19 July 2017

ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING

Dixons Carphone plc (the 'Company') has today published its Annual Report and Accounts 2016/17 and Notice of Annual General Meeting 2017. These documents are available to view on the Company's website at www.dixonscarphone.com/investors. In addition, along with the Form of Proxy for the Annual General Meeting 2017, they have been posted or otherwise made available to shareholders and also submitted to the National Storage Mechanism, where they will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM.

The Company's Annual General Meeting 2017 will be held at 11.00am on Thursday 7 September 2017 at Hilton London Kensington Hotel, 179-199 Holland Park Avenue, London W11 4UL.

The information included in the Appendix to this announcement has been extracted from the Annual Report and Accounts 2016/17 and is reproduced here solely for the purposes of complying with the requirements of Disclosure Guidance and Transparency Rule ('DTR') 6.3.5 in respect of how to make annual financial reports available to the public.

The content of this announcement, including the Appendix, should be read in conjunction with the Company's Preliminary Results announcement, which was released on 28 June 2017 and is available on the Company's website at http://www.dixonscarphone.com/~/media/Files/D/Dixons-Carphone/documents/2016-17-preliminary-results.pdf.

Together, these announcements constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report and Accounts 2016/17. Defined terms used in the Appendix refer to terms as defined in the Annual Report and Accounts 2016/17. Page numbers and cross references in the Appendix refer to pages and sections of the Annual Report and Accounts 2016/17.

Appendix

A. Principal risks to achieving the Group's objectives (pages 16 to 21)

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 category.

Specific risks and potential impacts - Example mitigating actions and related strategic priorities

STRATEGIC RISKS

Principal risks

1. Dependence on networks

Specific risks

·    Changes in MNO strategies in relation to the Group, or more generally, and / or their performance, could materially affect the revenues and profits of the business

Potential impacts

·      Reduced revenue and profitability

·      Deteriorating cash flow

·      Reduced market share

Example mitigating actions

·    Multi-year commercial agreements are in place with all the major MNOs, which closely align interests and drive value for both parties

Change in net risk in 2016/17

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This risk has remained stable over 2016/17

Principal risks

2. Dependence on key suppliers

Specific risks

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

Potential impacts

·      Reduced revenue and profitability

·      Deteriorating cash flow

·      Reduced market share

Example mitigating actions

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

Change in net risk in 2016/17

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This risk has remained stable over 2016/17

Principal risks

3. Impact of Brexit

Specific risks

·    Economic uncertainty and impact on consumer confidence caused by the decision of the UK to leave the European Union ('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

Potential impacts

·      Reduced revenue and profitability

·      Deteriorating cash flow

Example mitigating actions

·   Strategic and business planning takes into account varying economic scenarios, with ongoing monitoring by finance and senior executives

·     Long-term credit facilities in place

·     Foreign exchange hedging to mitigate impact of currency fluctuation

·     Long-term contingency planning to address wider regulatory and legislative changes

Change in net risk in 2016/17

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The risk has increased in 2016/17 following the decision to leave the EU

Principal risks

4. Greek business

Specific risks

·    Economic uncertainty and / or possibility of Greece's exit from the Euro ('Grexit') could lead to a deterioration in consumer confidence and disposable income resulting in a significant impact on our Greek business, Kotsovolos

Potential impacts

·      Reduced revenue and profitability

·      Deteriorating cash flow

Example mitigating actions

·     Ongoing monitoring of local political and economic developments

·     Focus on optimising business performance and management of costs

·  Operation of controls over supplier funding and consumer credit arrangements to reduce risk exposure

Change in net risk in 2016/17

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This risk has remained stable over 2016/17

Principal risks

5. Consumer environment and sustainable business model

Specific risks

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

·     Failure to respond effectively to changes in the industry, economic and / or competitor landscape

·     Failure to accommodate changes in consumer preferences and behaviours

Potential impacts

·      Reduced revenue and profitability

·      Deteriorating cash flow

·      Reduced market share

Example mitigating actions

·     Close scrutiny of product performance, trading results, competitor activity and market share

·     Use of customer insight / advocacy to monitor success of initiatives and actions

·     Continued focus on driving cost improvements through cost-efficiency initiatives

·     Ongoing evolution of our multi-channel proposition

·     Differentiation from competitors through strategic partner relationships, innovative propositions, and high quality customer service

·     Working to leverage expertise and scale to build partnerships with other retailers and businesses

·     Development of the Services strategy

Change in net risk in 2016/17

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This risk has increased in 2016/17 as uncertainty caused by the decision to leave the EU has impacted the financial markets' evaluation of the prospects for the UK economy and in particular the consumer sector

REGULATORY RISKS

Principal risks

6. Non-compliance with Financial Conduct Authority ('FCA') regulation

Specific risks

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

Potential impacts

·      Reputational damage

·      Financial penalties

·      Reduced revenue and profitability

·      Deteriorating cash flow

·      Customer compensation

Example mitigating actions

·    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 monitoring of any required mitigating actions

·    Internal committees, including a dedicated FCA compliance committee, and control structures to ensure appropriate compliance (e.g. undertaking quality assurance procedures for samples of mobile phone sales) and to react swiftly should issues arise

·     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

Change in net risk in 2016/17

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This risk has decreased over 2016/17 due to improvements over the operation and monitoring of a comprehensive control environment covering all of the Group's FCA-regulated activities

Principal risks

7. Data Protection

Specific risks

·    Adequacy of internal systems and processes to comply with requirements of forthcoming EU General Data Protection Regulation ('GDPR') which comes into effect in May 2018

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

Potential impacts

·      Reputational damage

·      Financial penalties

·      Reduced revenues and profitability

·      Deteriorating cash flow

·      Loss of competitive advantage

Example mitigating actions

·     A comprehensive GDPR readiness assessment is being conducted across the Group's operations to benchmark current practices against requirements of new legislation

·     Existing control activities operate over management of customer and employee data in accordance with the Group's Data Protection policy and processes

·     Ongoing training programmes for colleagues on requirements for data protection

Change in net risk in 2016/17

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This risk was presented as part of the information security risk in 2015/16 and is now shown separately to reflect our focus on meeting the requirements of GDPR. The risk has remained stable over 2016/17

OPERATIONAL RISKS

Principal risks

8. Information security

Specific risks

·     Vulnerability to attack, malware, and associated cyber risks

Potential impacts

·     Reputational damage

·     Financial penalties

·     Reduced revenue and profitability

·     Deteriorating cash flow

·     Loss of competitive advantage

Example mitigating actions

·    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 & Ireland, set up with responsibility for oversight, co-ordination and monitoring of information security policy and risk

·     Information policy and standards defined and communicated

·     Ongoing training and awareness programmes for employees

·     Audit programme over key suppliers' information security standards

·     Ongoing programme of penetration testing

Change in net risk in 2016/17

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Our overall information security position has improved in 2016/17 following significant and ongoing management effort and investment to reduce this risk exposure

Principal risks

9. Health and safety

Specific risks

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

Potential impacts

·      Employee / customer injury or loss of life

·      Reputational damage

·      Financial penalties

·      Legal action

Example mitigating actions

·     Group Health and Safety strategy

·     Group Health and Safety policy

·     Health and Safety management / governance committee

·     Comprehensive set of policies and standards supporting continued improvement

·     Head of Health and Safety and operational Health and Safety teams located across business units and markets

·     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

Change in net risk in 2016/17

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This risk has decreased in 2016/17 as a result of actions initiated following a comprehensive internal review of Health and Safety processes conducted in 2015/16

Principal risks

10. Business continuity plans are not effective and major incident response is inadequate

Specific risks

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

Potential impacts

·     Reduced revenue and profitability

·     Deteriorating cash flow

·     Reputational damage

·     Loss of competitive advantage

Example mitigating actions

·     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

·     Crisis team appointed to manage response to significant events

·     Major risks insured

Change in net risk in 2016/17

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This risk has remained stable over 2016/17

TECHNOLOGY RISKS

Principal risks

11. IT systems and infrastructure

Specific risks

·     Failure to appropriately invest in IT systems and infrastructure, or an inability to effectively integrate IT assets across the Group constrains the Group's ability to grow and / or adapt quickly. A key system becomes unavailable for a period of time

Potential impacts

·     Reduced revenue and profitability

·     Deteriorating cash flow

·     Loss of competitive advantage

·     Restricted growth and adaptability

·     Reputational damage

Example mitigating actions

·     Significant investment being made in IT systems and infrastructure across the Group, supported by rigorous testing processes

·     Ongoing IT transformation to align IT infrastructure to future needs of the business

·     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

Change in net risk in 2016/17

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The risk has remained stable over 2016/17

PEOPLE RISKS

Principal risks

12. Colleague retention and capability

Specific risks

·    Failure to attract, develop and retain quality and depth of necessary leadership, management and colleague talent

·    Maturing of long term incentive schemes may increase risk of higher turnover in senior management population

Potential impacts

·     Reputational damage

·     Reduced revenue and profitability

·     Deteriorating cash flow

·     Loss of competitive advantage

Example mitigating actions

·     Ongoing review to ensure appropriate and effective roles, responsibilities, and accountabilities

·    Defined and standardised performance management frameworks in place and reward aligned to attract and retain talent

·     Store structures which provide a clear career path for colleagues, retaining and developing the best retail talent

·     Bonus plans which include components relating to both business and personal performance

·  Continued improvements in the quality of training courses and development programmes with specialist focus on core business areas

·    Development of appropriate Board succession planning, as set out in the Nominations Committee Report on pages 59 and 60

Change in net risk in 2016/17

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The business is subject to competition to attract and retain talent in growth areas of the business. Our exposure to this risk increased in 2016/17 as we approach the vesting date of various long term incentive plans

FINANCIAL RISKS

Principal risks

13. Fraud

Specific risks

·     Payment card fraud

·     Manipulation or misuse of Electronic Point of Sale system and / or other payment systems

·     Customer false identity and other 'no intention to pay' frauds in taking out network contracts

Potential impacts

·     Reduced revenue and profitability

·     Reputational damage

Example mitigating actions

·     Fraud prevention and detection controls

·     Real-time transaction monitoring

·     24/7 fraud and loss prevention teams

·     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

Change in net risk in 2016/17

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This risk has remained stable over 2016/17

B. Responsibility Statement (page 87)

We* confirm to the best of our knowledge:

·    the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

·     the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

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

By Order of the Board

Sebastian James, Group Chief Executive

Humphrey Singer, Group Finance Director

27 June 2017

* The directors of Dixons Carphone plc as at 27 June 2017 are listed on pages 36 and 37 of the Annual Report and Accounts 2016/17.

ENDS

For further information:

Nigel Paterson            General Counsel and Company Secretary    +44 (0)203 110 4411

Kate Ferry                   IR, PR and Corporate Affairs Director            +44 (0)7748 933 206