Dunelm : Notice of 2023 Annual General Meeting

Your attention is drawn to the Definitions in Part 3 which apply throughout this document and the Form of Proxy unless the context requires otherwise.

All times referred to are London times unless otherwise stated.

19 October 2023

To Shareholders of the Company Dear Shareholder

1 Introduction

The purpose of this letter is to provide you with an explanation of the Resolutions to be proposed at the Annual General Meeting of the Company which will be held at Stoke 2 Distribution Centre, White Rock Road, Prologis Park, Stoke on Trent, ST4 4FA at 11.30 am on 16 November 2023 and to seek your approval of them. The notice of Annual General Meeting is set out at Part 5 of this document and definitions which apply throughout this document are set out in Part 3.

The Directors believe that the Resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and Shareholders as a whole and accordingly they recommend that you vote in favour of each of the Resolutions at the Annual General Meeting, save that Sir Will Adderley makes no recommendation with regard to the Waiver Resolution (being Resolution 22) as, in accordance with the provisions of the Takeover Code, Sir Will Adderley is considered to be interested in the outcome of the Waiver Resolution.

Voting on the business of the meeting will be conducted by way of a poll. The results of voting on the Resolutions will be posted on the Company's website: corporate.dunelm.com as soon as practicable after the Annual General Meeting. Each of the Resolutions to be proposed at the Annual General Meeting is explained in further detail below.

2 Ordinary Business

The ordinary business of the Annual General Meeting comprises Resolutions 1 to 17 inclusive.

Resolution 1: Report and Accounts

The Directors are required to lay the Directors' Report, the audited annual accounts of the Company and the independent Auditor's Report before Shareholders at the Annual General Meeting. Accordingly, Resolution 1 presents the accounts for the year ended 1 July 2023 and, although not a statutory requirement, proposes the accounts for adoption. A copy of the Annual Report accompanies this document and is available to download from the Dunelm website: corporate.dunelm.com.

Resolution 2: Final Dividend

Shareholder approval is required for the payment of a final dividend as recommended by the Board. Subject to Shareholder approval, this dividend will be paid on 20 November 2023 to Shareholders on the register of members of the Company at the close of business on 27 October 2023.

Resolutions 3 to 13: Re-election of Directors

In accordance with the provisions of the UK Corporate Governance Code, all directors will retire and offer themselves for re-election at the Annual General Meeting.

Under Listing Rule 9.2.2E R, because Sir Will Adderley and the other members of the Concert Party (further details of which are set out in Part 2 of this document) are Controlling Shareholders of the Company, the re-election of any Independent Director by Shareholders must be approved by a majority vote of both:

1. the Shareholders as a whole; and
2. the Independent Shareholders.

The Board considers that the following Directors are independent for the purposes of Listing Rule 9.2.2E R: Alison Brittain, William Reeve, Ian Bull, Arja Taaveniku, Peter Ruis, Vijay Talwar and Kelly Devine. Although no longer considered by the Board to be independent for the purposes of Listing Rule 9.2.2.E R due to her tenure of over nine years, Marion Sears will also put herself forward for re-election by a majority vote of both the Shareholders as a whole and the Independent Shareholders.

The Company will separately count the number of votes cast by the Independent Shareholders in favour of the relevant Resolutions (as a proportion of the total votes of Independent Shareholders cast on each Resolution) to determine whether the threshold referred to in (b) above has been met. The Company will announce the results of these Resolutions on this basis as well as announcing the results of the ordinary Resolutions of all Shareholders. For these purposes, the votes controlled by Sir Will Adderley and the other members of the Concert Party will therefore be excluded when calculating the votes of the Independent Shareholders as referred to in

(b) above.

Under Listing Rule 9.2.2F R, if a Resolution to re-elect an Independent Director is not approved by a majority vote of both the Shareholders as a whole and the Independent Shareholders, a further resolution to re-elect the relevant Independent Director must be put forward to be approved by the Shareholders as a whole at a meeting which must be held more than 90 days after the date of the original vote but within 120 days of the date of the original vote.

The Directors have no present intention of allotting new Ordinary Shares other than in relation to the Company's employee share scheme, however the Directors consider it desirable to have the maximum flexibility permitted by corporate governance guidelines to respond to market developments and to enable allotments to take place to manage the Group's capital resources. This authority will expire at the conclusion of the next annual general meeting of the Company after the passing of this Resolution or, if earlier, on 31 December 2024 unless it is previously renewed, varied or revoked.

Resolution 18 will be proposed as an ordinary resolution.

Resolutions 19 and 20: Authority to issue shares on a non pre-emptive basis

These Resolutions (which will be proposed as special resolutions) give the Directors authority to allot equity securities of the Company (including any Ordinary Shares which the Company has purchased and elected to hold as treasury shares) for cash other than on a pre-emptive basis as provided by the CA 2006. Other than in connection with a rights or other pre-emptive issue, the authorities contained in these Resolutions will be limited to issues of Ordinary Shares representing an aggregate nominal value of £201,737, which in turn represents approximately 10 per cent. of the issued Ordinary Shares of the Company as at the Latest Practicable Date.

The Directors intend to adhere to the provisions in the Pre-Emption Group's Statement of Principles most recently published prior to the date of this Notice of Annual General Meeting, not to allot shares for cash on a non-pre-emptive basis pursuant to the authority in Resolution 19: (i) in excess of an amount equivalent to 5 per cent. of the total issued Ordinary Share capital of the Company; or (ii) in excess of an amount equal to 7.5 per cent. of the total issued Ordinary Share capital of the Company in a rolling three-year period, without prior consultation with Shareholders, in each case other than in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment or which has taken place in the preceding six-month period and is disclosed in the announcement of the allotment.

In accordance with the Pre-Emption Group's Statement of Principles, separate Resolutions are being proposed to

1. disapply pre-emption rights on up to 5 per cent. of the issued share capital (Resolution 19) and (b) disapply pre- emption rights for an additional 5 per cent. for transactions which the Board determines to be an acquisition or other capital investment as defined by the Statement of Principles (Resolution 20).

In relation to Resolutions 19 and 20, the Directors consider that it is in the best interests of the Company and its Shareholders generally that the Company should have the flexibility conferred by the above authorities. This is in line with corporate governance guidelines. However, the Directors have no present intention of exercising any of these authorities or to issue any unissued Ordinary Shares in the Company, other than in respect of the exercise of Share Options by employees under the Employee Share Schemes. If Resolutions 19 and 20 are passed, both authorities will expire on the earlier of either the conclusion of the annual general meeting to be held in 2024 or on 31 December 2024.

Resolution 21: Authority to make market purchases of Ordinary Shares

This Resolution (which will be proposed as a special resolution) seeks authority for the Company to buy back its own Ordinary Shares in the market as permitted by the CA 2006 (the 'Market Purchase Authority'). The authority, if granted, limits the number of Ordinary Shares that could be purchased to a maximum of 5,000,000 Ordinary Shares, representing approximately 2.5 per cent. of the Company's issued Ordinary Share capital as at the Latest Practicable Date. Resolution 21 specifies the minimum and maximum prices which may be paid for any Ordinary Shares purchased under this authority, reflecting the requirements of the Listing Rules.

If Resolution 21 is passed, the Market Purchase Authority will expire on the earlier of either the conclusion of the annual general meeting to be held in 2024 or on 31 December

2024. The Company may either retain any of its own Ordinary Shares which it has purchased as treasury shares with a possible re-issue at a future date or cancel them.

Since the Company started a buyback programme of its Ordinary Shares in 2007, it has not cancelled any of the Ordinary Shares that it has bought. The Company has bought back 7,777,577 Ordinary Shares since starting the buyback programme and has transferred 6,087,877 of such Ordinary Shares out of treasury to employees exercising Share Options under the Employee Share Schemes. As at the Latest Practicable Date, the Company held 1,689,700 Ordinary Shares in treasury.

The Directors currently intend to utilise the Market Purchase Authority only to the extent necessary to satisfy future exercises of Share Options under the Employee Share Schemes and, as such, the Company intends to hold any Ordinary Shares that it purchases pursuant to the Market Purchase Authority as treasury shares for re-issue to employees exercising Share Options under the Employee Share Schemes, because the Board believes that this gives the Company the ability to cost-effectively fulfil Share Option entitlements, and provides the Company with additional flexibility in the management of its capital base. The Company does not currently intend to re-issue for sale or cancel any Ordinary Shares that it purchases pursuant to the Market Purchase Authority.

The Company intends on an annual basis to grant Share Options to Executive Directors and senior employees pursuant to the LTIP and to employees pursuant to the Dunelm Sharesave Scheme and, on an ad hoc basis, under the Dunelm 2020 Share Plan.

The total number of Share Options outstanding as at the Latest Practicable Date was 4,138,595, representing approximately 2.05 per cent. of the issued Ordinary Share capital of the Company (excluding treasury shares) as at that date. If the Market Purchase Authority and any remaining capacity under the equivalent existing authority given at the 2022 AGM were to be utilised in full, the total number of Share Options outstanding as at the Latest Practicable Date would, assuming no further Ordinary Shares are issued and no further Share Options granted, represent approximately

2.10 per cent. of the Ordinary Share capital of the Company (excluding treasury shares).

A purchase of Ordinary Shares by the Company pursuant to the Market Purchase Authority could increase the percentage of voting rights held by the Concert Party. In certain circumstances (described below) such an increase could trigger an obligation on the Concert Party to make a mandatory offer for the whole of the issued share capital of the Company pursuant to the Takeover Code. Non-Concert Party Shareholders will be asked, under Resolution 22, to approve the waiver by the Panel of the mandatory offer provisions such that the Market Purchase Authority will not trigger a requirement for the Concert Party to make a mandatory offer for the entire issued share capital of the Company. Further details of this waiver are set out below.

Resolution 22: The Waiver Resolution

The Waiver Resolution seeks Non-Concert Party Shareholders' approval of a waiver of the obligation that could arise on the Concert Party to make an offer for the entire issued share capital of the Company because of purchases by the Company of Ordinary Shares pursuant to the Market Purchase Authority.

Rule 9 of the Takeover Code

As an English company with its shares admitted to listing on the premium listing segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange, the Takeover Code applies to the Company. Under Rule 9 of the Takeover Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code is normally required to make an offer to all the remaining shareholders to acquire their shares.

Similarly, where any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of the voting rights of the company, an offer will normally be required if such person or any person acting in concert with that person acquires a further interest in shares which increases the percentage of shares carrying voting rights in which that person is interested.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any persons acting in concert with such person, for any interest in shares in the company during the twelve months prior to the announcement of the offer.

Where members of a concert party hold more than 50 per cent. of the voting rights in a company, no obligations under Rule 9 normally arise from acquisitions by any member of the concert party. They may accordingly increase their aggregate interests in shares without incurring any obligation under Rule 9 to make an offer, although individual members of a concert party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.

Impact of Rule 37 of the Takeover Code

Under Rule 37 of the Takeover Code, when a company purchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purposes of Rule 9 of the Takeover Code (although a shareholder who is neither a director nor acting in concert with a director will not normally incur an obligation to make a Rule 9 offer). Accordingly, if the Concert Party's aggregate shareholding increased as a result of the exercise of the Market Purchase Authority, the Concert Party would be required to make a mandatory offer for the remainder of the issued share capital of the Company.

Panel Waiver - exercise of the Market Purchase Authority

The Company has applied to the Panel for a waiver of Rule 9 of the Takeover Code in order to permit the Market Purchase Authority to be exercised by the Board (if such authority is approved by Shareholders) without triggering an obligation on the part of the Concert Party to make an offer to Shareholders. The Panel has agreed to waive the obligation to make an offer that would otherwise arise under Rule 9 of the Takeover Code as a result of purchases by the Company of up to 5,000,000 Ordinary Shares pursuant to the Market Purchase Authority, subject to the approval of Non-Concert Party Shareholders. Accordingly, the Waiver Resolution is being proposed at the AGM and will be taken on a poll. The members of the Concert Party will not be entitled to vote on the Waiver Resolution. No other Shareholder is considered to be acting in concert with the Concert Party.

The Concert Party

The Company has agreed with the Panel that the following persons are presumed to be acting in concert in relation to the Company: Sir Will Adderley, his wife, Lady Nadine Adderley and his mother, Jean Adderley, the Stoneygate Trust (a private charitable trust of which Sir Will Adderley and Lady Nadine Adderley are trustees) and the Paddocks Discretionary Trust (a private trust relating to the Adderley family), WA Capital Limited and WA Capital Investments Limited.

Sir Will Adderley joined the business in 1992. He has worked in and is familiar with all major areas of the business and took over the running of the Group as Chief Executive from his father, Bill Adderley, in 1996. In February 2011, he relinquished the role of Chief Executive to Nick Wharton, and became Deputy Chair. Following the resignation of Nick Wharton, Sir Will Adderley was re-appointed Chief Executive on 11 September 2014. He resumed his previous role as Deputy Chair in January 2016. He continues to hold an executive role to support the business in matters agreed with the current Chief Executive, Nick Wilkinson, as required.

Sir Will Adderley is currently beneficially interested in an aggregate of 75,231,779 Ordinary Shares, representing

37.29 per cent. of the voting rights in the Company as at the Latest Practicable Date, held by himself directly and through WA Capital Limited (a private company established by Sir Will Adderley to act as a long-term holding company for his beneficial shareholding in the Company) and WA Capital Investments Limited (a wholly owned subsidiary of WA Capital Limited). The Concert Party holds and/or is presumed to

be interested in, in aggregate, 86,340,279 Ordinary Shares representing 42.80 per cent. of the voting rights in the Company as at the Latest Practicable Date.

Intentions of the Directors

The Directors intend to maintain the listing of the Ordinary Shares on the Official List for the foreseeable future.

The Independent Directors anticipate that they will continue to seek Shareholder approval on an annual basis of the waiver of any Rule 9 obligation which may arise as a result of the exercise of a renewed buy back authority.

Resolution 22 will be proposed as an ordinary resolution.

Resolution 23: Notice period for general meetings

This Resolution, which will be proposed as a special resolution, relates to the requirement under the CA 2006 which increases the notice period for general meetings of traded companies to 21 days unless certain conditions are met. One of the conditions is that a shareholder resolution, such as Resolution 23, reducing the notice period to 14 clear days, is passed on an annual basis. The shorter notice period will, if approved by Shareholders, not be used as a matter of routine for such meetings, but only where the flexibility is merited by the business of the meeting and is thought to be in the best interests of Shareholders as a whole.

Resolutions 24 and 25: Approval of the amendments to the Company's Long Term Incentive Plan and Sharesave Plan

Resolutions 24 and 25 relate to the amendment of the Dunelm Group 2014 Long Term Incentive Plan (the '2014 LTIP') and the Dunelm Group 2014 Sharesave Plan (the 'Sharesave').

The 2014 LTIP and the Sharesave were approved by shareholders and adopted by the Company in 2014, with shareholders subsequently approving amendments to the 2014 LTIP at the Annual General Meetings in 2015 and 2017. The 2014 LTIP is the Company's long-termshare-based incentive arrangement for Executive Directors and other members of the Company's leadership team. The Sharesave is an 'all-employee' share based incentive plan.

The LTIP and Sharesave as originally approved by shareholders expire for the purposes of new awards in 2024, following the end of their originally anticipated ten-year life. In Resolutions 24 and 25, the Company is seeking approval for amendments to the 2014 LTIP and Sharesave, including to the extension of the life of each plan for a further period of ten years. Although the plans are not scheduled to expire until 2024, this approval is sought now to coincide with the approval of a revised Directors' Remuneration Policy as referred to in relation to Resolution 14.

Although shareholders are only being asked to approve the amendments to the 2014 LTIP and Sharesave, as the amended plans will last for a further ten years we have included a full summary of the plans as amended in Part 4 of this document.

Resolutions 24 and 25 will be proposed as ordinary resolutions.

4 Audited consolidated accounts and significant change

The audited consolidated accounts for the periods to 2 July 2022 and 1 July 2023 can be found at corporate.dunelm.com, and are incorporated into this document by reference. For the avoidance of doubt, the content of the website is not incorporated into and does not form part of this document.

If you require a hard copy of the audited consolidated accounts for FY22 or FY23 or the trading update dated

19 October 2023 referred to below, a request should be sent to Luisa Wright at investorrelations@dunelm.com or Dunelm Group plc, Watermead Business Park, Syston, Leicester, LE7 1AD (Tel 0116 264 4400).

The Directors are not aware of any significant change in the financial or trading position of the Group since 1 July 2023, being the end date of the last financial period for which audited accounts were published.

5 Action to be taken

A Form of Proxy for use in connection with the Annual General Meeting is enclosed. Whether or not you intend to be present at the meeting, you are requested to complete, sign, and return the Form of Proxy by one of the following methods:

1. in hard copy form using the Form of Proxy enclosed by post, by courier or by hand (during normal business hours) to the Company's registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA; or
2. in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in notes 8 and 9 to the Notice of Annual General Meeting set out at Part 5 of this document; or
3. electronically by visiting www.sharevote.co.uk. You will need your Voting ID, Task ID and Shareholder Reference Number (this is the series of numbers printed on the Form of Proxy). Alternatively, if you have already registered with Equiniti Limited's online portfolio service, Shareview, you can submit your Form of Proxy at www.shareview.co.uk. Full instructions are provided on both websites; or
4. if you are an institutional investor, electronically via the Proxymity platform in accordance with the procedures set out in note 11 to the Notice of Annual General Meeting set out at Part 5 of this document,

and in each case so that it is received by the Company's registrars, Equiniti Limited, as soon as possible and in any event not later than 11.30 am on 14 November 2023.

Completion and return of the Form of Proxy, the transmission of a CREST Proxy Instruction or the electronic appointment of proxies will not preclude Shareholders from attending and voting in person at the Annual General Meeting, should they so wish.

6 Additional Information

Your attention is drawn to the Annual Report and to Part 2 of this document which contain certain additional information in respect of the Company, including Directors' interests.

Shareholders are advised to read the whole of this document and the Annual Report and not rely solely on the summary information set out in this letter.

7 Recommendations

In the opinion of the Board, each of the Resolutions to be proposed at the Annual General Meeting is in the best interests of the Company and Shareholders as a whole, save that Sir Will Adderley makes no recommendation with regard to the Waiver Resolution (Resolution 22) as, in accordance with the provisions of the Takeover Code, Sir Will Adderley is considered to be interested in the outcome of the Waiver Resolution.

Accordingly, the Board, excluding Sir Will Adderley for the purposes of the Waiver Resolution, recommends that Shareholders vote in favour of the Resolutions at the Annual General Meeting, as the Directors intend to do in respect of their own beneficial holdings of Ordinary Shares, which amount to 37.27 per cent. of the issued Ordinary Shares, save that Sir Will Adderley will not vote in respect of his beneficial holdings of Ordinary Shares, which amount to 36.98 per cent. of the issued Ordinary Shares, on the Waiver Resolution, in which he is considered to be interested.

The Independent Directors, who have been so advised by Barclays, consider the Waiver Resolution to be fair and reasonable and to be in the best interests of the Non- Concert Party Shareholders and the Company as a whole. In providing its advice to the Independent Directors, Barclays has taken account of the Independent Directors' commercial assessments.

Accordingly, the Independent Directors unanimously recommend that Non-Concert Party Shareholders vote in favour of the Waiver Resolution to be proposed at the Annual General Meeting, as the Independent Directors intend to do in respect of their own beneficial holdings of Ordinary Shares, which amount to approximately 0.29 per cent. of the issued Ordinary Shares.

Yours faithfully

Alison Brittain

Chair

1 Responsibility

1.1 The Directors take responsibility for the information contained in this document other than:

1. the recommendation and associated opinion attributed to the Independent Directors set out in paragraph 7 of the Chair's Letter; and
2. the statement in paragraph 3 of the Chair's Letter (under the heading 'Intentions of the Concert Party' on page 6) that the Concert Party has no present intention of changing the Board or the employment rights of employees,

and the only responsibility accepted by the Directors in respect of the information in this document relating to the Concert Party has been to ensure that such information has been correctly and fairly reproduced or presented as notified to the Company (and no steps have been taken by the Directors to verify this information).

To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

1. Each member of the Concert Party takes responsibility for the statements in paragraph 3 of the Chair's Letter that relate to them and their respective intentions. To the best of the knowledge and belief of each member of the Concert Party (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.
2. The Independent Directors take responsibility for the recommendation and associated opinion attributed to them in paragraph 7 of the Chair's Letter. To the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that this is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

2 The Company

1. The Company was incorporated and registered in England and Wales on 23 March 2003 and with registered number 4708277. The registered office of the Company and the business address of all of the Directors is Watermead Business Park, Syston, Leicester, Leicestershire LE7 1AD.
2. The Company is a UK homewares retailer.
3. As at the Latest Practicable Date, the issued share capital of the Company was 203,426,835 Ordinary Shares, carrying one vote each and the Company held 1,689,700 Ordinary Shares in treasury. Therefore, the total number of voting rights in the Company as at the Latest Practicable Date was 201,737,135.
4. As at the Latest Practicable Date, there were 4,138,595 Share Options outstanding over the Ordinary Shares, representing 2.05 per cent. of the Ordinary Shares in issue (excluding treasury shares).

3 The Concert Party

1. The Concert Party holds 86,340,279 Ordinary Shares representing 42.80 per cent. of the voting rights in the Company as at the Latest Practicable Date.
2. Sir Will Adderley is currently beneficially interested in an aggregate of 75,231,779 Ordinary Shares, representing

1. 37.29 per cent. of the voting rights in the Company as at the Latest Practicable Date. 36,070,000 Ordinary Shares are held by him directly. 3,161,779 Ordinary Shares are registered in the name of WA Capital Limited, a private company established by Sir Will Adderley to act as a long-term holding company for his beneficial shareholding in the Company. Sir Will Adderley and his wife Lady Nadine Adderley are directors and the sole shareholders of WA Capital Limited. 36,000,000 Ordinary Shares are registered in the name of WA Capital Investments Limited, a private company and wholly owned subsidiary of WA Capital Limited. On

   20 September 2016, WA Capital Investments Limited entered into a loan facility with Barclays Bank plc and granted a security interest in favour of Barclays Bank plc over 18,000,000 Ordinary Shares as security for any amounts which may be due from time to time under the facility. On 8 December 2017, the size of this security interest increased by 18,000,000 Ordinary Shares to 36,000,000 Ordinary Shares in total. On 23 September 2021, this security was released, and a replacement granted in favour of Banco Santander S.A in connection with a loan facility with that bank. In the case of both the security interest granted to Barclays Bank plc and the replacement to Banco Santander S.A, WA Capital Investments Limited remains the beneficial owner of the Ordinary Shares subject to the security interest and retains full voting rights.

2. In addition, Sir Will Adderley is presumed to hold a legal interest in 967,250 Ordinary Shares held by the Stoneygate Trust and 172,750 Ordinary Shares held by the Paddocks Discretionary Trust. Sir Will Adderley and Lady Nadine Adderley are the trustees, but not beneficiaries, of the Stoneygate Trust and the Paddocks Discretionary Trust.
3. Furthermore 9,968,500 Ordinary Shares are held by Jean Adderley, Sir Will Adderley's mother.