrecognised byreferenceto a resultofperformanceitscontractualobligations. when theGroupobtainsrighttoconsiderationas agreements isrecognisedoverthetermofcontracts revenue earnedfromthesaleofcustomersupport is statednetofreturns; of saleor,wherelater,upondeliverytothecustomerand revenue fromthesaleofgoodsisrecognisedatpoint section the individualcontractwithMNO,asoutlinedin reference tothestageofcompletionserviceunder network commissionrevenueisrecognisedwith (e) ‌‌;

11.32 10.86 1.29 1.18 2017

Average 12.65 12.51 1.49 1.36 2016 11.47 11.11 1.29 1.18 2017

11.74 11.77 Closing 1.46 1.28 2016 Dixons Carphone plc • • • only recognisedwhenallperformance obligationswithinthe suppliers. Judgementisrequired toensurethatincomeis to marketingactivitiesthatare performed onbehalfof Marketing income:Thisincome isreceivedinrelation on theagreementtermsandonly oncetheitemissold. are recognisedasareductionto costofgoodssoldbased per unitbasis.Thelevelofestimationisminimalasamounts Discounts: Thisincomeisreceivedfromsuppliersonaprice the receiptofrebateandareliableestimatecanbemade. only recognisedwheretheGrouphasaclearentitlementto the estimationoflevelincomerecognised.Amountsare recognised. Forecastsareusedaswellhistoricaldatain period ends,judgementisrequiredregardingamountstobe of inventoryattheperiodend.Whereanagreementspans relate toinventorynotsoldarerecognisedwithinthevalue of goodssoldasinventoryissold.Unearnedrebatesthat from suppliersandisrecognisedasareductiontocost Volume Rebates:Thisincomeislinkedtopurchasesmade which aresummarisedbelow: units purchasedaswellotherrebatesanddiscounts The Group’sagreementswithsupplierscontainapricefor statements. the recognition ofsupplierfundingintheGroup’s financial in understandingthejudgementsandestimatesmade aimed atassistingtheusersoffinancialstatements Reporting CouncilinDecember2015.Thisdisclosure is funding followingguidanceissuedbytheFinancial The Group hasprovided enhanceddisclosure onsupplier fromsupplierssuchasvolumerebates Income received • • provided; service,suchasairtimeordata,is revenue isrecognisedintheperiodwhich for MVNOoperationswheretheGroupisprincipal, £nil); recognised of£22millioninthecurrentyear(2015/16: insurance contractsresultedinadditionalrevenue Changes incontractualtermsforthesaleofthirdparty services isrecognisedoverthelifeofrelevantpolicies. Revenue fromtheprovisionofinsuranceadministration measured andtherearenoongoingserviceobligations. it relatesaresold,totheextentthatcanbereliably parties isrecognisedwhentheinsurancepoliciestowhich insurance products.Salescommissionreceivedfromthird insurance revenuerelatestothesaleofthird-party recognised whentherelevantservicesareprovided; installation, productrepairsandsupport) revenue arisingonservices(includingdeliveryand expected futuretrends; to ensurethiscontinuesreflectthebestestimateof The directorsmakeanannualassessmentofthisdata that currentandfutureexperiencewillfollowpasttrends. lives oftherelevantcustomers. network servicesisrecognisedasitearnedoverthe revenue generatedfromtheprovisionoffixedandmobile the customerusesairtimeorcreditexpires;and revenue fromthesaleofprepaidcreditsisdeferreduntil AnnualReport andAccounts 2016/17 ‌‌ , is 101

Financial statements Financial statements 102 expected levels ofconsumerspend,and to levelsofconsumerdefaultwithin thecontractperiod, Assumptions arethereforerequired, particularlyinrelation consumer behaviourrecognised intheincomestatement. amortised costwithremeasurements duetochangesin The associatedreceivablesare subsequentlymeasuredat trends. continues toreflectthebestestimateofexpectedfuture a twice-yearlyassessmentofthisdatatoensure trends. Managementmakeaquarterly,andthedirectors assumes thatcurrentandfutureexperiencewillfollowpast obtained fromthenetworks.Relianceonhistoricaldata Estimates arebasedonextensivehistoricalevidence can bereliablymeasuredforeachcohortofconsumers. Commission revenueisonlyrecognisedtotheextentit relating totheconsumerconnection. the pointatwhichwehavecompletedserviceobligation month ofconnectiontheconsumertoMNOasthisis The determinedcommissionisrecognisedinfullthe network anddiscountthesebasedontheirtimingofreceipt. estimate allfuturecashflowsthatwillbereceivedfromthe associated receivablesinthemonthofconnectionisto The methodofmeasuringthefairvaluerevenueand note 26forfurtherinformationaroundthisjudgement. on consumerbehaviourafterthepointofrecognition.See therefore subjecttosignificantjudgementandisdependent both fixed(monthlylinerental) MNO. Thetotalconsiderationreceivableisdeterminedby of themonthlypaymentsmadebyconsumerto The levelofnetworkcommissionearnedisbasedonashare services. IAS 39tothefinancialassetsarisingfromprovisionof appropriate unitofaccountforthepurposesapplying basis, themonthlybillingcyclehasbeendeemedtobe contract. AsinvoicestoMNOsareraisedonamonthly the bestoutputmeasureofstagecompletioneach each MNOinanygivenmonth(a that thenumberandvalueofconsumersprovidedto account usedinrecognition.The judgement associatedwiththisrecognitionistheunitof under theindividualcontractwitheachMNO.Akey with referencetothestageofcompletionservice each MNO( The Groupearnsacommissionfortheserviceprovidedto contract period. MNO forthetosupplyongoingairtimeoverthat The individualconsumerentersintoacontractwiththe is theprocurementofconnectionstoMNOs’networks. contracts theserviceprovidedbyGrouptoeachMNO Mobile NetworkOperators( The Groupoperatesundercontractswithanumberof e) balance sheet. not invoicedareshownwithinaccruedincomeonthe Supplier fundingamountsthathavebeenrecognisedand be collected. contract havebeenfulfilledandtheincomeisexpectedto Notes totheGroup financialstatements ewr commissions Network ‌‌ Dixons Carphone plc ‘ network commission AnnualReport andAccounts 2016/17 ‘ MNOs ‌‌ andvariableelementsis ’ ‘ G ) cohort ‌‌ . Revenueisrecognised ’ roup hasdetermined ) ‌‌ . Overthelifeofthese ’ ) represents ‌‌ either throughitsactivityorgeographicalareaofoperation, which representsasignificantseparatelineofbusiness, A discontinuedoperationisacomponentoftheGroup f) probable. which arerecognisedwhentheincomebecomeshighly marketing supportandvolumeincentivesfromtheMNO, In additiontotheabove,Groupmayalsoreceive changes recognisedinthecurrentperiod. income statement.Seenote26forfurtherdetailofthese commission. Anysuchchangesarerecognisedinthe enabling therecognitionofpreviouslyunrecognised for example,morerecentinformationbecomesavailable behaviour, changestorevenuemayalsobemade,where In additiontoremeasurementduechangesinconsumer value canbefoundinnote26. changes inestimatesandsensitivityanalysisofthecarrying sheet date,effectsonthecurrentyearincomestatementof subsequently valuecommissionreceivableatthebalance of estimatesusedtoinitiallyvaluerevenuerecognisedand behaviour beyondtheinitialcontractperiod.Furtherdetails with acorrespondingentryinreserves. balance sheetdateisrecognised intheincomestatement, The movementincumulativeexpense sincetheprevious expected performanceagainst external performancecriteria. of performanceagainsttarget.Noadjustmentismadefor expected tovestisalsoadjustedbasedonexpectations with internalperformancecriteria,thenumberofoptions expectations ofleaverspriortovesting.Forschemes is recalculatedateachbalancesheetdate,basedon For allschemes,thenumberofoptionsexpectedtovest targets) payments haveexternalperformancecriteria(suchasTSR model oraBlackScholesmodel.Whereshare-based targets) conditions orinternalperformancecriteria(suchasEPS Where share-basedpaymentsaresubjectonlytoservice number ofsharesthatwilleventuallyvest. basis overthevestingperiod,basedonanestimateof value atthedateofgrant,andexpensedonastraight Equity settledshare-basedpaymentsaremeasuredatfair g) amortised ordepreciated. assets andproperty,plant&equipmentarenolonger less coststosell.Onceclassifiedasheldforsale,intangible are measuredatthelowerofcarryingamountandfairvalue the dateofclassification.Assetsandliabilitiesheldforsale expectation thatthesalewillcompletewithinoneyearfrom classified asheldforsale.Suchclassificationassumesthe is availableforimmediatesaleinitspresentcondition,it highly probableatthebalancesheetdate Where thesaleofacomponentGroupisconsidered which hasbeensold,isheldforsaleorclosed. ‌‌  hr-ae payments Share-based ‌‌ held forsale Discontinued operationsandassetsliabilities ‌‌ ‌‌ aMonteCarlomodelisusedtomeasurefairvalue. , fairvalueismeasuredusingeitheraBinomial and thebusiness - line income statement onastraight-linebasisover theperiodof Rental paymentsunderoperating leasesarechargedtothe Operating leases of theleaseinproportionto capitalelementoutstanding. charges arechargedtotheincome statementovertheterm charges andreductionoftheleaseobligation.Finance liability. Leasepaymentsareapportionedbetweenfinance obligation tothelessorisincludedinbalancesheetasa useful livesortheleasetermifshorter.Thecorresponding inception oftheleaseanddepreciatedovertheirestimated of theminimumleasepayments,eachdeterminedat fair valueonacquisitionor,iflower,atthepresent Assets heldunderfinanceleasesarecapitalisedattheir Finance leases The Groupasalessee the leaseterm. leased assetandrecognisedonastraight-linebasisover operating leaseareaddedtothecarryingamountof Initial directcostsincurredinnegotiatingandarrangingan a straight-linebasisoverthetermofrelevantlease. Rental incomefromoperatingleasesisrecognisedon The Groupasalessor leases. not classifiedasfinanceleasesareoperating to thelandandbuildingselementsseparately.Allleases the classificationofpropertyleasesismadebyreference rewards ofownershiptothelessee.Thedetermination terms oftheleasetransfersubstantiallyallrisksand Leases areclassifiedasfinanceleaseswheneverthe i) of contributionorbenefitpayments. the netdefinedbenefitobligationduringyearasaresult benefit liabilityorassettakingintoaccountanychangesin is calculatedbyapplyingthediscountratetonetdefined interest beingrecognisedwithinfinancecosts.Net comprise mainlynetinterestexpenseorincomewithsuch Defined benefitcostsrecognisedintheincomestatement statement insubsequentyears. arise. Suchamountsarenotreclassifiedtotheincome statement ofcomprehensiveincomeandexpenseasthey actual returnonassetsarerecognisedintheconsolidated assumptions togetherwithexperienceadjustmentsand Actuarial gainsandlossesarisingfromchangesinactuarial credit method. of thepresentvalueisdeterminedusingprojectedunit or liabilityintheconsolidatedbalancesheet.Thecalculation value oftheaccruedpensionliabilitiesisshownasanasset between themarketvalueofassetsandpresent For definedbenefitpensionschemes,thedifference rendered serviceentitlingthemtothecontributions. statement onanaccrualsbasiswhenemployeeshave for certainoverseasemployeesarechargedtotheincome schemes andcontributionsmadetostatepension Company contributionstodefinedcontributionpension h) Leases ‌‌ ‌‌ Retirement benefitobligations Dixons Carphone plc Deferred taxliabilitiesarerecognisedfortaxabletemporary differences canbeutilised. profits willbeavailableagainstwhichdeductibletemporary are recognisedtotheextentthatitisprobabletaxable represent taxpayableinfutureperiods.Deferredassets liability inthebalancesheetandtaxbasevalue differences betweenthecarryingamountofanassetor Deferred taxliabilitiesarerecognisedforalltemporary tax Deferred years. date andadjustedforanytaxpayableinrespectofprevious been enactedorsubstantiallybythebalancesheet recovered usingtheprevailingtaxratesandlawsthathave Current tax,isprovidedatamountsexpectedtobepaidor tax Current j) statement overtheperiodoflease. into operatingleasesareamortisedthroughtheincome Benefits receivedandreceivableasanincentivetoenter are incurred. are recognisedasanexpenseintheperiodwhichthey the lease.Contingentrentalsarisingunderoperatingleases of CashGenerating Units( At theacquisitiondate,goodwill isallocatedtoeachgroup basis, withanyexcessconsideration representinggoodwill. tangible andintangibleassets liabilitiesonafairvalue the considerationisallocatedbetween theidentifiablenet On acquisitionofasubsidiaryor associate,thefairvalueof k) balances arenotdiscounted. current taxassetsandliabilitiesonanetbasis.Deferred tax jurisdictionandwhentheGroupintendstosettleits other whentheyrelatetoincometaxesleviedbythesame Deferred taxassetsandliabilitiesareoffsetagainsteach the balancesheetdate. laws thathavebeenenacted,orsubstantiallyenactedby differences areexpectedtoreverse,basedontaxratesand are expectedtoapplyintheyearswhichtiming Deferred taxismeasuredattheaverageratesthat reserves asappropriate. recognised directlyinothercomprehensiveincomeor comprehensive incomeorreserves,inwhichcaseitis where itrelatestoanitemrecogniseddirectlyinother deferred taxisrecognisedintheincomestatementexcept against whichtheassetcanbeutilised.Currentand it isprobablethatfuturetaxableprofitswillbeavailable A deferredtaxassetisrecognisedonlytotheextentthat future. that theseprofitswillnotbedistributedintheforeseeable or associatedundertakingswhereithasbeendetermined the distributionofretainedprofitsoverseassubsidiaries provision ismadefortaxwhichwouldhavebeenpayableon difference willnotreverseintheforeseeablefuture.No temporary differenceanditisprobablethatthe where theGroupisabletocontrolreversalof differences arisingoninvestmentsinsubsidiaries,except Taxation ‌‌ Goodwill ‌‌ AnnualReport andAccounts 2016/17 ‘ CGUs ’ ) ‌‌ expectedtobenefit from 103

Financial statements Financial statements 104 and eightyears,isrecorded inadministrativeexpenses. off thecostofassetsonastraight estimated lossondisposal.Amortisation isprovidedtowrite and, whereappropriate,provision forimpairmentinvalueor Software isstatedatcostless accumulated amortisation specific assettowhichitrelates. increases thefutureeconomicbenefitsembodiedin Subsequent expenditureiscapitalisedonlywhenit direct labourandanappropriateproportionofoverheads. The expenditurecapitalisedincludesthecostofmaterials, they arecapitalised. the futureeconomicbenefitsofasset,inwhichcase recognised asanexpenseincurredunlesstheyincrease with developingormaintainingcomputersoftwareare in theyearwhichitisincurred.Costsassociated development expenditureisrecognisedasanexpense measured reliably.Wheretheseconditionsarenotmet, which exceedoneyear,andthedevelopmentcostcanbe that theassetwillgeneratefutureeconomicbenefits asset onlyifitcanbeseparatelyidentified,isprobable Internally generatedsoftwareisrecognisedasanintangible assets intouse. incurred inthedevelopmentofsoftwareordertobring assets aswellinternalinfrastructureanddesigncosts Software andlicencesincludecostsincurredtoacquirethe andlicences Software administrative This amortisationisrecognisedin Customer relationships Brands straight Amortisation isprovidedtowriteoffthecostofassetsona impairment invalueorestimatedlossondisposal. amortisation and,whereappropriate,provisionfor intangible assetsarestatedatcostlessaccumulated their usefuleconomiclivesonastraight of businessesandarecapitalisedamortisedover customer relationshipspurchasedaspartofacquisitions Acquisition intangiblescomprisebrandnamesand Acquisition intangibles l) or lossondisposal. relevant goodwillisincludedinthecalculationofprofit On disposalofsubsidiaryundertakingsandbusinesses,the impairment chargeisrecognisedintheincomestatement. cash flowsarelessthanthecarryingvalueofgoodwill,an monitored bymanagement.Wherethefuturediscounted to whichthegoodwillrelates,atlevelthisis by measuringthefuturecashflowsofgroupCGUs that goodwillmaybeimpaired.Impairmentisassessed impairment, ormorefrequentlywherethereisanindication Goodwill isnotamortised,butreviewedannuallyfor to whichthegoodwillrelates. the combinationandheldincurrencyofoperations Notes totheGroup financialstatements nagbe assets Intangible ‌‌ Dixons Carphone plc - line basisonthefollowingbases: expenses. AnnualReport andAccounts 2016/17 13% –50%perannum 7% –20%perannum - n line basisbetweenthree on- h - eadline line basis.These or groupofstores,andbusinessindicatorsexistwhich equipment formpartofaseparateCGU,suchasstore impairment chargeislevied.Wheretheproperty,plant& supportable. Whereassetsaretobetakenoutofuse,an could leadtotheconclusionthatnetbookvalueisnot basis todeterminewhethercircumstancesexistthat Property, plant&equipmentareassessedonanongoing the termoflease. Assets capitalisedasfinanceleasesaredepreciatedover Fixtures, fittingsandequipment transferred therisksandrewards ofownership. from thefinancialassetexpire ortheGroup hassubstantially derecognised whenthecontractualrightstocashflows in ahedgerelationship’,respectively.Financialassetsare and receivables’‘heldfortradingunlessdesignated further describedinnotes1r) equivalents andderivativefinancialinstruments,whichare the classificationsstipulatedbyIAS 39,cashand 14 and15withtheexceptionofprepayments.Under sale. Financialassetscompriseallitemsshowninnotes parties, andinvestmentsclassifiedasavailable-for- involve acontractualrighttoreceivecashfromexternal comprise cashandequivalents,receivableswhich provisions oftheinvestment.TheGroup’sfinancialassets sheet whentheGroupbecomespartytocontractual Financial assetsarerecognisedintheGroup’sbalance n) with thevalueinuse. impairment isdeterminedbycomparingthenetbookvalue to management’sprojectionoffutureprofitabilityandany is calculatedbyapplyingdiscountedcashflowmodelling determined bycalculatingitsvalueinuse.Theuse not supportable,therecoverableamountofCGUis could leadtotheconclusionsthatnetbookvalueis Land andbuildings equipment areasfollows: Rates appliedtodifferentclassesofproperty,plant& being usedonastraight-linebasis. from thedateassetwasbroughtintouseorcapableof off thecostofassetsovertheirexpectedusefullives With theexceptionofland,depreciationisprovidedtowrite losses. accumulated depreciationandanyimpairment Property, plant&equipmentarestatedatcostless m) reorganisation, and defaultordelinquencyinpayments are probability thatadebtorwillenter bankruptcyorfinancial s receivable, impairmentisrecognised throughthe Group willnotbeabletocollect thefullamountof or impairment.Ifthereisobjective evidencethatthe and subsequentlyheldatamortised cost,lessprovision and otherreceivablesareinitiallyrecognisedatfairvalue assets) Trade andotherreceivables(excludingderivativefinancial Trade andotherreceivables tatement. Significantfinancialdifficulties ofthedebtor, ‌‌ Financialassetsandinvestments ‌‌ Property, plant&equipment ‌‌ areclassifiedas‘loansandreceivables’.Trade ‌‌ and26,areclassifiedas‘loans 10% –33 1 2 ⁄ 3 % –4%perannum 1 ⁄ 3 % perannum i ncome contractual obligation todelivercashexternal partiesat The Group’sfinancialliabilities are thosewhichinvolvea r) shown undercurrentliabilities. equivalents forthepurposeof cashflowstatement,are value. Bankoverdrafts,whichformpartofcashand which aresubjecttoaninsignificantriskofchangesin hand, bankoverdraftsandshorttermhighlyliquiddeposits Cash andcashequivalentscompriseatbankin q) defective itemswhereappropriate. disposal. Provisionismadeforobsolete,slowmovingor selling price,lessfurthercostsexpectedtobeincurred of thatinventory.Netrealisablevalueisbasedonestimated discounts andbonusesreceivedfromsuppliersinrespect their presentlocationandconditionlessanyattributable that havebeenincurredinbringingtheinventoriesto Cost comprisesdirectpurchasecostandthoseoverheads realisable value,andonaweightedaveragecostbasis. Inventories arestatedatthelowerofcostandnet p) impairment aspartofthatinvestment. the carryingvalueofinvestmentandisassessedfor the jointventure.Anyassociatedgoodwillisincludedwithin losses, orwheretheGrouphasmadepaymentsonbehalfof it hasincurredlegalorconstructiveobligationstofundsuch Group onlyprovidesforadditionallossestotheextentthat share oflossesexceedsitsinterestinthejointventure, joint venturehasbeenreducedtonilbecausetheGroup’s less anyimpairmentlosses.WhentheGroup’sinterestina gains andlossesofjointventuresusingtheequitymethod statements includetheGroup’sshareoftotalrecognised net assetsofthearrangement.Theseconsolidatedfinancial that havejointcontrolofthearrangementrightsto Joint venturesarejointarrangementswherebytheparties o) Group’s righttoreceivethedividendsisestablished. instruments arerecognisedinprofitorlosswhenthe income statement.Dividendsonavailable-for-saleequity in theaccumulatedprofitsreserveisreclassifiedto impaired, thecumulativegainorlosspreviouslyrecognised the investmentisdisposedofordeterminedtobe accumulated intheprofitsreserve.Where value arerecognisedinothercomprehensiveincomeand in note12.Gainsandlossesarisingfromchangesfair measured) the directorsconsiderthattheirfairvaluecanbereliably for-sale financialassetsandstatedatfairvalue(because traded inanactivemarketbutareclassifiedas The Grouphasinvestmentsinunlistedsharesthatarenot Available-for-sale investments original interestrate. the relatedestimatedfuturecashflows,discountedat carrying valueofthereceivableandpresent The impairmentiscalculatedasthedifferencebetween considered indicatorsthatthetradereceivableisimpaired. ‌‌ Borrowings andotherfinancialliabilities ‌‌ Inventories ‌‌ ‌‌ Cashandcashequivalents Interests injointventures ‌‌ . Fairvalueisdeterminedinthemannerdescribed available - Dixons Carphone plc basis. over theperiodofborrowingsonaneffectiveinterest redemption valuebeingrecognisedinthe at amortisedcostwithanydifferencebetweenand Subsequent toinitialrecognition,borrowingsarestated incurred. in theincomestatementperiodwhichtheyare the relevantfacility.Allotherborrowingcostsarerecognised amortised throughtheincomestatementovertermof associated withthesecuringoffinancingarecapitalisedand costs. Transactionfeessuchasbankandlegalcosts initially recordedatfairvaluelessattributabletransaction committed anduncommittedbankloans.Borrowingsare Borrowings intheGroup’sbalancesheetrepresent Borrowings expires. specified inthecontractisdischargedorcancelled of afinancialliability)arederecognisedwhentheobligation provisions oftheinstrument.Financialliabilities(orapart sheet whentheGroupbecomesapartytocontractual Financial liabilitiesarerecognisedintheGroup’sbalance in notes16to19withtheexceptionofdeferredincome. a futuredate.Financialliabilitiescompriseallitemsshown from changesinthecashflows ofafinancialliabilitydue exchange hedgingandahedge oftheexposurearising forecast transaction(cashflow hedge) accounting aretreatedasahedge ofahighlyprobable the itembeinghedged.Derivatives thatqualifyforhedge designated asahedginginstrument andifso,thenatureof resulting gainorlossdependsonwhetherthederivativeis remeasured attheirfairvalue.Thetreatmentofthe date thecontractisenteredintoandaresubsequently instruments areinitiallyrecognisedatfairvalueonthe fluctuating interestandforeignexchangerates.These The Groupusesderivativestomanageitsexposures Derivative financialinstrumentsandhedgingactivity the financialassetsandliabilitiespresentedonanetbasis. presented onanetbasis.Seenote26fordescriptionof other receivablesandpayablesunderIAS39,theseare Where theGrouphasrightofoffsetinrelationtotradeand be effective. are designatedashedgesandsuchprovedto recognised intheincomestatementunlessderivatives losses arisingfromrevaluationatthebalancesheetdateare held withinassetsorliabilitiesasappropriate.Gainsand remeasured tofairvalueateachbalancesheetdateandare are initiallyrecordedatfairvalueandthensubsequently measured atamortisedcost.Derivativefinancialinstruments liabilities) Trade andotherpayables(excludingderivativefinancial Trade andotherpayables hedge relationship’. 26, areclassifiedas‘heldfortradingunlessdesignatedina financial instruments,whicharedescribedfurtherinnote ‘financial liabilitiesmeasuredatamortisedcost’.Derivative (excluding derivativefinancialliabilities) finance leaseobligationsandtradeotherpayables Under theclassificationsstipulatedbyIAS39,borrowings, ‌‌ areinitiallyrecordedatfairvalueandsubsequently AnnualReport andAccounts 2016/17 ‌‌ inthecaseofforeign ‌‌ areclassifiedas i ncome s tatement 105

Financial statements Financial statements 106 details ofestimates usedtovaluecommission receivable, judgement involvedcanbefound atnote1(e) behaviour afterthepointofsale. Furtherdetailsofthe on mobilephoneconnectionsdepends onc For certaintransactionswithMNOs, commissionreceivable – networkcommissions Revenue recognition Key sources ofestimationuncertainty uncertain, andassuchchangesmayhaveamaterialimpact. and estimatesarereasonable,bytheirnaturethey Whilst everyeffortismadetoensurethatsuchjudgements reviewed andrevisedasnecessary. the preparationoffinancialstatementsarecontinually Critical accountingjudgementsandestimatesusedin estimation uncertainty t) available informationatthebalancesheetdate. All provisionsareassessedbyreferencetothebest the timevalueofmoneyisconsideredtobematerial. amount oftheobligation.Provisionsarediscountedwhere obligation andareliableestimatecanbemadeofthe that anoutflowofresourceswillberequiredtosettlethe obligation existsasaresultofpasteventsanditisprobable Provisions arerecognisedwhenalegalorconstructive s) 2. 1. remains aneffectivehedgeofthetransaction. life ofthehedginginstrumenttoensurethat assessment isrepeatedonanongoingbasisduringthe in thecashflowofhedgeditem.Thiseffectiveness used inthehedgingtransactionoffsettingchanges assessment oftheeffectivenessderivativeinstrument instrument andthehedgeditemisdocumented,asan At inceptiontherelationshipbetweenhedging case ofinterestratehedging. to interestrateriskonafloatingdebtinstrumentinthe Notes totheGroup financialstatements ‌‌ Provisions ‌‌ Criticalaccountingjudgementsandkeysources of immediately inthe do notqualifyforhedgeaccountingarerecognised All changesinfairvalueofderivativeinstrumentsthat these areclassifiedatfairvaluethroughprofitorloss. Derivatives thatdonotqualifyforhedgeaccounting: to theincomestatement. other comprehensiveincomeisimmediatelytransferred longer expectedtooccur,thecumulativegainorlossin the incomestatement.Ifforecasttransactionisno the forecasttransactionisultimatelyrecognisedin other comprehensiveincome,andisrecognisedwhen other comprehensiveincomeatthattimeremainsin accounting, anycumulativegainorlossexistingin or issold,nolongermeetsthecriteriaforhedge affect profitorloss.Ifthehedginginstrumentexpires statement intheperiodwhenhedgeditemwill comprehensive incomearerecycledtothe the incomestatement.Amountsrecognisedinother to theineffectiveportionisrecognisedimmediatelyin other comprehensiveincome.Anygainorlossrelating portion ofchangesinthefairvalueisrecognised Derivatives classifiedascashflowhedges:theeffective Dixons Carphone plc i ncome AnnualReport andAccounts 2016/17 s tatement. onsumer ‌‌ , andfurther

statement ofcomprehensiveincomeandexpenseis scheme thatisrecognisedthroughtheconsolidated The surplusordeficitintheUKdefinedbenefitpension Defined benefitpensionschemes £3 entered inpreviousperiodstotalled£21million(2015/16: During theyear,changesinestimatesrelatingtocontracts based onhistoricalcostprofilesforeachtypeofagreement. of theoutcomeagreementsandtimingcosts, relation totheagreementsrequireforecastsbemade techniques usedforrevenueandprofitrecognitionin reference toextensivehistoricalclaimsdata.Theestimation total obligationsundertheagreements,determinedby the proportionofexpectedcostsfulfillingGroup’s date. Thestageofcompletionisestimatedwithreferenceto completion ofthecontractualtermsatbalancesheet agreements isrecognisedbyreferencetothestageof As setoutinnote1(d) –customersupportagreements Revenue recognition note 26. sensitivity analysisofthecarryingvaluecanbefoundin current yearincomestatementofchangesinestimatesand carrying amountsatthebalancesheetdate,effectson The costsandtiming ofcashflowsaredependent onexiting to thestorereorganisationprogramme describedinnote4. arise. Themostsignificantprovision currentlyisinrelation of anyclaimmadeagainstthe Group andifanyliabilitywill Judgement isrequiredtoassess thelikelihoodofsuccess available tomanagementatthe balancesheetdate. The Group’sprovisionsarebased onthebestinformation Provisions uncertain. the timingofsettlementtheseamountsremains £54 million) uncertain taxpositionsof£66millionat29 April2017(2016: made. TheGrouphasrecognisedprovisionsinrelationto tax provisionsintheyeartowhichsuchdeterminationis any differenceswillimpacttheincometaxanddeferred of suchmattersdiffersfromtheamountsinitiallyrecorded, liability isprobableandestimable.Wherethefinaloutcome on bestinformationavailableandwheretheanticipated Group recognisesliabilitiesforanticipatedtaxesduebased tax determinationisuncertain.Insuchcircumstances,the appropriate provisionfortransactionswheretheultimate jurisdictions andjudgementisrequiredindeterminingthe Group issubjecttoincometaxesinanumberofdifferent recognition ofanyliabilitiesassessedwherenecessary.The Group aremonitoredregularlyandtherequirementfor Such potentialamendmentsandtheirapplicationtothe result ofchangesinfiscalcircumstancesorpriorities. amended bytherelevantauthorities,forexampleasa Tax lawsthatapplytotheGroup’sbusinessesmaybe Taxation information. similar pensionschemes.Refertonote21forfurther are basedonactuarialadviceandbenchmarkedagainst discount ratesandmemberlongevity.Suchassumptions assumptions regardingsalaryincreases,inflationrates, The calculatedliabilitiesoftheschemearebasedon subject toanumberofassumptionsanduncertainties. million) ‌‌. ‌‌ . Duetothenatureofprovisionsrecorded, ‌‌ , revenuerelatingtocustomersupport review hasbeen complete effect oftheadoptionabove standardsuntiladetailed It isnotpracticabletoprovidea reasonableestimateofthe • • • some cases,havenotyetbeenadoptedbytheEU: Group, havebeenpublishedbutarenotyeteffectiveand,in The followingnewstandards,whichareapplicabletothe these financialstatements. to beimplementedduringtheyearthatsignificantlyaffect There werenonewIFRSsorIFRICinterpretationsthathad u) further information. differ fromthoseultimatelyincurred.Refertonote20for costs assumedareinevitablyonlyestimates,whichmay exiting aleaseandthelevelofsubleaseincome.Thefuture cost totheGroupincludingnature,timingandof Significant assumptionsareusedinestimatingtheultimate the propertyleasecontractsorsublettingproperty. ‌‌ Recentaccountingdevelopments report. We expecttoreportontheimpact inthe2017/18annual for implementationandtheoptions aroundtransition. including consideringthesystemsandprocessesrequired the Grouptoassessoverallimpactofstandard, flow statementwillchange.Aprojectisunderwayacross of thisstandard,howeverthepresentationcash the termoflease.Thereisnocashimpactadoption were previouslyrecognisedasoperatingexpensesover treated asdepreciationandfinancingexpensewhich with theleaseswhichundernewstandardwillbe the measurementanddisclosureofexpenseassociated both non-currentandcurrentliabilities,fixedassets as operatingleases.Thiswillhaveamaterialeffecton use assetformostofthoseleasespreviouslytreated the Grouptorecognisealeaseliabilityandright-of- Group inthe2019/20financialyear.IFRS16willrequire after 1January2019,andwillthereforebeappliedbythe IFRS 16‘Leases’isapplicableforperiodsbeginningonor change instandard. changes tocashflowsorcommercialimpactfromthe any potentialimpactonreportedrevenue.Thereareno a detailedprojectduring2017/18inordertoconfirm assessment ontheimpactofstandard.Wewillinitiate financial year.Wehaveperformedahigh-level therefore willbeappliedbytheGroupin2018/19 periods beginningonorafter1January2018,and measurement ofrevenue.IFRS15isapplicablefor provides guidanceontherecognition,timingand IFRS 15‘RevenuefromContractswithCustomers’ the AnnualReport. standard otherthaninprovidingadditionaldisclosures do notcurrentlyanticipateamaterialimpactfromthenew financial year.Basedonourpreliminaryassessment,we therefore willbeappliedbytheGroupin2018/19 periods beginningonorafter1January2018,and measuring financialassets.IFRS9isapplicablefor 9 introducesnewrequirementsforclassifyingand Instruments: RecognitionandMeasurement’.IFRS first stepintheprocesstoreplaceIAS39‘Financial IFRS 9‘FinancialInstruments’.Thisstandardisthe d . Dixons Carphone plc • • • • follows: The Group’sreportablesegmentshavebeenidentifiedas into onesegment. characteristics suchthattheycanbeaggregatedtogether which areeithermanagedseparatelyorhavesimilartrading information ispredominantlybasedongeographicalareas to manageperformanceandallocateresources.This routinely reviewedbytheBoardandwhichareused The Group’soperatingsegmentsreflectthe 2 Segmentalanalysis the Group’snetresultsorassets. Group orarenotexpectedtohaveanymaterialimpacton are inissuebutnotyeteffective,eitherdoapplytothe existing accountingstandardsandinterpretationswhich Certain othernewaccountingstandards,amendmentsto basis. Transactions betweensegmentsareonanarm’slength channels. products andservices,primarilythroughstoresoronline in thesaleofconsumerelectronicsandmobiletechnology UK &Ireland,NordicsandSouthernEuropeareinvolved Connected WorldServicesistheGroup’sB2Boperation Greece. Southern EuropecomprisesoperationsinSpainand and Iceland. Nordics operatesinNorway,Sweden,Finland,Denmark UK &IrelandcomprisesoperationsintheandIreland. world solutions. to thirdpartieslookingdeveloptheirownconnected and technologyoftheGrouptoprovidemanagedservices which leveragesthespecialistskills,operatingprocesses AnnualReport andAccounts 2016/17 107

Financial statements Financial statements EBIT before share ofresults of Connected World Services EuropeSouthern * (restated) EBIT Headline Share ofheadlineresults ofjointventures (restated) Headline EBITbefore share ofresults ofjointventures Total headlinerevenue (restated) Inter-segmental revenue revenueHeadline external (restated) Profit /(loss) Finance costs Finance income EBIT Share ofresults ofjointventures 108 Nordics UK &Ireland tax Reconciliation ofheadlineprofittototalbefore Headline EBIT Share ofheadlineresults ofjointventures Headline EBITbefore share ofresults ofjointventures Total headlinerevenue Inter-segmental revenue revenueHeadline external (a) 2 Segmentalanalysis Notes totheGroup financialstatements emna results Segmental ‌‌ (restated) joint ventures discussed innote4and32. operations, whichhavebeenclassifiedasbusinessestobeexitedinthe currentyearandcomparativehavebeenrestatedaccordinglyas t JV Headline resultshavebeenrestatedtoexcludetheofiDmobile operationsIntheRepublicofIrelandandSprintJV Dixons Carphone plc ‌‌* ‌‌ before tax continued ‌‌* AnnualReport andAccounts 2016/17

‌‌ * ‌‌ * Headline £million (loss) / profit 501 517 517 385 (33) 17 21 22 89 — ‌‌ ‌‌ to beexited Businesses £million (28) (28) (17) (11) (11) ‌‌ * — — — — —

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Amortisation intangibles acquisition

£million 6,462 6,402 £million Ireland (12) (20) (34) (34) (34) 371 371 UK & — — — (1) (1) £million Ireland 6,631 6,550 60 — of UK & 385 385 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

81 — transformation

integration 2,632 2,632 £million Nordics £million Merger Nordics £million costs 3,156 3,156 (31) (31) (31) (28) 79 79 — — and — — — — — (3) 89 89 — —

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Southern Southern Pension scheme Southern Southern £million interest £million Europe £million Europe 550 550 (16) (16) 17 17 661 661 — — — — — — — — — — 22 22 — — ‌‌ ‌‌ Connected Connected Unieuro £million income Services Services £million £million World 152 152 World 213 213 — — — — — — 11 11 — — Year ended30April2016(restated) 5 5 5 5 21 21 — — taxable benefit compensation Eliminations Eliminations Year ended29April2017 Year ended29April2017 Share plan £million £million £million (60) (60) (11) (11) (11) (10) (81) (81) — — — — — — — — — — — — — (1) ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Total profit 10,580 10,580 £million £million 9,736 9,736 £million (loss) / 478 478 386 418 435 316 517 517 Total (49) (17) Total 73 17 20 26 — — — — ‌‌ ‌‌ ‌‌ ‌‌

Nordics tax Reconciliation ofheadlineprofittototalbefore (a) 2 Segmentalanalysis Finance costs Finance income EBIT Share ofresults ofjointventures EBIT before share ofresults ofjoint Connected World Services EuropeSouthern UK &Ireland Profit /(loss) * Connected World Services EuropeSouthern Nordics UK &Ireland c) different tothatshownbydomicile. Revenues areallocatedtocountriesaccordingtheentity’scountryofdomicile.Revenuebydestinationisnotmaterially b) * te information Other ‌‌ egahcl information Geographical ‌‌ emna results Segmental ‌‌ ventures have beenrestatedtoexcludefinancialassets. discussed innote4and32. operations, whichhavebeenclassifiedasbusinessestobeexitedinthecurrentyearandcomparativerestatedaccordingly or 2015/16 Non-current assetsaboveexcludefinancialassets,deferredtaxand assetsrelatedtodiscontinuedoperations.Figuresfor2015/16 Headline resultshavebeenrestatedtoexcludetheofiDmobileoperationsInRepublicIrelandandSprintJV ‌‌ before tax continued continued

profit / (loss) profit (restated) Headline £million 478 478 371 457 (38) 79 17 11 17 — ‌‌* ‌‌ ‌‌ to beexited* Businesses £million (10) (10) — — — — — (4) (6) (6) ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Amortisation intangibles acquisition Year ended Dixons Carphone plc £million £million 29 April 4,084 1,268 2,746 (13) (40) (40) (40) (24) — — — Non-current assets* 2017 (2) (1) of 63 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌‌‌ 7

(restated)* £million Merger Dixons 30April 1,203 3,960 2,687 Retail £million (48) (37) (52) (48) ended — — — 2016 (5) (4) (6) Year 17 53 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

rationalisation Year ended AnnualReport andAccounts 2016/17 Property £million 29 April £million costs 242 175 2017 Capital expenditure (70) (70) (70) (70) 40 16 11 — — — — — — ‌‌ ‌‌ ‌‌ ‌‌

Acquisition £million £million 30 April related ended 221 152 Year ended30April2016(restated) 2016 Year 57 — — — — — (5) (6) (6) (1) (6) 7 5 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Depreciation /Amortisation Year ended £million Pension 29 April scheme £million interest 186 132 2017 (16) (16) 43 — — — — — — — — 4 7 ‌‌ ‌‌

Total profit 30April £million £million ended (loss) / 233 304 308 263 177 129 2016 (58) Year 56 17 15 40 (4) 109 4 2 6 ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 110 Other employeecosts(seenote5) Share-based paymentsexpense Net foreign exchange(gains) Investment property rental income Rentals received underoperating leases–subleases Contingent rent Non-contingent rent Rentals paidunderoperatingleases: Cost ofinventoryrecognised asanexpense Loss ondisposalofproperty, plant&equipment Impairment ofinventory Impairment oftradereceivables Amortisation ofotherintangibles Amortisation ofacquisitionintangibles Depreciation ofproperty, plant&equipment Profit /(loss) agreements, deliveryandinstallation,productrepairssupport. Revenue fromservicespredominantlycomprisesthoserelatingtocommissionsMNOs,insurance,customersupport * Revenue from services Sale ofgoods Revenue canbefurtheranalysedasfollows: of jointventures Profit /(loss) Operating expenses Gross profit Cost ofsales Revenue 3 Revenueandprofit /(loss) Notes totheGroup financialstatements Headline resultsandrevenuehavebeenrestatedasoutlinedinnote32. Dixons Carphone plc ‌‌ ‌‌ before interest, taxationandshare ofresults beforeinterestandtaxationforcontinuingoperationsisstatedaftercharging/(crediting) AnnualReport andAccounts 2016/17 ‌‌ /losses ‌‌ before interest, taxationandshare ofresults ofjointventures ‌‌

10,580 10,580 Headline Headline (1,822) (8,241) £million £million 2,831 7,749 2,339 517 ‌‌ ‌‌ Year ended29April2017 Year ended29April2017 headline headline £million £million Non- Non- (82) (80) — (2) (7) 5 5 5

‌‌ ‌‌ ‌‌ ‌‌ 10,585 10,585 (1,902) (8,248) £million £million 2,836 7,749 2,337 435 Total Total

‌‌ ‌‌ (restated) (7,548) (restated) (1,710) Headline Headline 9,736 2,718 7,018 2,188 9,736 £million £million 478 Year ended30April2016(restated) Year ended30April2016(restated)

‌‌* ‌‌ ‌‌ ‌‌‌‌

‌‌ thefollowing: Year ended (restated) (restated) £million 29 April 1,148 7,837 headline headline £million £million (170) 326 (167) 2017 Non- Non- 17 24 51 57 34 95 (2) (1) (3) — (3) (5) 3 8 2 2 2 ‌‌* ‌‌*

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌‌‌ Year ended (1,877) (7,553) 30April 9,738 2,720 7,018 2,185 9,738 1,051 7,343 £million £million £million 308 340 2016 Total Total 55 11 39 40 98 10 17 (1) (6) 2 1 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

* Total impactonprofit /(loss) after tax Discontinued operations Total impactonprofit /(loss) Tax onnon-headlineitems Total impactonprofit /(loss) Included innetfinancecosts: Unieuro income Included inprofit /(loss) Included inrevenue 4 Non-headlineitems and taxadvisoryservices In additiontotheabovefees,£nil(2015/16:£0.1m) Other assuranceservices Tax complianceservices Total auditfees subsidiaries Fees payabletotheCompany’s auditoranditsassociatesfortheirauditoftheCompany’s Fees payabletotheCompany’s auditorfortheauditofCompany’s annualaccounts Auditor’s remunerationcomprisesthefollowing: 3 Revenueandprofit /(loss) Comparative non-headlineresultsfortheyearended30April2016have beenrestatedassetoutinnote32. Exceptional items–Merger andtransformationrelated costs Net non-cashfinancecostsondefinedbenefitpensionschemes Share plantaxablebenefitcompensation Exceptional items–Merger andtransformationrelated costs Amortisation ofacquisitionintangibles Businesses tobeexited Businesses tobeexited

– Acquisitionrelated – Property rationalisationcosts ‌‌ before interest andtax: provided ‌‌ ‌‌ aftertax–continuingoperations before tax ‌‌ before interest, taxationandshare ofresults ofjointventures to discontinuedoperations. ‌‌ ofnon-auditfeeswerepaidtotheauditorinrespecttaxcompliance Dixons Carphone plc AnnualReport andAccounts 2016/17

Note (viii) (vii) 25 (vi) (iv) (iii) (iii) continued (v) (ii) (i) (i)

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Year ended Year ended £million £million 29 April 29 April (115) 2017 2017 (94) (98) (16) (16) (99) (11) (31) (34) (28) 2.1 0.2 0.1 1.8 1.7 0.1 17 — — — 4 5 5 5

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Year ended Year ended (restated) £million £million 30 April 30 April (186) (168) (194) (174) 2016 2016 (18) (20) (16) (70) (48) (40) (10) 1.9 0.2 0.2 1.5 1.4 0.1 26 — — (4) (6) 111 2 2 ‌‌* ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 112 (v) (iv) (iii) (ii) (i) 4 Non-headlineitems Notes totheGroup financialstatements ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ custo related: Acquisition costs: rationalisation Property Exceptional items–Mergerandtransformationrelatedcosts: Amortisation ofacquisitionintangibles: Businesses tobeexited: the acquisitionofSimplifydigitalandInfoCare(£1million) consideration payableonabusinessacquiredbyDixonsinthe Nordicsin2011/12(£5million) Acquisition relatedcomprisescostsincurredintheyearended 30April2016relatingtoanincreaseinthecontingent relating tothepropertyrationalisation,andexistingprovisions havebeenutilised. as exceptionalitems.Onanetbasis,therehavebeennoadditional costsincurredintheyearended29April2017 lease terminationpremiums,onerousprovisions,dilapidations andfixedassetimpairments,havebeentreated Carphone Warehouse,reducingtheoverallstoreportfolioby134. Thecostsassociatedwiththisinitiative,beingearly store conceptintheUK&Ireland.Thisinvolvesmergingremaining PCWorldandCurrysstoresinsertinga Following theMergeritwasannouncedthatGroupwouldlaunchamajorroll-outofitsfullyrefurbished3-in-1 • • • The Mergerhasgivenrisetothefollowingcostswhichhavebeentreatedasexceptionalitems: Revolving Credit Facilityfeewriteoff Transformation related costs Merger integrationcosts Acquisition, theDixonsRetailMergerandSimplifydigitalacquisition(2015/16:£40million) A chargeof£34millionaroseduringtheyearinrelationtoacquisitionintangiblesarisingonCPWEurope accordingly assetoutinnote32. therefore beenclassifiedasabusinesstobeexited.Theshareoflossfor2015/16£4millionhasrestated recognised intheyearof£17million,togetherwithcentralcostsdirectlyrelatedtooperation£1have In June2017theGroupannouncedsaleof50%interestinSprintjointventure.Theshareloss £2 millionandalossof£6million)whichhasbeenclassifiedasnon-headline.Restatedamountsaresetoutinnote32. Republic ofIrelandcontributed£5millioninrevenueandaloss£10EBIT2016/17(2015/16: headline itemsinthecurrentyearincomestatementandrelateddisclosures.TheiDmobileoperations most likelythroughasaletothirdparty.TheresultsoftheIrelandMVNOhavethereforebeenreclassifiedasnon- of IrelandandtheresultsSprintjointventure.ForiDmobileIreland,adecisionwasreachedtoexitbusiness, disclosure asdiscontinuedoperations.Inthecurrentperiod,thiscomprisesofiDmobileoperationsinRepublic Comprises thetradingresultofbusinessestobeexitedwheretheydonotmeetcriteriaunderIFRS5forseparate Dixons Carphone plc the Mergeratshortnotice.Norelatedamountswererecognisedincurrentyear. deferred facilityfeeswrittenoff.TheincurredwerearesultoftheMergerandfinancingrequiredtofacilitate In theyearended30April2016,RevolvingCreditFacilityfeewriteoffrecognisedinfinancecostsrelatesto procedures acrosskeysupportfunctionsofthebusiness.Thecostsprimarilyrelatetoconsultancyfees. and humanresourcesfunctionstorationalisesharedservicecentreactivitiesharmonisepolicies During thecurrentperiod,functionaltransformationprojectshavecommencedacrossfinance,procurement professional fees,employeeseveranceandincentivecostsassociatedwiththeintegrationprocess. Merger integrationcostsrelatetothereorganisationofGroupfollowingandprimarilycomprise continued AnnualReport andAccounts 2016/17 ‌‌ . ‌‌ ‌‌ . , andcostsincurredin

Year ended £million 29 April 2017 (18) (31) (13) —

‌‌ ‌‌ ‌‌ Year ended £million 30 April 2016 (48) (52) — (4) ‌‌ ‌‌ ‌‌

Connected World Services EuropeSouthern Nordics UK &Ireland The averagenumberofemployees fordiscontinuedoperationsisnil(2015/16:341‌ The averagenumberofemployeesforcontinuingoperationsis: social securitycostsof£nil(2015/16:£1million) Aggregate remunerationfordiscontinuedoperationsaresalariesandperformancebonusesof£nil(2015/16:£6million) Share-based payments Other pensioncosts Social securitycosts Salaries andperformancebonuses The aggregateremunerationrecognisedintheincomestatementforcontinuingoperationsisasfollows: a) 5 Employeecostsandshare-based payments (viii) (vii) (vi) 4 Non-headlineitems mlye costs Employee ‌‌ ‌‌ ‌‌ ner income: Unieuro ‌‌ Net non-cashfinancingcostsondefinedbenefitpensionschemes: Share plantaxablebenefitcompensation: income inlinewiththetreatmentoforiginaldisposal,asdisclosednote25. of £5millionforaloanpreviouslyimpairedfollowingthedisposal,whichhasbeentreatedasdiscontinuedoperation which istreatedasnon-headlinerelatestoadisposalofportionourinvestment.Arepaymentwasalsoreceived operations. AsaresultoftheIPO,Groupreceiveddividendfromintermediateholdingcompany£5million, undertook anIPOfor31.8%ofitsshareholdings,whichreducedtheGroup’sinvestmentto10.2%Unieuro investment wasinitiallyrecognisedat£ Electronics Holdingss.r.l(IEH) In November2013,theGroupdisposedofitsUni will crystallise,andthereforeprovisionof£11millionhasbeenmadeduring2016/17. of loansgrantedunderthescheme.Basedoncurrentshareperformanceitisconsideredprobablethatthisliability compensation willbepaidtoparticipantsoftheSharePlanforanytaxablebenefitarisingonwaiverportion As discussedintheRemunerationCommitteeChairmen’sstatementonpage61,eventofnon-vesting, revaluations ofnetdefinedbenefitpensionliabilitieshavebeenexcludedfromheadlineearnings. liabilities paidandpayable.Consistentwithanumberofothercompanies,theaccountingeffectsthesenon-cash rates prevailingonaparticulardayandisalsounrepresentativeoftheactualinvestmentgainsorlossesmade and balancesheetresultsinanon-cashremeasurementcostwhichcanbevolatileduetocorporatebondyield benefit obligation.Corporatebondyieldratesvaryovertimewhichinturncreatesvolatilitytheincomestatement applying thecorporatebondyieldratesapplicableonlastdayofpreviousfinancialyeartonetdefined Under IAS19‘EmployeeBenefits’,thenetinterestchargeondefinedbenefitpensionschemesiscalculatedby continued ‌‌ , aholdingcompanywhichinturnowned100%oftheUni n il basedonthefairvalueofretainedinterest.InMarch2017,Unieuro ‌‌‌ . e uro operations,andretainedaninvestmentof14.96%inItalian Dixons Carphone plc AnnualReport andAccounts 2016/17 )‌ . e uro operations.The

Year ended Year ended 45,461 10,309 30,917 Number £million 29 April 29 April 3,918 1,165 1,148 1,006 317 118 2017 2017 17 24

Year ended Year ended 45,202 10,283 31,003 (restated) 30April Number 3,764 1,061 1,051 £million 30 April 152 107 921 2016 2016 ‌‌ and 10 23 113

Financial statements Financial statements 114 growth andrelativeTSRperformance againsttheconstituentsofFTSE51-150at1May 2016. For optionsgrantedduringthe year ended29April2017,performanceconditionsarebased onacombinationofEPS based onacombinationofabsolute TSRperformanceandrelativeagainst theFTSE250or350. subject toperformanceconditions. Foroptionsgrantedduring2015/16andearlierperiods,performance conditionsare Options werefirstgrantedunder theschemeinJanuary2014.Theoptionsaresubjecttocontinuing employmentandare offered tosenioremployees. During theyearended29March2014,Groupintroduced a shareoptionschemewhichallowsnil-pricedoptionstobe ii) any portionofloansgrantedunderthescheme.Thisisdiscussed furtherinnote4. event ofnon-vestingtheCompanyhasagreedtocompensate participantsforanytaxablebenefitarisingonthewaiverof Based onthecurrentsharepriceperformanceitisconsidered probablethatpartoftheSharePlanwillnotvest,andin or similarreorganisation. neither advantagednordisadvantagedbyavariationoftheshare capitaloftheCompany,bonafidemerger,reconstruction The mechanicsoftheschememaybevariedbyRemuneration Committeeifnecessarytoensurethatparticipantsare an awardnotwithstandingtheterminationoftheiremployment. A participantshallbea‘goodleaver’atthesolediscretionof the RemunerationCommitteeandmaybepermittedtoretain their ownresources. outstanding loan(andanyaccruedinterest) equal tothetotalamountoutstandingunderloan.Ifmarketvalueofsharesislessthan A ‘badleaver’willberequiredtotransfertheparticipationsharessuchpartyasCompanydesignatesforanamount Company forcashand/ortheCompany’sordinaryshares. the openingvaluationtogetherwithminimumreturnoninvestedcapital.Theseshareswillthenbepurchasedby value ofthesharesheldbyparticipantswillbebasedonincremental(ifany) year ended29April2017,when60%ofthesharesvest,with40%deferredforafurtheryear.Whenawards The performanceoftheschemewillordinarilybemeasuredafterpublicationpreliminaryannouncementfor to acquiretheshares.Loansareordinarilyrepayableinfullifperformanceconditionsmet. CPW Europeand,sincetheMerger,DixonsRetail.TheGroupgrantedloanstoparticipantsatacommercialrateofinterest Participants acquired,atmarketvalue,participationsharesinasubsidiarycompanythatholdstheGroup’sinterests FTSE 250. plan isunderpinnedbyaminimumannualcompoundTSRgrowthof5%andoutperformancethemedian of preliminarymergerdiscussionsinFebruary2015) 2015, assessedontheaggregatedvalueofCPWandDixonsRetailoveraone-monthperiodpriortoannouncement period priortoapprovaloftheplanbyshareholdersinJune2013and,fornewentrantsduring13monthsended2May incremental valuecreatedintheGroupexcessofanopening(assessedonCPWoverathree-month During theyearended29March2014,GroupintroducedSharePlanwhichallowsparticipantstoshare10%of i) b) entitlements, whichformpartofthesefinancialstatements,isprovidedintheRemunerationReport. Further informationaboutindividualdirectors’remuneration,shareinterests,options,pensionsandother during theperiod(2015/16:£0.3million) £9 million(2016:£10million) management inrelationtotheSharePlan.At29April2017,loanskeytheseschemestotalled During the13monthsended2May2015andyear29March2014loanswereadvancedtomembersofkey Share-based payments Short-term employeebenefits Compensation earnedbykeymanagement,comprisingtheBoardof a) 5 Employeecostsandshare-based payments Notes totheGroup financialstatements hr Plan Share ‌‌ ‌‌ mlye costs Employee ‌‌ Share optionschemes Share hr-ae payments Share-based ‌‌ Dixons Carphone plc continued AnnualReport andAccounts 2016/17 ‌‌ . Interestischargedonloansatmarketratesandinterestof£0.2millionhasbeenrecognised ‌‌ . ‌‌ thentheparticipantmayberequiredtorepayup20%ofshortfallout continued ‌‌ andbeyondanannualrateofreturn7%oninvestedcapital.The D irectors andseniorexecutives,isasfollows: ‌‌ ofDixonsCarphoneinexcess

Year ended £million 29 April 2017 14 11 3

Year ended £million 30 April 2016 14 12 2

Range ofexercise pricesfor optionsoutstanding Weighted averageremaining contractuallifeofawards outstanding Weighted averagemarketpriceofoptionsexercised intheperiod Exercisable attheendofperiod Outstanding attheendofperiod Forfeited duringperiod Exercised duringtheperiod Granted duringtheperiod Outstanding atthebeginningofperiod The followingtablesummarisesthenumberandWAEPofshareoptionsfortheseschemes: The savingsperiodandexercisedateoftheseoptionsremainunchanged. Employees whochosetorolloverreceived0.155optionsinDixonsCarphoneexchangeforeachoptionheld. to rollovertheirawardsintooptionssharesinthemergedentity,DixonsCarphone,oncompletionofMerger. determined atthecommencementofscheme.ParticipantsinDixonsRetailplcSAYEschemehadopportunity the endofsavingsperiod,participantscanpurchasesharesinCompanybasedonadiscountedshareprice The GrouphasSAYEschemeswhichallowparticipantstosaveup£500permonthforeitherthreeorfiveyears.At iii) Exercise priceforoptionsoutstanding Weighted averageremaining contractuallifeofawards outstanding Exercisable attheendofperiod Outstanding attheendofperiod Forfeited duringtheperiod Granted duringtheperiod Outstanding atthebeginningofperiod The followingtablesummarisesthenumberandweightedaverageexercisepriceofshareoptionsfortheseschemes: ii) b) 5 Employeecostsandshare-based payments ‌‌ Share optionschemescontinued Share hr-ae payments Share-based ‌‌ AE scheme SAYE ‌‌ continued continued Dixons Carphone plc

AnnualReport andAccounts 2016/17 Number Number million million 15 13 25 12 14 — (5) (2) (1) 1 9

‌‌ ‌‌ ‌‌

29 April2017 29 April2017 Year ended Year ended £2.24 –£3.77 WAEP WAEP 2.29 2.85 3.46 2.21 2.52 3.22 29 April2017 — — — — — Year ended £ £ 2.9 yrs

£3.42 Year ended 8.3 yrs Number Number 29 April million million

£nil 2017 13 13 14 17 £2.09 –£3.77 — — (2) (2) (4) 4 1 ‌‌ ‌‌ ‌‌

30 April2016 30 April2016 30 April2016 Year ended Year ended Year ended Year ended 2.6 yrs 8.3 yrs £4.38 30 April WAEP WAEP 3.22 3.13 1.03 3.77 2.71 2016 £nil — — — — — — 115 £ £

Financial statements Financial statements 116 The EBThaswaivedrightstoreceivedividendsandtheshares havenotbeenallocatedtospecificschemes. employees) 1.9 millionshareswerepurchasedbytheESOTsfornetcash consideration (afterthereceiptofexercisepricefrom The EBTdidnotundertakeanymarketpurchasesoftheCompany’ssharesduringyearended29April2017(2015/16: which theyrelate.Shareholders’fundsarereducedbythenetbookvalueofsharesheldinEBT. outstanding plans.ThecostsoffundingandadministeringtheEBTarechargedtoincomestatementinyear The numberofsharesheldbytheEBT,whichareshownintableabove,remainforpotentialawardsunder respectively. Retail ESOT,weretransferredintotheEBT.TheESOTsterminatedon16September2016and28 in thetwolegacyEmployeeShareOwnershipsTrusts(‘ESOTs’),beingCarphoneWarehouseESOTandDixons Following theMerger,DixonsCarphoneplcEBTwasestablishedon12August2016,afterwhichassetsheld Maximum numberofshares heldduringtheperiod Investment inownshares c) (2015/ During theyearended29 April2017,Grouprecognisedanon-cashaccountingchargetoprofitandlossof£17million v) consideration ofthehistoricalvolatilityCarphoneWarehouseandDixonspriortoMerger. The expectedvolatilityreflectstheassumptionthathistoricalisindicativeoffuturetrends,including Weighted averageshare price Expected optionlife Historical andexpectedvolatility Dividend yield Exercise price the inputstomodel: The weightedaveragefairvalueofoptionsgrantedduringtheperiodwas£1.40(2015/16:£0.74) performance ofDixons. performance ofCarphoneWarehouseand,foroptionsissuedsubsequenttotheMergeron6August2014,historical market priceofashareatthedategrantwithprobabilitymeetingperformancecriteria,basedonhistorical The fairvalueofoptionswasestimatedatthedategrantusingaMonteCarlomodel.modelcombines iv) b) 5 Employeecostsandshare-based payments Notes totheGroup financialstatements ‌‌ ‌‌ hr-ae payments Share-based ‌‌ Chargetotheincomestatementandentriesinreserves ‌‌ EmployeeBenefitTrust (‘EBT’) Fairvaluemodel 16: £10million) Dixons Carphone plc ‌‌ of£5 million)‌ ‌‌ inrespectofequitysettledshare-basedpayments,withacorrespondingcreditthroughreserves. . AnnualReport andAccounts 2016/17 continued ‌‌ continued

£million Market value 3 2 Nominal £million value — — 29 April2017 Number million 0.7 0.5

2.6% –3.0% £million ‌‌ £nil Market . Thefollowingtablelists value 4 –10yrs 29 April2017 10 Year ended

3 – £2.52 £3.26 30% Nominal £million

value — — 27% –28% £nil –£3.77 4 –10yrs 30 April2016 30 April2016 Year ended Number £4.35 2.3% million 2.2 0.7

(i) Headline totalnetfinancecosts Total netfinancecosts Amortisation offacilityfees Unwind ofdiscountsonliabilities Finance leaseinterest payable Finance costs Other interest expense Revolving credit facilityfeewriteoff Net interest ondefinedbenefitpensionobligations Interest onbankoverdrafts, loansandborrowings Finance income Interest receivable Unwind ofdiscountsontradereceivables 6 Netfinancecosts

ty fees Headline financecostsexcludenetinterestondefinedbenefitpensionobligationsandthewriteoffofrevolvingcreditfacilityfees (see note

4) ‌‌. (i) ‌‌ (i) ‌‌ Dixons Carphone plc AnnualReport andAccounts 2016/17

Year ended £million 29 April 2017 (16) (32) (49) (16) (12) 17 15 — (1) (8) (6) (6)

2

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Year ended £million 30 April 2016 (21) (41) (58) (10) (16) (16) 17 17 — (4) (4) (2) (6) 117

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements Tax relatedtodiscontinuedoperationsisincludedinthefigures setoutinnote25. (i) Headline taxcharge Total taxcharge 118 Total deferred tax Adjustments inrespect ofprioryears: – Overseas tax Non-headline UK tax Deferred tax Total current tax Adjustments madeinrespect ofprioryears: – Overseas tax Non-headline UK corporationtaxat19.92% Current tax The corporationtaxchargecomprises: a) 7 Tax Notes totheGroup financialstatements

a expense Tax ‌‌ ended 30April2016was20%) (year The UKcorporationtaxrateforthe12monthsended29April2017was 20% forthe11monthsto31March2017and19%thereafter(year Overseas UK corporationtax tax – Headline Overseas tax UK corporationtax Dixons Carphone plc

AnnualReport andAccounts 2016/17 ‌‌ (i) . (2015/1620% ) ‌ ‌‌ – Non-headline – Headline – Headline – Non-headline – Headline – Headline – Non-headline – Headline – Headline – Non-headline Headline –

Year ended £million 29 April 112 2017 (17) (20) 95 15 13 80 97 21 85 — — (1) (9) (4) (3) 6 1 5 9 3 4

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Year ended £million 30 April 110 2016 (12) (15) 65 84 19 18 19 77 23 71 — — (1) (3) (5) (6) (1) (2) 1 2 2

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Deferred taxliabilities Deferred taxassets Deferred taxcomprisesthefollowingbalances: At 29April2017 Reclassification Credited /(charged) toequity Charged directly toincomestatement At 30April2016 Reclassification C Charged At 3May2015 c) sheet dateandhasbeenusedintherecognitionofdeferredtaxbalances. A furtherreductionintheUKcorporationtaxrateto17%from1April2020hasbeensubstantivelyenactedbybalance which nodeductionisavailableinrespectofcapitalallowances. and movementsinuncertaintaxpositions.Itemsattractingnorelieforliabilityrelateprimarilytocapitalexpenditureon Adjustments inrespectofprioryearsincludeaone-offtaxcreditfollowingsuccessfulresolutionyearissue the Nordics. tax relieforliabilityandareductioninpaidathigheroverseasrates,largelyasresultofstatutoryratechanges The effectivetaxrateonheadlineearningsof22%(2015/16:24%) Total taxcharge /(credit) Other differences Effect ofchangeinstatutorytaxrate Movement inunprovided deferred tax Items attractingnotaxrelief orliability Adjustments inrespect ofprioryears Differences ineffective overseastaxrates Tax atUKstatutoryrateof19.92%(2015/16:20%) Profit /(loss) rate ofUKcorporationtaxtoprofit/(loss) The principaldifferencesbetweenthetotaltaxchargeshownaboveandamountcalculatedbyapplyingstandard b) 7 Tax eerd tax Deferred ‌‌ ‌‌ harged Reconciliationofstandard toactual(effective) continued ‌‌ ‌‌ directly toincomestatement toequity ‌‌ before taxation ‌‌ ‌‌ beforetaxationareasfollows: ‌‌ ‌‌ taxrate

Dixons Carphone plc Headline £million

112 100 501 ‌‌ hasdecreasedduetoareductioninitemsattractingno — — — Accelerated 5 5 2 allowances

£million Year ended29April2017 capital headline (34) (11) (24) (17) £million — — — (7) (115) 1 Non- (23) (17) ‌‌ ‌‌ ‌‌

‌‌ ‌‌ — — (1) 1 5 1 Retirement obligations

‌‌ ‌‌ ‌‌ ‌‌ AnnualReport andAccounts 2016/17 £million benefit Statutory £million (13) 99 15 84 98 — — — (1) 386 95 10 77 ‌‌ ‌‌

— — 1 4 3

forward £million carried Losses Headline £million 110 457 — — — — — Year ended30April2016(restated) (1) 3 3 4 91 13

(5) ‌‌

1 3 2 5 ‌‌

differences temporary £million £million 29 April headline £million (138) Other (194) 115 253 2017 (11) (11) Non- (38) (26) 47 56 77 (1) (4) (4) 17 — — — (6) 1 1 ‌‌ ‌‌

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Statutory £million £million £million 30 April (115) 119 234 115 119 162 263 Total 2016 (15) (24) (19) (11) 11 84 30 53 — — 119 1 3 3 5 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌

Financial statements Financial statements 120 h earnings pershareispresented inordertoshowtheunderlyingperformanceofGroup.Adjustments usedtodetermine Basic anddilutedearningsper share arebasedontheprofitforperiodattributabletoequity shareholders.Headline pershareHeadline dilutedearnings Adjustments fornon-headline– continuingoperations(netoftaxation) Continuing operations Adjustment inrespect ofdiscontinued operations Total (continuinganddiscontinuedoperations) pershareDiluted earnings pershareHeadline basicearnings Adjustments fornon-headline–continuingoperations(netoftaxation) Continuing operations Adjustment inrespect ofdiscontinued operations Total (continuinganddiscontinuedoperations) pershare Basic earnings pershareFor dilutedearnings Dilutive effect ofshare optionsandotherincentiveschemes pershareFor basicearnings Less averageholdingbyGroup EBT Average shares inissue Weighted averagenumberofshares Total Discontinued operations Continuing operations Total /(loss) earnings Continuing operations Headline earnings pershare8 Earnings deferred taxliabilitieshadnotbeenrecognisedattheendofeitheryear. There werenotemporarydifferencesassociatedwithundistributableearningsofsubsidiaries future taxableprofits.Theunrecognisedtaxlossesmaybecarriedforwardindefinitely. deferred taxassethasbeenrecognisedinrespectofthelossesduetolackcertaintyregardingavailability The Grouphastotalunrecogniseddeferredtaxassetsrelatingtolossesof£1,404million(2015/16:£1,414million) Other temporarydifferences Share-based payments Defined benefitpensionschemes Analysis ofdeferredtaxrelatingtoitems(charged) 7 Tax Notes totheGroup financialstatements eadline earnings aredescribedfurtherinnote 4. continued Dixons Carphone plc ‌‌ AnnualReport andAccounts 2016/17 ‌‌ ‌‌ ‌‌ /creditedtoequityintheperiod ‌‌ ‌‌ or jointventures

Year ended Year ended £million £million 29 April 29 April 1,155 1,151 1,152 Million Pence 33.7 25.2 25.5 33.8 25.3 25.6 (0.3) (0.3) 295 291 389 2017 2017 8.5 8.5 11 15 (3) (1) (1) 4 4 for which

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ Year ended Year ended (restated) 1,188 1,150 1,151 £million £million 30 April 30 April ‌‌ Million Pence 29.2 14.1 15.1 13.6 30.2 14.6 15.6 14.0 . No 161 179 347 2016 2016 (24) (13) (18) 1.5 1.6 38 (4) (7) (1) ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌‌‌‌‌

• • • The keyassumptionsusedincalculatingvalueuseare: reason, thegoodwillhasbeencombinedforpurposesofimpairment reviews. level, comparedtothepreviouslevelusedofUK–Carphone, Ireland–Carphone,UK&IDixonsandSimplifydigital.Forthis has determinedthatthelevelatwhichgoodwillforUK&Ireland businessismonitoredatanoverallUK&Ireland and operationalmanagement,thecombinedreportingof results formanagementreportingpurposes, activities followingtheMerger,includingintroductionof‘store-within-a-store’ operations,theintegrationoffinance monitored forgoodwillimpairmentpurposesunderIAS36‘Impairment ofAssets’.Duetothecontinuedintegration operations ofCarphoneWarehouseandDixonsismonitoredbymanagement,thereforethelevelatwhichthis During theyear,managementhasreassessedlevelatwhichgoodwillpreviouslyrelatedtoUK&Ireland • • • • • • criteria: As requiredbyIAS36,goodwillissubjecttoannualimpairmentreviews.Thesereviewsarecarriedoutusingthefollowing b) Spain Nordics UK &Ireland The componentsofgoodwillcomprisethefollowingbusinesses: a) Accumulated impairment Cost At endofperiod Foreign exchange Additions (note24) At beginningofperiod 9 Goodwill ‌‌ ‌‌ Carryingvalueofgoodwill Goodwillimpairmenttesting the recoverableamountofeachCGUgroupisdeterminedbasedoncalculatingitsvalueinuse(‘VIU’) ‘Impairment ofAssets’; the mannerinwhichthesebusinessesarerunandmanagedisusedtodetermineCGUgroupingasdefinedIAS36 business acquisitionsgenerateanattributedamountofgoodwill; the pre-taxdiscountrate. the growthratebeyondfiveyears;and management’s projections; the VIUisthencomparedtocarryingamountinorderdeterminewhetherimpairmenthasoccurred. of GrossDomesticProduct(‘GDP’) cash flowsbeyondthefive-yearperiodareextrapolatedusingalong-termgrowthrateequivalenttoforecasts period; the VIUiscalculatedbyapplyingdiscountedcashflowmodellingtomanagement’sownprojectionscoveringafive-year ‌‌ ‌‌ growthratesfortherelevantmarket;and Dixons Carphone plc AnnualReport andAccounts 2016/17

‌‌ ; £million £million 29 April 29 April 3,111 1,014 2,066 3,111 3,111 3,111 3,054 2017 2017 31 53 — 4

3,054 2,065 3,054 3,054 3,054 2,989 £million £million 30 April 30 April 959 2016 2016 30 39 26 — 121

Financial statements Financial statements 122 UK &Ireland * The valueattributedtotheseassumptionsforthemostsignificantcomponentsofgoodwillareasfollows: used togeneratethevaluesattributedtheseassumptions. calculation. HistoricalamountsforthebusinessesunderimpairmentreviewaswellfromotherpartsofGroupare profit marginsandtheinyearfiveofprojectionswhichisturnusedtocalculateterminalvalueVIU five targets,butalsoonthecurrentfinancialyearbase.Thesewhencombined,accordinglydriveresulting The compoundannualgrowthrateinsalesandcostscanriseaswellfallyear-on-yeardependingnotonlyontheyear Key assumptionsusedindeterminingthefive-yearprojectionscomprisegrowthsalesandcostsoverthisperiod. management drawsonpastexperienceasameasuretoforecastfutureperformance. in ordertomaintainandoperatethebusinessescompetetheirmarkets.Informingfive-yearprojections, from thesefive-yearprojectionsincludeongoingcapitalexpenditurerequiredtodevelopandupgradethestorenetwork views onthefutureachievablegrowthinmarketshareandimpactofcommittedinitiatives.Thecashflowswhichderive have regardtotherelativeperformanceofcompetitorsandknowledgecurrentmarkettogetherwithmanagement’s budget for2017/18togetherwiththethree-yearstrategicplansasabaseextrapolatedtofiveyears.Theseprojections The longtermprojections,whichhavebeenapprovedbymanagement,preparedusingthelatest b) 9 Goodwill Notes totheGroup financialstatements carrying amountofgoodwilltoexceeditsvalueinuse. The directorshaveconcludedthattherearenoreasonablypossiblechangesinkeyassumptionswhichwouldcausethe variables heldconstant.Considerationofsensitivitiestokeyassumptionscanevolvefromonefinancialyearthenext. A sensitivityanalysishasbeenperformedoneachofthebasecaseassumptionsusedforassessinggoodwillwithother c) flows reflectcurrentmarketassessmentsofthetimevaluemoneyandrisksspecifictoCGUs. growth ratefortheterritoriesinwhichbusinessesoperate.Thepre-taxdiscountratesappliedtoforecastcash Growth ratesusedweredeterminedbasedonthird *  Nordics are unchanged. compound annualgrowthratesincostswere2.6%and2.1%respectively.Growthpre-taxdiscountthecomparativeperiod separated basis,thecompoundannualgrowthratesinsalesusedforUK–Carphoneand&IrelandDixonswere2.8%2.3% , on a comparative valueshavebeendisclosedonanoverallUK&Irelandlevelfollowingthechangediscussedabove.Inprioryear,a ‌‌ ‌‌ Goodwillimpairmentsensitivityanalysis Goodwillimpairmenttesting Dixons Carphone plc continued AnnualReport andAccounts 2016/17 continued

Compound growth in 2.6% 2.7% annual sales Compound - growth in party long-termgrowthrateforecastsandarebasedontheGDP 2.6% 2.6% annual costs Growth rate beyond five 1.8% 2.0% years 29 April2017 discount Pre-tax 8.4% 8.2% rate Compound growth in 4.4% 2.5% annual sales Compound growth in 4.3% 2.4% annual costs Growth rate beyond five 2.0% 2.1% years 30 April2016 discount 8.1% 8.8% Pre-tax rate

Simplifydigital Gigantti Elkjøp Elgiganten CurrysPCWorld statements. Theprimaryintangibleassets,theirnetbookvaluesandremainingamortisationperiodsareasfollows: Customer relationshipsandbrandsincludeintangibleassetswhichareconsideredindividuallymaterialtothefinancial Individually materialintangibleassets charged astheassetshavenotyetbeenbroughtintouse. Software andlicencesincludeassetswithacostof£24million(2016:£15million) Balance at30April2016 Accumulated amortisationandimpairmentlosses Cost Balance at30April2016 Foreign exchange Amortisation Additions Acquired onacquisitionofsubsidiary Balance at3May2015 Balance at29April2017 Accumulated amortisationandimpairmentlosses Cost Balance at29April2017 Foreign exchange Impairment Amortisation Additions Balance at1May2016 10 Intangibleassets Dixons Carphone plc

£million £million Brands Brands 336 299 372 299 317 317 364 317 (73) (26) (47) (26) — — — — 8 7 ‌‌ ‌‌

‌‌ ‌‌ relationships relationships Customer ‌‌ Customer onwhichamortisationhasnotbeen AnnualReport andAccounts 2016/17 Acquisition intangibles £million £million Acquisition intangibles (50) (42) (14) 20 26 23 73 23 31 31 73 31 — — — — (8) (1) ‌‌ ‌‌ ‌‌

‌‌ ‌‌ Sub-total Sub-total £million £million (123) 362 322 445 322 348 348 437 348 (34) (89) (40) 20 — — — 6 8

‌‌ ‌‌

‌‌ ‌‌ and licences Software and Net book Software licences £million £million £million (145) value 163 376 140 277 192 231 231 192 192 (57) (39) (85) 63 16 31 48 64 97 (3) 3 2 2 ‌‌ ‌‌

‌‌ ‌‌ ‌‌ amortisation Remaining £million £million (268) (174) period Years 525 540 714 540 553 821 553 540 Total (91) Total (79) 13 13 13 13 63 23 10 97 (3) 123 4 8 ‌‌ ‌‌

‌‌ ‌‌ ‌‌

Financial statements Financial statements 124 investment propertiesissetoutinnote30. appropriate yieldratesandmarketevidenceofrecenttransactions. FutureminimumleaseincomeinrespectoftheGroup’s in thelocationandcategoryofpropertiesbeingvalued.The valuationofpropertieswasperformedbyreferenceto £14 million) investment propertywasdeterminedbyanexternal,independent propertyvaluationexpertas£13million(2016: Freehold landandbuildingsincludetheGroup’sinvestmentproperty, whichisrecordedatcost.Thefairvalueof Assets heldunderfinanceleases Assets inthecourseofconstruction Land notdepreciated Included innetbookvalueasat30April2016 Balance asat30April2016 Accumulated depreciation Cost Balance asat30April2016 Foreign exchange Impairment Disposals Depreciation Additions Acquisition ofsubsidiary Balance at3May2015 Assets heldunderfinanceleases Assets inthecourseofconstruction Land notdepreciated Included innetbookvalueasat29April2017 Balance asat29April2017 Accumulated depreciation Cost Balance asat29April2017 Foreign exchange Disposals Depreciation Additions Balance at1May2016 11 Property, plant&equipment Notes totheGroup financialstatements Dixons Carphone plc ‌‌ . Thevaluationexperthasappropriaterecognisedprofessional qualificationsaswellrecentexperience AnnualReport andAccounts 2016/17 Land and buildings Land and buildings £million £million 118 100 100 117 100 (26) (17) (20) 51 92 92 57 33 93 — — — — — — (4) (8) (6) 8 4 8 ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ equipment equipment and other and other Fixtures, Fixtures, £million £million fittings fittings (278) (185) 234 328 606 328 147 266 266 451 266 124 (87) (92) 52 40 — — — — (3) (4) (3) 1 5 6 ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ £million £million (304) (202) 327 420 724 420 151 366 366 568 366 157 Total (95) Total (23) (98) 51 52 57 40 (7) (4) 8 6 1 8 5 ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ Finished goodsandforresale 13 Inventory note 26. comprehensive incomeasclassifiedan‘available-for-sale’investment.Thefairvaluationtechniquesusedareoutlinedin the investmenthasthereforebeenvaluedat£19million.Themovementinvaluetakentoother the successfulIPO,areadily-determinablefairvalueisavailablebasedonmarketpriceoflistedshares,and IPO for31.8%ofitsshareholdings,whichreducedtheGroup’sinvestmentto10.2%Unieurooperations.Given was initiallyrecognisedat£ Electronics Holdingss.r.l(IEH) In November2013,theGroupdisposedofit’sUnieurooperations,andretainedaninvestment14.96%inItalian Investments classifiedasavailable-for-sale Investments wholesaler network,whicharenotconsideredsignificant. The remainingjointventureinvestments(£1million)relatetoheldbyourNordicsoperationsthroughthe as disclosedinnotes4and32. light ofthisdecision,thetradingresultincurrentandpriorfinancialyearshasbeenrestatedasbusinessestobeexited, In June2017,theGroupannouncedthatinterestheldinSprintjointventurewouldbesold,assetoutnote33. comprehensive income. other comprehensiveincomeintheperiodandthereforeshareofresultsrepresentsGroup’stotal The shareofresultsrecognisedallrelatetobusinessesbeexited,asdescribedbelow.Therewerenoitems Closing balance Foreign exchangegain Share ofresults Additions Opening balance The Group’sinterestsinjointventuresareanalysedasfollows: Sprint ConnectLLC Name The principalinterestsinjointventuresareasfollows: injointventures Interests 12 Interests injointventures andinvestments n il basedonthefairvalueofretainedinterest.InMarch2017,Unieuroundertookan ‌‌ , aholdingcompanywhichinturnowned100%oftheUnieurooperations.Theinvestment Country ofincorporationorregistration United StatesofAmerica Dixons Carphone plc AnnualReport andAccounts 2016/17 Nature ofbusiness Distribution

50.0% £million £million £million Interest 29 April 29 April 29 April 29 April 1,101 2017 2017 2017 2017 (17) 19 18 29 1 5

‌‌ 50.0% £million £million £million 30 April 30 April 30 April 30 April Interest 2016 958 2016 2016 2016 — — — (4) 125 5 9 ‌‌

Financial statements Financial statements 126 Over fourmonths Two tofourmonths Under twomonths provision basedonhistoricalratesofrecoverability. The Group’stradereceivablesincludedthefollowingamounts whichwerepastdue,butfortheGrouphasmadeno Closing balance Receivables writtenoff asirrecoverable Charged totheincomestatement Opening balance Movements intheprovisionforimpairmentoftradereceivablesisasfollows: Over fourmonths Two tofourmonths Under twomonths Past due: Not yetdue Ageing ofgross tradereceivables andprovisions: approximates fairvalue. using discountrateswhichreflecttherelevantcostsoffinancing.Thecarryingamounttradeandotherreceivables receivable onsales,asdescribedinnote26.Wheretheeffectismaterial,tradeandotherreceivablesarediscounted The majorityoftradeandotherreceivablesarenon-interestbearing.Non-currentmainlycomprisecommission Current Non-current Accrued income Other receivables Prepayments Less provision forbadanddoubtfuldebts Trade receivables 14 Trade andotherreceivables Notes totheGroup financialstatements Dixons Carphone plc AnnualReport andAccounts 2016/17

Gross trade receivables £million 1,284 1,436 152 108 22 22

Provision £million (13) (13) (18) — — (5)

‌‌ ‌‌ ‌‌ ‌‌ 29 April2017 receivables Net trade £million 1,279 1,418 139 108 22

9 Gross trade receivables 1,304 1,186 £million 118

47 14 57

£million £million £million Provision 29 April 29 April 29 April 1,667 1,136 1,667 1,418 1,436 £million 531 118 103 139 108 2017 2017 2017 (18) (18) (20) (20) (13) (11) 28 22 10 (8) (1) (1) (7) 9

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ 30 April2016 receivables Net trade 1,521 1,113 1,521 1,284 1,304 1,179 1,284 £million £million £million £million 30 April 30 April 30 April 408 115 100 105 105 2016 2016 2016 (20) (20) (11) (20) 22 36 13 56 11 36 13 56

‌‌ ‌‌ ‌‌ ‌‌

consideration payable. in growthassumptionsusedthefairvaluemethodologywould resultinareductiontheamountofcontingent fair valueofcontingentconsiderationarrangementshasbeen estimatedbyapplyingtheincomeapproach.Areduction of SimplifydigitalandtheEpoqkitchenbusinessagainstearnings growthtargetsoveraperiodofuptofouryears.The Earn-out considerationofupto£22millionispayableincash (2015/16: £23million)andiscontingentontheperformance Change invaluation(note4) Settlements Recognised onacquisitionofsubsidiary(note24) Opening balance Closing balance Deferred andcontingentconsideration 17 Deferred andcontingentconsideration trade andotherpayablesapproximatestheirfairvalue. acquisitions. Theseliabilitiesareunwoundovertheperiodofrelevantlease,upto21years.Thecarryingamount Non-current othercreditorsrelateprincipallytopropertyleasesthataredeemedbeover-rentedwhicharosefrom Deferred income Accruals Other creditors Other taxesandsocialsecurity Trade payables 16 Trade andotherpayables requirements. ThesefundsarenotavailabletooffsettheGroup’sborrowings. potential customersupportagreementliabilitiesaswellbytheGroup’sinsurancebusinessestocoverregulatoryreserve equivalents, £62million(2016:£67million) Cash atbankandondepositincludesshort Cash atbankandondeposit 15 Cashandcashequivalents ‌‌ ‌‌ isrestrictedandpredominantlycomprisesfundsheldundertrusttofund - term bankdepositswhichareavailableondemand.Withincashand ‌‌ Dixons Carphone plc

AnnualReport andAccounts 2016/17 £million £million Current Current 2,502 1,689 245 159 368 41 8

29 April2017 29 April2017 Non-current Non-current £million £million 178 368 141 49 14 — —

£million £million 29 April 29 April 2,268 1,373 £million £million Current Current 156 360 108 271 209 2017 2017 (11) 22 33 12 — —

‌‌ 30 April2016 30 April2016 Non-current £million £million £million £million 30 April 30 April current 423 157 206 233 Non- 2016 2016 (26) 33 23 31 21 60 — — 127 5 ‌‌

Financial statements Financial statements 128 The fairvalueoftheGroup’sleaseobligationsapproximatestheir carryingamount. no arrangementshavebeenenteredintoforcontingentrental payments. 9.29% (2016:5.51%and8.67%) lease termsvarybetween9and20years.Theeffectiveborrowing rateonindividualleasesrangedbetween5.51%and The majorityoffinanceleasesrelatetopropertiesintheUKwhere obligationsaredenominatedinSterlingandremaining Amounts dueaftermore thanoneyear Less amountsduewithinoneyear Present valueofleaseobligations Less future financecharges Amounts due: 19 Financeleaseobligations The Grouphasoverdraftanduncommittedmoneymarketfacilitiestotallingapproximately£13 Bank overdraftandotheruncommittedfacilities The rateofinterestpayableonthetermloanisamargin1.50%perannumoverapplicablereferencerate. The rateofinterestpayableonfacilitiesisamargin1.10%perannumovertheapplicablereferencerate. addition, on28October2016anadditional On 7October2016afurther£250millionmulti-currencyrevolvingcreditfacilitywassignedwhichmaturesin2020.In 7 October 2016thisfacilitywasextendedtomaturein2021. in October2020andreplacedthemulti-currencytermrevolvingcreditfacilitywhichwaspreviouslyplace.On On 8October2015theGroupsignedanewmulti-currencyrevolvingcreditfacilityfor£800million,whichmatures Committed facilities Loans andotherborrowings Non-current liabilities Bank overdrafts Current liabilities 18 Loansandotherborrowings Notes totheGroup financialstatements In more thanfiveyears In more thanoneyearandnotmore thanfiveyears Within oneyear Dixons Carphone plc AnnualReport andAccounts 2016/17 ‌‌ . Interestratesarefixedatthecontractdate.Allleaseson afixedrepaymentbasisand € 50 milliontermloanfacilitywasalsosigned,whichmaturesin2020.

payments Minimum £million lease 149 103 (60) 86 89 37 (3) 9 ‌‌ ‌‌ 29 April2017 payments minimum value of £million Present 6 million(2016:£128million) lease 86 89 89 52 29 — (3) 8

‌‌ payments Minimum £million 29 April £million 391 381 155 111 lease 2017 (64) 10 10 89 91 35 (2) 9 ‌‌ ‌‌

Present value 30 April2016 of minimum payments £million £million 30 April 409 409 lease 2016 89 91 91 54 29 — — — (2) 8 ‌‌

‌‌ . Retirement benefitobligations–UK contributions aremadetostatepensionschemeswithdefined benefitcharacteristics. to newentrants,withassetsheldbyalifeinsurancecompany aswellanunsecuredpensionarrangement.Inaddition, In theNordicsdivision,Groupoperatessmallfundedsecured definedbenefitpensionschemes,whicharealsoclosed is offeredtoeligibleemployees. offered tothoseactivemembersofthedefinedbenefitsection atthattime.Membershipofthedefinedcontributionsection entrants andon30April2010wasclosedtofutureaccrualwith automaticentryintothedefinedcontributionsectionbeing with theactuary’sadvice.Since1September2002,defined benefitsectionoftheschemehasbeenclosedtonew fund. Theschemeisvaluedbyaqualifiedactuaryatleastevery threeyearsandcontributionsareassessedinaccordance operates intheUKincludesafundeddefinedbenefitsectionwhose assetsareheldinaseparatetrusteeadministered The Groupoperatesadefinedbenefitandnumberofcontributionschemes.principalschemewhich 21 Retirement andotherpost-employmentbenefitobligations Non-current provisionsareexpectedtobeutilisedoveraperioduptenyears. costs ofinsuranceclaims,contingentliabilitiesrecognisedthroughbusinesscombinations,andotheronerouscontracts. Other provisionsrelatetowarrantiesprovidedinrelationbusinessdisposalsandrespectoftheexpected costs asdescribedinnote4. provisions fordilapidations.Additionsduringtheyearended30April2016relatedprincipallytopropertyrationalisation Property provisionsrelatemainlytocostsassociatedwithoperatingleaseearlyexistpremiums,onerousleasesand information thatisconsideredtoberelevant. performance penalties.Theanticipatedcostsoftheseitemsareassessedbyreferencetohistoricaltrendsandanyother Sales provisionsrelateto‘cash-back’andsimilarpromotions,productwarranties,returns,networkoperator appropriate communicationtothoseaffectedhasbeenundertakenatthebalancesheetdate. arising asaresultofreorganisation,andareonlyrecognisedwhereplansdemonstrablycommitted Reorganisation provisionsrelateprincipallytoMergerrelatedcostsandredundancyotheronerouscontracts Non-current Current Analysed as: At endofperiod Foreign exchange Utilised intheperiod Released intheperiod Additions At beginningofperiod 20 Provisions

anisation £million Reorg- – Nordics (16) 12 12 12 16 12 — — —

‌‌ £million Sales (29) 10 10 30 — 2 8 1 8

‌‌ Property £million (34) (24) 62 19 43 62 29 90 1

‌‌ ‌‌ £million Other 21 21 21 11 15 — — (4) (1) Dixons Carphone plc

‌‌ ‌‌ 29 April2017 £million 105 105 125 Total (83) (25) 21 84 86 2

‌‌ ‌‌ anisation £million Reorg- (26) 12 12 12 15 23 — — — AnnualReport andAccounts 2016/17 ‌‌

£million Sales (40) 42 — — 8 1 7 8 6 ‌‌

Property £million

90 46 44 90 71 25 — — (6) ‌‌

£million 29 April £million 591 589 2017 Other 2 15 15 15 21 — — (9) (1)

4 ‌‌ ‌‌

30 April2016 £million £million 30 April 474 472 125 125 132 2016 Total (81) 47 78 75 — (1) 129 2 ‌‌ ‌‌

Financial statements Financial statements 130 89.7 yearsformenandbetween 88.9yearsand90.8forwomenthosereaching65 overthenext20years. 1.25% perannumforwomen.Applying suchtablesresultsinanaverageexpectedlongevity ofbetween87.5yearsand 2003 byusingthenewCMI2015Coreprojectionswithalong termrateofimprovement1.5%perannumformenand 100% formalesand105%females.Inaddition,anallowance hasbeenmadeforfutureimprovementsinlongevityfrom tables publishedbytheCMI,basedonexperienceofSelf-Administered PensionSchemes(SAPS) 2016. Inparticular,postretirementmortalityhasbeenassumed tofollowthestandardmortalitytables‘S2’AllPensioners The Groupusesdemographicassumptionsunderlyingthelast formalactuarialvaluationoftheschemeasat31March Inflation Rate ofincrease inpensions inpayment/deferred pensions(pre /postApril2006 accrual) Discount rate Rates perannum independent actuaries. The assumptionsusedincalculatingtheexpensesandobligationsaresetbydirectorsafterconsultationwith (i) actuaries indeterminingfundingarrangements. in thestatementofcomprehensiveincome.ThemethodssetoutIAS19aredifferentfromthoseusedbyscheme statement, thefundedstatusandamountsrecognisedinconsolidatedbalancesheetother The followingsummarisesthecomponentsofnetdefinedbenefitexpenserecognisedinconsolidatedincome c) £1,490 million. the valueofassetswassufficienttocover62%benefitsaccruedmemberswithliabilitiesamounting At 31March2016,themarketvalueofscheme’sinvestmentswas£930millionand,basedonaboveassumptions, † Inflation Rate ofincrease topensions Discount rateforaccruedbenefits The principalactuarialassumptionsasat31March2016were: valuation willbeasat31March2019. agreed contributionof£36million,whichleadstototalcontributionspaidin2016/17£43million.Thenexttriennial result ofthevaluation,duringcurrentyearGroupagreedtopayanamount£7millioninadditionpreviously contributions inrespectoftheschemewillincreaseto£46millionperyearstartingfrom2017/18financialyear.Asa with liabilitiesof£560million.A‘recoveryplan’basedonthisvaluationwasagreedtheTrusteessuchthat A fullactuarialvaluationoftheschemewascarriedoutasat31March2016andshowedashortfallassetscompared b) The pensionchargeinrespectofdefinedcontributionschemeswas£24million(2015/16:£23million) a) or reducethevalueofassetsplans. members, lowerthanexpectedreturnoninvestmentsandhigherinflation,whichmayincreasetheliabilities The definedbenefitpensionschemesexposetheGrouptoactuarialriskssuchaslongerthanexpectedlongevityof 21 Retirement andotherpost-employmentbenefitobligations Notes totheGroup financialstatements ‌‌ ‌‌ ‌‌ ‌‌ UKDefinedbenefitpensionscheme–IAS19 Definedcontributionpensionschemes UKdefinedbenefitpensionscheme–actuarialvaluationandassumptions that in20years’timetheassetportfolioisprojectedtobe90%investedmatchingassetsandmulti-assetcredit. growth assets(suchasequities)tomatchingbonds)andmulti-assetcreditoveraperiodof10yearsfrom20262036so ts from The discountrateisbasedonalinearde-riskingmethodologywhichassumestheScheme’sinvestmentstrategyswitchesinvestmentsfrom rnia asmtos adopted assumptions Principal Dixons Carphone plc AnnualReport andAccounts 2016/17 †

– Matchingportfolio – Growth portfolio continued ‌‌

‌‌ ‌‌ .

withmultipliersof 3.2% / 29 April 3.3% 2.2% 2.6%

2017

Rate perannum 0% –3.6% 2.9% / 2.95% 30 April 2.1% 3.5% 3.0% 2.2% 4.6% 2016

Closing fairvalue Benefits paid Remeasurements inothercomprehensive income: Employer specialcontributions Interest income Opening fairvalue Changes inthefairvalueofschemeassets: The weightedaveragematurityprofileofthedefinedbenefitobligation attheendofyearis21years. Closing obligation Benefits paid Demographic assumptions Experience adjustments Financial assumptions Changes inthepresentvalueofdefinedbenefitobligation: Net obligation Fair valueofplanassets Present valueofdefinedbenefitobligations Remeasurements inothercomprehensive income–actuariallosses/(gains) Interest cost Opening obligation (iv) Cumulative actuarialloss Actual returnonplanassets(excludingamountsincludedinnetinterest expense) Remeasurement ofschemeassets: Change indemographicassumptions Experience adjustments Changes infinancialassumptions Remeasurement ofdefinedbenefitobligation–actuarialgains/(losses) (iii) Net interest expenseondefinedbenefitobligation (ii) c) 21 Retirement andotherpost-employmentbenefitobligations ‌‌ ‌‌ UKDefinedbenefitpensionscheme–IAS19 ‌‌ ‌‌ Actual returnonplanassets(excluding interest income) Amounts recognised intheconsolidatedbalancesheet Amounts recognised Amounts recognised in the consolidated statement of comprehensive income: intheconsolidatedstatementofcomprehensive Amounts recognised Amounts recognised inconsolidatedincomestatement Amounts recognised continued ‌‌ Dixons Carphone plc continued ‌‌ arisingfrom: ‌‌ arisingfrom changesin: ‌‌ AnnualReport andAccounts 2016/17

Year ended Year ended (1,714) £million £million £million £million £million 29 April 29 April 29 April 29 April 29 April 1,125 1,714 1,395 1,125 (589) (144) (374) 174 923 374 174 2017 2017 2017 2017 2017 (47) (47) (58) 43 32 48 58 16 (2) 2

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Year ended Year ended (1,395) 1,395 1,431 £million £million £million £million £million 30 April 30 April 30 April 30 April 30 April (472) 923 945 923 2016 2016 2016 2016 2016 (33) (57) (33) (27) (25) (57) 35 33 49 27 25 16 — — (5) 131 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 132 benefits areunfunded.At29April 2017thenetobligationinrelationtothesebenefitswas£3 million(2016:£3million) The Groupoffersotherpost-employment benefitstoemployeesinoverseasterritories,particular inGreece.These d) correlated. it isunlikelythatthechangesinassumptionswouldoccurisolation ofoneanotherassometheassumptionsmaybe The sensitivityanalysispresentedabovemaynotberepresentative oftheactualchangeindefinedbenefitobligationas † Mortality rate:1yearincrease Inflation rate:0.25%increase Discount rate:0.25%increase Positive /(negative) and balancesheet. estimate ofthepotentialimpactseachthesevariablesifappliedtocurrentyearconsolidatedincomestatement assumptions arethediscountrate,rateofinflationandassumedmortalityrate.Thefollowingtableprovidesan benefit costsandliabilitiesmayhaveamaterialimpactonthe2016/17incomestatementbalancesheet.Themain which compriseapproximately49%ofthescheme’sassets.Changesinassumptionsusedfordeterminingretirement The valueoftheUKdefinedbenefitpensionschemeassetsaresensitivetomarketconditions,particularlyequityvalues (v) Actual returnontheschemeassetswasagainof£174million(2015/16:loss£57million) assets primarilycomprisingholdingsininflationlinkedgilts independent investmentconsultant.Theschemeinvestsinadiverserangeofassetclassesassetoutabovewithmatching The investmentstrategyoftheschemeisdeterminedbyindependentTrusteesthroughadviceprovidedan Other Cash andcashinstruments Liability driveninvestments(‘LDIs’) Corporate bonds Index-linked gilts Property Private credit Private equity Emerging marketmultiassetfunds Multi-asset credit funds Diversified growth Overseas andglobalequities Analysis ofschemeassets: 21 Notes totheGroup financialstatements ‌‌ Sensitivities ‌‌ Otherpost-employmentbenefits–IAS19 The increaseinschemebenefitsprovidedtomembersonretirementissubject toaninflationcap. Retirement andotherpost-employmentbenefitobligations Dixons Carphone plc ‌‌ effect AnnualReport andAccounts 2016/17 † ‌‌

– Unlisted – Unlisted – Listed – Listed – Listed – Unlisted – Unlisted – Listed – Unlisted – Unlisted – Listed – Unlisted – Listed – Unlisted – Listed – Listed , corporatebonds continued

andliabilitydriveninvestments Year ended £million 29 April 2017 (1) (2) Net financecosts 2

‌‌ ‌‌

‌‌ . Year ended £million 30 April 2016 (2) (2) 2

‌‌

‌‌‌‌

£million £million 29 April 29 April 1,125 115 320 310 2017 2017 (69) (74) . 92 66 90 14 21 70 30 43 45 — — — — 1

‌‌ ‌‌

Net deficit £million £million 30 April 30 April ‌‌ . 170 277 923 112 102 2016 2016 (41) (52) 45 24 28 11 75 20 80 13 37 — — 1 3 ‌‌

‌‌‌‌

year ended30 April2016.Duringthecurrentperiod,nomaterialadjustments wereidentified. value ofidentifiableassetsandliabilitiesSimplifyDigitalLimited werereportedintheannualreportandaccountsforthe On 31March2016theGroupacquired100%ofissuedshare capitalofSimplifyDigitalLimited.Theprovisionalfair £4 million wasrecognisedfromthistransaction. In August2016theGroupacquiredtradeandassetsoften FONAstoresinDenmarkfor£6million.Goodwillof 24 Acquisitions Final dividendfortheyearended29April2017of7.75pperordinary share at theforthcomingAnnualGeneralMeeting: The followingdistributionisproposedbuthadnotbeeneffectedat29April2017andsubjecttoshareholders’approval Interim dividendfortheyearended29April2017of3.50pperordinary share Final dividendfortheyearended30April2016of6.50pperordinary share Interim dividendfortheyearended30April2016of3.25pperordinary share Final dividendforthe13monthsended2May2015of6.00pperordinary share Amounts recognised asdistributionstoequityshareholders intheperiod 23 Equitydividends demerger oftheGroupfromTalkTalkin2010. are recognisedinretainedearnings–refertonote5forfurtherinformation.Thedemergerreservearoseaspartofthe which weredesignatedandeffectiveascashflowhedgesinterestratehedges.OwnsharesheldbytheGroup’sE Retained earningsat29April2017includes£4millionofgains(2016:£18losses)associatedwithderivatives changes inequity. Movement inretainedearningsandreservesduringthereportedperiodsarepresentedconsolidatedstatementof b) schemes. for considerationof£4 million(2015/16:£nil)tosatisfyexercisesshareoptionsawardedundertheGroup’sSAYE During theyearended29 April2017,1,725,661(2015/16:nil)ordinaryshareswithnominalvalueof0.1peachwereissued Ordinary shares of0.1peachinissueattheendperiod Issued duringtheperiod Ordinary shares of0.1peachinissueatthebeginningperiod Authorised, allotted,called-upandfullypaidordinary shares of0.1peach a) 22 Share capital,retainedandreserves earnings hr capital Share ‌‌ ‌‌ Retained earnings andreserves Retainedearnings – onordinary shares of0.1peach Dixons Carphone plc

AnnualReport andAccounts 2016/17 29 April 29 April 1,151 1,153 1,153 million million 2017 2017 2

1,151 1,151 1,151 30 April 30 April million million 2016 2016 —

£million £million £million 29 April 29 April 29 April 115 2017 2017 2017 40 75 — — — 1 1 1

£million £million £million £million 30 April 30 April 30 April 106 BT 2016 2016 2016 89 37 69 — — — 133 1 1 1

Financial statements Financial statements 134 are notmaterially different. The directorsconsiderthatthe bookvalueoffinancialassetsandliabilitiesrecordedatamortised costandtheirfairvalue appropriate totheinstrument. no earlyredemption,orbyrevaluing forwardcurrencycontractsandinterestrateswapstoperiod endmarketratesas Fair valueshavebeenarrivedat bydiscountingfuturecashflows(wheretheimpactof ismaterial) value hierarchy.Therehavealso beennotransfersofassetsorliabilitiesbetweenlevelsthe fairvaluehierarchy. the balancesheet,beingderivativefinancialassetsandliabilities, areobservableandclassifiedaslevel2inthefair The significantinputsrequiredtofairvaluetheGroup’sremaining financialinstrumentsthataremeasuredatfairvalueon note 17. unobservable inputs.Anexplanationofthevaluationmethodologies andtheinputstovaluationmodelisprovidedin Contingent considerationiscategorisedaslevel3inthefairvalue hierarchyasthevaluationrequiresuseofsignificant and arevaluedbasedonquotedbidpricesinanactivemarket. Available-for-sale financialassets,inrelationtolistedinvestments held,arecategorisedaslevel1inthefairvaluehierarchy An explanationofthevaluationmethodologiesandinputs tothemodelsareprovidedbelowfornetworkcommission. current carryingvalue. of significantunobservableinputs.Underthisalternativemeasurement basistheirfairvalueisapproximatelyequalto profit andlossthesereceivableswouldbecategorisedaslevel3inthefairvaluehierarchyvaluationrequiresuse is £1,014million(2016:£904million) carrying valueofsuchongoingnetworkcommissionreceivables(netreceivedatthepointconnection) carrying valueofreceivablestotheassumptionsandestimatesthismethodhasbeenprovidedbelowinnote26(h) is akeysourceofestimationuncertainty,anexplanationthevaluationmethodandanalysissensitivity IAS 39 andarethereforeaccountedforatamortisedcost.Themeasurementofcertainnetworkcommissionreceivables The Grouphasassessednetworkcommissionreceivablestomeetthedefinitionofloansandasdefinedin • • • measurements bylevelbasedonthefollowingfairvaluemeasurementhierarchy: Financial instrumentsthataremeasuredatfairvalueinthefinancialstatementsrequiredisclosureof 26 Financialriskmanagementandderivativefinancialinstruments Investing activities Operating activities within theConsolidatedcashflowstatement: The netcashflowsincurredbythediscontinuedoperationduringyearareasfollows.Theseincluded b) operations andothercostsassociatedwiththeexits. with acquirers,adjustmentstonetassetsdisposed,therecyclingofforeigncurrencytranslationreservesdiscontinued The netlossondisposalrecognisedintheprioryearof£18millionprimarilyrelatestoworkingcapitaladjustmentsagreed 2017. There werenoothersignificantmovementsinresultsrelatingtodiscontinuedoperationstheyearended29April recognised intheoriginallossondisposal. been made,thisincomehasclassifiedasadiscontinuedoperationtheoriginalimpairmentofloanwas in 2013,whichwasfullyimpairedaspartofthelossondisposal.Incurrentyear,repaymentprinciplehas investment. InApril2017theGroupreceived£5millionasrepaymentofaloantodisposedoperationfromdisposal The netprofitof£4millionrecognisedinthecurrentyearprimarilyrelatestoincomerelatingUnieuro a) 25 Discontinuedoperationsandassetsheldforsale Notes totheGroup financialstatements ‌‌ ‌‌ Profit /(loss)aftertax–discontinuedoperations Cashflowsfrom discontinuedoperations Level 3–inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(thatis,unobservableinputs) (that is,asprices) Level 2–inputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliabilityeitherdirectly Level 1–quotedprices(unadjusted) Dixons Carphone plc ‌‌ orindirectly(thatis,derivedfromprices) AnnualReport andAccounts 2016/17 ‌‌ . Ifnetworkcommissionreceivableswerealternativelyclassifiedatfairvaluethrough ‌‌ inactivemarketsforidenticalassetsandliabilities; ‌‌ ; and

Year ended £million 29 April 2017 22 21 (1) ‌‌ , assuming

‌‌ Year ended 30April £million ‌‌ ‌‌ . The . 2016 ‌‌ 30 32

2

Cash andcashequivalents Forward foreign exchange contracts Cash andcashequivalents Forward foreign exchangecontracts Cash andcashequivalents Forward foreign exchangecontracts (i) The Grouphasforwardforeignexchangecontractsandcashthataresubjecttoenforceablemasternettingarrangements. Offsetting financialassetsandliabilities (4) Heldatamortisedcost (3) Heldatfairvaluethroughprofitandloss (2) Classifiedasloansandreceivablesheldatamortisedcost (1) Heldasanavailable-for-saleasset Loans andotherborrowings Deferred andcontingentconsideration Finance leases Trade andotherpayables Net derivativefinancialliabilities Cash andcashequivalents Cash andcashequivalents Forward foreign exchangecontracts (ii) Net derivativefinancialassets Trade andotherreceivables excludingderivativefinancialassets Investments The bookvalueandfairoftheGroup’sfinancialassets,liabilitiesderivativeinstrumentsareasfollows: 26 Financialriskmanagementandderivativefinancialinstruments iaca assets Financial ‌‌ iaca liabilities Financial ‌‌

(1) (4) (4) (2)

(4) (3) (3)

(3) recognised financial recognised financial recognised financial recognised financial Gross amountsof Gross amountsof Gross amountsof Gross amountsof liabilities (1,934) (1,921) (1,687) (1,645) liabilities £million £million 1,878 2,120 1,896 2,137 £million £million assets assets (13) (42) 17 18 ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ recognised financial recognised financial liabilities setoff inthe assets setoff inthe recognised financial recognised financial assets setoff inthe liabilities setoff in Gross amountsof Gross amountsof the balancesheet Gross amountsof Gross amountsof Dixons Carphone plc balance sheet balance sheet balance sheet (2) (1,911) (1,911) (1,645) (1,645) £million £million 1,645 1,645 1,911 1,911 £million £million — — — — continued ‌‌ ‌‌

‌‌ ‌‌ financial liabilities financial liabilities presented inthe presented inthe financial assets Net amountsof Net amountsof presented inthe presented inthe Net amountsof Net amountsof financial assets balance sheet balance sheet balance sheet balance sheet AnnualReport andAccounts 2016/17 £million £million £million £million 251 233 226 209 (23) (10) (13) (42) (42) 18 17 — ‌‌ ‌‌

‌‌ ‌‌ ‌‌ Financial instruments Financial instruments instruments notset instruments notset off inthebalance off inthebalance not setoff inthe not setoff inthe balance sheet balance sheet

Financial Financial £million £million £million £million sheet sheet (11) (11) (17) (17) (2,570) 17 17 11 11 — — — — £million 29 April 1,564 (391) (22) (89) 209 ‌‌ ‌‌

‌‌ ‌‌ 2017 19 — 4

29 April2017 29 April2017 30 April2016 30 April2016 Net amount Net amount Net amount Net amount (2,378) 1,421 £million £million £million 30 April £million £million (409) 233 2016 (33) (91) (24) 234 233 215 209 (12) (10) (25) (25) — — 135 — (2) 1 6 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌

‌‌ ‌‌ ‌‌

Financial statements Financial statements 136 1% increase intheSterlinginterest rate financial instrumentsisbasedasfollows,assumingthatthe yearendpositionsprevailthroughouttheyear: Group cash,cashequivalents,loansandotherborrowingsare denominatedandonwhichthevaluationofmostderivative The effectontheincomestatementandequityof1%movements intheinterestrateforcurrencieswhichmost use oflongterminterestratederivativesinmanagingtherisks associatedwithmovementsininterestrates. these financialinstrumentsdependoninterestratesandperiods agreedatthetimeofrollover.Grouppolicypermits linked toLIBORandotherinterestratebasesasappropriate theinstrumentandcurrency.Futurecashflowsarisingfrom at floatingratesofinterestandwhichthereforeexposetheGrouptocashflowraterisk.Theseare The Group’sinterestrateriskarisesprimarilyoncash,cashequivalentsandloansotherborrowings,allofwhichare c) 10% movementintheChineseYuan Offshore exchangerate 10% movementintheNorwegianKrone exchangerate 10% movementintheDanishKrone exchangerate 10% movementintheSwedishKrona exchangerate 10% movementintheEuro exchangerate 10% movementintheUSdollarexchangerate comparison toyear foreign exchangecontractsaresensitivetomovementsinrates.Thissensitivitycanbeanalysed £2,856 At 29April2017,thetotalnotionalprincipalamountofoutstandingcurrencycontractswas£1,35 exposures aretheEuroandNorwegianKrone. converted intoSterlingataverageexchangeratesthroughouttheyear.TheGroup’sprincipaltranslationcurrency The translationriskonconvertingoverseascurrencyprofitsorlossesisnothedgedandsuchare to mitigatetheseexposures,withsuchcontractsdesignedcoverexposuresrangingfromonemonthyear. exposure beingtoEuro,NorwegianKroneandUSDollarfluctuations.TheGroupusesspotforwardcurrencycontracts to exchangeratefluctuations.Theseexposuresprimarilyarisefrominventorypurchases,withmostoftheGroup’s The Groupundertakescertaintransactionsthataredenominatedinforeigncurrenciesandasaconsequencehasexposure b) such derivativeshavebeenaccountedforseparately. or otherinstrumentswaspermitted.Nocontractswithembeddedderivativeshavebeenidentifiedand,accordingly,no Throughout theperiodunderreview,inaccordancewithGrouppolicy,nospeculativeuseofderivatives,foreignexchange contracts, foreignexchangeswapsandinterestrateswaps. from theserisks.Thesefinancialinstrumentsconsistofbankloansanddeposits,spotforwardforeignexchange the Board,usescertainfinancialinstrumentstomitigatepotentiallyadverseeffectsonGroup’sperformance rate risk) The Group’sactivitiesexposeittocertainfinancialrisksincludingmarketrisk(suchasforeignexchangeandinterest a) 26 Financialriskmanagementandderivativefinancialinstruments Notes totheGroup financialstatements ‌‌ ‌‌ ‌‌ Interest raterisk Financialriskmanagementpolicies Foreign exchangerisk

Dixons Carphone plc million) ‌‌ , creditriskandliquidityrisk.TheGroup’streasuryfunction,whichoperatesunderpoliciesapprovedby ‌‌ andhadafairvalueof£4millionasset(2015/16:£23liability)

end rates(assumingallothervariablesremainconstant) AnnualReport andAccounts 2016/17 continued ‌‌ asfollows:

profit before profit before tax increase (decrease) / Effect on Effect on headline headline £million £million ‌‌ . Monetaryassetsandliabilities tax — — — — — — 1

‌‌

29 April2017 29 April2017 totalequity totalequity Year ended Year ended (decrease) increase / Effect on Effect on £million £million 8 17 13 24 56 million(2016: 1 6 5

‌‌

tax increase / profit before profit before (decrease) Effect on Effect on headline headline £million £million — — — — — — — tax ‌‌

30 April2016 30 April2016 totalequity totalequity Year ended Year ended (decrease) increase / Effect on Effect on £million £million 58 — 1 6 2 2 5 ‌‌

Group’s exposuretoconcentration ofcreditrisk. consumer creditcheckingprocess priortoconnectionwiththenetwork.Thelargevolumeof MNOconsumersreducesthe below (consumerdefaultrates) consumers. Detailsofthesensitivity analysisofachangeincreditriskassociatedwiththeMNO consumerisdetailed significantly totheGroup’scredit riskexposure.Inadditioncreditisalsoinherentlyassociated withtheMNOend enterprises withwhomtheGrouphaswell-establishedrelationships andareconsequentlynotconsideredtoadd The majorityoftheGroup’stradereceivablesarebalancesdue fromMNOs,whicharegenerallymajormulti-national the Group’spolicyisupdatedasappropriate. principally fromtheGroup’sreceivablesconsumers.The Group’sexposuretocreditriskisregularlymonitoredand Credit riskistheoffinanciallosstoGroupifacounterparty failstomeetitscontractualobligations,andarises e) Trade andotherpayables Deferred consideration Loans andotherborrowings Derivative financialinstruments–receivable: Derivative financialinstruments–payable: Finance leases 30 April2016 Trade andotherpayables Deferred consideration Loans andotherborrowings Derivative financialinstruments–receivable: Derivative financialinstruments–payable: Finance leases 29 April2017 interest flows,assumingthatratesremainconstantandborrowingsarepaidinfulltheyearofmaturity. groupings. Theamountsdisclosedinthetablearecontractualundiscountedcashflows,includingbothprincipaland The tablebelowanalysestheGroup’sfinancialliabilitiesandderivativeassetsintorelevantmaturity committed borrowingfacilitiesareshowninnote18. bank facilities,excludingoverdraftsrepayableondemand,totalling£1,050million(2016:£800million) In ordertoensurethatsufficientfundsareavailableforongoingandfuturedevelopments,theGrouphascommitted reviewing regularlythelongtermandshortcashflowprojectionsforbusinessagainstresourcesavailabletoit. liabilities thataresettledbydeliveringcashoranotherfinancialasset.TheGroupmanagesitsexposuretoliquidityriskby Liquidity riskisthethatGroupwillencounterdifficultyinmeetingobligationsassociatedwithitsfinancial d) 26 Financialriskmanagementandderivativefinancialinstruments rdt risk Credit ‌‌ iudt risk Liquidity ‌‌ Forward foreign exchangecontracts Interest rateswaps Forward foreign exchangecontracts Forward foreign exchangecontracts Interest rateswaps Forward foreign exchangecontracts ‌‌ . Exposuretocreditriskassociated withtheMNOconsumerismanagedthroughextensive Dixons Carphone plc continued

one year (1,358) (2,343) (2,112) (2,856) AnnualReport andAccounts 2016/17 one year £million 2,832 1,362 £million Within Within (17) (12) (1) (9) (8) (7) (1) (9) ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ In more than one yearbut In more than one yearbut not more than five not more than five £million £million (227) (408) (266) (441) years years (37) (14) (19) (35) — — — — (1) (1) ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ In more than ‌‌ . Furtherdetailsof In more than five years five years £million £million (103) (111) — — — — — — — — — — — (2) ‌‌ ‌‌

‌‌ (1,358) (2,570) (2,378) (2,856) £million 2,832 1,362 £million (425) (149) (448) (155) Total (22) Total (33) (2) (2) 137 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 138 • • • • • • The keyinputstothemodelare: rate determinedinthemonthofconnection. receivables aremeasuredatthepresentvalueofestimated futurecashflowsdiscountedusingtheeffectiveinterest will bereceivedfromtheMNOanddiscountingthesebasedontheirtimingofreceipt.Subsequentlynetworkcommission the fairvalueofrevenueandassociatedreceivablesinmonthconnection,byestimatingallfuturecashflowsthat depends onconsumerbehaviourafterthepointofconnection.Adiscountedcashflowmethodologyisusedtomeasure Under certainarrangementswithMNOs,thecommissionreceivableformonthlyconsumerconnectionstoMNOs h) interest rate.ThesecontractsmaturebetweenJune2017andDecember2020. (2015/16: £1millionliability) The Groupheldinterestrateswapswithanotionalvalueof£60million(2016:£255million) rateswaps Interest was £2millionliability(2015/16:£6liability) The fairvalueofderivativeforeignexchangecontractsandswapsnotdesignatedascashflowhedges and effectiveascashflowhedges.Thesecontractsareexpectedtocoverexposuresrangingfromonemonthyear. £1,190 At 29April2017theGrouphadforwardandswapforeignexchangecontractsinplacewithanotionalvalueof Cash flowhedges swaps. TheGrouphasdesignatedfinancialinstrumentsunderIAS39asfollows: Derivative financialinstrumentscompriseforwardforeignexchangecontracts,swapsandinterestrate g) capital structureonanongoingbasis,includingassessingtherisksassociatedwitheachclassofcapital. in itsinsurancebusiness,theGroupisnotsubjecttoanyexternallyimposedcapitalrequirements.Themonitors Company, comprisingissuedcapital,reservesandaccumulatedprofits.Exceptinrelationtominimumcapitalrequirements consists ofcashandequivalents,loansotherborrowingsequityattributabletoholdersthe maximising thereturntoshareholdersthroughasuitablemixofdebtandequity.ThecapitalstructureGroup The Groupmanagesitscapitaltoensurethatentitieswithinthewillbeablecontinueasgoingconcerns,whilst f) the Group’smaximumexposuretocreditrisk. The carryingamountoffinancialassetsrecordedinthestatements,whichisnetimpairmentlosses,represents considered tobeadequatelycapitalisedcontinuemeettheirobligationsunderthefacility. The Group’sfundingisreliantonits£1,050millionbankfacilities,whichareprovidedbyninebanks;theseinstitutions are usedindeterminingmaximumcounterpartycreditrisk. The creditrisksoncashandequivalentsderivativefinancialinstrumentsarecloselymonitoredratings considered tobeirrecoverable.Detailsoftradereceivableswhicharepastduebutnotimpairedprovidedinnote14. appropriate, theGroupobtainscreditinsuranceonaccountsreceivable.Provisionismadeforanyreceivablesthatare World Servicesconsumers,businesstoconsumersandconsumercreditreceivables.Whereitisconsidered The Group’stradereceivablesalsoincludebalancesduefromequipmentmanufacturers,dealersandConnected 26 Financialriskmanagementandderivativefinancialinstruments Notes totheGroup financialstatements aia risk Capital ‌‌ ‌‌ Derivatives ‌‌ Networkcommissionreceivables consumerbehaviourrisk an MNO. upgrade propensity–the%of consumers initiallyconnectedbytheGroupestimatedtobesubsequently upgradedby contract term;and spend beyondtheinitialcontractperiod–oftimeconsumer remainsconnectedtotheMNOafterinitial consumer defaultrate–atwhichconsumersdisconnectfrom theMNO; out-of-bundle spend–additionalbytheconsumermeasured asa%oftotalspend; minimum contractperiod–thelengthofenteredinto bytheconsumer; revenue sharepercentage–theofconsumer’s spend(totheMNO)

Dixons Carphone plc million (2016:£1,909million) AnnualReport andAccounts 2016/17 ‌‌ wherebytheGroupreceivesafloatingrateofinterestbasedonLIBORandpaysfixed ‌‌ andafairvalueof£6millionasset(2015/16:£17liability) ‌‌ . continued ‌‌ towhichtheGroupisentitled; ‌‌ andafairvalueof£nilmillion ‌‌ thatweredesignated interest ratesand counterpartycreditrisk. receivable was measured atfairvalueonthebalance sheet.Inaddition,thefair valuewouldbeimpactedby changesin used inthetableaboveare samesignificantunobservableinputsthatwouldberequired ifthenetworkcommission not beconsideredinaggregate. Thesignificantunobservableinputsindeterminingtheamortised costcarryingvalues period ofspendaftertheinitial terms leadstoanincreaseinupgradepropensity),andtherefore thesesensitivitiesshould shows aninverserelationshipbetween upgradepropensityandspendaftertheinitialcontract term(adecreaseinthe We considerthattherearesignificant interdependencies between movementsinthevarious inputs,inparticularexperience model (+/-5%;2015/16:+/-2%),andchangesinnetworkupgrade behaviourintheyear. MNOs. Upgradepropensityrangeshavewidenedreflectingan increasetothesensitivityappliedactualinputs consumer defaultratesfornewsubscriberschangedreflecting theincreasingaverageconsumerqualityconnectedto the MNOsandactualvariancesexperiencedbymanagement. Inthecurrentyearrangeofsensitivitiesinrelationto Ranges ofassumptionsusedinthesensitivityanalysisabove evolve yearontoreflectthelatestdataprovidedby Changes inrangeofassumptions (3) (2) (1) Upgrade propensity Spend aftertheinitialcontractterm Consumer defaultrate Out-of-bundle spend Unobservable inputs 30 April2016 Upgrade propensity Spend aftertheinitialcontractterm Consumer defaultrate Out-of-bundle spend Unobservable inputs 29 April2017 to thebelowsensitivitiesis£1,581 million(2015/16:£1,391million) possible changeininputtothediscountedcashflowmodel.Thegrossvalueofnetworkcommissionreceivablesubject The tablesbelowprovidethesensitivityofcarryingvaluenetworkcommissionreceivablestoareasonably assessment ofthisdatatoensurecontinuesreflectthebestestimateexpectedfuturetrends. cash flowsultimatelyrealisedovertheforecastperiod.Managementmakeaquarterly,anddirectorstwice-yearly experience willfollowpasttrends,thereisthereforeariskthatchangesinconsumerbehaviourreduceorincreasethetotal made fortheriskofpotentialchangesinconsumerbehaviour.Relianceonhistoricaldataassumesthatcurrentandfuture The lastfourinputsareestimatedbasedonextensivehistoricalevidenceobtainedfromthenetworks,andadjustmentis 26 Financialriskmanagementandderivativefinancialinstruments

ant MNOs, The valueofcommissionreceivableusedforconsumerdefaultraterepresents thetotalofin-contractcommissionsforrelevantMNOs, The reasonablypossiblerangedisclosedrepresentthehighandlow ofeachunobservableinput,acrossallMNOs,overtheprevious The sensitivityrepresentsthefavourableandunfavourableeffectonincomestatementofremeasuringcarryingvaluefora as thepercentagedefaultrateappliedisoverthistotalbalance. relevant elementofthegrossreceivable. three years.Thesensitivities,whichfallwithinthisrange,havebeenapplied totheunobservableinputsonaMNObybasis MNO basis.Theamountsshownabovearethecumulativesensitivitiesfor eachinputacrossallMNOs. on aMNObybasis.Thesensitivityanalysisperformedhasappliedreasonablypossiblechangeaninputand reasonably possiblechangeinthevalueofinputused.WhilstnatureinputsisconsistentacrossallMNOsapplieddiffers

higher thecarryingvalue The higherthepropensity, the the carryingvalue The higherthespend, lower thecarryingvalue The higherthedefaultrate, the carryingvalue The higherthespend, remeasurement ofcarryingvalue Relationship ofunobservableinputsto higher thecarryingvalue The higherthepropensity, the the carryingvalue The higherthespend, lower thecarryingvalue The higherthedefaultrate, the carryingvalue The higherthespend, remeasurement ofcarryingvalue Relationship ofunobservableinputsto

Dixons Carphone plc

‌‌ : continued Favourable Favourable £million £million Sensitivity Sensitivity 10 30 35 13 47 25 29 57 AnnualReport andAccounts 2016/17

(1) (1) Unfavourable Unfavourable ‌‌ ‌‌ £million £million (35) (25) (29) (57) (10) (30) (13) (47)

‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ ‌‌ 4.9% -18.2%New New subscribers 1.0 months–5.5 1.5% -15.9% 10.0% -36.4% 16.9% -24.9% 0.6% -4.6% 1.2% -4.2% 7.0% -22.0% 7.5% -25.9% 1.5 months- 7.7 months subscribers Upgrades Upgrades months Range Range 139 (2) (2)

‌‌ ‌‌

Financial statements Financial statements 140 discontinued operations.Comparative amountshavebeenpresentedaccordingly. In thecurrentyear,presentation oftheabovereconciliationandstatementcashflows include bothcontinuingand Cash generatedfrom operations Movements inworkingcapital: Operating cashflowsbefore movementsinworkingcapital Impairments andothernon-cashitems Share ofresults ofjointventures Share-based paymentcharge Investment income Depreciation andamortisation Profit before interest andtax–discontinuedoperations Profit before interest andtax–continuingoperations a) 27 Notestothecashflowstatement Net networkcommissionreceivable presented inthe balancesheet Net networkcommissionreceivable inmore than1year Net networkcommissionreceivable inlessthan1year cash flowsettlementofcommissionisasfollows: Cash £1,014 million(30April2016:£904million) by commissionreceivedof£567 total grossnetworkcommissionreceivableat29April2017is£1,581million(302016:£1,391million) not yetsubjecttonetsettlementisclawbackshouldtheconsumerdefaultonitscontractwithMNO.The in anymonthissettledforcertainMNOsnetof1/24ththeamountreceivedonconnection.Initialcommission receives monthlyinstalmentsfromendconsumersoverthelifeofconsumercontract.Thegrosscommissionreceivable Payment termswiththeMNOsarebasedonamixofcashreceiveduponconnectionandfuturepaymentsasMNO £7 milliondecrease). future revenuesby£26million(2015/16:£13increase),anddecreasecurrentyearrevenue£11 in thecurrentyear,certainamountswouldhavebeenexpectedtoberecognisedfutureperiods,whichincrease spend assumptions.Iftheseamountsrelatingtoconsumerconnectionsoriginatinginpreviousyearswerenotrecognised in previousperiodsandspendaftertheinitialcontracttermassumptionsoffsetbychangesanticipatedout-of-bundle spend assumptions.In2015/16,thisprincipallyrelatedtosettlementofreceiptsduefromMNOsforconsumersconnected upgrade propensityandspendaftertheinitialcontracttermassumptionsoffsetbychangesinanticipatedout-of-bundle revenue of£21millioninthecurrentyear(2015/16:£32million).Inyear,thisprincipallyrelatestochanges changes inassumptionsorrecognitionofpreviouslyunrecognisedelementscommissionresultedanincrease Changes inrelationtonetworkcommissionreceivable,forconsumerconnectionsrecognisedpreviousyears,due 26 Financialriskmanagementandderivativefinancialinstruments Notes totheGroup financialstatements ‌‌ Reconciliationofoperatingprofit tonetcashinflowfrom operatingactivities (Decrease) / Increase inpayables Increase‌ Increase ininventory

flows inassociationwiththenetworkreceivablearereceivedoveraperiodof1–5years.Theexpectedtimingnet Dixons Carphone plc inreceivables increase‌ inprovisions AnnualReport andAccounts 2016/17

million (30April2016:£487million) ‌‌ . ‌‌ , resultinginanetnetworkcommissionreceivableof continued

Year ended £million £million 29 April 29 April 1,014 ‌‌ (154) (130) (112) whichisoffset 479 186 418 488 526 110 633 2017 2017 (22) (8) 17 17 — 3

‌‌ ‌‌ ‌‌ ‌‌ Year ended £million 30April £million 30 April (245) 487 177 304 904 283 621 170 495 2016 2016 (16) 10 83 (4) — (8) 4 4 ‌‌ ‌‌ ‌‌

All transactionsenteredintowith relatedpartieswerecompletedonanarm’slengthbasis. Amounts owedtotheGroup Revenue from saleofgoodsandservices Free cashflow Other movements Proceeds from disposaloffixedassets Capital expenditure Interest, facilityarrangementfees,dividendsfrom investmentsandrepayment offinanceleases Taxation Operating cashflowsfrom discontinuedoperations Cash inflowfrom operations Net funds/(debt) Borrowings dueaftermore thanoneyear Borrowings duewithinoneyear The Grouphadthefollowingtransactionsandbalanceswithits associatesandjointventure: management personnel. consolidation andaccordinglyarenotdisclosed.Seenote5 (a)fordetailsofrelatedpartytransactionswithkey Transactions betweentheGroup’ssubsidiaryundertakings,which arerelatedparties,havebeeneliminatedon 28 Relatedpartytransactions (1) c) Obligations underfinanceleases Cash andcashequivalents Obligations underfinanceleases Borrowings dueaftermore thanoneyear Borrowings duewithinoneyear Cash andcashequivalents b) 27 Notestothecashflowstatement Net (debt) ‌ ‌‌ ‌‌ Reconciliationofcashinflowfrom operationstofree cashflow Analysisofnetdebt basis. ontinuing Operating cashflowsfromdiscontinuedoperationsareremovedintheabove reconciliationasfreecashflowispresentedonacontinuing

‌‌ /funds ‌‌ continued (1) Dixons Carphone plc £million £million (313) (330) (267) (500) (409) (476) 3 May 1 May 163 233 233 2015 2016 (55) (91) (91) — ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Cash flow Cash flow AnnualReport andAccounts 2016/17 £million £million (13) (10) (39) (39) (80) (19) 55 34 53 26 28 6 8 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ movements movements non-cash non-cash £million £million Other Other (6) (6) (6) — — — — — — — (6) (6) (6) ‌‌ ‌‌ ‌‌ Year ended translation translation Currency Currency £million £million £million 29 April 29 April £million (242) 479 160 2017 2017 (15) (72) 17 11 18 15 15 15 — — — — — — — 6 9 1‌ 1 1

‌‌ ‌‌ ‌‌ Year ended £million 30April 29 April £million £million £million 30 April 30 April (271) (480) (381) (221) (267) (500) (409) 487 202 233 209 209 2016 2016 2016 2017 (89) (10) (31) (56) (91) 24 24 — (2) 141 2 1 ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 142 Due tothenatureofthesecontingent liabilities,itisnotpracticabletoestimatetheirtimingor possiblefinancialimpact. recorded inthefinancialstatements. to complete.Whereitisconsideredthatfuturetaxliabilitiesare morelikelythannottoarise,anappropriateprovisionis differing interpretationsandtheresolutionofafinaltaxposition, throughnegotiationorlitigation,cantakeseveralyears sales taxesacrossvariousjurisdictionsinwhichtheGroupoperates. Applicabletaxlawsandregulationsaresubjectto The Groupissubjecttoperiodictaxauditsandinvestigations byvarioustaxauthoritiescoveringcorporate,employeeand warranties. financial statements,someofthesewarrantiesremainopenand itispossiblethatclaimscouldariseunderthese agreements, theGrouphasprovidedacquirerwithgeneral andtaxrelatedwarranties.Atthedateofsigningthese In recentyearstheGrouphasenteredintoagreementstodispose ofcertainoperations.Aspartthesedisposal 31 Contingentliabilities Total undiscountedfuture minimumleaseincomereceivable: income isasfollows: The Grouphasinvestmentpropertieswhicharelettothirdpartiesonlongtermleasesfortheminimumfuture b) million) £21 The futureminimumsub-leasepaymentsexpectedtobereceivedundernon-cancellablesub-leasesis£17million(2016: balance sheet,includingthoseforbusinessesexited. The abovefiguresincludecommittedpaymentsunderonerousleasecontractsforwhichprovisionsoraccrualsexistonthe figures shownincludeonlytheminimumrentalcomponent. equipment andofficeequipment.Contingentrentalsarepayableoncertainretailstoreleasesbasedrevenues Operating leasecommitmentsrepresentrentalspayableforretail,distributionandofficeproperties,aswellvehicles, Total undiscountedfuture committedpaymentsdue: Total undiscountedfuturecommittedpaymentsdueforcontinuingoperationsareasfollows: a) 30 Operatingleasearrangements Contracted forbutnotprovided forintheaccounts Property, plant&equipment Intangible assets 29 Capitalcommitments Notes totheGroup financialstatements ‌‌ ‌‌ TheGroup asalessee TheGroup asalessor After fiveyears Between twotofiveyears Within oneyear After fiveyears Between twoandfiveyears Within oneyear Dixons Carphone plc

‌‌. AnnualReport andAccounts 2016/17 Land and buildings £million 2,019 1,032 644 343

29 April2017 Other assets £million 38 24 14 —

Land and buildings £million £million 29 April 29 April 2,261 1,126 £million 785 350 2017 2017 10 41 23 18 4 5 1

30 April2016 Other assets £million £million £million 30 April 30 April 2016 2016 17 10 39 21 18 11 — 5 5 1 7

Net financecosts £7 million to£11million. the restatementhasincreased the headlineEBITofConnectedWorldServicesoperating segmentby£4million,from The Sprintjointventureoperations werepreviouslyincludedintheConnectedWorldServices operatingsegment,and The headlineEBIToftheUK& Ireland segmentfor2015/16hasincreasedby£6millionfrom £365millionto£371million. external revenueoftheUK&Ireland operatingsegmentfor2015/16by£2million,from£6,404 millionto£6,402million. iD mobileoperationswerepreviously includedintheUK&Irelandoperatingsegmentandhave decreasedtheheadline The comparativesegmentalinformationprovidedinnote3has beenadjustedtoreflecttheabovereclassifications.The Segmental information * -Costof Diluted –total Basic –total operations Diluted –continuing operations Basic –continuing pershareEarnings (pence) the period Profit /(loss)aftertaxfor operations Loss aftertax–discontinued continuing operations Profit /(loss)aftertax– Profit /(loss)before tax interest andtax Profit /(loss)before ventures Share ofresults ofjoint results ofjointventures operations before share of Profit /(loss)from Operating expenses* Gross profit * Cost ofsales* Revenue Continuing operations the totalreportedperformancemeasures.Theimpactofrestatementhasbeensetoutbelow: The resultsofbothoperationshavebeenreclassifiedfromheadlinetonon-headlineresults.Therehasnoimpacton Consolidated incomestatement 2016 hasbeenrestatedaccordingly.Theimpactoftherestatementsetoutbelow: accordance withtheaccountingpolicyasdescribedin have beenclassifiedas‘businessestobeexited’setoutin During theyear,iDmobileoperationsinRepublicofIrelandandSprintJointVentureUnitedStates 32 Restatementofcomparativeinformation Income tax(expense)/credit s ales, g ross p rofit and

o perating previously (1,713) (7,553) reported 2015/16 28.4p 29.3p 2,185 9,738 £million (110) 337 447 468 472 337 (21) — (4) as

e ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

xpenses measuresaredisclosedin iD mobile £million Ireland 0.5p 0.5p — — — — (2) 6 6 6 6 6 3 3 5 ‌‌

Sprint joint £million venture 0.3p 0.4p n ote 1,comparativeinformationforthefinancialyearended30April — — — — — — — — 4 4 4 4 4 Headline results

n Dixons Carphone plc (1,710) (7,548) ote 4,andthereforeclassifiedin 2015/16 restated 29.2p 30.2p 2,188 9,736 £million (110) 478 478 347 347 457 (21) — —

n

‌‌ ‌‌ ‌‌ ‌‌ ote 3. 2015/16 as previously reported £million

(164) (164) (176) (184) (164) (158) (20) (18) 26 — — — —

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

AnnualReport andAccounts 2016/17 iD mobile £million Ireland — — — — (6) (6) (3) (3) (5) (6) (6) (6) 2

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Sprint joint £million venture n Non-headline results on- — — — — — — — — (4) (4) (4) (4) (4)

h ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

eadline results.In 2015/16 restated £million (170) (167) (186) (194) (174) (168) (18) (20) 26 (3) (5) (4) 2

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

and restated 2015/16 as previously (1,877) (7,553) reported 13.6p 14.0p 15.1p 15.6p 2,185 9,738 £million 304 161 179 263 308 Total (41) (18) (84) (4) 143

‌‌ ‌‌ ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 144 presented asa‘businesstobeexited’outlinedinnote4,andcomparativeshavebeenrestated32. value ofconsiderationreceivedbytheGroupon9June2017was$30million.Theresultsjointventurehavebeen by theGroup.Inaddition,ongoingagreementsrelatingtoconsultancyandintellectualpropertywillbesettled.Thetotal companies reachedmutualagreementthatSprintwillacquirethe50%remainingshareofjointventurecurrentlyheld In June2017,inlightofthechangingUSmobilemarketlandscapeandSprint’sreviewitsowndistributionstrategy, 33 Eventsafterthebalancesheetdate consolidated cashflowstatement,asthesestatementsdonotseparatelydistinguish sheet, consolidatedstatementofothercomprehensiveincome,changesinequityor In accordancewiththepolicyassetoutin Other disclosures from servicesdisclosedin The salesfromtheiDMobileoperationsinRepublicofIrelandrelatetoservices,therefore 32 Restatementofcomparativeinformation Notes totheGroup financialstatements Dixons Carphone plc n AnnualReport andAccounts 2016/17 ote 3hasdecreasedfrom£2,720millionto£2,718 n ote 1,therehavebeennorestatementsmadetotheconsolidatedbalance continued h in2015/16 eadline and . n on- h h eadline eadline measures. r evenue Group ChiefExecutive Sebastian James, signed onitsbehalfby: The financialstatementsoftheCompany(registerednumber07105905) The Company’sprofitfortheyearwas£18million(2015/16:£75million)‌ Profit andlossaccount Share premium reserve Called-up share capital Capital andreserves Net assets Loans payable Provisions Total assetslesscurrent liabilities Net current assets Derivative liabilities Creditors: amountsfallingduewithinoneyear Derivative assets Debtors: duewithinoneyear Cash andcashequivalents Current assets Investments insubsidiaries Fixed assets Company balancesheet

Group FinanceDirector Humphrey Singer, Dixons Carphone plc

‌‌ .‌ wereapprovedbytheBoardon27 June2017and AnnualReport andAccounts 2016/17 Notes C9 C8 C7 C6 C5 C4 C9

(1,750) £million 29 April 3,343 2,260 2,950 2,447 2,194 2,678 2,950 (381) 665 689 223 2017 (12) (32) 30 1

‌‌ ‌‌ ‌‌ ‌‌ (1,141) 3,043 3,453 1,973 1,884 3,043 2,256 2,678 £million 30 April (409) 786 775 2016 (57) 57 32 (1) 145 1 ‌‌ ‌‌ ‌‌ ‌‌

Financial statements Financial statements 146 At 29April2017 Equity dividends Issue ofownshares Total comprehensive income and expensefortheyear Profit fortheyear At 30April2016 Equity dividends Total comprehensive income and expensefortheyear in equity Other comprehensive incomeandexpenserecognised directly Profit fortheyear At 2May2015 Company statementofchangesinequity Dixons Carphone plc AnnualReport andAccounts 2016/17

share capital Called-up £million — — — — — — — — 1 1 1

premium £million 2,260 2,256 2,256 reserve Share — — — — — — — 4 loss account Profit and £million (115) (106) 689 786 818 18 18 74 75 — (1) ‌‌‌‌ ‌‌‌‌ ‌‌‌‌ Total equity £million 2,950 3,043 3,075 (115) (106) 18 18 74 75 (1) 4 ‌‌‌‌ ‌‌‌‌ ‌‌‌‌ Deferred taxasset Amounts owedbyGroup undertakings Amounts owedbyGroupundertakings arerepayablewithin12monthsofthebalancesheet date. Other debtors Prepayments C5 Debtors:amountsfallingduewithinoneyear Company’s investmentsinsubsidiaryundertakingsareprovided innoteC10. Fixed assetinvestmentscompriseinsubsidiaryundertakings andotherminorityinvestments.Detailsofthe Net carryingamount Accumulated impairments Cost Closing balance Opening balance C4 Fixedassetinvestments the Groupfinancialstatements. Details ofamountsrecognisedasdistributionstoshareholdersintheperiodandthoseproposedaredetailednote23 C3 Equitydividends statements. (2015/16: £75 of theCompanyisnotpresentedseparately.Theprofitrecognisedforyearended29April2017was£18million In accordancewiththeexemptionpermittedbysection408ofCompaniesAct2006,profitandlossaccount C2 Profit andlossaccount Investments insubsidiariesare statedatcostless,whereappropriate,provisionsforimpairment. financial statementsexceptasnotedbelow. instruments tofairvalue.Theprincipalaccountingpoliciesadoptedarethesameasthosesetoutinnote1Group The financialstatementshavebeenpreparedonthehistoricalcostbasisexceptforre Where required,equivalentdisclosuresaregivenintheconsolidated financialstatements. respect ofcertainassets,presentation acashflowstatementandrelatedpartytransactions. relation toshare-basedpayments,financialinstruments,capitalmanagement,presentationofcomparativeinformationin As permittedbyFRS101,theCompanyhastakenadvantageofdisclosureexemptionsavailableunderthatstandardin 2015 thatareeffectiveforaccountingperiodsbeginningonorafter1January2016. amendments toCompanylawmadebyTheCompanies,PartnershipsandGroups(AccountsReports) incorporating theAmendmentstoFRS101issuedbyFinancialReportingCouncilinJuly2015andhasapplied (Financial ReportingStandard101) Reporting Council.Accordingly,thefinancialstatementshavethereforebeen preparedinaccordancewithFRS101 meets thedefinitionofaqualifyingentityunder FRS100(FinancialReportingStandard100) The separatefinancialstatementsoftheCompanyarepresented asrequiredbyCompaniesAct2006. basis (seenote1totheGroupfinancialstatements) The CompanyisincorporatedintheUnitedKingdom.financialstatementshavebeenpreparedonagoingconcern Basis ofpreparation C1 Accountingpolicies Notes totheCompanyfinancialstatements

million) ‌‌ . InformationregardingtheauditfeesforGroupisprovidedinnote3tofinancial ‌‌ ‘Reduced DisclosureFramework’asissuedbytheFinancialReportingCouncil, ‌‌ . Dixons Carphone plc AnnualReport andAccounts 2016/17 - measurement of certainfinancial ‌‌ issuedbytheFinancial

£million £million 29 April 29 April 2,194 2,183 2,678 2,776 2,678 2,678 ‌‌ Regulations (98) 2017 2017 3 7 1

1,884 1,869 2,678 2,776 2,678 2,678 £million £million 30 April 30 April 2016 2016 (98) 147 8 5 2 ‌‌

Financial statements Financial statements 148 statements. Details ofmovementsincalledupshare-capitalandsharepremiumaredisclosednote22totheGroupfinancial C9 Called-upshare capitalandshare premium Details ofloanspayableareprovidedinnote18totheGroupfinancialstatements. C8 Loanspayable n The provisionsrecordedinthecurrentyearprimarilyrelatetoshareplantaxablebenefitcompensationasdiscussed Closing balance Utilised Additions Opening balance C7 Provisions Accruals anddeferred income Corporation tax Overdrafts Other creditors Amounts owedtoGroup undertakings C6 Creditors: Amountsfallingduewithinoneyear Notes totheCompanyfinancialstatements ote 4totheGroupfinancialstatements Dixons Carphone plc

AnnualReport andAccounts 2016/17 .

£million £million 29 April 29 April 1,750 1,676 2017 2017 12 11 72 — — 1 1 1

1,045 1,141 £million £million 30 April 30 April 2016 2016 84 — (1) 1 2 6 5 1 ‌‌

3 2 1 ** * S.L.U. The PhoneHouseSpain Limited The CarphoneWarehouse Limited The CarphoneWarehouse New Technology Insurance Limited Dixons CarphoneHoldings Limited Honeybee DigitalSolutions Gigantti Oy Elkjøp Norge AS Elkjøp Nordic AS ElGiganten A/S Elgiganten Aktiebolag DSG RetailLimited DSG RetailIreland Limited Limited Holdings DSG International A.E.V.E. Dixons SouthEastEurope Dixons RetailGroup Limited Limited Carphone Warehouse Europe Name and givetheGroupaneffectiveholdingof100%onconsolidation. The Companyhasinvestmentsinthefollowingprincipalsubsidiaryundertakings.Allholdingsareequitysharecapital a) C10 Subsidiaryundertakings ‌‌ Principalsubsidiariesasat29April2017 Dixons Carphone Holdings LimitedwascalledNewCPW Limiteduntil9November2016. Honeybee DigitalSolutionsLimitedwas calledISE-NetSolutionsLimiteduntil14March2017. Dixons RetailGroupLimitedwasapublic limitedcompanycalledDixonsRetailplcuntil8June2016. This istheonlyinterestofDixonsCarphoneplc,directlyorindirectly,inthis classofshares. Interest helddirectlybyDixonsCarphoneplc. 2 3 1 14th kmAthens-Lamia,National København S,2300Copenhagen 40 UpperMountStreet, Dublin 2, 40 UpperMountStreet, Dublin 2, Vía deLasDosCastillas,No.33 1 PortalWay, London,W3 6RS 1 PortalWay, London,W3 6RS Road &2SpiliasStreet, 14452 Arne JacobsensAllé16,2.sal Arne Attiki, Sahkotie 3,01510,Vantaa Solheimsveien, 6-8,1473, Solheimsveien, 6-8,1473, Complejo Atica-Edificiol, 3rd Floor, FlemingCourt, Box 1264,164,29Kista, 1 PortalWay, London, 1 PortalWay, London, 1 PortalWay, London, 1 PortalWay, London, 1 PortalWay, London,

Pozuelo deAlarcón, Dublin 4,D04N4X9 Registered officeaddress Fleming’s Place, Madrid 28224 Lørenskog Lørenskog Stockholm D02 PR89 D02 PR89 W3 6RS W3 6RS W3 6RS W3 6RS W3 6RS Dixons Carphone plc

Country ofincorporation United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom or registration Denmark Sweden Norway Norway Finland Greece Ireland Ireland Ireland Spain AnnualReport andAccounts 2016/17

Preference and A &BOrdinary hr class(es) Share A &BShares Irredeemable AOrdinary Cumulative B Ordinary Deferred Deferred Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary held ‌‌

% held 37.1** 100* 100* 100* 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 3.5** Business activity Insurance company company company company Holding Holding Holding Holding Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail Retail IT 149

Financial statements Financial statements 150 4 * Dixons Group Limited Dixons CarphoneCoEs.r.o. DISL Limited DISL 2Limited CWIAB Limited Currys Group Limited CPW Tulketh MillLimited CPW IrlamLimited CPW GCHoldingsBV CPW DistributionLimited CPW CPLimited CPW ConsultancyLimited CPW Brands2Limited CPW ActonOneLimited CPW ActonFiveLimited Connected World ServicesSAS Netherlands BV Connected World Services Connected World ServicesLLC S.L. Connected World ServicesEurope Distributions Limited Connected World Services Codic GmbH(inliquidation) Charterhouse ManagementLimited Limited Carphone Warehouse Ireland Mobile Name previous page. All thesecompaniesareeitherholdingorprovidegeneralsupporttotheprincipalsubsidiarieslistedon The followingaretheothersubsidiaryundertakingsofGroup,allwhichwhollyownedunlessotherwiseindicated. b) C10 Subsidiaryundertakings Notes totheCompanyfinancialstatements ‌‌ Othersubsidiaryundertakings Dixons Carphone CoE s.r.o.wascalledDixonsRetailSSC s.r.o.until19July2016. Interest helddirectlybyDixonsCarphoneplc. Dixons Carphone plc AnnualReport andAccounts 2016/17 ‌‌ 4 continued 2711 CentervilleRoad,Suite400 Prospect Hill,Douglas,IM11EQ Prospect Hill,Douglas,IM11EQ Prospect Hill,Douglas,IM11EQ Prospect Hill,Douglas,IM1 1EQ Vía deLasDosCastillas,No.33 Eschenheimer Anlage1,60316, 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 26 ruedeCambacérès,75008 Watermanweg 96,3067GG, Trnita, 491/5,60200 Brno Complejo Atica-Edificiol, Postbus 2645,3800GD, 6th Floor, Victory House, 6th Floor, Victory House, 6th Floor, Victory House, 6th Floor, Victory House, 40 UpperMountStreet, Wilmington DE19808 Pozuelo deAlarcón, Dublin 2, D02PR89 Registered officeaddress Madrid 28224 Amersfoort Rotterdam Frankfurt Paris

Country ofincorporation United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United States Netherlands Netherlands Isle ofMan Isle ofMan Isle ofMan Isle ofMan or registration Germany France Ireland Spain

Preference and hr class(es) Share A, B,C&D Ordinary B Business Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Shares held ‌‌ % held 100* 100* 100* 100* 100* 100* 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Name b) C10 Subsidiaryundertakings InfoCare Workshop Oy InfoCare Workshop HoldingAS InfoCare Workshop AS InfoCare CSAB ID MobileLimited Epoq LogisticDCk.s. Epoq HoldingAB Elkjøp Kleiverenga AS El-Giganten LogistikAB Limited DSG RetailIreland PensionTrust DSG OverseasInvestmentsLimited DSG KHILimited DSG Ireland Limited Management Limited TreasuryDSG International Limited RetailProperties DSG International liquidation) BelgiumBVBA(in DSG International DSG HongKongSourcing Limited DSG European InvestmentsLimited DSG CorporateServicesLimited DSG Card HandlingServicesLimited DSG BoxmoorLimited Dixons Travel srl(inliquidation) AS Dixons Stores Group RetailNorway Dixons Sourcing Limited ‌‌ Othersubsidiaryundertakings ‌‌ continued 31/F, AXATower LandmarkEast, 31/F, AXATower LandmarkEast, 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS Evropská 868,66442Modrˇice Silvastintie 1,01510,Vantaa Foro Buonaparte70,20121, Esbogatan 12,16474Kista Arabygatan 9,35246Växjö, Solheimsveien, 6-8,1473, Solheimsveien, 6-8,1473, Havenlaan 86C,Bus204, Industrivegen, 65,2212, Industrivegen, 53,2212, 40 UpperMountStreet, Mobelvagen 51,55652 100 HowMingStreet, 100 HowMingStreet, Kwun Tong Kowloon Kwun Tong Kowloon Dublin 2, D02PR89 Registered officeaddress B-1000 Brussels Kronobergs län Kongsvinger Kongsvinger Lørenskog Lørenskog Jönköping Dixons Carphone plc Milan

Country ofincorporation United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Czech Republic Hong Kong Hong Kong or registration AnnualReport andAccounts 2016/17 Belgium Sweden Sweden Sweden Norway Norway Norway Norway Finland Ireland Italy

D Preference and Cumulative C& hr class(es) Share and Ordinary B Preference Preference, Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary held ‌‌

% held 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 151

Financial statements Financial statements 152 Sprint ConnectLLC F Group A/S(inliquidation) Elkjøp Fjordane AS Name The followingaretheothersignificantshareholdingsofCompany, allofwhichareheldindirectly. c) 5 * Limited The PhoneHouseHoldings(UK) The CarphoneWarehouse UKLimited Limited The CarphoneWarehouse Resources Limited The CarphoneWarehouse (Digital) TalkM Limited Smarthouse Spain,S.A. Simplify DigitalSystemsLimited Simplify DigitalLimited Petrus InsuranceCompanyLimited Pelham Limited PC CityNorge AS PC City(France) Aparelhos deTelecomunicações, Lda Osfone Negócios–Comercio de Telecomunicações, Lda Osfone Comercio deAparelhos de Participações Sociais,Lda OSAA –SociedadeGestoraDe NSS FinancialsA/S MTIS Limited Mohua Limited Limited Mastercare ServiceandDistribution Leverstock InvestmentsLimited Lefdal Elektromarked AS Kereru Limited Name b) C10 Subsidiaryundertakings Notes totheCompanyfinancialstatements ‌‌ ‌‌ Othersignificantshareholdings Othersubsidiaryundertakings Smarthouse Spain,S.A.wascalledPCCitySpainuntil14July2016. Interest helddirectlybyDixonsCarphoneplc. Dixons Carphone plc ‌‌ SNC 5 AnnualReport andAccounts 2016/17 continued ‌‌

‌‌

Fleming’s Place,Dublin4,D04N4X9 2711 CentervilleRoad,Suite400 Prospect Hill,Douglas,IM11EQ Prospect Hill,Douglas,IM11EQ Vía delasDosCastillas,No.33 Fugleskjærgata 10,6900Flor 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS 1 PortalWay, London,W36RS Solheimsveien, 6-8,1471, Solheimsveien, 6-8,1471, Hørkær 12A,2730Herlev Complejo Atica-Edificiol, 6th Floor, Victory House, 6th Floor, Victory House, 3rd Floor, FlemingCourt, Lyskaer 1,2730 Herlev R. LatinoCoelhonº13, R. LatinoCoelhonº13, R. LatinoCoelhonº13, Wilmington DE19808 Pozuelo deAlarcón, 52 ruedelaVictoire Registered officeaddress Registered officeaddress 1050-132 Lisbon 1050-132 Lisbon 1050-132 Lisbon Madrid 28224 2 IrishTown 75009 Paris 1401 Flora Lørenskog Lørenskog

ø ,

Country ofincorporation Country ofincorporation United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United States Isle ofMan Isle ofMan or registration or registration Denmark Denmark Gibraltar Portugal Portugal Portugal Norway Norway Norway France Ireland Spain

Partnership A Ordinary hr class(es) Share Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary % held 50 40 30 held ‌‌ Business Retail Retail Retail % held activity 100* 100* 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

The PhoneHouseHoldings(UK) The CarphoneWarehouse UKLimited The CarphoneWarehouse (Digital) DSG OverseasInvestmentsLimited DSG KHILimited DSG Ireland Limited TreasuryDSG International ManagementLimited RetailProperties Limited DSG International HoldingsLimited DSG International DSG European InvestmentsLimited DSG Card HandlingServicesLimited DSG BoxmoorLimited CWIAB Limited CPW Tulketh MillLimited CPW IrlamLimited CPW CPLimited CPW ConsultancyLimited CPW Brands2Limited CPW ActonFiveLimited Name that Act: from therequirementsofCompaniesAct2006relatingtoauditindividualaccountsbyvirtuesection479A The followingsubsidiaries,allofwhichareincorporatedinEnglandandWalesincludedsectionb) d) C10 Subsidiaryundertakings ‌‌ Subsidiaryundertakingsexemptfrom audit continued ‌‌ Limited ‌‌ Limited Dixons Carphone plc Company registration number 09012752 00240621 02792167 00476440 03887870 03891149 04185110 05430014 02441554 06585719 05825842 06585457 07881879 07135355 05738735 03663563 03827277 03966947 02734677 AnnualReport andAccounts 2016/17 ‌‌ , areexempt 153

Financial statements Investor information 154 (3) (2) (1) Profit before taxation Interest EBIT Revenue Pro formaheadlineresults – Diluted – Basic pershareEarnings Net profit aftertax Share ofresults ofjointventures andassociates(aftertax) Profit aftertax–whollyownedoperations Revenue Headline Income statement–HeadlineandPro forma Five yearrecord (unaudited)

epublic of Headline resultsfor2015/16havebeenrestatedtoreflectthecurrentyearclassificationofiDmobileoperationsinRepublic Pro formaresultsarepresentedasthoughtheDixonsRetailMergerandCPWEuropeAcquisitionhadoccurredatbeginningof Headline results–continuingoperationsreflectthestatutoryofGroupexcludingitemsclassifiedasnon-headline. not bematerial. further detailsseenote4tothefinancialstatements.Resultsfor2014/15andearlierperiodshavenotbeenrestatedasimpactwould Ireland andtheSprintjointventureasbusinessestobeexitedincomparativeperiod,thereforeclassifiednon-headline.For for discontinuedoperations. 2013/14 annualreportandaccountsonpage97byDixonsRetailinits127,adjusting five-year period.ThisfinancialinformationhasbeenpreparedbyaggregatingthefiveyearrecordspresentedCarphoneWarehouseinits Dixons Carphone plc (1) AnnualReport andAccounts 2016/17 (2) ‌‌ ‌‌

10,580 10,580 2016/17 £million 33.7p 33.8p 501 517 389 389 (16) —

‌‌ 2015/16 29.2p 30.2p 9,736 9,736 £million 457 478 347 347 (21) — (3) ‌‌ ‌‌

2014/15 28.7p 29.7p 9,750 8,255 £million 381 413 285 285 (32) — ‌‌

1,943 2013/14 18.3p 18.6p 9,752 £million 103 100 316 359 (43) 3 ‌‌

10.8p 10.9p 2012/13 9,517 £million 277 310 (33) 52 48 11 4 ‌‌

Direct dial:+17189218124(from outsidetheUS) Toll freenumber:(866) Email: [email protected] United States Brooklyn, NY11219 6201 15thAvenue Operations Center American StockTransfer&TrustCompany Deutsche BankShareholderServices Contact detailsforregistered ADRholders London: +44(0) New York:+12122509100 Deutsche BankADRbrokerservicesdesks Contact detailsforADRinvestorsandbrokers shares inDixonsCarphoneplc. US stockexchange) market underthesymbolDXCPY(theyarenotlistedona bank. TheADRstradeontheUSover-the-counter( Company Americas(‘DeutscheBank’) 1 ADRprogramandhasappointedDeutscheBankTrust Dixons CarphoneplchasestablishedasponsoredLevel American DepositaryReceipts(‘ADRs’) (final dividend2016/17) Intended dividendpaymentdate Annual GeneralMeeting Record date(finaldividend2016/17) Ex-dividend date(finaldividend2016/17) Financial calendar Registration anduseoftheserviceisfree. your sharecertificate,dividendtaxvoucherorproxycard. shareholder referencenumber,whichcanbefoundon www.shareview.co.uk. Toregister,youwillneedyour communications servicecalledShareviewat You canmanageyourshareholdingsviaanelectronic (UK time) Lines areopen8.30amto5.30pmMondayFriday +44 (0) 0371 3842089(UKonly) United Kingdom BN99 6DA West Sussex Lancing Spencer Road Aspect House Equiniti Registrars constituent oftheFTSE250. London StockExchange(stocksymbol:DC) Dixons Carphoneplcislistedonthemainmarketof Shareholder andcorporateinformation ‌‌ 121 4157047(fromoutsidetheUK) ‌‌ , excludingpublicholidaysinEnglandandWales. ‌‌ 207 5476500(fromoutsidetheUK) ‌‌ . EachADRrepresentstwoordinary ‌‌ 2492593(fromwithintheUS) ‌‌ ‌‌ ‌‌

‌‌ asthedepositary ‌‌

‌‌ ‌‌ ‌‌ andisa

22 Sep2017 07 Sep2017 25 Aug2017 24 Aug2017 ‌‌ ‘

OTC ‌‌ ’ )‌‌

Dixons Carphone plc [email protected] Mark Reynolds,HeadofInvestorRelations Kate Ferry,IR,PRandCorporateAffairsDirectoror Enquiries shouldbedirectedto: Investor relations [email protected] General CounselandCompanySecretary Nigel Paterson Enquiries shouldbedirectedto: Company Secretary 07105905 Company registration number www.dixonscarphone.com +44 (0) United Kingdom W3 6RS London 1 PortalWay Registered office /Headoffice www.citigroup.com E14 5LB Canary Wharf 33 CanadaSquare Citigroup GlobalMarketsLimited www.db.com EC2N 2DB London 1 GreatWinchesterStreet Deutsche BankAG Joint Stockbrokers www.deloitte.com EC4A 3BZ London 2 NewStreetSquare Deloitte LLP Auditor Advisors ‌‌ 3450130345 AnnualReport andAccounts 2016/17 155

Investor information Investor information In responsetotheGuidelinesonAlternativePerformanceMeasuresissuesbyEuropeanSecuritiesandMarkets on-year movementmeasureswithouttheimpactofforeignexchangemovements. This restatesthepriorperiodresultsatacommonexchangeratetocurrentyearinorderprovideappropriateyear- Some comparativeperformancemeasuresaretranslatedatconstantexchangerates,called‘ Local currency comparative informationisrestatedaccordingly. items orone-offtypeactivities.Whereappropriate,forexamplewhereabusinessisclassifiedasexited/tobeexited, Items excludedfrom recurring charges),incomefrompreviouslydisposedoperationsandnetpensioninterestcosts. underlying performance(suchasre acquisition intangibles, Non- results arestatedbefore performance measurestobea Headline performancemeasuresreflectadjustmentstototalmeasures.Thedirectorsconsider‘ change Like-for-like (LFL)% Revenue Headline /non-headline Revenue measures measure performance Alternative Authority ( 156 The Group’sincomestatementandsegmentalanalysisidentifyseparately Headline andnon-headlinemeasures superior to,IFRSmeasures. measures or‘adjusted’revenueprofitusedbyothercompanies,andarenotintendedtobeasubstitutefor, Group’s performance.Thesealternativeperformancemeasuresmaynotbedirectlycomparablewithothersimilarlytitled considered tobedistortiveontradingperformance used toenhancethecomparabilityofinformationbetweenreportingperiods,byadjustingfornon-recurringor and areconsideredcriticaltounderstandingthefinancialperformancehealthofGroup.APMsalso on theperformanceofbusinessandtrendstoshareholders.Thesemeasuresareconsistentwiththoseusedinternally, that these additional measures (commonly referred to as ‘alternat In thereportingoffinancialinformation,GroupusescertainmeasuresthatarenotrequiredunderIFRS.Weconsider performancemeasuresAlternative (‘APMs’) Glossary anddefinitions h eadline itemsconsistoftheresultsdiscontinuedoperationsorexited/tobebusinesses,amortisation Dixons Carphone plc ‘ ESMA

’ ), wehaveprovidedadditionalinformationontheAPMsusedbyGroupbelow. h eadline resultscanevolvefromonefinancialyeartothenextdependingonnatureofexceptional n on- No direct equivalent Revenue measure Closest equivalentGAAP AnnualReport andAccounts 2016/17 h n informativeadditionalmeasure eadline items. - related costs,anyexceptionalitemsconsideredsufficient - organisation costs,impairmentcharges,propertyrationalisationcostsandothernon- Not applicable 2015/16. amounts for details ofrestated and note32for See note2and4, measure Reconciliation toIFRS which may

affect IFRSmeasures,toaidtheuserinunderstanding oftheongoingtradingperformanceGroup.Headline

iv

e performance measures’) provide additional information and onlineportfolio. performance ofourunderlying and ongoingstore revenue represents ausefulmeasure ofthetrading like-for-like calculations.We considerthatLFL and othernon-retail businesses are excludedfrom along withrevenue from ConnectedWorld Services agreement, insuranceandwholesale revenues closure duringeitherperiod.Customersupport closed stores are excludedforanyperiodof Revenue from franchisestores are excludedand at thebeginningandendoffinancialperiod. they havebeenopenforafullfinancialyearboth exchange rates.Newstores are includedwhere headline storerevenue andinternet usingconstant Like-for-like revenue iscalculatedbasedon in non-headlineresults. as a‘businesstobeexited’andtherefore presented operations inRepublicofIreland, whichisclassified comparative periods,thisrelates totheiD mobile headline revenue items.Inthecurrent andrestated of theGroup, andare adjustedtoremove non- Headline revenues represent theongoingrevenues Definition andpurpose h eadline performanceand ly l ocal currency’measures. materialthattheydistort n on- h eadline items. h eadline’ items total headline dilutedEPS- headline basicEPS–total, continuing operations, headline dilutedEPS– continuing operations, Headline basicEPS– pershareEarnings measures tax rate Headline /Total effective (credit) income taxexpense/ Headline /non-headline net financecosts Headline /non-headline measuresOther earnings EBIT after tax EBIT andprofit /(loss) profit /(loss)before tax, Headline /non-headline Profit measures Local currency %change measure performance Alternative

Revenue compared measure Closest equivalentGAAP / (credit) Income taxexpense Net financecosts interest andtax Profit /(loss)before interest andtax. profit /(loss)after interest andtax, Profit /(loss)before rate. constant exchange consolidated ata to priorperiod figures Statutory EPS No direct equivalent Not applicable measure Reconciliation toIFRS See note4 See note4 No reconciling items 2015/16. amounts for details ofrestated and note32for See note2and4, See note8

Dixons Carphone plc

net pensioninterest costs,financeincomefrom the financecharge ofbusinessestobeexited, cost items.Non-headlinefinancecostsincludes finance coststoremove non-headlinefinance Headline netfinancecostsare adjustedfrom total communications. historically andinexternal terminology usedisconsistentwiththat comparable toprofit /(loss)before tax.The beforeEarnings interest andtax(EBIT)isdirectly above. headline’ items,thenature ofwhichare disclosed adjusted from totalmeasures toremove ‘non- the ongoingperformanceofGroup. Theseare measures inorder toprovide ausefulmeasure of As discussedabove,theGroup usesheadlineprofit movements. excluding theimpactofforeign exchangerate period basis.Provides ameasure ofperformance Reflects totalrevenues onaconstantcurrency and Definition andpurpose of theunderlyingGroup. provides ausefulmeasure oftheongoingearnings share oftheGroup. We considertheheadlineEPS EPS figure, whichreflects per theheadlineearnings of non-headlineitemsinorder toshowaheadline EPS measures are presented toreflect theimpact of taxrecognised ontotalearnings. andtotaleffectiveheadline earnings, taxistherate effective taxistherateof recognised on indication ofthetaxrateGroup. Headline The effective taxratemeasures provide auseful ongoing taxcharge /credit oftheGroup. tax measures represent ausefulmeasure of the non-headline. We considertheheadlineincome tax adjustmentsonitemspreviously classifiedas current year, orthecurrent yeareffect ofprioryear on itemsclassifiedas‘non-headline’,eitherinthe income taxexpense/(credit) represents thetax Non-headline the incometaxonheadlineearnings. Headline incometaxexpense/(credit) represents remove thisnon-cashvolatility. from measure ourheadlineearnings inorder to liabilities. Therefore thisitemhasbeenremoved the actualinvestmentgainsorlossesmadeon in theincomestatementandisunrepresentative of date, which,ascanvaryovertime,creates volatility based oncorporatebondyieldratesataspecific on definedbenefitpensionschemesiscalculated 19 ‘EmployeeBenefits’,thenetinterest charge underlying financecostsoftheGroup. UnderIAS considered soone-off andmaterialthattheydistort as discontinued,andotherexceptionalitems previously disposedoperationsnotclassified AnnualReport andAccounts 2016/17 157

Investor information Investor information 158 accounts 2015/16. summary. Forinformationontheproformafinancialandreconciliationspleaserefertoannualreport information isnotpresentedasdoesaffectthecomparativeperiodsforcurrentyear,otherthaninfiveyear as iftheMergeron6August2014hadoccurredatstartof2013/14financialyear.Incurrentyear,proforma information inordertoreflectresultsofbothCarphoneWarehouseandDixonsRetailthroughoutthecomparativeperiods In previousperiods(uptotheannualreportandaccounts2015/16),Grouppresented‘proforma’comparativefinancial results Pro forma Employed (ROCE) onCapital Return Other measures Net debt Free cashflow Cash flowmeasures measure performance Alternative Glossary anddefinitions Dixons Carphone plc

No direct equivalent obligations. finance lease borrowings and loans andother equivalents less Cash andcash from operations Cash generated measure Closest equivalentGAAP AnnualReport andAccounts 2016/17 Not applicable See note27 See note27 measure Reconciliation toIFRS but excludinggoodwill,cash,taxandthedefined is basedonnetassetsincludingcapitalisedleases, capitalising operatingleasecosts.Capitalemployed add backtheinterest componentassociatedwith The return isbasedonheadlineEBIT, adjustedto Calculated onapre-tax andleaseadjustedbasis. measure oftheindebtednessGroup. creditors. We considerthatthisprovides auseful term deposits,lessborrowings andfinancelease Comprises cashandequivalentsshort how businessperformanceismeasured internally. respect ofcashgenerationandisconsistentwith additional usefulinformationtoshareholders in The directors considerthat‘free cashflow’provides less incometaxpaidandnetcapitalexpenditure. pension contributions,lessnetfinanceexpense, (utilised by)continuingoperationsbefore special Free cashflowcomprisesgeneratedfrom / Definition andpurpose period. the Group hasusedthecapitalemployedduring consider thisausefulmeasure tounderstandhow in useduringtheyeartogeneratereturn.We match thereturnonassetsinayearwith performed onamovingannualtotalinorder tobest benefit pensionobligations.Thecalculationis IFRS honeybee HMRC ESOT EBT Dixons RetailMergeror Dixons CarphoneorGroup Dixons orRetail CWS CPW Europe Acquisition CPW Europe CPW Company orthe CGU or CarphoneGroup Carphone, CarphoneWarehouse Businesses tobeexited Board Best BuyEurope Best Buy B2B ARPU ADRs Acquisition intangibles The followingdefinitionsapplythroughoutthisAnnualReportandAccountsunlessthecontextotherwiserequires: Other definitions International FinancialReportingStandardsInternational asadoptedbytheEuropean Union simplifies thedeliveryandmanagement ofcomplexdigitalcustomerjourneys. mobile phoneconsumers.Itis a uniqueomni-channel,multi-industrysoftware that honeybee isourproprietary ITsoftware, developedin-houseinitiallytoserveour Her Majesty’s Revenue andCustoms Employee share ownership trust Employee benefittrust occurred on6August2014 The all-share merger ofDixonsRetailplcandCarphoneWarehouse Group plcwhich The Company, itssubsidiaries,interests injointventures andotherinvestments Dixons Retailplcanditssubsidiarycompanies The ConnectedWorld ServicesdivisionoftheCompany on 26June2013 The Company’s acquisition ofBestBuy’s interest inCPWEurope, whichcompleted Best BuyEurope’s core continuingoperations The continuingbusinessoftheCarphoneGroup 6RS registered number07105905) Dixons Carphoneplc(incorporatedinEnglandandWales undertheAct,with Cash GeneratingUnit The CompanyorGroup priortotheMerger on6August2014 to beexited. income andthenotesare restated accordingly fortheimpactofbusinessesexited or operations oftheGroup. Comparativeresults inthestatementofcomprehensive of discontinuedoperationsasstipulatedbyIFRSandare materialtotheresults or to orcommencedexitthrough disposalorclosure butdonotmeetthedefinition Businesses exitedortobeare thosewhichtheGroup hasexitedorcommitted The Board ofDirectors oftheCompany ventures andassociates(incorporatedinEngland&Wales) Best BuyEurope DistributionsLimitedanditssubsidiariesinterests injoint interests injointventures andassociates Best BuyCo.,Inc.(incorporatedintheUnitedStates) Business tobusiness Average monthlyrevenue peruser American DepositaryReceipts between segments. is removed frommeasures ourheadlineearnings inorder toincrease comparability amortisation ofacquired intangiblesandtherefore thenon-cashamortisationcharge Where businesseshavegrown organically ratherthanthrough acquisition,there isno assets acquired through abusinesscombinationcapitalisedseparatelyfrom goodwill. Acquired intangibleassetssuchascustomerbases,brandsandother Dixons Carphone plc ‌‌ , whoseregistered office isat1PortalWay, LondonW3 AnnualReport andAccounts 2016/17 ‌‌ anditssubsidiaries ‌‌ 159

Investor information Investor information 160 WAEP Virgin MobileFrance UK GAAP TSR TalkTalk orTalkTalk Group SWAS Sprint JV SIMO Sharesave orSAYE RCF Old CarphoneWarehouse NPS New CPW MVNO MNO Market position Glossary anddefinitions Dixons Carphone plc AnnualReport andAccounts 2016/17 comparing dataforrevenue orvolumeofunitssoldrelative tosimilarmetricsfor by marketshare. Marketshare ismeasured foreachoftheGroup’s marketsby Ranking againstcompetitorsintheelectricalandmobileretail market,measured Weighted averageexercise price Limited andFinancomS.A.S. operating anMVNOinFranceasajointventure betweentheCompany, BluebottleUK Omer Telecom Limited(incorporatedinEnglandandWales) United KingdomAccountingStandards andapplicablelaw Total shareholder return TalkTalk Telecom Group PLCanditssubsidiariesotherinvestments Stores-within-a-store venture heldwithSprintLLCintheUSA. The 50%investmentheldbytheGroup inSprintConnectLLC,adistributionjoint Sales ofSIM-onlycontracts,withoutattachedhandset shareSave asyouearn scheme Revolving credit facility PLC) TalkTalk Telecom HoldingsLimited(previously calledTheCarphoneWarehouse Group recommend itsoperations Net Promoter Score, aratingusedbytheGroup tomeasure customers’likelihoodto in EnglandandWales) Dixons CarphoneHoldingsLimited,previously calledNewCPWLimited(incorporated Mobile virtualnetworkoperator Mobile networkoperator competitors inthesamemarket ‌‌ (incorporatedinEnglandandWales) ‌‌ ‌‌ ‌‌ anditssubsidiaries, “Over the last few years a great deal of work has been done to make the company stronger, lower risk and more resilient. We are seeing the upside of these efforts now as we declare record headline profits before tax of over half a billion pounds – up 10%. More importantly, the improvement in our cost base, the strong leadership position that we have built, the investment that we have made in our digital business and, above all, the enormous shift in customer satisfaction and price competitiveness that we have driven leave us well positioned to flourish in the years ahead. While the UK consumer environment seems to be holding up for us, there will undoubtedly continue to be changes in the way people buy all of the products that we sell from phones to washing machines. Change always represents opportunity, and our job is to find the propositions that keep us compelling to our customers forever. We are excited about our plans in services and about the myriad of initiatives that will drive long- term relationships with our customers. In short, it has been a good year for Dixons Carphone and it gives me great pleasure once again to thank my 43,000 colleagues for the work that they have done to deliver so well and so energetically for our customers.”

Sebastian James Group Chief Executive 27 June 2017

Cautionary statement Designed and printed by Black&Callow Certain statements made in this Annual Report and Accounts are forward looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results This report is printed on Oxygen Offset 100% Recycled board and referred to in these forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not Soporset paper. Both papers are FSC certified and produced in ISO 9001 and ISO 14001 certified paper mills. undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Nothing in this Annual Report and Accounts should be regarded as a profit forecast. Dixons Carphone plc Annual Report and Accounts Annual Report and Accounts 2016/17 2 016 /17

Dixons Carphone plc 1 Portal Way London W3 6RS United Kingdom Telephone: +44 (0) 345 013 0345 Email: [email protected] www.dixonscarphone.com www.dixonscarphone.com @DixonsCarphone