Appendix 4E (Rule 4.3A) Baby Bunting Group Limited ABN 58 128 533 693 For the period ended: 52 weeks ended 30 June 2024 Previous corresponding period: 53 weeks ended 2 July 2023 Results for announcement to the market Statutory Financial Results 2024 $’000 2023 $’000 Mvmt $’000 up/(down) % Revenue from ordinary activities 498,387 524,281 (25,894) (5%) Net profit from ordinary activities after tax (attributable to members) 1,696 9,854 (8,158) (83%) Net profit attributable to members 1,696 9,854 (8,158) (83%) Pro Forma Financial Results 2024 $’000 2023 $’000 Mvmt $’000 up/(down) % Revenue from ordinary activities 498,387 515,790 (17,403) (3%) Net profit from ordinary activities after tax (attributable to members) 3,676 14,503 (10,827) (75%) Net profit attributable to members 3,676 14,503 (10,827) (75%) Pro forma financial results have been calculated to exclude certain items contained in the following table that reconciles the statutory results to pro forma financial results for the period ended 30 June 2024 and 2 July 2023 and provide further detail on pro forma adjustments. This has been done to more clearly represent the consolidated entity’s underlying earnings (noting that this financial information has not been audited in accordance with Australian Auditing Standards). The following table reconciles the statutory to pro forma financial results for the year ended 30 June 2024 (noting that this financial information has not been audited in accordance with Australian Auditing Standards): Period ended 30 June 2024 $’000 Sales NPAT Statutory results 498,387 1,696 Employee equity incentive expenses1 – 461 Transformation project expenses2 – 930 Restructuring costs3 – 1,438 Tax impact from pro forma adjustments – (849) Pro forma results 498,387 3,676 1. Expense reflects the cost amortisation of performance rights (LTI) on issue in the reporting period. This also includes a recovery of prepaid payroll tax on the plans as the EPS CAGR hurdles as defined under the LTI plan were not achieved. 2. The Company incurred non-capital costs ($1.330 million) for transformation projects. This was offset by a $0.400 million cash settlement received in December 2023 from the vendor of order management software following a dispute in relation to that software and its implementation. 3. The Company incurred restructuring costs ($1.438 million) which included make good costs relating to the Camperdown store closure ($0.186 million) and payments associated with organisational restructure including the disestablishment of a number of head office roles. Baby Bunting Appendix 4E 2024 i The following table reconciles the statutory to pro forma financial results for the year ended 2 July 2023 (noting that this financial information has not been audited in accordance with Australian Auditing Standards): Year ended 2 July 2023 $’000 Sales NPAT Statutory results 524,281 9,854 Employee equity incentive expenses1,2 - 965 Transformation project expenses3 - 4,745 Impact of week 534 (8,491) (412) Tax impact from pro forma adjustments5 - (649) Pro forma results 515,790 14,503 1. Expense reflects the cost amortisation of performance rights (LTI) on issue in the reporting period. This also includes a write-back of the 2020 (EPS CAGR) expenses ($1.673 million) and the 2021 (EPS CAGR) expenses ($0.275 million) and the payroll tax paid on the plans as the CAGR hurdles as defined under the LTI plan, are unlikely to be achieved. 2. The Company issued 277,182 shares under its General Employee Share Plan in the reporting period with no monetary consideration payable by participating eligible employees who each received approximately $1,000 worth of shares ($0.782 million). 3. The Company continued its investment in transformation projects and during the period the Company incurred non-capital costs ($4.745 million) associated with the implementation of a time and attendance system and the initial planning phase of a replacement of its enterprise resource planning (ERP) and point-of-sale systems. Other transformation project expenses include external consultant costs associated with project management costs to deliver the transformation projects. 4. FY2023 was a 53 week retail financial year. Week 53 revenues and expenses have been excluded to enable comparison to the FY2024 full year financial period (52 weeks) and prior years. 5. Tax impact from pro forma adjustments includes income tax expense relating to performance rights vesting under the Company’s Long Term Incentive Plan ($0.864 million). Dividends Amount per security (cps) Franked amount Dividends paid Final FY2023 dividend – paid 8 September 2023 4.8 100% Interim FY2024 dividend – paid 19 March 2024 1.8 100% Dividends determined Final FY2024 dividend Nil - The Company does not propose to pay a final FY2024 dividend. The Company does not currently offer a dividend reinvestment plan. ii Appendix 4E Continued Commentary on results for the period For further explanation of the statutory figures above refer to the accompanying financial report for the period ended 30 June 2024, which includes the Directors’ Report. The Full Year Results Presentation released in conjunction with this Results Announcement provides further analysis of the results. Net tangible assets per ordinary share Net tangible asset per ordinary share 2024 $ 2023 $ Net tangible asset per ordinary share1 0.35 0.41 1. Net tangible assets per ordinary share includes the Right-of-use assets as per AASB16. Other information Independent Audit by Auditor This report is based on the consolidated financial statements which have been audited by Ernst & Young. Baby Bunting Appendix 4E 2024 iii iv Page left intentionally blank. Annual Report 2024 Baby Bunting Group Limited ABN 58 128 533 693 The 2024 Baby Bunting Annual Report reflects Baby Bunting’s performance for the 52 week period from 3 July 2023 to 30 June 2024. The Baby Bunting Group Limited Annual Report is available online at investors.babybunting.com.au. Hard copies can be obtained by contacting Baby Bunting’s share registry (details inside back cover). Contents 3 Performance overview 4 Chair’s report 6 CEO’s report 8 Store network 10 Sustainability 12 The board 15 Corporate governance statement 27 Directors’ report 43 Remuneration report – audited 58 Financial report 101 Consolidated entity disclosure statement 102 Directors’ declaration 103 Auditor’s independence declaration 104 Independent auditor’s report 109 Shareholder information 111 Corporate directory Notice of 2024 Annual General Meeting 10.00am (Sydney time) Tuesday, 15 October 2024. Further details will be contained in the Notice of Annual General Meeting that will be made available in September 2024. The best start for the brightest future Our Vision 1 Baby Bunting Annual Report 2024 Baby Bunting has been supporting and inspiring confident parenting for 45 years Customer Value Proposition What we promise to deliver to our customer Choice Service Experience Value We offer ANZ’s widest range of carefully curated products across every stage of the early parenting journey, for every budget. We draw on 45 years of expertise to offer best in class service, reliable advice, education and services from car seat fitment to postnatal support to make the parenting journey easier. We go beyond the transaction to provide world class Customer Experience across our network of stores and seamless online shopping experience, making it easy to find what you need, when you need it. We deliver exceptional value for all parents by ensuring competitive prices backed by our strong price guarantee. 2 Our Mission To support and inspire confident parenting, from newborn to toddler Performance overview FY2024 pro forma results Refer to Section 2.5 of the Directors’ Report for further discussion on pro forma financial information and a reconciliation to statutory results. $498.4m Sales 21.8% Online Sales (% of total sales) (incl. C&C) 73 Net promotor score Up from 72 in FY23 36.3% Exclusive Products (% of total sales) Up 22 bps $15.9m Group EBITDA (pre-AASB 16) EBITDA margin 3.2% -3.4% Total sales growth 9.7% Private Label (% of total sales) Up 69 bps 36.8% Gross Margin Down 56 bps +800,000 Active loyalty customers >90% of sales from loyalty customers $3.7m Pro forma Group NPAT Down 74.7% vs pcp AU NPAT $6.8m Baby Bunting Annual Report 2024 3 Melanie Wilson, Chair Chair’s report Dear Shareholder This year has been a pivot point for the Group. While conditions have been challenging, we have reset the business around growth pillars as we continue to build the Baby Bunting platform to return the Group to growth and our target of being a plus 10% EBITDA margin business. There are signs early in FY2025 that our new strategy is driving positive momentum. Our customers are more sensitive than many other groups to cost-of-living pressures. In these times, we have seen that many of them have been managing their spending carefully as they move into a new and different stage of their lives. In these conditions, the Board, with Baby Bunting’s new CEO, Mark Teperson, and his management team, have been focused on developing a new long-term strategy to deliver shareholder value. The Board approved that strategy during the year which was announced to shareholders in June 2024. Baby Bunting has a great platform with the largest store network across Australia, the leading baby goods specialty website, a fantastic team and a very strong position in the market. We are still in the early stages of establishing Baby Bunting in the New Zealand market. It was very pleasing to welcome three new stores into our New Zealand network during the year, with two new stores in Auckland and one in Christchurch. We received a strong endorsement of our New Zealand business with our appointment in June 2024 as the exclusive retailer for Bugaboo in New Zealand, a leading premium international brand. Our financial results for the year reflected the challenges we have been working through in what has been a difficult economic climate. The Board is committed to leading the organisation in its recovery and to future growth. Our new strategy is an important part of returning value to our shareholders. 4 Our new strategy The strategy is built around three objectives: • grow market share; • grow EBITDA; and • grow return on invested capital. The Board believes that these objectives, and the initiatives that underpin them, are part of a clear plan to re-establish the business as a plus 10% EBITDA margin business and deliver sustainable shareholder value. Mark Teperson, in his comments that follow, will touch on these objectives and the underlying initiatives. You can also read more about them in the Directors’ Report. Building our capabilities The Board appointed Mark Teperson as our new CEO and he commenced in October 2023. Mark has led a review of the business and, in addition to the focus on stabilising the business’s performance, has prioritised defining the change required to re-engineer the business to return to growth. Under Mark’s leadership, we have seen new team members join the executive leadership team, with a new role of Chief Customer Officer and Chief Data & Analytics Officer appointed. This role is critical to ensure that Baby Bunting leverages the data and insights it has about our customers, to ensure that we can build more engaging customer experiences and build customer lifetime value. A new General Manager of Supply Chain will join early in the new financial year, with a mandate to build operational efficiency in our supply chains throughout Australia and New Zealand. Disciplined capital management Towards the end of the financial year, the Group rolled over its existing NAB debt facility, which was due to mature in March 2025. The facility has been extended to September 2027, with the existing pricing maintained. The Group’s initiatives for FY2025 see it undertaking a range of capital investments, including our new store redesign and new store formats which are expected to be deployed towards the end of this financial year. We will also continue to make investments in ongoing store and Store Support Centre sustenance and further investments in our digital architecture to ensure we remain a leading omni-channel retailer. In light of these investments, and with a view to supporting the future growth of the business, the Board determined that no final dividend would be paid in respect of the 2024 financial year. Sustainability The Board continues to be focused on ensuring the long-term sustainable operation of the Group. The Group continues to provide significant support for the communities in which we operate. Baby Bunting helped raise over $650,000 for our key charity partners, PANDA (Perinatal Anxiety & Depression Australia) and Lifes Little Treasures Foundation, as well as making other donations and donations in kind. The Group maintained its focus on achieving its gender diversity objectives, with Board and senior store and operations leadership objectives met. Work is ongoing at the executive level. Through operational improvements, progress was also made towards our goal of eliminating single use plastics in our supply chain and optimising online deliveries to reduce transportation impacts. Baby Bunting has also recently commenced a 12-month trial in Melbourne of an end-of-life car seat recycling program. The trial aims to divert up to 12 tonnes of car seats from landfill, with about 80% of car seats by weight able to be recycled. Baby Bunting has for a number of years been a participant in efforts to find a sustainable solution for end-of-life car seats and we are excited about this trial which we hope will be a step to further efforts across the industry. The year ahead Our strategy is one that we believe will deliver sustainable shareholder value. Baby Bunting has a great foundation on which to build, and we are focused on driving the success of the business. Our long-term success depends upon our customers, our suppliers and our great team. Our suppliers bring innovation and new products to our customers, and we are excited to be able to provide a great platform for them to interact with our customers. Our team, spread across our Australian and New Zealand stores, our distribution centres and our Store Support Centre are committed to our mission to support and inspire confident parenting, from newborn to toddler. On behalf of the Board, I thank them for their amazing efforts. Thank you all for your continued support. Melanie Wilson Chair Baby Bunting Group Limited Baby Bunting Annual Report 2024 5 Mark Teperson, Chief Executive Officer CEO’s report Dear Shareholder I’m pleased to be able to address shareholders at the end of my first financial year with the Group, I joined Baby Bunting in October 2023 with a mandate from the Board to return the Group to growth. Baby Bunting is a fantastic brand and has been supporting families for 45 years in Australia, and more recently in New Zealand. Baby Bunting has a great platform with over 800,000 active loyalty customers, more than 32 million visits to our websites and more than 90% of our sales coming from members of our loyalty program. This means we are generating great insights into how our customers interact with us and how they are moving through their parenting journey. Our evolving customer Baby Bunting is a leader in supporting parents. As part of this leadership, as our customer base evolves, Baby Bunting needs to evolve. A large part of our store fleet was established and deployed at a time when our core customers were Generation X, being parents born in the period 1965 to 1980. Our present core customers are families born in the Millennial Generation (1981 to 1996). In five years, our core customers will be Generation Z or Zoomers, who were born between 1997 to 2010. The parenting style, technological awareness, brand loyalty, price sensitivity and product preferences of each of these generations are varied. Our growth strategy We have developed a strategy that seeks to build on and leverage the Baby Bunting platform and to drive sustainable shareholder returns. Baby Bunting operates in a $6.3 billion total addressable market across Australia and New Zealand. Baby Bunting is the leader in hard goods, which includes prams, strollers, car safety seats and furniture. There is a clear opportunity to leverage our leadership in hard goods to grow our market share in soft goods, which includes manchester, apparel, feeding, sleeping and consumables. 6 We are focused on driving long term growth and returning the business to be a plus 10% EBITDA margin business, which was a level of performance last achieved in FY2022. Our plan sees us targeting this through a combination of an increase in gross margin and operating leverage achieved through network growth and productivity improvements. The strategy we presented in June 2024, has three key objectives: grow market share, grow EBITDA and grow return on invested capital. The Directors’ Report, included in this Annual Report, includes further detail on the initiatives that sit under those objectives. The objectives have at their heart enhancing customer experience, driving platform leverage and disciplined capital management. To grow market share and enhance customer experience, we will focus on providing market leading products, exceptional services and best-in-class experience, combined with data and analytical skills and insights. Key elements of this involve new product innovation to drive growth and reinforce our market leadership. Innovation and newness is very important to demonstrate that we can meet the evolving needs of parents. Pleasingly, we will introduce around 25% more newness into the business in Q1 FY2025 compared to the prior corresponding period. Where we have focused on newness and range innovation, in particular in categories like manchester and sleeping, we have delivered positive growth. A key project that commenced towards the end of FY2024 is the development of our new store design. Our stores serve as an experience centre for our customers, a distribution centre for our products and a stage for our brand partners to showcase their innovation and new products. Revamping our existing large format stores will enhance the experience for our customers by moving to an emotionally resonant and activity-led design. Final store designs are expected towards the end of the first half in FY2025, with the first redesigned stores expected to be in market in the second half of FY2025. This will be a key focus for Baby Bunting and after a period of testing and assessment, we expect to move to deploying the new design across our store network. Baby Bunting has significant investments in its existing assets and has plans to make future investments. A key focus of our new strategy is to grow return on Baby Bunting’s invested capital. This will focus on our new store roll-out which sees a further 26 metro and 15 regional stores in Australia and a further 6 large format stores in New Zealand. The newly developed small format store design may also provide further opportunities to deploy stores into new catchments to reach more consumers outside of our traditional large format areas. We are also focused on inventory productivity and ensuring efficient working capital. Our immediate objectives While we have a plan to drive growth into future years, we are also focused on our operating and financial performance for FY2025. Our aims are to stabilise sales, improve our gross margin to 40% and progress and embed the many productivity improvements we have commenced in the business. To achieve our mission to support and inspire confident parenting, from newborn to toddler we will be making further investments in our team to ensure that they continue to provide great service and advice to our customers throughout Australia and New Zealand who are on their parenting journey. As a team, we are focused on continuing to build Baby Bunting to be the leading baby goods retailer providing the best start, for the brightest future. Mark Teperson CEO Baby Bunting Group Limited Baby Bunting Annual Report 2024 7 14 22 2 1 6 5 Store Support Centre and National Distribution Centre Dandenong South, Victoria 20 Australia WA + 3PL facility SA ACT TAS VIC QLD + 3PL facility NSW + 3PL facility Network plan Large format stores 110+ Current Large format stores 70 Growing our store network in Australia and New Zealand Store network 8 Distribution Centre Wiri, Auckland 3 New Zealand 1 Current Large format stores 4 Network plan Large format stores 10+ AKL CHC • Network plan for more than 110 large format stores in Australia and more than 10 large format stores in New Zealand • Network growth is key to building omni-channel customers and growing customer lifetime value • Store of the Future initiative commenced in FY2024 to undertake a brand and store redesign. First stores in the new format expected to be in market towards the end of FY2025 • Trialling new small format store, which will provide an opportunity to meet more needs of parents in new markets and different regions Baby Bunting Annual Report 2024 9 Baby Bunting and sustainability Our ESG strategy is based around the following three pillars: • Our People – creating an equitable, inclusive and safe workplace where our team members can thrive. With a focus on being a parent friendly organisation. • Our Communities – contributing to support the communities in which we operate and to focus on the needs of parents and families. • Our Planet – operating in a sustainable manner to reduce the environmental impact of our actions. Our 2024 Sustainability Report describes in detail our goals and progress during FY2024. It is available at investors.babybunting.com.au Sustainability Some highlights for FY2024 include: • We raised and donated over $650,000 to support our charity partners and families in need. • We partnered with The Nappy Collective for the first time during the year. The Nappy Collective is an organisation that collects donations of new and leftover nappies - ones that little ones have grown out of or no longer need - and pass them onto community partners who support families. Our store network helped collect more than 324,000 nappies which assisted more than 10,000 families. • Our use of green energy remained consistent with FY2023 levels. Across Australian stores and the Distribution Centre, energy consumption declined by 1.4% (unaudited). The Group’s estimated Scope 2 emissions declined by 10% (unaudited). • With expanded online fulfilment capabilities we were able to reduce the number of split orders (being orders delivered in two or more instalments) eliminating more than 12,000 individual delivery journeys. • We have replaced recycled plastic bubblemailers with a paper craft alternative, a further progression towards our goal of eliminating single use packaging used in online fulfilment. Car seat recycling trial We finalised arrangements for an end-of-life car seat recycling trial, to commence in early FY2025 in some of our Melbourne stores. The trial is targeting up to 2,400 seats which equates to around 12 tonnes of materials, most of which can be processed and diverted from landfill. The trial will operate for around 12 months, during which time we will seek to better understand the costs of the trial and the ability to roll it out in other places. 10 11 Baby Bunting Annual Report 2024 Melanie Wilson Chair, Non-Executive Director MBA, B.Comm (Hons), GAICD Melanie has over 15 years’ retail experience in senior management roles. Her appointments have included Limited Brands, Starwood Hotels (New York), Woolworths and Diva/Lovisa and have covered a wide spectrum of retail including store operations, merchandise systems, online e-commerce, marketing, brand development and logistics/ fulfilment. In her most recent executive position, Melanie was Head of Online at BIG W. Prior to her retail experience, Melanie performed roles at Bain and Company (Boston) and Goldman Sachs (Hong Kong and Sydney). Melanie holds a Bachelor of Commerce (Hons) and has a Master of Business Administration (Harvard). She is a graduate of the Australian Institute of Company Directors. She is currently a non-executive director of JB Hi-Fi Limited (appointed in June 2020) and PropertyGuru Group Ltd (a NYSE listed entity) (appointed November 2019). She was a non-executive director of iSelect Limited (April 2016 to October 2021) and EML Payments Limited (February 2018 to February 2023). Gary Levin Non-Executive Director B.Comm, LLB, MAICD Chair of the Audit and Risk Committee Gary has over 40 years’ management, executive and non- executive experience in public and private companies including in the retail, investment and online industries. As a founder, Gary has built and grown many successful retail businesses, and as a non-executive director he has been closely involved in the transformation and growth of retail and digital businesses. These businesses include Rabbit Photo (former joint managing director), JB Hi-Fi (former non- executive director), Catch Group (former Chair), Cheap as Chips (a discount variety retailer) (current Chair) as well as his role at Baby Bunting since 2015. Donna Player Non-Executive Director BA, GAICD Member of the Remuneration and Nomination Committee Donna has over 40 years’ experience in retail, marketing and product development gained in both retail and wholesale industries. Currently she is Director of Merchandise for Camilla Australia and has had executive responsibilities for merchandise, planning, branding, sourcing and supplier strategies in previous roles. Donna holds a Bachelor of Arts from the University of NSW and is a graduate of the Australian Institute of Company Directors. She is currently a non-executive director of Accent Group Limited (appointed in November 2017). The board Details of the qualifications, experience and special responsibilities of each current director are as follows: 12 Gary Kent Non-Executive Director BEc, GAICD Chair of the Remuneration and Nomination Committee, Member of the Audit and Risk Committee Gary has an extensive background in the retail and services sector, with considerable experience in corporate finance transactions. He had a career of 18 years with Coles Myer and the Coles Group, during which time his roles included Chief Financial Officer of the Coles Group and Group General Manager for Finance at Kmart and Myer. Gary has served as the Chief Executive Officer of the Western Bulldogs AFL club, where he has also served as a non-executive director and as Chair of the club’s audit and risk committee. He is a non-executive director of Blooms The Chemist Management Services Limited. Gary holds an economics degree, is a chartered accountant and a graduate of the Harvard advanced management program. Francine Ereira Non-Executive Director B.Bus, GAICD Member of the Remuneration and Nomination Committee Francine brings over 20 years’ experience in areas including e-commerce, digital/technology, retail, payments, marketing and supply chain. Most recently her appointments have included CEO at Klarna, Australia & New Zealand, General Manager Sales & Solution Delivery at Zip Co Limited, and senior management roles at Disney, Saab, Sheridan and Holden. Francine holds a Bachelor of Business from Monash University and is a graduate of the Australian Institute of Company Directors. She is currently a non-executive director of Brainwave Australia and an advisory Board member of Greener and InDebted. Stephen Roche Non-Executive Director B.Bus, FAICD Member of the Audit and Risk Committee Stephen has over 15 years’ experience as a director of public companies, private family offices and not for profit enterprises. Most recently he was Managing Director of Bridgestone Australia & New Zealand. He has also been Managing Director and CEO of Australian Pharmaceutical Industries Limited from August 2006 to February 2017. He brings extensive experience in strategy, business development and supply chains across retail, healthcare and consumer markets. Stephen is currently a non-executive director of GWA Group Limited (appointed in November 2022), Myer Family Investments Limited and a director of the Adelaide Football Club. He was previously a non- executive director of Blackmores Limited (September 2021 to August 2023). He holds a Bachelor of Business from the University of South Australia, is an alumnus of Columbia University NY and is a fellow of the Australian Institute of Company Directors. Baby Bunting Annual Report 2024 13 Our corporate governance statement describes Baby Bunting’s governance framework designed to support effective and responsible decision-making. 14 Additional information on Baby Bunting’s corporate governance framework and practices can be found at: • the corporate governance page of Baby Bunting’s website at investors.babybunting.com.au/corporate- governance; • the Appendix 4G – Key to Disclosure Corporate Governance Council Principles and Recommendations. A copy was lodged with ASX on 20 August 2024 and is also available on the corporate governance page of Baby Bunting’s website; • the Remuneration Report; • the Material business risks and uncertainties section of the Directors’ Report; • copies of the Board and Board Committee charters can be found at investors.babybunting.com.au/ corporate-governance; • copies of the policies referred to in this statement can be found at investors.babybunting.com.au/corporate- governance. Corporate governance statement The Board of Baby Bunting Group Limited (Baby Bunting or the Group), with the support of its Board Committees, is responsible for the oversight of Baby Bunting and its subsidiaries’ governance framework. The purpose of this governance framework is to provide effective and responsible decision-making and to seek to ensure that Baby Bunting is managed and operates in a way that delivers on its strategy and purpose. This Statement, which has been approved by the Board, is current as at 30 June 2024 being the balance date for FY2024. See investors.babybunting.com.au/ corporate-governance for more information Baby Bunting Annual Report 2024 15 1. Board of Directors 1.1. Board composition Baby Bunting’s Board comprises six Non-Executive Directors, each of whom is independent, and Baby Bunting’s Chief Executive Officer (CEO), Mark Teperson. Melanie Wilson is the independent Chair of the Board. The roles of the Chair and CEO are separate. Three of Baby Bunting’s Directors are female and four are male. The qualifications, experience and special responsibilities of each Director is set out on pages 12 and 13 of this Annual Report and is also available on Baby Bunting’s website at investors.babybunting.com.au/our-board-executives. The name of each Director, together with their appointment information, is set out below. In accordance with Baby Bunting’s Constitution, Melanie Wilson, Francine Ereira and Stephen Roche will each seek re-election as a Director at the 2024 AGM. As CEO, Mark Teperson is not required to seek re-election by shareholders every three years in accordance with ASX Listing Rules. Directors Roles Date appointed to the Board AGM where last elected/re-elected Melanie Wilson Chair of the Board February 2016 October 2021 – will seek re-election at the 2024 AGM Mark Teperson CEO October 2023 n/a Gary Levin Chair of the Audit and Risk Committee August 2014 October 2023 Donna Player Member of the Remuneration and Nomination Committee January 2017 October 2023 Gary Kent Chair of the Remuneration and Nomination Committee Member of the Audit and Risk Committee December 2018 October 2022 Francine Ereira Member of the Remuneration and Nomination Committee September 2021 October 2021 – will seek re-election at the 2024 AGM Stephen Roche Member of the Audit and Risk Committee September 2021 October 2021 – will seek re-election at the 2024 AGM 16 Corporate governance statement Continued 1.2. Role of the Board and management The Board is responsible for the overall performance of Baby Bunting and accordingly takes accountability for monitoring the Group’s business and affairs and setting its strategic direction, establishing policies and overseeing Baby Bunting’s financial position and performance. The Board has adopted a written charter to provide a framework for the effective operation of the Board, which sets out: • the Board’s composition, its role and responsibilities, including that the Board is responsible for approving and monitoring the Group’s strategy, business performance objectives, financial performance objectives, and overseeing and monitoring the establishment of systems of risk management and internal controls; • the roles and responsibilities of the Chair and the company secretary; • the division of authority between the Board, the CEO and management; • the ability of Directors to seek independent advice; and • the process for periodic performance evaluations of the Board, each Director and the Board committees. The Group’s Delegation of Authority Policy sets out in detail the authority that has been delegated to the CEO, other executives and Team Members. While the Board is responsible for approving the annual budget prepared by management, executives are delegated responsibility for the budgets that apply to their functions and departments. The Delegation of Authority Policy also specifies the processes for review and approval of contracts and other commitments. The Company’s Constitution sets out the rights of shareholders and the manner in which Directors are to be elected and how the Company is to be governed. The Board Charter sets out those matters that are reserved to the Board and the manner in which the Board is to operate. Expected standards of behaviour and processes to ensure appropriate conduct are set out in policies such as the Securities Trading, Continuous Disclosure, Anti-Bribery and Corruption, Whistleblower and Code of Conduct. Responsibilities include assisting the Board in respect of risk management, financial and corporate reporting and external audit. Responsibilities include assisting the Board with remuneration policies and practices, advice on the composition of the Board (including deserved skills) and succession planning. Committee Charters set out the matters delegated by the Board to the Committees and how they are to function. Delegation of Authority Policy set out the matters delegated to management (and in which authority is to be exercised). The Board Shareholders Audit & Risk Committee Remuneration & Nomination Committee Chief Executive Officer Executive Leadership Team Baby Bunting Team Members Baby Bunting Annual Report 2024 17 1.3. Director’s attendance at Board and Committee meetings The number of Board, and Board Committee, meetings held during the financial year and Director’s attendance at those meetings are set out below. All Directors are invited to attend Board Committee meetings and most Board Committee meetings are attended by all Directors. However, only attendance by Directors who are members of the relevant Board Committee is shown in the table below. During the year, the Board formally approved one matter by way of circulating resolution. The substance of that matter had been considered at a prior Board meeting. Board Audit and Risk Committee Remuneration and Nomination Committee A B A B A B Melanie Wilson 10 10 Mark Teperson1 8 8 Gary Levin 10 10 6 6 Donna Player 10 10 3 3 Gary Kent 10 10 6 6 3 3 Francine Ereira 10 10 3 3 Stephen Roche 10 10 6 6 1. Mark Teperson was appointed a Director with effect on 2 October 2023. A Special Committee of the Board can be convened to formally approve certain matters in relation to the half-year and full year results, where the Board had previously considered and provided in-principle approval for those matters subject to finalisation of certain procedural matters. The Special Committee met once during the year, noting that membership is ad hoc. Column A indicates the number of meetings the Director was eligible to attend as a member. Column B indicates the number of meetings attended. 1.4. CEO and delegation to management The Board appoints the CEO. The CEO appoints other executives, after consultation with the Board. Executive remuneration is subject to the approval of the Board. All executives enter into written employment agreements with the Group, with their appointment subject to completion of appropriate screening and background checks, including police checks. The Board has delegated authority to the CEO, and through the CEO, to senior management (set out in the Delegation of Authority Policy). The Executive Leadership Team meets weekly and is responsible for the Group’s operational performance and management. There are a number of other management committees and meetings, which are held on a regular basis, with a focus on specific aspects of Baby Bunting’s operations, including Health and Safety, Trading, Property, Merchandise and Compliance. 1.5. Board composition, selection and appointment The Board has an objective that the Board comprise at least 40% of women and 40% of men. This objective has been met since September 2021. Three out of the seven Directors during this time have been women and, excluding the CEO, there are three female Non-Executive Directors and three male Non-Executive Directors. The Board seeks to ensure that there is a mix of skills and diversity on the Board (see Board skills and experience below). The Board periodically considers its composition. If it considers that additional appointments should be made, the Remuneration and Nomination Committee has specific responsibilities in respect of candidate assessment, Board composition and the Board’s skills matrix. Potential new directors are subject to appropriate screening and background checks, including police checks, prior to their appointment. Once appointed, new Directors are required by Baby Bunting’s constitution to retire at the next AGM and seek election by shareholders. All material information about the Director, that is held by the Group, is included in the Notice of AGM to enable shareholders to assess whether or not to elect or re-elect a Director. 18 Corporate governance statement Continued Before a Director is appointed, Baby Bunting enters into a written agreement with the Director setting out the terms of their appointment. The appointment letter specifies, among other things, that the Director must comply with Baby Bunting’s constitution and key policies, including the Securities Trading Policy. It also discusses the Director’s responsibilities and expectations about dedicating sufficient time to the Group’s affairs, as well as conflicts of interests and the obligations to make appropriate disclosures to the Board. The appointment letter also sets out details of the remuneration arrangements for Directors, noting that Non-Executive Directors are not entitled to participate in any of the Group’s incentive programs. Since November 2022, the Board has had a Minimum Shareholding Policy which requires Directors to obtain, over time, a holding of Baby Bunting’s shares at least equal to 100% of their Director’s fees. Details of Directors’ shareholdings are set out in the Remuneration Report on page 56. 1.6. Board skills and experience The Board, having regard to the current size of the Group and its current strategies, has adopted a skills matrix setting out the mix of skills and diversity that the Board is looking to achieve in its membership at this time. The Board also has regard to the attributes and personal qualities of Directors, including the ability of individual Directors to contribute effectively to the functioning of the Board and a commitment to the Group’s values and its purpose. For persons being considered for appointment to the Board, the Board will seek to identify whether the person has a demonstrated or assessed ability to work in a collegiate environment along with the ability, where necessary, to express a dissenting view objectively and constructively. The Board considers that each Non-Executive Director possesses these attributes. Given the Group’s size, the Board considers that the Board should be comprised of five to seven Non-Executive Directors. Skill or experience Description Executive Leadership Demonstrated success at CEO or senior executive level in a major business. Effective communication skills to foster collaboration and consensus among diverse stakeholders. Retail / Commercial and financial acumen Demonstrated success via a senior executive or leadership position in sustainably managing the financial and non-financial performance of a large retail business or commercial undertaking. Proficiency in interpreting financial statements, and financial analysis to support strategic decision making and assessing financial health and reporting compliance. People and organisational culture Experience with managing people and teams, including the ability to appoint and evaluate senior executives, manage talent development and oversee organisational change. Industry knowledge and innovation Demonstrated ability to understand the dynamics and trends of the retail industry, including challenges, opportunities and emerging trends. Relevant experience with digital and online retailing including the ability to assess the impact of technological advancements, changing consumer preferences and macroeconomic factors. Experience in driving innovation, exploring new business models and leveraging technology. Governance, Risk management and compliance and ESG Experience in overseeing risk management and compliance frameworks and related policies and processes, setting risk appetites, identifying and providing oversight of material business risks. Understanding of corporate governance principles, regulatory requirements and best practices relevant to the retail sector and public companies. Experience in formulating, implementing and/or overseeing corporate governance and strategies focused on conducting business responsibly and ethically, enhancing corporate culture and generating long-term sustainable value for shareholders, employees, stakeholders and the community. Information technology and supply chain Knowledge and experience in retail logistics and distribution. Extensive experience in overseeing major system upgrades or transformational programs in large scale enterprises. ASX-board experience and investor advocacy Experience as a non-executive director of an ASX listed company, including an ability to articulate the expected views of all categories of investors. International experience Experience in international markets, exposed to a range of political, cultural, regulatory and business environments. Baby Bunting Annual Report 2024 19 1.7. Director induction and training The Board Charter contemplates that new Directors will be provided with an induction program to assist them in becoming familiar with the Group, its management and its business following their appointment. The induction program involves, among other things, meetings with members of the Board and executive briefings on the Group’s operations and relevant business matters. Directors may, with the approval of the Chair, undertake appropriate professional development opportunities (at the expense of the Group) to maintain their skills and knowledge needed to perform their role. The Board and executives have adopted processes to ensure that the Board is briefed on developments relevant to the Group and the markets in which it operates. During the financial year, the Board received briefings from subject matter experts on a range of topics, including artificial intelligence, developments in sustainable retail, consumer preferences and demographics and changes in key regulatory requirements. 1.8. Director independence Baby Bunting’s Board Charter provides that a majority of the Board will be independent Directors. The Board Charter also specifies the test for independence and the manner in which the Board will assess independence. The Board considers an independent Director to be a Non-Executive Director who is free of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect, his or her capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of Baby Bunting. The materiality of the interest, position, association or relationship will be assessed to determine whether it might interfere, or might reasonably be seen to interfere, with the Director’s characterisation as an independent Director. In assessing independence, the Board has had regard to the factors set out in the ASX Corporate Governance Council Principles and Recommendations. The Board has assessed each Non-Executive Director to be independent. 1.9. Outside commitments of Non-Executive Directors The letter of appointment for each Non-Executive Director provides that if that Director wishes to accept any additional directorships, the Director should first discuss that with the Chair of the Board. In discussing the proposed directorship, the Chair and the relevant Director will reflect on the likely time commitments that any additional role may impose as well as the potential for any conflict between the Directors’ duties to Baby Bunting and their interests or duties owed to the proposed external organisation. In the case of the Chair of the Board, the Chair of the Remuneration and Nomination Committee participates in the discussion and reflection. For FY2025, each Non-Executive Director has confirmed that they anticipate being available to perform their duties without constraint from other outside commitments. 2. Performance evaluations 2.1. Board performance evaluations The Remuneration and Nomination Committee Charter provides that the Remuneration and Nomination Committee will assist the Board to assess Board performance, and the performance of Board committees and individual Directors. In June and July 2024, the Board assessed its own performance, and considered the performance of the Board committees and individual Directors. The performance reviews were undertaken by way of questionnaires as well as discussions on how the Board and each committee’s processes could be improved or modified. The Board also sought the views of other Board meeting participants to seek additional perspectives on the Board and Committee processes and interactions between the Board and management. 20 Corporate governance statement Continued 2.2. Senior executive performance evaluations The Remuneration and Nomination Committee Charter provides that the Committee will oversee the processes for the performance evaluation of the executives reporting to the CEO and review the results of that performance evaluation process. The Board is responsible for reviewing the performance of the CEO. In relation to the performance of senior executives, after the end of the reporting period, the Remuneration and Nomination Committee and the Board received reports of the outcome of the executive performance evaluation processes. These were subsequently considered by the Board. The executive evaluation processes involved, among other things, assessing the performance of executives against their specific performance objectives as well as the Group’s overall performance on a range of measures (including financial and specific key performance indicators). For the performance assessment of the CEO, the Board considers the CEO’s performance for the year having regard to, among other things, his specific performance objectives and the Group’s performance. The Chair was responsible for engaging with the CEO in relation to the Board’s assessment of his performance. 3. Company secretaries The Board appoints Baby Bunting’s company secretaries. For administrative reasons, the Group has appointed two company secretaries, Corey Lewis and Darin Hoekman. Corey Lewis is the Chief Legal Officer (CLO). He is responsible for the provision of legal services to Baby Bunting. He works with the Chair, the Chairs of the Board Committees and the Directors and senior management and is responsible to the Board for the corporate governance function. He oversees the Group’s relationship with its share registrar and the interactions with the ASX and other regulators. He is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. Corey commenced employment with the Group in February 2016 and was appointed company secretary in March 2016. Before joining Baby Bunting, Corey worked as a corporate lawyer at a national law firm. He holds a Bachelor of Laws (Hons) and a Bachelor of Arts. He is a graduate of the Australian Institute of Company Directors. Darin Hoekman, the Chief Financial Officer (CFO), is also a company secretary of the Company. He has responsibility for the matters described above in the absence of the CLO. Darin is a Chartered Accountant and holds a Bachelor of Commerce. 4. Board Committees 4.1. Structure, composition and functioning The Board has established two principal Board Committees: • the Audit and Risk Committee; and • the Remuneration and Nomination Committee. Each Board Committee has its own Charter, is comprised only of independent Non-Executive Directors and has three members, and has a Chair that is a Non-Executive Director who is not the Board Chair. Audit and Risk Committee Remuneration and Nomination Committee Chair Gary Levin Gary Kent Members Gary Kent Stephen Roche Donna Player Francine Ereira Each Board Committee has the ability to access Baby Bunting’s records and employees and the external auditor for the purpose of carrying out its responsibilities. The Committee Charters provide that the Committee may seek the advice of independent advisors on any matter relating to the duties or responsibilities of the Committee. Baby Bunting Annual Report 2024 21 The papers for all Board Committee meetings are distributed to all Directors. Directors who are not members of the Committee may attend Committee meetings. From time-to-time, the Board may establish ad hoc or special purpose Board Committees. Where these have been established, they have related to specific matters (procedural matters relating to the approval of periodic reports) or due to significant business events (for example, the Group’s COVID-19 response). 4.2. Audit and Risk Committee The role of the Audit and Risk Committee is to assist the Board in fulfilling its responsibilities for corporate governance and oversight of the Group’s financial and corporate reporting, risk management and compliance structures and external audit functions. Under its Charter, the Committee has specific responsibilities in respect of the areas of risk management and compliance, financial and corporate reporting and external audit matters. With respect to external audit matters, the Committee has responsibility for developing and overseeing implementation of the Group’s policy on the engagement of the external auditor to supply non-audit services (noting that the Committee is required to advise the Board as to whether it is satisfied that the provision of any non-audit services is compatible with the general standard of independence for auditors). During the year, the Committee’s Charter was updated to specify that the Committee’s responsibilities in relation to risk management include climate-related risks. Members of the Committee, between them, have financial and accounting experience, technical knowledge and an understanding of the industries in which the Group operates. The Audit and Risk Committee meets with the external auditor without management being present. The Chair of the Committee meets separately with the external auditor and management. The CFO is the primary contact for the Audit and Risk Committee and the CLO, as company secretary, assists with the administration and operation of the Committee. The Audit and Risk Committee receives reports from management in relation to the Group’s risk management framework and material business risks. The purpose of the Committee’s risk management processes is to assist the Board in relation to risk management policies, procedures and systems and to ensure that risks are identified, assessed and appropriately managed. CEO and CFO declarations The Audit and Risk Committee reviews the preparation of the Group’s periodic financial reports. As part of that process it reviews and considers declarations provided by the CEO and CFO. The CEO and CFO provided declarations to the Board concerning: • the Group’s 2024 half year financial statements and other matters that are recommended by Recommendation 4.2 of the ASX Corporate Governance Council Governance Principles; and • the Group’s 2024 full year financial statements, and other matters, that are required by section 295A of the Corporations Act and Recommendation 4.2 of the ASX Corporate Governance Council Governance Principles. The declaration included that, in the opinion of the person giving the declaration, the financial records of the entity have been properly maintained, the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity, the consolidated entity disclosure required by the Corporations Act is true and correct, and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively in all material respects. Corporate reporting In addition to the CEO and CFO Declarations (described above), the Group has processes that seek to ensure that its annual reports, half yearly reports and other reports prepared for the benefit of investors are not misleading or deceptive and do not omit material information. These processes include: • a process of confirming pro forma non-statutory numbers against appropriate supporting files, along with review and verification by the appropriate individuals; • verifying key statements against appropriate source material; and • allocating material parts of the report or document for review and confirmation by an appropriate approver. 22 Corporate governance statement Continued Risk management framework The Board is responsible for overseeing the establishment of and approving risk management strategies, policies, procedures and systems of the Group, and is supported in this area by the Audit and Risk Committee. The Group’s management is responsible for establishing the Group’s risk management framework. The objectives of the risk management framework include: • identifying the key risks associated with Baby Bunting’s business; • raising the profile of risk within Baby Bunting and helping to embed a risk-aware culture within Baby Bunting; • assisting management and the Board to ensure that the Group has a sound risk management framework; • supporting the declarations by the CEO and the CFO; and • where appropriate, having controls, policies and procedures to manage certain specific business risks – e.g an insurance program, regular financial budgeting and reporting, business plans, strategic plans, etc – so as to mitigate the likelihood, or consequence, of certain specific business risks. As part of the risk management framework, processes exist to identify, assess, monitor and review the Group’s key risks and to document and monitor the Group’s other risks. In connection with its responsibilities for risk management, the Audit and Risk Committee receives reports from management on the risk management system, key risks and the related risk treatment plans as well as information on critical events that may arise throughout the year. Risk appetite statement The Board has adopted a Risk Appetite Statement. The statement provides guidance as to the type and degree of risk that the Board is willing to accept in pursuing the Group’s strategy and conducting its business. Risk appetite is the amount of risk that Baby Bunting is willing to accept or retain to pursue its strategy and conduct its business. It seeks to balance the benefits of an activity or new opportunity with the risk that the activity or opportunity might bring. The Risk Appetite Statement identifies a number of risk types (eg operational risk, people and culture risk, financial risk, legal and compliance risk, strategic risk) and states a risk appetite rating or tolerance for each. Risk appetite ratings range from zero appetite through to high appetite. Instances where a risk tolerance has been exceeded must be reported to the Audit and Risk Committee or Board, along with details of any proposed corrective actions. 4.3. Remuneration and Nomination Committee The role of the Remuneration and Nomination Committee is to assist the Board in fulfilling its responsibilities relating to Board composition and succession as well as remuneration policies and practices for the Group. During the financial year, the Committee considered and made recommendations to the Board in relation to specific remuneration matters (see the Remuneration Report on page 43 for more information). The General Manager – People and Culture provides support to the Committee and the CLO, as company secretary, assists with the administration and operation of the Committee. Minimum Shareholding Policy The Board has adopted a minimum shareholding policy for directors and key management personnel. A person subject to the policy is required to achieve and maintain a minimum shareholding in Baby Bunting’s shares equivalent to 100% of their director’s fees or fixed annual remuneration, as applicable. Participants must accumulate the shareholding within the later of 5 years after the adoption of the policy or their date of appointment. See Section 9 of the Remuneration Report. 5. Audit and Financial Governance 5.1. Financial controls The Audit and Risk Committee is responsible for reviewing the adequacy of the Group’s financial and corporate reporting processes and internal control framework. Members of the executive team periodically attest to the integrity of the financial results and disclosures, compliance with reporting obligations and the effectiveness of internal controls. Baby Bunting Annual Report 2024 23 5.2. Internal audit The Group does not have a formalised internal audit function, but has processes for evaluating and continually improving the effectiveness of risk management and internal financial control processes. To evaluate and continually improve the effectiveness of the Group’s risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks. These processes are implemented, overseen and assessed by the management team, the CFO and CEO, and the Audit and Risk Committee. 5.3. External audit Ernst & Young is the Group’s external auditor. It was first appointed in November 2017 and it first conducted the external audit of the Group’s financial statements for the 2018 financial year. Tony Morse has been the lead audit partner since the 2020 financial year and he has performed that role in respect of the 2024 financial year. In accordance with auditor independence requirements, Tony will cease in that role. For the 2025 financial year, Katie Struthers, a partner at Ernst & Young, will perform the role of lead audit partner. The Audit and Risk Committee has responsibilities that include making recommendations to the Board on the appointment, reappointment or replacement of the external auditor, reviewing the external auditor’s proposed work plan for the year, and monitoring auditor independence issues, including the engagement of the auditor for non-audit work. The Committee provides advice and a report to the Board as to whether the Committee is satisfied that the provision of non-audit services is compatible with the general standard of independence, and an explanation of why those non-audit services do not compromise audit independence. This report and advice support the Board in being in a position to make the statements required by the Corporations Act about auditor independence. 6. Ethical and responsible decision making 6.1. Vision, Mission and Values Baby Bunting’s Vision is “The best start for the brightest future” and its mission is “To support and inspire confident parenting, from newborn to toddler”. The Group’s values are: • Be passionate about providing our customers with great products and services, advice and value every day. • Be considerate and respectful of others and think about how our decisions and actions impact others. • Act with integrity and use good judgement. • Think big, but get on with doing the small things that make a big difference. • Never be afraid to evolve – encourage a culture of adventure and creativity. • Be positive and enjoy doing the things that contribute to a great team spirit. 6.2. Code of Conduct The Board has approved the adoption of a formal Code of Conduct which outlines how Baby Bunting expects its employees to behave and conduct business in the workplace. The Code of Conduct applies to all employees, regardless of employment status or work location. In addition, the Directors, in the Board Charter, have committed to abiding by the Code of Conduct as it applies to the Board. The Code of Conduct is designed to: • provide a benchmark for ethical and professional behaviour throughout Baby Bunting; • promote a healthy, respectful and positive workplace and environment for all Team Members; • ensure that there is compliance with laws, regulations, policies and procedures relevant to Baby Bunting’s operations, including workplace health and safety, privacy, fair trading and conflicts of interest; • ensure that there is an appropriate mechanism for Team Members to report conduct which breaches the Code of Conduct; and • ensure that Team Members are aware of the consequences they face if they breach the Code of Conduct. 24 Corporate governance statement Continued 6.3. Whistleblower Protection Policy The Group has adopted a Whistleblower Protection Policy. The CLO has been appointed the Whistleblower Investigations Officer and the General Manager – People and Culture has been appointed the Whistleblower Protection Officer, for the purposes of the Policy. When they arise, the Board is informed of all whistleblower reports in a manner consistent with the confidentiality and security requirements of the Policy. No such matters were reported in the financial year. 6.4. Anti-Bribery and Corruption Policy The Group has adopted an Anti-Bribery and Corruption Policy. To support the Policy, the Group has adopted Acceptable Monetary Limits and Reporting Requirements which set out when an instance of a gift, entertainment or hospitality may be accepted by Baby Bunting Team Members. Generally, they must relate to general relationship building activities where it cannot reasonably be construed as an attempt to improperly influence the performance of the role or function of the recipient. Team Members must report instances of gifts, entertainment or hospitality other than where the value is immaterial. Where the estimated value exceeds specified limits, prior approval must be sought and obtained. The Board must be informed of material breaches of the Anti-Bribery and Corruption Policy. No such incidents or breaches were reported in the financial year. 6.5. Securities Trading Policy The Group’s Securities Trading Policy provides that persons subject to that policy (including Directors and executives) must not engage in transactions designed to hedge their exposure to Baby Bunting’s shares. In addition, designated persons must only trade during designated trading windows and must seek approval under the Policy before doing so. 7. Commitment to shareholders 7.1. Communicating with shareholders The Board’s aim is to ensure that shareholders are provided with sufficient information to assess the performance of the Group and that they are informed of all major developments affecting the affairs of the Group. The Group is required by law to communicate to shareholders through the lodgement of all relevant financial and other information with ASX and, in some instances, distributing information to shareholders. Information (including information released to ASX) is published on Baby Bunting’s website. The website also contains information about it, including key policies and the charters of the Board Committees. In addition, from time to time, the Group conducts ad-hoc briefings with institutional investors, as well as financial media. In some instances, that can involve site visits to stores or Baby Bunting’s Distribution Centre. It is the Group’s policy not to hold briefings with investors or analysts from 1 June until the release of the full year results in August and from 1 December until the release of the half year results in February. The Group encourages shareholders to receive communications from it and its share registrar electronically and provides details for shareholders to send electronic communications and to have them actioned appropriately. 7.2. Shareholder meetings The Group’s annual general meeting for the financial year ended 30 June 2024 will be held on 15 October 2024. It will be an in-person meeting. Shareholders are provided with notice of the meeting (either electronically or by hard copy) in advance of the scheduled meeting time. Shareholders have an opportunity to ask questions at the meeting. In addition, shareholders can submit questions electronically in advance of a meeting via the share registrar’s website. The Group’s external auditor attends the Group’s AGMs and is available to answer shareholder questions on any matter that concerns them in their capacity as auditor. It is the Group’s practice that all voting on substantive resolutions at shareholder meetings is conducted by way of a poll. Baby Bunting Annual Report 2024 25 8. Continuous Disclosure The Group has adopted a Continuous Disclosure Policy. The Continuous Disclosure Policy establishes procedures to ensure the Group complies with its continuous disclosure obligations under the Corporations Act and the ASX Listing Rules. The Board receives copies of all material market announcements promptly after they have been lodged with ASX. In addition, a copy of any new and substantive investor presentation is released to ASX in advance of the presentation. 9. Environmental and social risks The Group is exposed to a number of risks, details of which are included in the Directors’ Report on pages 36 to 39. These risks could have a material impact on the Group, its strategies and future financial performance. These risks were identified as part of the Group’s risk management framework (described above). Management is responsible for developing strategies to manage identified risks. As a retailer, the Group is exposed to environmental and social risks, including risks relating to supply chains, sustainable packaging and sustainable product development and sustainable operating practices. Further details about Baby Bunting’s approach to environmental and social sustainability matters are contained in its Sustainability Report (released in August 2024). The Group has published its 2024 Modern Slavery Statement. The statement describes the modern slavery risks that exist in the Group’s supply chains. A copy of these documents are available on Baby Bunting’s website (investors.babybunting.com.au). 10. Diversity The Board has adopted a Diversity Policy which sets out Baby Bunting’s commitment to recognising the importance of diversity for its business. Baby Bunting actively promotes diversity through its hiring and promotion practices, measures gender diversity in the composition of its senior executives and team members generally, and reports these annually to the Australian Government’s Workplace Gender Equality Agency. Baby Bunting has a majority female workforce (79% in FY2024, 80% in FY2023). Baby Bunting’s measurable objectives for gender diversity focus on the composition of senior levels of the organisation. This is considered to be a more appropriate objective and measure as it seeks to ensure diversity is achieved and maintained at levels of the organisation where significant operational or strategic decisions are designed, made and implemented. Baby Bunting has an objective of at least 40% of women across all levels of the Group by 2030. As at 30 June 2024, the proportion of women at Baby Bunting across parts of the organisation is set out below. Group 2024 objective 2023 objective 2024 actual % of women 2023 actual % of women Board That the Board comprise at least 40% of women and 40% of men That the Board comprise at least 40% of women and 40% of men 43% 43% Senior Executives (incl. CEO) That at least a third of Senior Executives are women in the medium term That at least a third of Senior Executives are women in the medium term 20% 20% Area and Regional Managers That at least 40% of Area Managers and Regional Managers are women That at least 40% of Area Managers and Regional Managers are women 54% 58% Under the Workplace Gender Equality Act, Baby Bunting is required to make annual public filings with the Workplace Gender Equality Agency, disclosing its “Gender Equality Indicators”. These reports are filed annually in respect of the 12 month period ending 31 March. A copy of Baby Bunting’s latest filing is available on Baby Bunting’s website at investors.babybunting.com.au/resource-centre. 26 Corporate governance statement Continued Directors’ report The Directors of Baby Bunting Group Limited (the Group or Baby Bunting) submit the financial report of the Group and its controlled entities (“the consolidated entity”) for the financial year ended 30 June 2024. 1. Principal activities During the financial period, the principal activity of the Group and its consolidated entities was the operation of Baby Bunting retail stores in Australia and New Zealand and related online stores. Baby Bunting is Australia’s largest specialty retailer of maternity and baby goods, primarily catering to parents with children from newborn to three years of age and parents-to-be. The Group’s principal product categories include prams, cots and nursery furniture, car safety, toys, babywear, feeding, nappies, manchester and associated accessories. Baby Bunting also provides services that are complementary to the products it sells, including car seat installation and hire services of certain nursery products. 2. Operating and financial review 2.1. The Group’s business model The Group’s business model is centred around the sale of baby goods through its store network and digital channel, as well as product services offered to parents and parents-to-be. Products sold by Baby Bunting include third-party produced and branded baby goods (many of which are sold exclusively by Baby Bunting) and private label products. Baby Bunting’s private label products include products sold under the 4baby, Bilbi and JENGO brands. Exclusive products are products sourced by the Group for sale on an exclusive basis (so that those products can only be purchased from Baby Bunting). Historically, exclusive supply arrangements have been arranged with suppliers in relation to selected products and for varying lengths of time. Providing complementary services is also part of Baby Bunting’s business model. The Group offers car seat installation services at its stores throughout Australia and New Zealand and the hire of certain nursery products. Baby Bunting’s business model is based on the following elements: Extensive store network With 70 stores around Australia, Baby Bunting’s store network is within one hour travel time of around 65% of Australia’s population. The stores carry a wide selection of products across a variety of categories, providing a platform for consumers to compare and experience products and to meet consumer preferences. Baby Bunting has four stores in New Zealand, with plans to open further stores in future periods. Consistent retail experience Baby Bunting is focused on providing customers with a consistent retail experience across its network. The Group’s stores in major market catchments (with populations greater than 200,000) range in size from approximately 1,500 to 2,000 square metres and are typically located in either bulky goods centres or at stand-alone sites. Baby Bunting has a number of stores located in shopping centres, where the format incorporates the key elements of the standard destination store format. In regional centres (with populations of less than 200,000), the Group typically operates a smaller store format of approximately 1,200 to 1,500 square metres, without compromising product range or customer service. Leading digital channel The Group’s website, babybunting.com.au, continues to be Australia’s leading specialty baby goods website as measured by number of visits. The Group is focused on delivering customers the best possible retail experience across all channels, in store, online or on mobile. Omni-channel experience All stores are enabled for online fulfilment. This means that orders can be allocated to the best location for fulfillment, with benefits in customer experience and inventory efficiency. Baby Bunting Annual Report 2024 27 Customer centric team culture Baby Bunting has a dedicated team of well-trained and knowledgeable staff to service customers’ individual needs. Baby Bunting collects feedback from customers in-store and online. Insights gained from customer feedback and preferences are enabling Baby Bunting to tailor its offering to focus on the steps in the customer journey of first time parents as well as parents with growing families. Baby Bunting’s Net Promotor Score at the end of the financial year was 73. Widest product offering, in-stock and available Baby Bunting offers what it believes to be the widest range of products, with over 7,800 products available. Through its Australian store network, approximately 22,000 square metre Distribution Centre and through the use of interstate third party warehouses, Baby Bunting aims to have its product range in-stock and available at the time of the customer’s purchase. In New Zealand, the Group has established a distribution centre in Auckland to support the store network and online fulfillment to ensure a strong in-stock position for that market. Competitively priced Baby Bunting’s approach to pricing is centred on offering customers value every day, every visit. Baby Bunting also has a range of essentials priced at entry-level pricing. Baby Bunting also offers a price promise to beat a competitor’s lower price on an identical in-stock product, subject to certain conditions. Complementary services Across its entire store network, Baby Bunting provides additional services to its customers, including click & collect services, layby, parenting rooms which include baby weigh scales, and an in-store/online gift registry. Car seat installation services are provided at all Baby Bunting stores. 2.2. People At the end of the financial year, the Group employed around 1,590 team members with the majority employed at the Group’s stores, and others located at the Group’s Store Support Centre and Distribution Centre at Dandenong South (Vic) and the distribution centre and support office in Auckland (NZ). 2.3. Review of the Group’s operations The adverse impact of cost-of-living pressures on consumer spending observed during the second half of FY2023 continued throughout FY2024. This had a negative impact on the Group’s financial performance. The Group’s consumers are more sensitive than many other groups to the widespread cost-of-living pressures and managed their spending carefully. At the start of the financial year, the Group initiated steps to optimise its cost structure by restructuring some Store Support Centre functions. This saw a small number of roles being made redundant from the Store Support Centre. The Group also decided to moderate the level of investment in the final transformation project, relating to its enterprise resource planning (ERP) and point of sale systems (POS) replacement. This assisted in the management of costs in the short term, with the investment expected to be undertaken in a future period. Australian operations Operational highlights for Baby Bunting in Australia during FY2024 included: • opening an additional new store, being Cranbourne (Vic), bringing the Australian store network to 70 stores (noting the closure of the Camperdown store in Sydney that occurred at the end of its lease during the year); • enabling online fulfilment in all Australian stores that did not already have this functionality. This means that orders can be allocated to the best location for fulfillment, with benefits in customer experience and inventory efficiency. In the first half of the 2025 financial year, the Group plans to initiate same day and urgent delivery services to provide customers with the option to select expedited delivery where required; • continuing the performance of the Group’s private label and exclusive products range, with these sales making up 46.0% of total sales for the year (up slightly from 45.1%). With the support of supplier partners, exclusive products made up 36.3% of sales and Baby Bunting’s private label range makes up 9.7% of sales; • the first full year of Baby Bunting’s marketplace, which was launched in June 2023. The marketplace enables third- party seller SKUs to be available for sale on babybunting.com.au. There are now more than 17,000 SKUs available on the marketplace, providing consumers with access to a broader selection of products. The number of curated marketplace SKUs is anticipated to grow further over the course of FY2025. The marketplace also plays an important role in future range planning and new product innovation; and 28 Directors’ report Continued • continuing the Group’s support for community partners through the support for fundraising efforts for Perinatal Anxiety & Depression Australia (PANDA) and Life’s Little Treasures Foundation (a foundation that provides support, friendship and information, specifically tailored for families of premature or sick babies). Funds raised and contributed by the Group for these and other causes during the year was around $650,000. Store operations were affected due to the extended closure of the Cairns store (July 2023 to March 2024) due to structural issues with the property. This resulted in additional expenses and costs and also had an adverse impact on the store’s trading. Repairs were completed and the store re-opened in March 2024. New Zealand operations For New Zealand, operational highlights include opening three new stores towards the end of the first half of the financial year. Two stores (Sylvia Park and Manukau) are located in Auckland, joining the existing store at Albany, located towards the north of Auckland. A store was also opened in Christchurch on the South Island of New Zealand. Further investments were made in the New Zealand team, with roles added in marketing, supply chain and inventory functions dedicated to operations in New Zealand. Refer to the Chair’s Report on page 4 of this Annual Report for more information on the Group’s operations during the 2024 financial year. 2.4. Review of the Group’s financial performance The full year statutory results for the 52-week period ended 30 June 2024 (FY2023: 53-week period ended 2 July 2023) are summarised below: • total sales down 4.9% to $498.4 million; • gross profit margin of 36.8%, down 0.6% year-on-year; • statutory net profit after tax (NPAT) of $1.7 million, a decrease of 82.8% on the prior year; • statutory basic earnings per share (EPS) of 1.3 cents; • cash and cash equivalents less borrowings (net debt) of $13.0 million (versus net debt of $6.2 million at the end of FY2023); and • cash flow from operations of $40.1 million (down $2.9 million year-on-year). In relation to the 2024 and 2023 financial years, the underlying operating results (as measured by pro forma earnings) are more clearly demonstrated with the following exclusions or adjustments: • employee equity incentive expenses: the primary economic impact is issued capital dilution if and when shares are issued; • business transformation project expenses: non-recurring project related expenses associated with significant one-off projects primarily focused around transition of business systems to modern platforms; • pro forma earnings before interest, tax, depreciation and amortisation is calculated on a pre AASB 16 lease accounting basis; and • business restructuring costs incurred in relation to organisational changes. The Directors consider that these adjustments are appropriate to better represent the underlying financial performance of the business and to facilitate comparisons with prior periods. On a pro forma basis, the FY2024 financial results were: • pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) was $15.9 million, down 48.9% on the prior corresponding period; • total sales down 3.4% to $498.4 million, with comparable store sales being negative 6.3% for the financial year; • gross profit of $183.7 million down 4.8%, with a gross profit margin of 36.8%; • pro forma NPAT of $3.7 million, down 74.7% on the prior corresponding period; • pro forma costs of doing business (CODB) (excluding the impact of AASB 16 lease accounting) were $167.7 million or 33.6% of sales, an increase of 229 basis points on the prior corresponding period (CODB of 31.4% of sales in FY2023); and • cash flow from operations of $13.7 million, down $11.8 million on the prior corresponding period. A reconciliation between statutory and pro forma financial results is below. Baby Bunting Annual Report 2024 29 Non-IFRS financial measures The consolidated entity uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are collectively referred to as “non-IFRS financial measures”. Non-IFRS financial measures are intended to supplement the measures calculated in accordance with Australian Accounting Standards and are not a substitute for those measures. Underlying operating and pro forma results and non-IFRS financial measures are intended to provide shareholders with additional information to enhance their understanding of the performance of the consolidated entity. Non-IFRS financial measures that are referred to in this report are as follows: Non-IFRS financial measure Definition Cost of doing business (CODB) Includes store, administrative, marketing and warehousing expenses (excluding the impact of AASB 16 Leases accounting). EBIT Earnings before interest and tax. EBIT eliminates the impact of the consolidated entity’s capital structure and historical tax position when assessing profitability. Operating EBIT Excludes the effects of interest revenue, finance costs, income tax and other non- operating costs. The CEO assesses the performance of the two reportable segments, Australia and New Zealand, based on a measure of Operating EBIT. Pro forma EBITDA Earnings before interest, tax, depreciation and amortisation expense (excluding the impact of AASB 16 Leases accounting) and excludes pro forma adjustments included in the financial results below. Pro forma financial results In relation to the 2024 and 2023 financial years, the pro forma financial results have been calculated to exclude the impact of employee equity incentive expenses and business transformation project expenses. This has been done to more clearly represent the consolidated entity’s underlying earnings (noting that this financial information has not been audited in accordance with the Australian Auditing Standards). Year ended 30 June 2024 $’000 Sales NPAT Statutory results 498,387 1,696 Employee equity incentive expenses1 – 461 Transformation project expenses2 – 930 Restructuring costs³ – 1,438 Tax impact from pro forma adjustments – (849) Pro forma results 498,387 3,676 1. Expense reflects the cost amortisation of performance rights (LTI) on issue in the reporting period. This also includes a recovery of prepaid payroll tax on the plans as the EPS CAGR hurdles as defined under the LTI plan were not achieved. 2. The Company incurred non-capital costs ($1.330 million) for transformation projects. This was offset by a $0.400 million cash settlement received in December 2023 from the vendor of order management software following a dispute in relation to that software and its implementation. 3. The Company incurred restructuring costs ($1.438 million) which included make good costs relating to the Camperdown store closure ($0.186 million) and payments associated with organisational restructure including the disestablishment of a number of head office roles. 30 Directors’ report Continued The following table reconciles the statutory to pro forma financial results for the year ended 2 July 2023 (noting that this financial information has not been audited in accordance with Australian Auditing Standards): Year ended 2 July 2023 $’000 Sales NPAT Statutory results 524,281 9,854 Employee equity incentive expenses1,2 – 965 Transformation project expenses3 – 4,745 Impact of week 534 (8,491) (412) Tax impact from pro forma adjustments5 – (649) Pro forma results 515,790 14,503 1. Expense reflects the cost amortisation of performance rights (LTI) on issue in the reporting period. This also includes a write-back of the 2020 (EPS CAGR) expenses ($1.673 million) and the 2021 (EPS CAGR) expenses ($0.275 million) and the payroll tax paid on the plans as the CAGR hurdles as defined under the LTI plan, are unlikely to be achieved. 2. The Company issued 277,182 shares under its General Employee Share Plan in the reporting period with no monetary consideration payable by participating eligible employees who each received approximately $1,000 worth of shares ($0.782 million). 3. The Company continued its investment in transformation projects and during the period the Company incurred non-capital costs ($4.745 million) associated with the implementation of a time and attendance system and the initial planning phase of a replacement of its enterprise resource planning (ERP) and point-of-sale systems. Other transformation project expenses include external consultant costs associated with project management costs to deliver the transformation projects. 4. FY2023 was a 53-week retail financial year. Week 53 revenues and expenses have been excluded to enable comparison to the FY2024 full year financial period (52 weeks) and prior years. 5. Tax impact from pro forma adjustments includes income tax expense relating to performance rights vesting under the Company’s Long Term Incentive Plan ($0.864 million). Revenue The sales for the year ended 30 June 2024 of $498.4 million represented a decrease of 3.4% on FY2023. During the period, four new stores opened, and one store closed (being Camperdown in NSW). In addition, seven new stores opened during FY2023 and traded for a full financial year in FY2024. Comparable store sales were negative 6.3% when compared to the prior year. Comparable store sales growth is calculated having regard to the growth of stores that have been open for all of the prior financial year and includes click & collect sales fulfilled from the store. Stores not included in the comparable store sales growth calculations in FY2024 were the four stores opened in FY2024, and the seven stores opened in FY2023 noting also that the stores that closed during the period were also excluded from the date they ceased trading. This sales decline was driven by lower first half transaction volumes and lower transaction values in the second half. Transaction values were impacted by price competition in the key categories of car seats and prams. Sales from private label and exclusive products were 46.0% of total sales in FY2024, up from 45.1% in FY2023. This has been sustained partly from the support of key suppliers expanding the range of their products sold exclusively through Baby Bunting. Categories where exclusive product ranges have expanded significantly include prams and strollers, cots and furniture and car safety (ie car seats). On a standalone basis, exclusive products represented 36.3% of sales (36.1% in FY2023). Baby Bunting’s range of private label products include 4baby, Bilbi and JENGO. Sales of private label products represented 9.7% of sales (9.0% in FY2023). Total online sales (including click & collect) were 21.8% of total sales, an increase of 5.6% on the prior financial year (20.0% in FY2023). Baby Bunting Annual Report 2024 31 Expenses Pro forma costs of doing business (CODB) expenses (excluding the impact of AASB 16 Leases accounting) as a percentage of sales were 229 basis points higher year-on-year at 33.6% of sales (31.4% of sales in FY2023). In FY2024, pro forma CODB expenses were $167.7 million, up 3.7% on the prior year pro forma CODB expenses of $161.7 million. The increased investment in operating expenditure was driven by: • seven stores opened in FY2023 trading for a full financial year in FY2024; • four new stores opened in FY2024; and • wage inflation of 5.7% which impacted both store labour and distribution centre activities. Wage inflation in stores was offset by productivity initiatives which delivered a 6.0% reduction in store labour hours in the Group’s comparable store sales base year-on-year. These increases were offset by administrative expense reductions resulting from cost-out initiatives undertaken in the first half of FY2024. 2.5. Review of the Group’s financial position The Group finished the financial year in a net debt position of $13.0 million, a change of $6.8 million on the prior year net debt position of $6.2 million. Key items for the year include: • operating cash conversion of 86.0% and free cash flow of $4.2 million; • payment of $8.9 million in dividends, relating to the FY2023 final dividend of $6.5 million (paid on 8 September 2023) and the FY2024 interim dividend of $2.4 million (paid on 19 March 2024); and • capital expenditure of $8.6 million in FY2024 relating to new stores, store sustenance and continued investment in IT and digital assets. Renewed banking facilities In June 2024, the Group renewed its banking facility with National Australia Bank. The facility, which has a limit of $78 million (consisting of a $70 million corporate market loan facility and a $8 million bank guarantee facility), was due to mature in March 2025. The loan facility has been extended and now matures in September 2027. Dividends Reflecting an approach to disciplined balance sheet management, the Board has chosen not to pay a final dividend in respect of FY2024. An interim dividend of 1.8 cents per share was paid in March 2024. 3. Business strategy and future developments During the year, the Group refined its business strategy and plans for future financial years. The strategy reflects that there has been a demographic shift in the Group’s customers. The Group’s current customers are different from the Group’s future customers. A significant growth in Baby Bunting’s store network occurred at a time when Generation X parents (born 1965-1980) were the core customers. Over recent years and through to today, Baby Bunting’s core customers are Generation Y or Millennial parents (born 1981-1996). In the coming years, Baby Bunting’s core customers will be Generation Z parents (born 1997-2010) and the customer experience provided by the Group will evolve to meet these changes. The Group’s vision is the best start for the brightest future. The Group’s mission is to support and inspire confident parenting, from newborn to toddler. The Group has the long-term financial objective of returning to be a 10% plus EBITDA margin business and delivering shareholder value. 32 Directors’ report Continued The Group’s strategy involves three key objectives: Growth objectives Deliverables Grow Return on invested capital 3 Disciplined capital management Grow EBITDA 2 Grow Market share 1 Best-in-class services Enhance customer experience Gross Margin New Zealand profitability Media business Operating leverage Drive platform leverage Market leading products Exceptional experiences Data and Analytics Refurbish existing store network Re-platforming ERP/POS Inventory productivity Network growth 3.1. Grow market share Market leading products Growing market share will target growth in strategic product categories and improving the Group’s product offer. The Group will seek to broaden market share in the prams and strollers category and the furniture and nursery category, along with amplifying the Group’s presence in the car seat category through the Group’s expanding store network. The Group intends to continue to expand into the food, formula and feeding, clothing and toys categories. The Group intends to focus on range segmentation and expansion, fostering newness and innovation, enhancing customer experience and enriching offerings with valuable content. The Group launched the Baby Bunting marketplace in June 2023. This curated marketplace facilitates the offer for sale of additional SKUs by third-party sellers on babybunting.com.au. The marketplace capability builds on the Group’s e-commerce site and provides consumers with access to a broader range of products through the Group’s online channel. The Group intends to integrate marketplace into core categories, to enrich offerings with a wider array of colours and brand choice for customers. This expansion can assist in meeting the evolving preferences of customers and also services as a rich data source for understanding customer demand in new and adjacent categories. Exceptional experiences The Group seeks to provide exceptional experiences in store, with each store serving as an experience centre for customers, a distribution centre for products and a stage for the Group’s brand partners to showcase their innovation and new products. Towards the end of FY2024, the Group commenced a program to develop a brand and store redesign. The updated large format store design is intended to revamp the existing design with an emotionally resonant and activity-led design. It is anticipated that the final design plans will be available towards the end of Q2 FY2025, with the first stores to be refurbished completed towards the end of FY2025. Baby Bunting Annual Report 2024 33 The store redesign program will also develop a design for a small format store, which will be a new format for the Group. The Group is also focused on using its store network and online channel together to drive greater customer lifetime value. The store network can be used to facilitate delivery of goods from stores to fulfil online orders, providing benefits in terms of speed of fulfilment, cost savings and inventory efficiency. Best-in-class services The Group, through its car seat installation team, installs around 140,000 car seats a year in Australia. Providing car seat installation services at its stores throughout Australia and New Zealand is a key service offer for the Group. During FY2025, the Group intends to pilot two additional services in store: one-on-one personalised appointments and a pram cleaning service. One-on-one appointments will provide customers with extended consultations with experienced team members as they commence their pregnancy journey. The pram cleaning service is intended to assist customers to extend the lifecycle of their products and extend the customer lifetime value. Data and Analytics The Group has access to transaction and loyalty data that offers insights into customer behaviour and trends, including understanding customers through their early parenthood journey. The Group has expanded its Data & Analytics team, including with the appointment of a Chief Data & Analytics Officer, with the view to, among other things, build predictive analytics based on known milestones through pregnancy and the early years of raising children. This will enable the Group to offer education content, guidance and products to support parents of newborns and toddlers, growing loyalty and lifetime customer value. 3.2. Grow EBITDA The Group’s long term goal is to return to being a 10% plus EBITDA margin business. Gross margin The Group is targeting 40% gross margin in FY2025 and further growth in future years. Initiatives to achieve this goal include: • simplifying price architecture by eliminating layering of price discounting; • working with suppliers on trading terms to support mutual profitability and growth; • amplifying exclusive brands; • scaling the private label range, with a multi-year target to double the size of the Group’s private label sales from 10% to around 20%; and • de-ranging underperforming brands and products. In relation to its exclusive brand initiatives, in June 2024, the Group announced that it had entered into a 5-year exclusivity agreement with Nuna Baby for the supply of Nuna baby gear in Australia. The Group also announced that it had entered into a 3-year agreement with Bugaboo to be the exclusive retailer of Bugaboo products in New Zealand. Media business A focus for FY2025 is the establishment of a new revenue stream through monetising the Group’s existing in-store and digital assets. With around 800,000 active loyalty customers, 3.4 million annual transactions, around 32 million website visits and retail space in excess of approximately 100,000 square metres, the Group has significant assets to offer brand partners an opportunity to engage with new and expectant parents. New Zealand profitability The Group has an objective of scaling its New Zealand business to contribute positively to the Group’s overall earnings. This scaling will focus on continuation of the store roll-out and achieving operating leverage. There are four Baby Bunting stores in New Zealand, with plans to open at least a further six large format stores. The next store in New Zealand is anticipated to be in Auckland and to open in FY2025. The initial priority when establishing the New Zealand business was to grow market share and build brand awareness. In the future, a focus will be on growing gross margin to a level that supports ongoing profitability along with improving the supply chain economics. 34 Directors’ report Continued Operating leverage To support its objective of growing EBITDA margin, the Group will focus on operating leverage including lowering variable costs, leveraging investments made in systems and simplifying the operating structure. Through cost discipline, better use of existing systems and operational excellence in processes, the Group is seeking to achieve improved performance without increasing costs. 3.3. Grow return on invested capital The Group seeks to unlock value from its existing assets combined with discipline in relation to future investments. Grow store network The Group has a network plan for Australia and New Zealand that sees more than 110 large format stores in Australia (70 stores presently) and more than 10 large format stores in New Zealand (4 stores presently). The network plan is developed with the assistance of a third-party network planner and demographer, based on market share data, bureau of statistics information on growth rates and spend, as well as assessments of sales re- direction potential and retail growth areas. Network growth is an important element in further building omni-channel customers and growing customer lifetime value. The development of a small format store is anticipated to enable opportunities to target higher traffic areas and grow customer lifetime value. It also provides the opportunity to unlock high value smaller catchments that do not currently support the Group’s existing large format store, for example in inner urban and regional areas. A pilot of a small number of small format stores is expected to be commenced towards the end of FY2025, followed by a period of testing and assessment. Whether the small format store model is deployed more fully depends upon the performance of the pilot. Subject to this, the Group estimates that the potential exists for between 20 to 40 small format stores over the longer term. Refurbish existing store network Once the new store design has been developed, the Group intends to undertake a program of existing store refurbishments. The new store design is anticipated to contribute to increased store sales performance. Towards the end of FY2025, the Group intends to refurbish three existing large format stores and pilot the new design in three new stores. Following a period of assessment, the Group intends to roll-out the new store design over future years and commence a program of store refurbishments. Refurbishments will be targeted to occur in line with the renewal of existing store leases. Inventory productivity The Group has a significant investment in inventory. The Group intends to increase its focus on inventory productivity, to better inform range management and achieve improved returns from working capital. Re-platforming ERP/POS Modernising the Group’s enterprise resource planning (ERP) and point of sale (POS) systems is important for improving the Group’s productivity, enhancing customer engagement and improving operational efficiency. The Group anticipates commencement of this program in FY2026 with a two-year implementation period. 3.4. Capability platform Achievement of the Group’s strategy will be facilitated by building new capabilities in the Group and recalibrating existing capabilities. During FY2024, the Group has: • expanded its Data & Analytics team, to increase the use of data and improve insights and business decision-making, measurement and innovation. A new Chief Customer Officer and Chief Data & Analytics Officer was appointed in March 2024, along with a new Head of Data & Analytics and a new Head of Insights; • increased its growth marketing and digital trade capability, with the addition of a new Head of Social & Content and a new Head of Online Trade & Experience. Growth marketing capabilities are important in navigating the competitive retail landscape and by leveraging data-driven strategies, targeted customer acquisition, and retention tactics, the Group can pursue customer and sales growth. Baby Bunting Annual Report 2024 35 The Group also intends to invest in continuous education and training for its team, to continue to build product knowledge and awareness and retail and operational skills. Other areas for further investment include private label product development, merchandise planning and supply chain and a team to lead the re-platform of ERP and POS. Further information on likely developments in the Group’s operations and the expected results of those operations has not been included in this Directors’ Report. The Directors believe that the disclosure of such information, including certain business strategies, projects, and prospects would be likely to result in unreasonable prejudice to the Group’s interests. 4. Material business risks and uncertainties 4.1. Material business risks The Group’s strategies take into account the expected operating and retail market conditions, together with general economic conditions, which are inherently uncertain. The Group has a structured risk management framework and internal control systems in place to manage material risks (see page 23 for further information on the Group’s risk management framework). Some of the other key risks and uncertainties that may have an effect on the Group’s ability to execute its business strategies and the Group’s future growth prospects and how the Group manages these risks are set out below. Risk Description Mitigation External economic factors affecting consumer sentiment The Group’s performance is sensitive to the current state of, and future changes in, the retail environment and general economic conditions. A deterioration in consumer confidence, including as a result of increases in interest rates and the rate of inflation, or more generally, may cause consumers to reduce the size or value of purchases with the Group, which could have an adverse effect on sales and the Group’s financial performance. Public health restrictions, of the kind seen introduced with COVID-19, may also affect consumer sentiment. The Group seeks to ensure that it has a broad range of products across a range of price points, with a focus on value for customers every day. Inventory levels are monitored to minimise the risk of being overstocked. A large proportion of the Group’s inventory is non-seasonal. Attention is paid to ensuring that inventory levels are appropriate for trading conditions. The Group seeks to ensure that its cost profile is appropriate for the anticipated level of sales. Competitive and digital disruption risks The Group faces competition from specialty retailers as well as department stores, discount department stores and online only retailers. International online retailers and marketplaces are also sources of current and future competition. Second hand or buy, swap, sell markets, which facilitate the exchange of used baby goods, are also a source of competition for the Group. In addition, direct to consumer operators (without a physical store network) compete with the Group in specific product categories. Competition is based on a variety of factors including price, merchandise range, advertising, store location, store presentation, product presentation, new store roll-out and customer service. The Group seeks to address competitive risks by focusing on providing customers with competitive prices. Product differentiation through exclusive access to key brands is a strategy to mitigate this risk. In addition, the Group is focused on providing an excellent customer experience — regardless of whether the customer is visiting a physical store or the online store. Elements of this experience include quality advice, high service levels and a very wide product range. 36 Directors’ report Continued Risk Description Mitigation Supply chain risks The Group’s supply chain is important to ensuring that products are available in-store and online for customers. The key risks associated with Baby Bunting’s supply chain include events of global significance that disrupt global supply chains, operational disruption due to catastrophic events such as fire or flood, delays in product delivery or complete failure to receive products ordered. Poor supply chain management could adversely affect the Group’s financial performance and customers’ experience of shopping with Baby Bunting. The Group continues to focus on logistics and technology initiatives to ensure that this risk is managed appropriately. While the Group’s Distribution Centre has reduced the need for third party logistics facilities, they remain available to assist in managing supply chain risks by carrying additional inventory. Supplier relationships An element of the Group’s strategy involves growing its private label and exclusive product offerings as well as exclusive brand relationships. The ability of the Group to continue to offer exclusive products depends upon the relationships it has with suppliers. Any deterioration of those relationships could adversely impact the Group’s ability to supply exclusive products or, more generally, to successfully provide customers with a wide range of products at sustainable prices. The Group continues to invest in its merchandising team to continue to ensure that it is appropriately managing relationships with its suppliers. Workplace and people management risks Failure to manage health and safety risks could have a negative effect on the Group’s reputation and performance. The Group’s future performance depends to a significant degree on its key personnel, and its ability to attract and retain experienced and high performing personnel. At times of full or near-full employment, competition to attract and retain employees can become more pronounced with the result that the time and costs to recruit increase. This may impact the Group’s ability to achieve its operational and business transformation objectives. The Group has a Safety Management System, which includes a Health, Safety and Injury Management Policy, with the aim of identifying and assessing workplace health and safety risks as well as educating team members in stores, at the Store Support Centre and at the Distribution Centre about safe ways of working. The Group’s remuneration policies and practices seek to ensure that executives and managers are provided with appropriate incentives and rewards to support their retention. In addition, the Group continues to make investments in training and development to further expand the skills of the Group’s team members. Baby Bunting Annual Report 2024 37 Risk Description Mitigation Cyber, technology and information risks In common with other retailers, the Group faces a range of cyber risks. This is a broad concept and encompasses a variety of risks that could impact computer systems and that could result in unauthorised access or disclosure of information held by the Group (including the personal information of our customers), the commission of fraud or theft, or the disruption of normal business operations. The Group relies on its IT systems, retail point of sale and inventory management systems, networks and backup systems, and those of its external service providers, such as communication carriers and data providers, to process transactions (including online transactions), manage inventory, report financial results and manage its business. A malfunction of IT systems or a cybersecurity violation could adversely impact Baby Bunting’s ability to trade and to meet the needs of its customers. Unauthorised disclosure of, or unauthorised access to, personal information under the control of the Group could have an adverse effect on the Group’s reputation and ultimately the Group’s financial performance. The Group has a continuing focus on IT systems and security, with the aim of ensuring that the IT systems are available to support the Group’s operations and that steps are being taken to protect against adverse IT and cyber related events. Investments in security systems and processes continue to be made. IT infrastructure and data assets have been migrated to an external data centre and the Group remains focused on constantly improving its ability to prepare for and respond to a cyber attack or other adverse event. The Group also has systems and processes in place designed to appropriately use and secure customers’ personal information. Regulatory compliance and product safety Baby Bunting is subject to laws and regulations, including competition and consumer laws, taxation and workplace health and safety laws. Many of the products sold in Baby Bunting’s stores or online must comply with mandatory product safety standards. In addition, the products Baby Bunting sells must comply with general product safety requirements under applicable law and also meet the expectations of our consumers. Failure to do so may require the Group to, among other things, undertake a recall of products or take other actions. This may adversely affect the Group’s reputation and performance and result in significant financial penalties. The Group has procedures to assess compliance issues of the products that it supplies, as well as procedures to respond to and investigate reports of product safety incidents that it receives. Investments in the Group’s quality assurance and compliance team and equipment continue to ensure that product compliance remains a key focus. The Group also engages external advisers that provide training and advice on particular compliance matters. Business interruption and failure of the Store Support Centre Other unanticipated events such as natural disasters, wars, strikes and epidemics have the potential to materially affect the Group through their impact on supply chain, consumer behaviour and company operations. Some may pose a threat to the health and safety of those who work and shop with the Group. These events can arise rapidly with little or no warning and their duration and the subsequent recovery period is uncertain and may be protracted. The Group has a risk management framework intended to identify key risks and develop risk control measures. Mitigants include seeking to avoid over-concentration on a key supplier or provider (of goods or services). Business continuity and disaster recovery planning is also undertaken. 38 Directors’ report Continued 4.2. Sustainability and climate-related risks Sustainability The Group’s stakeholders (including customers, suppliers, team and shareholders) have expectations for Baby Bunting in relation to a range of environmental, social and governance matters. A failure to acknowledge and adequately address these expectations over time could negatively impact the Group’s reputation and profitability. Baby Bunting has adopted a sustainability strategy and commenced reporting on its approach to ESG matters in its Sustainability Report. Baby Bunting also discloses the manner in which it seeks to eliminate the risk of modern slavery in its operations and supply chain in its Modern Slavery Statement. Climate-related risks – physical risks As a retailer operating in Australia and New Zealand, the Group has an exposure to acute physical risks arising from climate change: • stores: extreme weather events, such as floods or storms, can damage the Group’s retail stores. These events can lead to temporary closures, loss of inventory and repair costs and other disruptions to trade. In recent years, some stores in Queensland and New South Wales have experienced disruptions and damage arising from flood events. In addition, extreme weather events can affect our team members. For example, team members may live in communities affected by extreme weather events, and they may experience disruptions associated with these events ranging from impacts associated with travel disruptions to more extreme impacts including damage to their own property. • supply chain disruptions: as a retailer with operations throughout Australia and parts of New Zealand, the Group’s operations are heavily dependent upon functioning supply chains. Climate-related events can disrupt supply chains through temporarily cutting off transport routes or damaging road and rail infrastructure, resulting in delays in delivering inventory and increased costs. Rail freight from parts of eastern Australia to Western Australia have, in recent years, been disrupted due to weather and flooding events impacting rail transportation. Climate-related risks – transition risks The Group has an exposure to transition risks arising from climate change. Economic transition risks for the Group include policy and regulatory responses, such as: • emissions reductions laws or regulations, which could increase the costs of energy or other inputs used by the Group; • changes to planning and building regulation which could increase the costs associated with store developments; • technological developments, for example affecting energy production or transportation technology; and • changes in the preferences of the Group’s consumers and other stakeholders. These risks may increase the costs of the Group’s operations, require greater capital investment and potentially impact the Group’s sales and financial performance where the Group does not address changes in applicable consumer preferences. Climate-related risks – governance The Audit and Risk Committee has the responsibility to assist the Board of the Group in overseeing management’s risk identification, planning and administration of climate-related risks and opportunities. During the 2025 financial year, the Board and management will undertake further activities in relation to climate- related risks and opportunities, including strategic risk planning and assessing their potential financial impact. 5. Significant changes in the state of affairs in FY2024 There were no significant changes in the state of affairs of the Group during the financial year. Baby Bunting Annual Report 2024 39 6. Matters subsequent to the end of the financial year No matter or circumstance has arisen since the end of the financial year which has not been dealt with in this Directors’ Report or the Financial Report, and which has significantly affected, or may significantly affect: • the Group’s operations in future financial years; • the results of those operations in future financial years; or • the Group’s state of affairs in future financial years. 7. Dividends The following dividends have been paid to shareholders during the financial year: Dividend $’000 Final dividend in respect of the financial year ended 2 July 2023 (4.8 cents per share fully franked) 6,476 Interim dividend in respect of the half year ended 31 December 2023 (1.8 cents per share fully franked) 2,428 The Board has elected not to pay a final dividend in respect of the financial year ended 30 June 2024. 8. Directors and Company Secretaries The following persons were Directors of Baby Bunting Group Limited during the financial period and/or up to the date of this Directors’ Report: Director Position Date appointed Melanie Wilson Chair, Non-Executive Director 15 February 2016 Mark Teperson CEO & Managing Director 2 October 2023 Gary Levin Non-Executive Director 25 August 2014 Donna Player Non-Executive Director 16 January 2017 Gary Kent Non-Executive Director 12 December 2018 Francine Ereira Non-Executive Director 1 September 2021 Stephen Roche Non-Executive Director 1 September 2021 8.1. Directors’ qualifications, experience and special responsibilities Details of the qualifications, experience and special responsibilities of each current director are set out on pages 12 and 13 of the Annual Report. 8.2. Directors’ attendance at Board and Committee meetings Details of the number of meetings of the Board and each Board Committee held during the financial year are set out in the Corporate Governance Statement on page 18. 8.3. Directors’ relevant interests in shares Details of the relevant interests that each Director has in the Group’s ordinary shares or other securities as at the date of this Directors’ Report are set out in the Remuneration Report on page 56. 8.4. Company secretaries Details of the Group’s company secretaries are set out in the Corporate Governance Statement on page 21. 40 Directors’ report Continued 9. Details of rights and options Rights The CEO was the only Director eligible to participate in the Group’s long-term incentive plan (LTI Plan). Further details of the LTI Plan are set out on pages 49 to 53 of the Remuneration Report. Each right entitles the holder to receive one fully paid share in the Group, subject to the satisfaction of the applicable performance or service conditions. All of the rights granted during the financial year are subject to performance or service conditions (see pages 49 to 53 of the Remuneration Report for more details). Details of rights that were granted, lapsed or forfeited are set out below: Event Issue price Number of rights Opening balance (3 July 2023) 4,745,000 Lapse of rights (FY2020 to FY2023 award) (23 October 2023) (2,360,000) Grant of rights under the LTI Plan – FY2023 to FY2026 grant (15 December 2023) nil 1,844,736 Grant of service rights under the LTI Plan (15 December 2023) nil 1,117,289 Forfeiture of rights (31 December 2023) (105,000) Forfeiture of rights (15 March 2024) (170,000) Closing balance 5,072,025 Options There are no options over shares on issue as at the date of this Directors’ Report and no shares were issued during the year as a result of the exercise of options. 10. Remuneration Report The Remuneration Report, which forms part of this Directors’ Report, is presented separately from page 43. 11. Indemnification and insurance of directors and officers and the auditor Under the Group’s Constitution, to the fullest extent permitted by law, the Group must indemnify every officer of the Group and its wholly owned subsidiaries, and may indemnify its auditor against any liability incurred as such an officer or auditor to a person (other than the Group or a related body corporate). The Group has entered into a deed of access, indemnity and insurance with each Non-Executive Director and the Chief Executive Officer which confirms each person’s right of access to certain books and records of the Group while they are a Director and after they cease to be a Director. The deed also requires the Group to provide an indemnity for liability incurred as an officer of the Group and its subsidiaries, to the maximum extent permitted by law. The Constitution also allows the Group to enter into and pay premiums on contracts of insurance, insuring any liability incurred by a current or former Director and officer of the Group. The deed of access, indemnity and insurance requires the Group to use its best endeavours to maintain an insurance policy, which insures the Director against liability as a Director and officer of the Group from the date of the deed until the date which is seven years after the Director ceases to hold office as a Director. During the financial year, the Group paid insurance premiums for directors’ and officers’ liability insurance that provides cover for the current and former directors, secretaries, executive officers and officers of the Group and its subsidiaries. The Directors have not included details of the nature of the liabilities covered in this contract or the amount of the premium paid, as disclosure is prohibited under the terms of the contract. To the extent permitted by law, the Group has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. Baby Bunting Annual Report 2024 41 12. External auditor 12.1. Auditor appointment and rotation The Group’s external auditor is Ernst & Young and shareholders approved the appointment of Ernst & Young as the Group’s external auditor at the 2017 AGM. Tony Morse, a partner of Ernst & Young, is the current signing audit partner for the Group’s audit. Following the conclusion of the audit for the 2024 financial year, Tony Morse will rotate off the Group’s audit and Katie Struthers, a partner of Ernst & Young, will succeed him as the signing partner for the Group’s audit. 12.2. Non-audit services The Group may decide to engage its external auditor on engagements additional to its statutory audit duties where the auditor’s expertise and experience with the Group are important. Details of the amounts paid or payable to Ernst & Young for audit and assurance services ($245,000) (FY2023: $220,300) and for non-audit services $30,900 (FY2023: $27,817) provided during the year are set out in the Financial Statements (at Note 30). The major element of non-audit services during the year related to taxation services. The Board has considered this and in accordance with advice received from the Audit and Risk Committee, is satisfied that the provision of non-audit services is compatible with the general standard of independence imposed on auditors by the Corporations Act. The Directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act for the following reasons: • all non-audit services have been reviewed by the Audit and Risk Committee to ensure that they do not impact on the impartiality and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. 12.3. Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act is attached to this Directors’ Report on page 104. 13. Proceedings on behalf of the Group No proceedings have been brought or intervened in on behalf of the Group with the leave of the court under section 237 of the Corporations Act. No person has applied to the court under section 237 of the Corporations Act for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party. 14. Environmental regulation The Group is not involved in activities that have a marked influence on the environment within its area of operation. As such, the Directors do not consider that the Group’s operations are subject to any particular and significant environmental regulation in Australia. 15. Rounding of amounts The Group has taken advantage of ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 relating to the “rounding off” of amounts in the Directors’ Report and Financial Statements. Amounts in these reports have been rounded off in accordance with that instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar. The Directors’ Report is made in accordance with a resolution of Directors. On behalf of the Directors Melanie Wilson Chair 20 August 2024 42 Directors’ report Continued Remuneration report – audited The Remuneration Report sets out remuneration information for the Group’s Non-Executive Directors and the other key management personnel identified in Section 1 (Disclosed Executives) for the year ended 30 June 2024. The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act. 1. Key management personnel The Group’s key management personnel (KMPs) are its Non-Executive Directors and those executives who have been identified as having the greatest authority for planning, directing and controlling the activities of the Group. Having regard to their roles and responsibilities and the authority limits contained in the Group’s Delegation of Authority Policy, the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) are considered to be KMP. They are referred to in this report as Disclosed Executives. The key change during the year to the Group’s KMP was the commencement of Mark Teperson as CEO on 2 October 2023. In the period before Mark commenced, Darin Hoekman (CFO) acted as interim CEO. Non-Executive Directors Disclosed Executives Melanie Wilson Mark Teperson – CEO (from 2 October 2023) Gary Levin Darin Hoekman – CFO Donna Player Gary Kent Francine Ereira Stephen Roche 2. Outcome at a glance 2.1. Overview CEO remuneration • Mark Teperson commenced as CEO on 2 October 2023. • His fixed annual remuneration (FAR) during the year was $850,000 per annum (inclusive of superannuation). • Mark will not be awarded any payment under the Group’s Short Term Incentive Plan in respect of FY2024, as the Group’s financial performance was below the level required for FY2024. • Following shareholder approval at the 2023 AGM, he was granted 467,289 service rights under the Group’s Long Term Incentive Plan. One third of these rights vest and become exercisable on the first, second and third anniversary of Mark’s commencement date. Accordingly, on 2 October 2024, 155,763 rights will vest and become exercisable. • Shareholders also approved the grant of 612,980 rights under the Group’s Long Term Incentive Plan, and in December 2023, Mark was provided with these rights, which will be assessed having regard to the Group’s EPS and TSR growth over the performance period from FY2023 to FY2026. CFO remuneration • In addition to his role as CFO, Darin Hoekman acted as CEO in the period from 2 June 2023 to 2 October 2023. During this period, his FAR was $625,000 per annum (inclusive of superannuation). • From 2 October 2023, Darin Hoekman’s FAR became $525,000 per annum (inclusive of superannuation). • Darin will not be awarded any payment under the Group’s Short Term Incentive Plan in respect of FY2024, as the Group’s financial performance was below the level required for FY2024. • Darin previously participated in the grant of rights under the Group’s Long Term Incentive Plan in respect of the performance period FY2021 to FY2024. He holds 70,000 EPS Rights and 105,000 TSR Rights. As the Group’s EPS growth over the performance period was below target, the EPS Rights will lapse. Whether the TSR Rights vests will be assessed after September 2024, but at current share price levels these rights are expected to lapse without vesting. Baby Bunting Annual Report 2024 43 • During the year, Darin was granted, as part of retention and incentive arrangements, 250,000 service rights with half of these rights vesting and becoming exercisable on 2 October 2024 and the balance vesting and becoming exercisable on 2 October 2025. • In December 2023, Darin Hoekman was provided with 252,403 rights under the Group’s Long Term Incentive Plan. These rights will be assessed over the period from FY2023 to FY2026. STI and LTI outcomes for FY2024 • As the Group’s financial performance was below target, no payments will be made under the Group’s Short Incentive Plan in respect of FY2024. • There are 1,092,192 rights outstanding which were granted under the Group’s Long Term Incentive Plan in relation to the FY2021 to FY2024 performance period. All of these rights are expected to lapse and not provide any benefit to participants holding these rights. Forty percent of these rights were subject to an EPS growth performance condition which was not met at the end of FY2024. The balance of the rights are subject to a TSR growth performance condition which will be measured at the end of September 2024. On the current share price, these rights are not expected to vest. Non-Executive Director fees • There were no increases in Non-Executive Director fees during FY2024. The last fee increase occurred in February 2022. 2.2. Received remuneration This Section 2.2 has been included in the Remuneration Report to show the remuneration actually received by the Disclosed Executives. The table in this section supplements, and is different to, the statutory remuneration tables (see Section 8) which presents the accounting expenses for both vested and unvested performance rights in accordance with Australian Accounting Standards. The table shows the remuneration the CEO and the CFO realised in relation to the 2024 financial year as cash, or in the case of prior equity awards, the value which vested in FY2024. Fixed remuneration1 $ STI variable cash remuneration $ Total cash $ Long term incentives which vested during the year2 $ Actual remuneration received $ Long term incentives which lapsed during the year3 $ Disclosed Executives Mark Teperson4 2024 631,172 – 631,172 – 631,172 – 2023 – – – – – – Darin Hoekman 2024 556,758 – 556,758 – 556,758 (612,500) 2023 493,672 – 493,672 967,566 1,461,238 (62,310) 1. Fixed remuneration includes superannuation contributions. 2. During FY2023, the vested performance rights were the performance rights granted under the FY2019 to FY2022 award that were assessed against a TSR CAGR performance condition and an EPS CAGR performance condition (351,842 rights vested for Darin Hoekman). To determine a monetary value for the rights that vested, the closing share price of $2.75 (being the closing price on 6 December 2022 which was the date of issue of shares following the exercise of the vested rights) has been used. 3. The value of the long term incentives which lapsed during the year was determined by multiplying the number of rights that lapsed by $1.75, being the closing share price on 23 October 2023. For FY2023, the amount was calculated using $2.75, being the share price on 6 December 2022. 4. Mark Teperson commenced as CEO on 2 October 2023. 44 Remuneration report – audited Continued 3. Remuneration during FY2024 3.1. FY2024 short term incentive payments – outcome The Group’s short term incentive plan operated again for the 2024 financial year. For the 2024 financial year, pro forma NPAT growth was negative 74.7%. The “threshold” growth target level for short term incentive payments was set at 44% pro forma NPAT year-on-year inclusive of the costs of any short term incentive payments. As the threshold growth target level was not achieved, no STI payments were awarded under the plan for FY2024. See Section 6.2 for further details. 3.2. FY2020 to FY2023 long term incentives – outcome The Group had previously granted rights under its Long Term Incentive Plan to certain participants, including the CFO. These rights were granted in relation to the FY2020 to FY2023 performance period. Having regard to the Group’s EPS and TSR performance over the period, these rights did not vest. They lapsed and the rights ceased in October 2023. 3.3. FY2021 to FY2024 long term incentives – expected outcome The Group had previously granted rights under its Long Term Incentive Plan to certain participants, including the CFO. These rights were granted in relation to the FY2021 to FY2024 performance period. Having regard to the Group’s EPS performance over the period and the current share price, these rights are not expected to vest and all rights will lapse. TSR performance will be calculated after the end of September 2024. On the current share price, these rights are not expected to vest. See Section 6.3 for further details. 3.4. FY2023 to FY2026 long term incentives – new grant Following shareholder approval at the 2023 AGM, the Group granted the CEO, 612,980 performance rights under the FY2023 to FY2026 grant. Approval for the grant was obtained under ASX Listing Rule 10.14. An additional 252,403 performance rights were granted on the same terms to the CFO. Details of the terms and conditions of this grant are contained in Section 6.3.1 below. 3.5. Service rights – new grant Following shareholder approval at the 2023 AGM, the Group granted the CEO 467,289 service rights. Approval for the grant was obtained under ASX Listing Rule 10.14. An additional 250,000 service rights were granted to the CFO. Details of the terms and conditions of this grant are contained in Section 6.3.2 below. Baby Bunting Annual Report 2024 45 4. Incentive arrangements for FY2025 During the year, the Board undertook a review of the Group’s incentives for key management personnel and other executives. Following that review, the Board has decided to replace the EPS performance condition used as part of the Long Term Incentive Plan. In its place, the Board has selected a return on average funds employed (ROFE) performance condition. This condition has been selected as it better measures the capital efficiency of the earnings growth achieved over the performance period. Further details of the Long Term Incentive Plan and the performance conditions will be included in the Notice of 2024 Annual General Meeting to be made available in September 2024, where approval will be sought for a grant under the LTI to the CEO. 5. Relationship between remuneration and the Group’s performance The following table shows key performance indicators for the Group over the last five years. 2020 20211 2022 2023 2024 Growth in 2024 CAGR last 5 years EBITDA (statutory) $’000 46,119 56,833 67,052 60,433 50,089 –17.1% 2% Net profit after tax (statutory) $’000 9,986 17,039 19,521 9,854 1,696 –82.8% –36% Net profit after tax (pro forma) $’000 19,291 26,031 29,573 14,503 3,676 –74.7% –34% Dividends per share – ordinary (cents) 10.5 14.1 15.6 7.5 1.8 –76.0% –36% Basic earnings per share (cents) (statutory) 7.8 13.2 14.9 7.4 1.3 –82.9% –37% Earnings per share (cents) (pro forma) 15.2 20.2 22.5 10.8 2.7 –74.8% –35% Share price at the end of the financial year $3.30 $5.42 $4.14 $1.38 $1.55 12.3% –17% 1. At the end of FY2022, the results for FY2021 were restated to reflect changes in the accounting policy in relation to configuration and customisation costs incurred in implementing SaaS arrangements. Refer to Note 2(aa) for detailed information on restatement of comparatives in the Financial Report for the year ended 26 June 2022. 46 Remuneration report – audited Continued 6. Remuneration policy and practices 6.1. Remuneration mix The Group’s remuneration policy seeks to appropriately reward, incentivise and retain key employees, by providing a link between remuneration outcomes and both the Group’s and an individual’s performance. The remuneration practices adopted by the Group include the use of fixed and variable remuneration, and short term and long term performance based incentives. For FY2024, the CEO’s target remuneration mix was a function of his FAR and the STI opportunity and LTI opportunity. The maximum STI opportunity is equal to 100% of his FAR and the LTI opportunity is equal to 150% of his FAR. On this basis, the total target remuneration mix for FY2024 was: 29% 42% FAR STI opportunity LTI opportunity 29% The CFO has an STI opportunity equal to 100% of his fixed annual remuneration and an LTI opportunity equal to 100% of his fixed annual remuneration. The total target remuneration mix for FY2024 was: FAR STI opportunity LTI opportunity 34% 33% 33% 6.2. Short term incentives The Group operates short term incentive plans for eligible employees, including executives and employees in other management or specialist roles. Under the Group’s principal short term incentive plans (STI plans), a cash bonus can be paid to an eligible employee, subject to the achievement of a range of financial and additional key performance indicators for the relevant financial year. Participation in, and payments under, the STI plans for a financial year are at the discretion of the Board. The annual key performance indicators for participants and related targets are also reviewed annually. Gateway for short term incentive payments for FY2024 For participants to become eligible to receive a payment under the STI plans in FY2024, there were the following gateways: • the participant’s performance evaluation rating for the year must exceed an acceptable rating for both performance and values, as assessed by the participant’s manager or, in the case of the CEO, the Board; and • the Group’s pro forma NPAT (inclusive of payments to be made under the STI plans) must be at least 44% higher than the prior year (this is known as “threshold” growth). Potential STI payments for FY2024 For FY2024, the CEO and the CFO had the opportunity to earn a maximum short term incentive payment of an amount equal to 100% of their FAR. At “threshold” growth, the opportunity was equal to 20% of fixed annual remuneration. Where pro forma NPAT growth exceeds “threshold” growth of 44%, the potential STI payment increases on a scale up to 100% of FAR if pro forma NPAT growth is at or beyond 90%. This scaling is to encourage and reward performance in achieving extraordinary NPAT growth. Baby Bunting Annual Report 2024 47 Performance conditions and determining the potential STI benefits for FY2024 The size of each participating executive’s actual STI payment is determined by applying financial and additional criteria. There is a large weighting of the performance conditions to the Group’s financial performance (which represent 70% of the weighting of the potential STI benefit), reflecting the principle that benefits under the STI plan are to be provided primarily when the Group has performed well. The additional criteria represent 30% of the potential STI benefit and were selected to focus on particular commercial, operational or customer and employee goals. Once “threshold” growth has been met (and the other gateways for eligibility have been satisfied), any actual STI payment is based on the extent of the pro forma NPAT growth and the satisfaction of other specific additional performance criteria. The level of pro forma NPAT growth required for the minimum and maximum potential STI payments are shown below: Minimum potential STI Maximum potential STI Actual STI for FY2024 If pro forma NPAT growth of 44% is achieved If pro forma NPAT growth of 90% is achieved Pro forma NPAT growth of below 44% Achievement of pro forma NPAT condition 14% of FAR becomes payable 70% of FAR becomes payable 0% of FAR becomes payable Achievement of all additional performance criteria (KPIs) 6% of FAR becomes payable 30% of FAR becomes payable 0% of FAR becomes payable Total potential STI payment 20% of FAR 100% of FAR 0% of FAR Outcome for FY2024 The pro forma NPAT growth against the prior year was negative 74.7%. Accordingly, no STI payments were awarded under the plan for FY2024. Additional performance criteria The additional performance criteria that applied to the Disclosed Executives for FY2024 related to, among other things, health and safety targets, customer and employee metrics, and business improvement projects. As the threshold financial performance was not achieved, the additional performance criteria were not assessed for the purposes of the STI. These performance criteria were selected to provide an incentive to participating executives to achieve specific targets relevant to the business as well as contributing to the overall financial performance of the Group. Assessment of whether the performance criteria have been satisfied for participating executives is undertaken by the CEO with any decision to award a payment approved by the Board. In relation to the CEO, the Board assesses the relevant performance criteria and approves any STI payment. For the Disclosed Executives, 100% of the potential STI payment was forfeited. If they are awarded, STI plan benefits are paid in cash and reflect amounts earned during the financial year and are provided for in the annual financial statements. 48 Remuneration report – audited Continued 6.3. Long term incentives The Long Term Incentive Plan (LTI Plan) is designed to align the interests of Disclosed Executives and participating employees more closely with the interests of the Group’s shareholders by providing an opportunity for eligible employees to receive an equity interest in the Group through the grant of “rights”. Upon vesting, each right entitles the participant to one fully paid ordinary share in the Group. Participation in a grant under the LTI Plan is by invitation. The Board may determine which executives or other employees are eligible. For grants of performance rights, whether a right vests depends upon the achievement of performance conditions. For this purpose, the Board has selected two performance conditions being: • growth in the Group’s profit (as measured by earnings per share growth); and • growth in returns to shareholders (as measured by total shareholder returns, which includes share price appreciation and dividends reinvested). The conditions are measured on an absolute basis – that is, growth is measured having regard to the Group’s earnings or share price from a prior period. The Board has considered this to be appropriate as it seeks to drive an improvement in the Group’s performance along with sustainable and profitable growth. On this basis, rewards to participating executives are firmly linked to the performance of the Group. FY2023 to FY2026 grant During the 2024 financial year, a grant was made under the LTI Plan for the period FY2023 to FY2026 and details of that grant are provided in Section 6.3.1. The number of performance rights granted to the CEO was determined by dividing 150% of his FAR by $2.08. This was the volume weighted average price of the Group’s shares traded on ASX during August 2023. The number of rights granted was 612,980. The number of performance rights granted to the CFO was determined by dividing 100% of his FAR by $2.08. The number of rights granted was 252,403. Service rights grant A grant of service rights was also made to the CEO and the CFO during the 2024 financial year. Details of these rights are provided in Section 6.3.2. Rights outstanding Information on grants made in previous years that remain outstanding are also contained in this section. As at 30 June 2024, the number of performance rights outstanding was: Long Term Incentive Plan grant Performance rights EPS Rights TSR Rights FY2021 to FY2024 grant¹ 436,877 655,315 FY2022 to FY2025 grant 407,123 610,685 FY2023 to FY2026 grant 737,894 1,106,842 Service rights Service rights FY2024 grant 1,117,289 Total 5,072,025 1. The EPS Rights from the FY2021 to FY2024 grant have not met the performance condition and will lapse. The TSR Rights from that same grant will be assessed after September 2024; however, based on the Group’s share price it is unlikely that those rights will vest. Baby Bunting Annual Report 2024 49 6.3.1 Performance rights There are three grants of performance rights outstanding at the date of this report. A summary of the conditions of those grants is set out below. FY2021 to FY2024 grant FY2022 to FY2025 grant FY2023 to FY2026 grant Performance conditions 40% of the rights granted are subject to the EPS growth performance condition (EPS Rights). 60% of the rights granted are subject to the TSR growth condition (TSR Rights). EPS growth performance condition The EPS growth performance condition is a measure of the compound annual growth rate in the Group’s EPS measured over the relevant performance period. EPS performance period FY2021 to FY2024 FY2022 to FY2025 FY2023 to FY2026 EPS base level 14.1 cents per share. This base level EPS was calculated by dividing the Group’s pro forma NPAT for the financial year ended 27 June 2021 by the average weighted number of ordinary shares on issue for the 2021 financial year. 15.6 cents per share. This base level EPS was calculated by dividing the Group’s pro forma NPAT for the financial year ended 26 June 2022 by the average weighted number of ordinary shares on issue for the 2022 financial year. 9.6 cents per share. This base level EPS was calculated by dividing the Group’s pro forma NPAT for the financial year ended 2 July 2023 by the average weighted number of ordinary shares on issue for the 2023 financial year. Pro forma NPAT excludes any unusual items but includes the statutory employee equity incentive expense. EPS vesting schedule EPS Rights vest and become exercisable if EPS CAGR is achieved over the performance period, as follows: • 30% of the EPS Rights will vest if the minimum EPS growth hurdle condition of 10% EPS CAGR is achieved; • 100% of the EPS Rights will vest if the EPS growth hurdle of 20% EPS CAGR is achieved; and • if the EPS CAGR is within the range of 10% to 20% EPS CAGR, the number of EPS Rights that will vest will be pro-rated on a straight-line basis for between 30% and 100% of the EPS Rights For the EPS Rights granted to the CEO, see the EPS vesting schedule at the end of this table. TSR growth performance condition The TSR growth performance condition is a measure of the compound annual growth of the Group’s TSR measured over the relevant performance period. TSR performance period Period to determine base share price: 1 July to 30 September 2021 Period to determine finishing share price: 1 July to 30 September 2024 or such other period as the Board considers appropriate. Period to determine base share price: 1 July to 30 September 2022 Period to determine finishing share price: 1 July to 30 September 2025 or such other period as the Board considers appropriate. Period to determine base share price: 1 to 31 August 2023 Period to determine finishing share price: 1 to 31 August 2026 or such other period as the Board considers appropriate. 50 Remuneration report – audited Continued FY2021 to FY2024 grant FY2022 to FY2025 grant FY2023 to FY2026 grant TSR base level $5.55 This was the volume weighted average price of the Group’s shares on ASX in the period 1 July 2021 to 30 September 2021. $4.49 This was the volume weighted average price of the Group’s shares on ASX in the period 1 July 2022 to 30 September 2022. $2.08 This was the volume weighted average price of the Group’s shares on ASX during August 2023. TSR vesting schedule TSR Rights vest and become exercisable if TSR CAGR is achieved over the performance period, as follows: • 30% of the TSR Rights will vest if the minimum TSR growth hurdle condition of 10% TSR CAGR is achieved; • 100% of the TSR Rights will vest if the TSR growth hurdle of 20% TSR CAGR is achieved; and • if the TSR CAGR is within the range of 10% to 20% TSR CAGR, the number of TSR Rights that will vest will be pro-rated on a straight-line basis for between 30% and 100% of the TSR Rights. For the TSR Rights granted to the CEO, see the TSR vesting schedule at the end of this table. Retesting If a performance right does not vest at the end of the relevant performance period it lapses. There is no retesting. Post-vesting disposal restriction Half of any shares that are issued to a participant upon vesting and exercise of a right will be subject to a 12 months disposal restriction. None None Number of participants (including Disclosed Executives) 9 participants 9 participants 10 participants Approval for the grant obtained under ASX Listing Rule 10.14 for the CEO Yes, at the 2021 AGM Yes, at the 2022 AGM Yes, at the 2023 AGM Number of initially rights granted 1,375,000 1,370,000 1,844,736 Number of rights that have lapsed during the performance period 282,808 rights lapsed when certain participants ceased employment 352,192 rights lapsed when certain participants ceased employment Nil Number of rights outstanding as at 30 June 2024 1,092,192 being: • 436,877 EPS Rights • 655,315 TSR Rights 1,017,808 being: • 407,123 EPS Rights • 610,685 TSR Rights 1,844,736 being: • 737,894 EPS Rights • 1,106,842 TSR Rights Baby Bunting Annual Report 2024 51 FY2021 to FY2024 grant FY2022 to FY2025 grant FY2023 to FY2026 grant Vesting outcome The EPS Rights will not vest, as the Group’s EPS CAGR for the period FY2021 to FY2024 was negative. The TSR Rights are unlikely to vest noting that the Group’s current share price is below the base level share price of $5.55. The final determination of TSR performance will occur after September 2024. To be determined at the end of FY2025 To be determined at the end of FY2026 Vesting schedule for EPS Rights and TSR Rights granted to the CEO (FY2023 to FY2026 grant) The CEO was first granted rights under the FY2023 to FY2026 grant. The grant was structured to provide the CEO with a target variable LTI opportunity equal to 100% of his FAR when EPS CAGR and TSR CAGR is at 20%. The grant will provide him with a maximum variable LTI opportunity equal to 150% of his FAR, which will be achieved when EPS CAGR and TSR CAGR is 30% or above. The schedule of vesting that applies is set out below. EPS CAGR EPS Rights that vest Less than 10% No EPS Rights vest Equal to 10% 30% of the EPS Rights vest Equal to 20% 66.67% of the EPS Rights vest 30% or more 100% of the EPS Rights vest TSR CAGR TSR Rights that vest Less than 10% No TSR Rights vest Equal to 10% 30% of the TSR Rights vest Equal to 20% 66.67% of the TSR Rights vest 30% or more 100% of the TSR Rights vest Vesting occurs on a straight line basis between the applicable performance levels. 6.3.2 Service rights During the financial year, the Group granted service rights to the CEO and CFO. These rights will vest and become exercisable on specified dates. Vesting is conditional upon the participant being employed by the Group (and not serving out a period of notice) at the time of vesting. No amount is payable upon the exercise of a vested right. The Group agreed to provide the CEO with these rights as a condition of him being appointed as CEO. Service rights were granted to the CFO as part of his retention and incentive arrangements. Shareholder approval for the grant of these rights to the CEO for the purpose of ASX Listing Rule 10.14 was obtained at the 2023 AGM. 52 Remuneration report – audited Continued Details of the rights granted to the CEO and the CFO are below: Grant to CEO Grant to CFO Number of rights 467,289 rights 250,000 rights Vesting schedule and periods • 155,763 rights vest on 2 October 2024 • 155,763 rights vest on 2 October 2025 • 155,763 rights vest on 2 October 2026 • 125,000 rights vest on 2 October 2024 • 125,000 rights vest on 2 October 2025 6.3.3 General comments on rights Exercise period If a right vests, a participant has two years from the vesting date in which they can elect to exercise the vested right and receive an ordinary share. If a vested right is not exercised in that period, it lapses. Malus and clawback The Long Term Incentive Plan provide for malus to be applied to unvested awards and for clawback provision to be applied for vested awards. This is to ensure that in the event of serious misconduct or the identification of a serious adverse subsequent event, the relevant participant does not inappropriately benefit in those circumstances. Treatment on cessation of employment Upon resignation or in instances where a participant’s employment is terminated for cause or as a result of unsatisfactory performance, their unvested rights will lapse. In other circumstances, a person ceasing employment may retain unvested rights with vesting to be tested at the end of the relevant performance period. However, in all cases, the Board has discretion to permit a participant to retain unvested rights, including a discretion to reduce the number of retained unvested rights to reflect the part of the performance period for which the participant was employed. Shareholder approval has been obtained for the purposes of sections 200B and 200E of the Corporations Act to permit the Group to give a benefit to a participant who holds a managerial or executive office in these circumstances. This approval was obtained at the 2021 annual general meeting and was expressed to be for the period up to the 2024 annual general meeting. Treatment on change of control In the event of a change of control of the Group, subject to the ASX Listing Rules, the Board has discretion to determine whether a change in control has occurred and the treatment of the rights at that time. Treatment may include permitting some or all outstanding unvested rights to vest or determining that unvested rights have lapsed. Other conditions Subject to the ASX Listing Rules (where relevant), a participant may only participate in new issues of shares or other securities if the right has been exercised in accordance with its terms and shares are issued or transferred and registered in respect of the right on or before the record date for determining entitlements to the issue. Participants will also be entitled to receive an allocation of additional shares as an adjustment for bonus issues. 6.4. Shares purchased on-market During the 2024 financial year, the Group arranged for the purchase of the Group’s shares on-market for the purpose of the Long Term Incentive Plan and to satisfy any future entitlements for participants to be provided with shares under the Long Term Incentive Plan. The number of shares purchased on-market was 467,289 with the average purchase price per share being $2.24. These shares are held by the trustee of the Group’s employee share plan trust, Baby Bunting EST Pty Ltd, in its capacity as trustee of that trust. Baby Bunting Annual Report 2024 53 7. Non-Executive Directors Remuneration Policy Under Baby Bunting’s Constitution, Non-Executive Directors’ remuneration for their services as a Director must not exceed in aggregate in any financial year $1,000,000 (being the amount specified in the Constitution) or any other amount fixed by shareholders in a general meeting. Currently, the aggregate fee cap is $1,000,000 (inclusive of superannuation contributions). Non-Executive Directors’ remuneration must not include a commission on, or a percentage of, operating revenue. Non-Executive Directors are not entitled to participate in any of the Group’s employee incentive plans. Non-Executive Directors may be reimbursed for travel and other reasonable expenses incurred on the business of the Group or in carrying out duties as a director. A director may be paid additional or special remuneration where a director performs extra services or makes special exertions. Non-Executive Directors’ fees Similar to executive remuneration, the Committee undertakes reviews of Non-Executive Director remuneration from time to time. A review was last undertaken by the Committee in February 2022 with fees adjusted with effect on 1 February 2022. Prior to that, the last fee adjustment occurred on 1 January 2019. The per annum fees (inclusive of superannuation contributions provided by the Group) are set out below: Fees $ per annum Chair 200,000 Non-Executive Director 100,000 Chair of a Board Committee 15,000 Member of a Board Committee 0 Recognising the expectation that Directors serve on Board Committees, no additional fees are provided for serving on one of the established Board Committees. For the financial year ended 30 June 2024, the fees paid and superannuation contributions to all Non-Executive Directors were approximately $730,000 in aggregate. 54 Remuneration report – audited Continued 8. Details of remuneration for Non-Executive Directors and Disclosed Executives Details of the remuneration of the Non-Executive Directors and other key management personnel of the Group are set out in the following table. Short term employee benefits Post- employment benefits Long term benefits Termination benefits2 Share- based payment3 Year Salary and fees1 $ STI and other fees $ Non- monetary benefits $ Super- annuation $ Long service leave $ $ LTI Plan rights4 $ Total5 $ Performance related % Non-Executive Directors Melanie Wilson 2024 180,180 – – 19,820 – – – 200,000 – 2023 184,476 – – 19,213 – – – 203,689 – Gary Levin 2024 103,604 – – 11,396 – – – 115,000 – 2023 106,074 – – 11,048 – – – 117,122 – Donna Player 2024 90,090 – – 9,910 – – – 100,000 – 2023 92,239 – – 9,607 – – – 101,846 – Gary Kent 2024 103,604 – – 11,396 – – – 115,000 – 2023 106,074 – – 11,048 – – – 117,122 – Francine Ereira 2024 90,090 – – 9,910 – – – 100,000 – 2023 92,239 – – 9,607 – – – 101,846 – Stephen Roche 2024 90,090 – – 9,910 – – – 100,000 – 2023 92,239 – – 9,607 – – – 101,846 – Disclosed Executives Mark Teperson6 2024 610,624 – 8,828 20,549 – – 261,089 901,090 29.0% 2023 – – – – – – – – – Darin Hoekman⁷ 2024 523,127 – 7,500 26,130 (7,933) – 206,016 754,840 27.3% 2023 467,111 – 7,789 26,561 40,408 – (40,647) 501,222 0.0% Former Disclosed Executives Matt Spencer 2024 – – – – – – – – – 2023 644,754 – 10,927 26,643 18,915 467,571 91,597 1,260,407 7.3% TOTAL 2024 1,791,409 – 16,328 119,021 (7,933) – 467,105 2,385,930 2023 1,785,206 – 18,716 123,334 59,323 467,571 50,950 2,505,100 1. Amount includes the value of annual leave accrued during the financial year and salary sacrifice arrangements. 2. The termination benefits recorded in FY2023 reflect an accrual for amounts that Matt Spencer was to receive in respect of cessation of his employment, which occurred on 31 December 2023. Matt Spencer ceased as a director and a member of the key management personnel of the Group on 2 June 2023. 3. The value of Share-based payments has been calculated in accordance with applicable accounting standards. 4. The value of the LTI plan rights included as remuneration in the table is an accounting value and represents the aggregate of amounts determined for both market based and non-market based performance hurdles. 5. As the 2023 financial period was 53 weeks, the total remuneration for Non-Executive Directors shown slightly exceeds the per annum amounts set out in Section 7. 6. Mark Teperson commenced on 2 October 2023. 7. The negative long term benefit is due to the reversal of a long service leave provision from FY2023, noting that he was temporarily paid a higher level of remuneration while acting as CEO in the period from 2 June 2023 to 2 October 2023. Baby Bunting Annual Report 2024 55 9. Equity instruments held by key management personnel The tables in this Section show the number of shares, performance rights and options in the Group that were held during the financial year by key management personnel, including close members of their family and entities related to them. No amounts remain unpaid in respect of the ordinary shares at the end of the financial year. Ordinary shares Shares held by key management personnel, including close members of their family and entities related to them. Non-Executive Directors Balance at start of the year Change Balance at end of the year Melanie Wilson 30,000 30,000 60,000 Gary Levin 220,000 30,000 250,000 Donna Player 36,000 10,000 46,000 Gary Kent 32,000 8,000 40,000 Francine Ereira 25,531 11,183 36,714 Stephen Roche 35,000 – 35,000 Disclosed Executive Balance at start of the year Change Balance at end of the year Mark Teperson – – – Darin Hoekman 552,630 – 552,630 Minimum shareholding policy The Board has adopted a minimum shareholding policy for directors and other key management personnel. A person subject to the policy is required to achieve and maintain a minimum shareholding in Baby Bunting’s shares equivalent to 100% of their director’s fees or fixed annual remuneration, as applicable. Participants must accumulate the shareholding within the later of 5 years after the adoption of policy (in November 2022) or their date of appointment. The value of a shareholding is calculated using the greater of the purchase price paid by the person for the shares and the closing price of Baby Bunting shares on the last day of the financial year. KMP Shareholding at the end of the year Shareholding value as a % of fees / FAR Time by which minimum holding must be met Melanie Wilson 60,000 78% November 2027 Gary Levin 250,000 >100% November 2027 Donna Player 46,000 96% November 2027 Gary Kent 40,000 >100% November 2027 Francine Ereira 36,714 90% November 2027 Stephen Roche 35,000 62% November 2027 Mark Teperson1 – – October 2028 Darin Hoekman 552,630 >100% November 2027 1. Mark Teperson commenced as CEO on 2 October 2023. 56 Remuneration report – audited Continued Rights granted to Disclosed Executives Disclosed Executives Balance at start of the year Number of rights granted as compensation during the year Fair value per right at grant date Value of rights granted during the year Number of rights exercised during the year Value of rights exercised during the year Number of rights lapsed during the year Number of rights held at end of the year (all unvested) Mark Teperson FY2023 to FY2026 rights – 612,980 $1.23 $754,701 – – – 612,980 Service rights – 467,289 $1.83 $855,139 – – – 467,289 Darin Hoekman FY2020 to FY2023 rights 350,000 – – – – – (350,000) – FY2021 to FY2024 rights 175,000 – – – – – – 175,000 FY2022 to FY2025 rights 175,000 – – – – – – 175,000 FY2023 to FY2026 rights – 252,403 $1.23 $310,759 – – – 252,403 Service rights – 250,000 $1.83 $457,500 – – – 250,000 Details of the performance conditions and performance periods for those rights are set out in Section 6.3 (Long term incentive plan) above. Options There are no options over shares on issue as at the date of this Directors’ Report. 10. Employment contracts Each Disclosed Executive has an employment contract specifying, among other things, remuneration arrangements, benefits, notice periods and other terms and conditions. The contracts provide that participation in the STI and LTI arrangements are at the Board’s discretion. The employment contracts for each of Mark Teperson and Darin Hoekman do not have a fixed term. Employment may be terminated by the Disclosed Executive by providing 6 months’ notice, or by the Group with 6 months’ notice or by payment in lieu of notice, or with immediate effect in circumstances including serious or wilful misconduct. The employment contracts with Disclosed Executives contain a 12-month post-employment restraint. The employment contract for Mark Teperson provides that if the Group makes a payment to Mark arising out of the cessation of employment and he is subsequently found to have engaged in serious misconduct, clawback will apply to those payments. This applies for two years after employment ends. 11. Other KMP disclosures Other than as disclosed in this Remuneration Report, no member of the Group’s key management personnel (or their respective close family members or an entity over which they have control or significant influence) has entered into any transaction with the Group or a subsidiary during the reporting period, other than transactions that occur within a normal employee, customer or supplier relationship, on arms-length terms and that are trivial or domestic in nature. There are no loans to key management personnel. This is the end of the Remuneration Report. Baby Bunting Annual Report 2024 57 Financial report for the 52 weeks ended 30 June 2024 Contents 59 Consolidated Statement of Profit or Loss and Other Comprehensive Income 61 Consolidated Statement of Financial Position 62 Consolidated Statement of Changes in Equity 63 Consolidated Statement of Cash Flows 64 Notes to the Consolidated Financial Statements 64 Note 1: Reporting entity 64 Note 2: Summary of material accounting policies 73 Note 3: Revenue from contracts with customers 73 Note 4: Other Income 73 Note 5: Profit for the period 74 Note 6: Income tax 75 Note 7: Trade and other receivables 75 Note 8: Inventory 75 Note 9: Other assets 76 Note 10: Plant and equipment 77 Note 11: Intangible assets and goodwill 78 Note 12: Leases 79 Note 13: Deferred tax assets 81 Note 14: Trade and other Payables 81 Note 15: Other Liabilities 81 Note 16: Loans and Borrowings 82 Note 17: Provisions 83 Note 18: Issued capital 83 Note 19: Dividends 84 Note 20: Retained earnings 84 Note 21: Segment information 86 Note 22: Reserves 88 Note 23: Related Party Transactions 89 Note 24: Commitments for expenditure 89 Note 25: Financial instruments – Fair values and risk management 94 Note 26: Notes to the statement of cash flows 95 Note 27: Parent entity disclosures 96 Note 28: Group entities 99 Note 29: Earnings per share 100 Note 30: Remuneration of auditors 100 Note 31: Events after balance sheet date 58 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the 52 weeks ended 30 June 2024 Note 2024 $’000 2023 $’000 Revenue 3 498,387 524,281 Cost of sales (314,733) (328,087) Gross profit 183,654 196,194 Other Income 4 400 – Store expenses 5 (115,076) (110,216) Marketing expenses (9,056) (8,312) Warehousing expenses 5 (11,742) (11,372) Administrative expenses 5 (33,434) (37,584) Transformation project expenses 5 (1,330) (4,745) Restructuring costs 5 (1,438) – Finance expenses 5 (9,136) (8,733) Profit before tax 2,842 15,232 Income tax expense 6 (1,146) (5,378) Profit after tax 1,696 9,854 Other comprehensive income Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations 78 (13) Net (loss)/gain on cash flow hedges 25 (129) (101) Income tax effect relating to the components of OCI 13 – (55) Net other comprehensive (loss)/gain that may be reclassified to profit or loss in subsequent periods (51) (169) Net other comprehensive (loss)/gain for the period, net of tax (51) (169) Total comprehensive income for the period, net of tax 1,645 9,685 Notes to the consolidated financial statements are included in pages 64 to 100. Baby Bunting Annual Report 2024 59 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the 52 weeks ended 30 June 2024 Note 2024 $’000 2023 $’000 Profit for the period attributable to: Equity holders of Baby Bunting Group Limited 1,696 9,854 Total comprehensive income attributable to: Equity holders of Baby Bunting Group Limited 1,645 9,685 Earnings per share From continuing operations Basic (cents per share) 29(a) 1.3 7.4 Diluted (cents per share) 29(b) 1.2 7.1 Notes to the consolidated financial statements are included in pages 64 to 100. 60 Consolidated Statement of Financial Position as at 30 June 2024 Note 30 June 2024 $’000 2 July 2023 $’000 Current Assets Cash and cash equivalents 26(b) 9,525 4,997 Trade and other receivables 7 3,968 3,451 Inventories 8 94,414 98,046 Current tax assets – 96 Other financial assets 25 – 185 Other assets 9 3,575 4,183 Total Current Assets 111,482 110,958 Non-Current Assets Plant and equipment 10 27,148 29,453 Intangibles 11 7,772 6,863 Goodwill 11 45,321 45,321 Right-of-use asset 12 131,260 143,916 Deferred tax assets 13 9,222 7,377 Total Non-Current Assets 220,723 232,930 Total Assets 332,205 343,888 Current Liabilities Trade and other payables 14 43,067 45,371 Other liabilities 15 4,659 6,156 Current tax liabilities 631 – Lease liability 12 37,139 34,057 Provisions 17 5,730 6,795 Total Current Liabilities 91,226 92,379 Non-Current Liabilities Loans and borrowings 16 22,570 11,209 Lease liability 12 115,704 130,296 Provisions 17 2,081 2,070 Total Non-Current Liabilities 140,355 143,575 Total Liabilities 231,581 235,954 Net Assets 100,624 107,934 Equity Issued capital 18 87,650 88,695 Reserves 22 16,616 15,673 (Accumulated losses)/Retained earnings 20 (3,642) 3,566 Total Equity 100,624 107,934 Notes to the consolidated financial statements are included in pages 64 to 100. Baby Bunting Annual Report 2024 61 Consolidated Statement of Changes in Equity for the 52 weeks ended 30 June 2024 Issued Capital $’000 Shares Held in Trust $’000 Share- based Payments Reserve $’000 Share- based Payment Tax Reserve $’000 Cash Flow Hedge Reserve $’000 Foreign Currency Translation Reserve $’000 Retained Earnings $’000 Total Equity $’000 Balance at 26 June 2022 87,913 – 15,782 1,287 285 24 9,430 114,721 Profit for the period – – – – – – 9,854 9,854 Other comprehensive income – – – – (156) (13) – (169) Total comprehensive income for the period – – – – (156) (13) 9,854 9,685 Issue of shares (Note 18) 782 – – – – – – 782 Dividends (Note 19) – – – – – – (15,563) (15,563) Share-based payment expense (Note 22) – – (251) – – – – (251) Tax effect of share- based payments (Note 22) – – – (1,440) – – – (1,440) Transfer to retained earnings (Note 22) – – – 155 – – (155) – Balance at 2 July 2023 88,695 – 15,531 2 129 11 3,566 107,934 Balance at 2 July 2023 88,695 – 15,531 2 129 11 3,566 107,934 Profit for the period – – – – – – 1,696 1,696 Other comprehensive income – – – – (129) (91) – (220) Total comprehensive income for the period – – – – (129) (91) 1,696 1,476 Issue of shares (Note 18) – – – – – – – – Purchase of shares in relation to equity incentive plan (Note 18) – (1,045) – – – – – (1,045) Dividends (Note 19) – – – – – – (8,904) (8,904) Share-based payment expense (Note 22) – – 1,163 – – – – 1,163 Tax effect of share- based payments (Note 22) – – – – – – – – Transfer to retained earnings (Note 22) – – – – – – – – Balance at 30 June 2024 88,695 (1,045) 16,694 2 – (80) (3,642) 100,624 Notes to the consolidated financial statements are included in pages 64 to 100. 62 Consolidated Statement of Cash Flows for the 52 weeks ended 30 June 2024 Note 2024 $’000 2023 $’000 Cash flows from operating activities Receipts from customers 547,692 577,248 Payments to suppliers and employees (496,271) (520,666) Income tax paid (2,226) (4,668) Finance costs paid (9,136) (8,910) Net cash from operating activities 26(a) 40,059 43,004 Cash flows from investing activities Payments for plant and equipment 10 (5,686) (5,755) Payments for intangibles 11 (2,918) (3,039) Net cash used in investing activities (8,604) (8,794) Cash flows from financing activities Dividends paid 19 (8,904) (15,563) Net borrowings/(repayments) 11,207 (1,738) Payments of principal portion of lease liability (28,184) (24,151) Purchase of shares in relation to equity incentive plan (1,045) – Net cash used in financing activities (26,926) (41,452) Net increase/(decrease) in cash and cash equivalents 4,529 (7,242) Net foreign exchange difference (1) 1 Cash and cash equivalents at beginning of the period 4,997 12,238 Cash and cash equivalents at end of the period 26(b) 9,525 4,997 Notes to the consolidated financial statements are included in pages 64 to 100. Baby Bunting Annual Report 2024 63 Notes to the Consolidated Financial Statements for the 52 weeks ended 30 June 2024 Note 1: Reporting entity Baby Bunting Group Limited (the Company) is a company domiciled in Australia. The address of the Company’s registered office and its principal place of business is 153 National Drive, Dandenong South, Victoria 3175, Australia. The consolidated financial statements of the Company as at and for the period ended 30 June 2024 comprise the Company and its subsidiaries (together referred to as the “consolidated entity”). The consolidated entity is primarily involved in the retailing of baby merchandise. The Company was admitted to the official list of the Australian Securities Exchange (ASX) on 14 October 2015 under the ASX code ‘BBN’. The Company has adopted a 52 week retail calendar for financial reporting purposes which ended 30 June 2024. The prior period was a 53 week retail calendar ended on 2 July 2023. Note 2: Summary of material accounting policies The following material accounting policies have been adopted in the preparation and presentation of the financial report. a. Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. The financial statements comprise the consolidated financial statements of the consolidated entity. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the consolidated entity comply with International Financial Reporting Standards (IFRS). For the purposes of preparing the Consolidated Financial Statements, the Company is a for-profit entity. The financial statements were authorised for issue by the directors on 20 August 2024. b. Basis of Preparation The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial assets and financial liabilities measured at fair value, as explained in the accounting policies below. All amounts are presented in Australian dollars, unless otherwise noted. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the consolidated entity takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, and in accordance with that instrument amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. c. Critical accounting judgements and key sources of estimation uncertainty In the application of the consolidated entity’s accounting policies, the Company is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period. 64 Determination of inventory provision for shrinkage, obsolescence and mark-down The Company’s judgement is applied in determining the inventory provision for shrinkage, obsolescence and mark- down. Estimates of shrinkage trends based on historical observations have been applied against inventory held at period end and where the estimated selling price of inventory including the costs necessary to sell is lower than the cost to sell, the difference is recognised in the provision for obsolescence. Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units (CGUs) to which goodwill has been allocated. The value in use calculation estimates the future cash flows expected to arise from the cash generating unit and a pre-tax discount rate in order to calculate present value. The key assumptions used in the value in use calculations are as follows: Forecasted sales growth of existing stores 2% for comparable store growth over a 5 year period (2023: 3.0%) Terminal sales growth rate 3.0% (2023: 3.0%) Forecasted gross margin Average gross margin achieved in the period immediately before the forecast period Forecasted retail store expenses Forecast increases correlate to the consumer price index. The values assigned to the key assumption are consistent with external sources of information Pre-tax weighted average cost of capital 13.84% (2023: 14.07%) The pre-tax weighted average cost of capital (WACC) calculated for the current period includes consideration of lease liabilities as part of the capital structure when determining debt/equity assumptions in the WACC. Goodwill is allocated to the Australian operating segment, as a group of cash generating units (CGUs) for the purpose of impairment testing. The recoverable amount of the consolidated entity’s CGU to which goodwill is allocated currently exceeds its carrying value. Reasonably possible changes that may occur to the assumptions used would not result in impairment. Lease term of contracts with renewal options and incremental borrowing rate for leases Refer to Note 2(t) for significant judgements required for lease term of contracts with renewal options and determining the incremental borrowing rate for leases. Revenue recognition – loyalty programme Refer to Note 2(l) for significant judgements required for assessment of breakage. d. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company: • has power over the investee; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the consolidated entity’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the consolidated entity are eliminated in full on consolidation. Baby Bunting Annual Report 2024 65 e. Fair value measurement The Company measures financial instruments such as derivatives at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • in the principal market for the asset or liability; or • in the absence of a principal market, in the most advantageous market for the asset or liability. f. Income tax The Company and its wholly-owned Australian controlled entities are part of a tax consolidated group under Australian taxation law, of which the Company is the head entity. As a result, the Company is subject to income tax through its membership of the tax consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group (if any) are recognised by the Company (as head entity in the tax-consolidated group). Nature of tax funding arrangements and tax sharing agreements Entities within the Australian tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with the head entity. Under the terms of the tax funding arrangement, the Company and the other entities in the tax-consolidated group have agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that each member’s liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under the tax funding arrangement. Current tax The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The consolidated entity’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 66 Financial report for the 52 weeks ended 30 June 2024 Continued Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the consolidated entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the consolidated entity intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the year Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. Deferred tax is recognised on share-based payments for the tax deduction that will be available to the Company on vesting of the LTI share-based payments. The deferred tax measurement is based on the share price at reporting date. The income tax benefit is recognised through income tax expense up to the amount relating to the cumulative share-based payment expense. Any tax benefit in excess of the amount relating to the cumulative share-based payment expense is recognised in the share-based payment tax reserve within equity. Refer to Note 22. g. Inventories Inventories are stated at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method most appropriate to each particular class of inventory being valued on a weighted average cost formula basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale. Volume rebates are recognised as a reduction in the cost of inventory and are recorded as a reduction in the cost of goods sold when the inventory is sold. Supplier promotional and marketing rebates that arise upon sale of inventory have been brought to account as a direct deduction in costs of goods sold. h. Plant and Equipment Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation. The depreciable amount of all fixed assets are depreciated over their estimated useful lives. The estimated useful lives and depreciation methods are reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis. The useful life for each class of asset is: Class of fixed asset Useful Life Plant & equipment 3 – 10 years Leasehold improvements 5 – 10 years i. Intangibles – computer software Intangible assets with finite lives that are acquired separately or internally generated are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. Class of intangible asset Useful Life Computer software 5 years Baby Bunting Annual Report 2024 67 j. Employee benefits Short-term employee benefits liabilities recognised for salaries and wages, annual leave and any other short term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured at the amounts expected to be paid when the liabilities are settled in respect of services provided by employees up to the reporting date. Long-term employee benefits liabilities recognised in respect of long service leave and any other long term employee benefits that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured at the present value of the estimated future cash outflows to be made by the Company in respect of services provided by employees up to the reporting date. Consideration is given to expected future salary levels, historical employee turnover rates and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. k. Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. All receivables from EFT, credit card and debit card point of sale transactions during the period are classified as cash and cash equivalents. l. Revenue from contracts with customers Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. This is generally in store when the customer purchases the goods or services, on delivery to the customer for online sales and on customer pickup for click and collect. For layby, revenue is recognised when customers make the final payment and goods have been collected. The initial layby deposit paid and subsequent instalment payments are recorded as unearned income in the balance sheet and included in sundry payables. A contractual liability is recognised of $4.308 million (2023: $4.899 million), of which 80% is refundable when the customer cancels the layby. Rights of return Certain contracts provide a customer with a right to return the goods within a specified period. The Company uses the expected value method (historical return rates provide a basis for the expected value) to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which the Company will be entitled. The requirements in AASB 15 Revenue from Contracts with Customers on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For goods that are expected to be returned, instead of revenue, the Company recognises a refund liability. A right of return asset (and corresponding adjustment to cost of sales) is also recognised for the right to recover products from a customer and recorded at cost value. The Company’s change of mind policy is 30 days or 60 days for members of the Company’s loyalty program. Contract liabilities A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract. The Company operates a loyalty program. Customers receive a loyalty voucher upon joining the Company’s loyalty program. In addition, under the loyalty program, the Company offered loyalty vouchers when a customer’s cumulative spend reached a specified threshold. On 12 March 2024, the reward element was retired. This resulted in a decrease in the unredeemed vouchers liability. The continuing loyalty program consists of one-off vouchers provided as a Welcome reward and upon the participant’s birthday. 68 Financial report for the 52 weeks ended 30 June 2024 Continued The Company estimates the fair value of the un-issued loyalty vouchers based on the cumulative spend balance relative to the specified amount. The Company estimates the “breakage” rate based on redemption history of expired loyalty vouchers. The Company records the contract liability based on the breakage rate for unspent and unexpired vouchers and un-issued vouchers. Refer to Note 15. m. Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: • where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or • for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. n. Goodwill Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over the consolidated entity’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date of the acquisition. Goodwill is subsequently measured at its cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the consolidated entity’s cash-generating units, or groups of cash-generating units, expected to benefit from the synergies of the business combination. Cash-generating units or groups of cash- generating units to which goodwill has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. If the recoverable amount of the cash-generating unit (or groups of cash-generating units) is less than the carrying amount of the cash-generating unit (or groups of cash-generating units), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or groups of cash-generating units) and then to the other assets of the cash generating units pro-rata on the basis of the carrying amount of each asset in the cash-generating unit (or groups of cash-generating units). An impairment loss recognised for goodwill is recognised immediately in the statement of profit or loss and other comprehensive income and is not reversed in a subsequent period. o. Trade payables Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. p. Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Baby Bunting Annual Report 2024 69 Warranties Provisions for the expected cost of warranty obligations under applicable consumer law are recognised at the date of sale of the relevant products, at the best estimate of the expenditure required to settle the Company’s obligation. q. Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. r. Share-based payment arrangements Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity settled transactions). Equity-settled transactions The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in Note 22. The cost is recognised as employee benefit expense, together with a corresponding increase in equity (share-based payment reserve), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 22(b). 70 Financial report for the 52 weeks ended 30 June 2024 Continued No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market condition, the transactions are treated as vested irrespective of whether the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 29). s. Comparative amounts The comparative figures are for the period 27 June 2022 to 2 July 2023. Where appropriate, comparative information has been reformatted to allow comparison with current year information. t. Leases The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract coveys the right to control the use of an identified asset for a period of time in exchange for consideration. Company as a lessee The Company applies a single recognition and measurement approach for all leases, except for short-term leases and lease of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right-of-use of the underlying assets. Right-of-use assets The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: • Property 5 to 12 years • Motor vehicles and material handling equipment 1 to 6 years The right-of-use assets are also subject to impairment. Lease liabilities At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. Short-term leases and leases of low-value assets The Company applies the short-term lease recognition exemption to its short-term leases of material handling equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as an expense on a straight-line basis over the lease term. Baby Bunting Annual Report 2024 71 Significant judgement is required in determining the lease term of contracts with renewal options The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised. The Company has the option, under some of its leases, to lease the assets for additional terms of mostly five year options. The Company applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (i.e. a change in business strategy). Significant judgement in determining the incremental borrowing rate for each lease The Company calculates the incremental borrowing rate for each lease determined using inputs including the Company’s three-year multi option facility lending margin (adjusted for tenure) and the government bond rate applicable at the time of entering into the lease if the interest rate implicit in the lease is not readily determinable. u. Capital management For the purpose of the Company’s capital management, capital includes issued capital, borrowings and all other equity reserve attributable to the equity holder of the parent. The primary objective of the Company’s capital management is to maximise the shareholder value. The Company manages its capital structure and make adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company has a dividend payout ratio policy to pay out approximately 70% of full year pro forma NPAT, subject to an assessment of anticipated current or future capital needs. v. Changes in accounting policies and disclosures The following new and amended Australian Accounting Standards and AASB interpretations apply for the first time during the period ended 30 June 2024. The impact of these new standards and amendments were not material to the consolidated financial statements of the Company. Reference Title Application AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates 1 January 2023 AASB 2021-5 Amendments to AASs – Deferred Tax related to Assets and Liabilities arising from a Single Transaction 1 January 2023 Other Australian accounting standards and interpretations that have recently been issued or amended but are not yet effective have not been adopted by the consolidated entity for the reporting period ended 30 June 2024. Reference Title Application AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non-current 1 January 2024 AASB 2022-6 Amendments to AASs – Non-current Liabilities with Covenants 1 January 2024 AASB 18 Presentation and Disclosure of Financial Statements 1 January 2027 72 Financial report for the 52 weeks ended 30 June 2024 Continued Note 3: Revenue from contracts with customers 2024 $’000 2023 $’000 An analysis of the consolidated entity’s revenue for the period, is as follows: Total revenue from contracts with customers1 498,387 524,281 1. Revenue from contracts with customers includes online revenue (including click & collect) $105.776 million (2023: $102.471 million) and from New Zealand store operations $7.238 million (2023: $2.920 million). Note 4: Other Income 2024 $’000 2023 $’000 Other Income1 400 – 1. The Company received a cash settlement payment ($0.400 million) from the vendor of order management software following a dispute in relation to that software and its implementation. Note 5: Profit for the period 2024 $’000 2023 $’000 Profit before income tax expense includes the following expenses: Interest and finance charges paid/payable Interest on lease liabilities 7,205 7,023 Interest on borrowings 1,931 1,710 Depreciation and amortisation 8,680 7,910 Depreciation on right-of-use assets 29,830 28,559 Employee benefits expense 90,239 94,683 Depreciation and amortisation Depreciation and amortisation is disclosed in the Consolidated Statement of Profit or Loss and Other Comprehensive Income under “Store expenses”, “Warehousing expenses”, “Administrative expenses” and “Transformation project expenses” as detailed below: For the period ended 30 June 2024 As reported $’000 Depreciation and amortisation on PPE and Intangibles $’000 Depreciation on Right-of-use Asset $’000 Excluding Depreciation and Amortisation $’000 Store expenses (115,076) 6,923 26,540 (81,613) Warehousing expenses (11,742) 216 3,135 (8,391) Administrative expenses (33,434) 1,538 155 (31,741) Transformation project expenses (1,330) 3 – (1,327) Total (161,582) 8,680 29,830 (123,072) Baby Bunting Annual Report 2024 73 For the period ended 2 July 2023 As reported $’000 Depreciation and amortisation on PPE and Intangibles $’000 Depreciation on Right-of-use Asset $’000 Excluding Depreciation and Amortisation $’000 Store expenses (110,216) 6,184 25,296 (78,736) Warehousing expenses (11,372) 214 3,079 (8,079) Administrative expenses (37,584) 1,512 184 (35,888) Transformation project expenses (4,745) – – (4,745) Total (163,917) 7,910 28,559 (127,448) 2024 $’000 2023 $’000 Transformation project expenses include the following: Transformation project expenses1 1,330 4,745 Restructuring costs2 1,438 – 1. The Company incurred $1.330 million non-capital costs (2023: $4,745 million) associated with the implementation of a time and attendance system and the initial planning phase of a replacement of its enterprise resource planning (ERP) and point-of-sale systems. 2. The Company incurred restructuring costs of $1.438 million which included make good costs relating to the Camperdown store closure ($0.186 million) and payments associated with organisational restructure including the disestablishment of a number of head office roles. Note 6: Income tax 2024 $’000 2023 $’000 Current tax in respect of the current period 2,936 6,593 Current tax in respect of the prior period – 251 Deferred tax (1,790) (1,466) Total tax expense 1,146 5,378 The income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: 2024 $’000 2023 $’000 Profit before tax from continuing operations 2,842 15,232 Income tax expense calculated at 30% (2023: 30%) (853) (4,570) Non-deductible expenditure (30) (55) Over/under from prior year – 251 Share-based payments (344) (1,077) Effect of lower tax rates in New Zealand 81 73 Income tax expense recognised in profit or loss (1,146) (5,378) 74 Financial report for the 52 weeks ended 30 June 2024 Continued The tax rate used for financial year 2024 and 2023 in the above reconciliation is the corporate tax rate of 30% payable by large Australian corporate entities on taxable profits under Australian tax law. The tax rate used for financial year 2024 for New Zealand is the corporate tax rate of 28% payable by New Zealand corporate entities on taxable profits under New Zealand tax law. Note 7: Trade and other receivables 2024 $’000 2023 $’000 Current Trade receivables 133 229 Other receivables 3,835 3,222 3,968 3,451 There are no material receivables past due date. The receivables are expected to be settled within 30-90 days, subject to the terms of the relevant agreement. Note 8: Inventories 2024 $’000 2023 $’000 Finished goods 96,196 98,792 Less: Provision for shrinkage, obsolescence and mark-down (1,782) (746) 94,414 98,046 The cost of inventories recognised as an expense during the current reporting period in respect of continuing operations was $314.733 million (2023: $328.087 million). During the financial year, there was an increase in the provision for shrinkage, obsolescence and mark-down of $1.036 million (2023: a decrease of $0.048 million in provision). Note 9: Other assets 2024 $’000 2023 $’000 Prepayments 2,424 3,011 Right of return 1,151 1,172 3,575 4,183 Baby Bunting Annual Report 2024 75 Note 10: Plant and equipment Cost Leasehold improvements $’000 Plant and equipment $’000 Total $’000 Balance at 2 July 2023 12,031 57,686 69,717 Additions 3,526 2,160 5,686 Disposals (876) (702) (1,578) Balance at 30 June 2024 14,681 59,144 73,825 Accumulated depreciation Balance at 2 July 2023 (5,524) (34,740) (40,264) Depreciation (1,618) (5,047) (6,665) Disposals 213 39 252 Balance at 30 June 2024 (6,929) (39,748) (46,677) Carrying amount as at 30 June 2024 7,752 19,396 27,148 Cost Leasehold improvements $’000 Plant and equipment $’000 Total $’000 Balance at 26 June 2022 9,494 56,289 65,783 Additions 3,695 2,060 5,755 Disposals (1,158) (663) (1,821) Balance at 2 July 2023 12,031 57,686 69,717 Accumulated depreciation Balance at 26 June 2022 (4,849) (30,618) (35,467) Depreciation (1,808) (4,622) (6,430) Disposals 1,133 500 1,633 Balance at 2 July 2023 (5,524) (34,740) (40,264) Carrying amount as at 2 July 2023 6,507 22,946 29,453 76 Financial report for the 52 weeks ended 30 June 2024 Continued Note 11: Intangible assets and goodwill Cost Goodwill $’000 Intangibles $’000 Balance at 2 July 2023 45,321 10,717 Additions – 2,918 Disposals – – Balance at 30 June 2024 45,321 13,635 Amortisation and impairment losses Balance at 2 July 2023 – (3,854) Amortisation – (2,009) Disposals – – Balance at 30 June 2024 – (5,863) Carrying amount as at 30 June 2024 45,321 7,772 Cost Goodwill $’000 Intangibles $’000 Balance at 26 June 2022 45,321 7,678 Additions – 3,039 Disposals – – Balance at 2 July 2023 45,321 10,717 Amortisation and impairment losses Balance at 26 June 2022 – (2,374) Amortisation – (1,480) Disposals – – Balance at 2 July 2023 – (3,854) Carrying amount as at 2 July 2023 45,321 6,863 Refer to Note 2(c) for detail on the inputs used in the impairment calculation of goodwill. Baby Bunting Annual Report 2024 77 Note 12: Leases The Company has lease contracts for various items of property, motor vehicles and material handling equipment used in its operations. Leases of buildings generally have lease terms between 5 and 12 years, while motor vehicles and material handling equipment generally have lease terms between 1 and 6 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension options and variable lease payments. Relevant factors the Company considers in determining the likelihood to exercise a lease renewal, to the point of reasonable certainty, include the Company’s overall property strategy, the importance of the leased asset to the Company, the existence of renewal options and their pricing, whether the market is a new market or an existing market, the costs of returning the leased asset in a contractually specified condition, the existence of alternate sites within the relevant catchment and the associated costs of a relocation, and any broader trends generally shaping the retail industry. The Company’s lease portfolio contains option periods averaging around 5 years that are not considered reasonably certain options to be exercised. However, these options provide the Company flexibility in managing the leased asset portfolio. The present value of the lease payments to be made under options considered reasonably certain to be exercised has been included in the lease liability balance as at 30 June 2024. The Company has several lease contracts that include extension options. These options are negotiated to provide flexibility in managing the leased-asset portfolio and align with the Company’s business needs. The undiscounted potential future payments at current rental rates under options that are not considered reasonably certain to be exercised is $295.414 million (2023: $279.050 million), which includes potential lease payments within the next five years of $32.395 million (2023: $22.334 million) should those options be exercised. The Company has several lease commitments entered into but not yet commenced and recognised as a right-of-use asset and lease liability. The undiscounted future payments at current rental rates is $37.067 million (2023: $31.963 million). The Company also has certain leases of material handling equipment with lease terms of 12 months or less and leases of office equipment that are low in value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. Set out below, are the carrying amounts of the Company’s right-of-use assets and lease liabilities and the movements during the period: Right-of-use asset Property $’000 Motor Vehicles $’000 Material Handling equipment $’000 Total $’000 As at 26 June 2022 136,569 337 2,932 139,838 Additions 17,850 134 493 18,477 Remeasurements1 13,926 – 234 14,160 Depreciation expense (27,357) (190) (886) (28,433) Impairment (126) – – (126) As at 2 July 2023 140,862 281 2,773 143,916 Additions 12,789 30 1,488 14,307 Remeasurements1 3,164 – – 3,164 Depreciation expense (28,965) (192) (970) (30,127) As at 30 June 2024 127,850 119 3,291 131,260 1. Remeasurements of right-of-use asset primarily represents lease extensions of stores. 78 Financial report for the 52 weeks ended 30 June 2024 Continued Lease Liabilities 2024 $’000 2023 $’000 Opening balance 164,353 156,232 Additions 14,307 18,477 Accretion of interest 7,205 7,023 Remeasurements1 2,783 13,795 Payments (35,805) (31,174) Closing balance 152,843 164,353 Current 37,139 34,057 Non-current 115,704 130,296 Total lease liabilities 152,843 164,353 1. Remeasurements of lease liabilities primarily represents lease extensions of stores. The maturity analysis of lease liabilities is disclosed in Note 25 Financial Instruments. The following are the amounts recognised in profit and loss: 2024 $’000 2023 $’000 Depreciation expense of right-of-use asset 29,830 28,559 Interest expense on lease liabilities 7,205 7,023 Rent expenses – short-term leases (included in stores, administration and warehouse) 76 96 Rent expenses – leases of low-value assets (included in stores, administration and warehouse) 780 596 Rent expenses – variable lease payments (included in store, administration and warehouse) 4,340 3,553 Total 42,231 39,827 The Company had total cash outflows for leases of $41.000 million in 2024 ($35.419 million in 2023). The Company also had additions to right-of-use assets and lease liabilities of $14.307 million in 2024 ($18.477 million in 2023). Note 13: Deferred tax assets Deferred tax balances are presented in the consolidated statement of financial position as follows: 2024 $’000 2023 $’000 Deferred tax assets Australia 7,215 6,354 New Zealand 2,007 1,023 Total 9,222 7,377 Baby Bunting Annual Report 2024 79 2024 – Consolidated $’000 Opening balance Recognised in profit or loss Recognised in other comprehen- sive income Recognised in equity Closing balance Employee benefits 2,323 (228) – – 2,095 Non-deductible accruals 380 (61) – – 319 Non-refundable layby income 877 (130) – – 747 Inventories 374 368 – – 742 Gift vouchers 1,275 (439) – – 836 Right of return 179 24 – – 203 Right-of-use asset (43,085) 3,946 – – (39,139) Lease liability 49,207 (3,611) – – 45,596 Property, plant and equipment (4,985) 1,079 – – (3,906) Cash flow hedge reserve (55) – 55 – – Tax losses carried forward (NZ) 887 842 – – 1,729 Total 7,377 1,790 55 – 9,222 2023 – Consolidated $’000 Opening balance Recognised in profit or loss Recognised in other comprehen- sive income Recognised in equity Closing balance Employee benefits 2,182 141 – – 2,323 Non-deductible accruals 188 192 – – 380 Non-refundable layby income 995 (118) – – 877 Inventories 423 (49) – – 374 Gift vouchers 1,041 234 – – 1,275 Right of return 240 (61) – – 179 Right-of-use asset (40,257) (2,828) – – (43,085) Lease liability 45,170 4,037 – – 49,207 Property, plant and equipment (4,066) (919) – – (4,985) Share-based payments 4,293 (3,007) – (1,286) – Cash flow hedge reserve (122) – 67 – (55) Unrealised FX gain/(loss) 50 (50) – – – Tax losses carried forward (NZ) – 887 – – 887 Total 10,137 (1,541) 67 (1,286) 7,377 80 Financial report for the 52 weeks ended 30 June 2024 Continued Of the total net deferred tax assets of $9.222 million as at 30 June 2024 (2023: $7.377 million), $1.729 million (2023: $0.887 million) is recognized in respect of subsidiary Baby Bunting NZ Limited where there have been losses in the current and preceding period. Management’s projections support the assumption that it is probable that the results of future operations will generate sufficient taxable income to utilize these deferred tax assets. This judgement is performed annually and based on budgets and business plans for the coming years, including planned commercial initiatives. No deferred tax liability has been recognized in respect of undistributed earnings of Baby Bunting NZ Limited, with an impact of $0.205 million (2023: nil). This is because it is probable that such differences may not reverse in the foreseeable future. Note 14: Trade and other Payables 2024 $’000 2023 $’000 Current Trade payables 28,131 29,713 Sundry payables 14,936 15,658 Total 43,067 45,371 Terms and conditions of the above financial liabilities: • Trade payables are non-interest bearing and are normally settled on 30-day terms. • Sundry payable includes $4.308 million (2023: $4.899 million) of deposit and instalment payments received by the Company in relation to layby sales taken out by customers. • Sundry payables (other than layby sales) are non-interest bearing and have an average term of three months. • For explanations on the Company’s liquidity risk management processes, refer to Note 25(b). Note 15: Other Liabilities 2024 $’000 2023 $’000 Unredeemed gift cards and vouchers1 2,791 4,255 Refund liability 1,828 1,782 Security deposits – car seat hire 40 119 Total 4,659 6,156 1. The unredeemed gift cards are expected to be redeemed within three years. Loyalty vouchers have a redemption period of 60 days. Note 16: Loans and Borrowings 2024 $’000 2023 $’000 Non-current – Secured Bank loan 22,570 11,209 Baby Bunting Annual Report 2024 81 The ongoing funding requirements of the consolidated entity are provided by the National Australia Bank (“NAB”). On 26 June 2024, the Company entered into an amendment deed with NAB with the effect that the capital market loan facility now matures on 30 September 2027. Security consists of a Deed of Charge over the assets of Baby Bunting Pty Ltd. The Company and Baby Bunting NZ Limited are guarantors to the facility. The total facility limit at balance date was $78,000,000, consisting of $70,000,000 Corporate Market Loan (“CML”) facility and $8,000,000 bank guarantee facility. The CML facility can be drawn to the lesser of $70,000,000 or 2.5 times the last 12 months historical rolling EBITDA. Interest on the facility is charged at a variable rate. The consolidated entity was in compliance with the facility agreement at 30 June 2024. The current facility does not require the consolidated entity to amortise borrowings. Note 17: Provisions 2024 $’000 2023 $’000 Current Employee benefits 5,730 6,495 Make-good provision1 – 300 Total current 5,730 6,795 Non-current Employee benefits 1,262 1,251 Make-good provision1 819 819 Total non-current 2,081 2,070 Make-good provision 2024 $’000 2023 $’000 Opening balance 1,119 563 (Utilised)/arising during the period1 (300) 556 Closing balance 819 1,119 1. Provision for make-good costs relate to costs that arise in the event we were to vacate the premise at the end of the lease. 82 Financial report for the 52 weeks ended 30 June 2024 Continued Note 18: Issued capital 30 June 2024 2 July 2023 No. of shares $’000 No. of shares $’000 Fully paid ordinary shares Balance at beginning of the period 134,906,489 88,695 132,458,126 87,913 Issue of shares: – Employee Gift Offer – – 277,182 782 – LTI vesting – – 2,171,181 – Balance at end of the period 134,906,489 88,695 134,906,489 88,695 Shares held in trust Balance at beginning of the period – – – – Purchase of shares in relation to equity incentive plan (467,289) (1,045) – – Balance at end of the period 134,439,200 87,650 134,906,489 88,695 Fully paid ordinary shares carry one vote per share and carry the right to dividends. Note 19: Dividends 2024 2023 $ per ordinary share $’000 $ per ordinary share $’000 Recognised amounts Final 2023 dividend 0.048 6,476 0.090 11,921 Interim 2024 dividend 0.018 2,428 0.027 3,642 On 11 August 2023, the Directors determined to pay a fully franked final dividend of 4.8 cents per share to the holders of fully paid ordinary shares in respect of the financial period ended 2 July 2023. The dividend was subsequently paid to shareholders on 8 September 2023 totalling $6.476 million. On 20 February 2024, the Directors determined to pay an interim fully franked dividend of 1.8 cents per share to the holders of fully paid ordinary shares in respect of the half-year ended 31 December 2023. The dividend was subsequently paid to shareholders on 19 March 2024 totalling $2.428 million. No final dividend will be paid in respect of the financial period ended 30 June 2024. Baby Bunting Annual Report 2024 83 Company 2024 $’000 2023 $’000 Adjusted franking account balance 303 1,897 Franking credits that will arise from the payment of income tax payable as at the end of the financial period 762 – Franking debits that will arise from the payment of final dividend in respect of the financial period1 – (2,790) There are no income tax consequences attached to the payment of dividends in either 2024 or 2023 by the Company to its shareholders. Note 20: Retained earnings 2024 $’000 2023 $’000 Retained earnings Balance at beginning of period 3,566 9,430 Profit attributable to owners of the Company 1,696 9,854 Payment of dividends (8,904) (15,563) Share-based payments1 – (155) Balance at end of period (3,642) 3,566 1. In the reporting period, no performance rights vested under the Company’s Long Term Incentive Plan. In the prior period, performance rights vested (2,171,181 performance rights) with a market value of market value of $5.798 million. This vesting resulted in an income tax benefit of $1.892 million. The vested portion of $0.155 million was a reduction to retained earnings. Note 21: Segment information Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer (the chief operating decision maker as defined under AASB 8) that are used to make strategic and operating decisions. The Chief Executive Officer considers the business primarily from a geographic perspective. Operations in New Zealand have been conducted by Baby Bunting NZ Limited, a wholly-owned subsidiary of the Company. All transactions were in New Zealand dollars. On this basis management has identified two reportable segment, Australia and New Zealand. 84 Financial report for the 52 weeks ended 30 June 2024 Continued The following is an analysis of the consolidated entity’s revenue and results from continuing operations by reportable segment: Australia New Zealand Total 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 Revenue 487,366 518,727 11,021 5,554 498,387 524,281 Operating EBIT 15,760 28,287 (3,721) (3,357) 12,039 24,930 Total segment assets 306,529 332,256 25,676 11,632 332,205 343,888 Additions to plant and equipment and intangibles 4,632 7,621 3,972 1,173 8,604 8,794 Depreciation and amortisation 35,998 35,117 2,512 1,352 38,510 36,469 Total non-current assets1 193,838 218,391 17,663 7,162 211,501 225,553 Total segment liabilities 208,557 226,590 23,024 9,364 231,581 235,954 1. Non-current assets exclude deferred tax assets. Revenue reported above represents revenue generated from external customers. Inter-segment sales are eliminated on consolidation in the current reporting period of $3.624 million (2023: $2.285 million). The accounting policies of the reportable segment are the same as the consolidated entity’s accounting policies described in Note 2. The Chief Executive Officer assesses the performance of the operating segment based on a measure of Operating EBIT. This measurement basis excludes the effects of interest revenue, other operating income, finance costs, income tax and employee equity expenses. Operating EBIT A reconciliation of operating EBIT to profit before tax is provided as follows: Australia New Zealand Total 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 Operating EBIT 15,760 28,287 (3,721) (3,357) 12,039 24,930 Other Income 400 – – – 400 – Finance costs (8,557) (8,485) (579) (248) (9,136) (8,733) Employee share-based payments (inclusive of tax) (461) (965) – – (461) (965) Profit before tax 7,142 18,837 (4,300) (3,605) 2,842 15,232 Baby Bunting Annual Report 2024 85 Segment assets and liabilities The amounts provided to the Chief Executive Officer with respect to total assets and liabilities are measured in a manner consistent with that of the financial statements. Reportable segments’ assets and liabilities are reconciled to total assets as follows: Australia New Zealand Total 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 Total segment assets 306,529 332,256 25,676 11,632 332,205 343,888 Total segment liabilities 208,557 226,590 23,024 9,364 231,581 235,954 Note 22: Reserves a. Share-based payments 2024 $’000 2023 $’000 Share-based payments reserve Balance at beginning of period 15,531 15,782 Performance rights – expense (Note 22(b)) 1,163 1,698 Performance rights – reversal (Note 22(b)) – (1,949) Balance at end of period 16,694 15,531 b. Performance rights The consolidated entity has previously established a Long Term Incentive Plan (LTI Plan) involving the grant of performance rights. Upon vesting, each right entitles the participant to one fully paid ordinary share in the Company. No dividends or voting rights are attached to performance rights prior to vesting. The number of rights that vest, across various grants, will be determined by reference to certain performance conditions that include some or all of the following: • Earnings per share (EPS) growth; • Total shareholder return (TSR) growth; and • Service condition (Service rights, EPS, TSR). 86 Financial report for the 52 weeks ended 30 June 2024 Continued Fair value of performance rights granted The weighted average fair value of the performance rights TSR component granted during the reporting period under the LTI Plan is $0.83 (2023: $0.45). The fair value of the TSR component of performance rights is determined at grant date using a Monte-Carlo simulation. For the non-market component (EPS CAGR), the fair value is determined with reference to the share price of ordinary shares at grant date. Performance rights series Grant date Number of rights Grant date fair value Exercise price Expiry date 2022 (TSR CAGR) 23 November 2021 655,315 $1.89 nil (1) 2022 (EPS CAGR) 23 November 2021 436,877 $5.81 nil (1) 2023 (TSR CAGR) 21 November 2022 610,685 $0.45 nil (1) 2023 (EPS CAGR) 21 November 2022 407,123 $2.56 nil (1) 2024 (TSR CAGR) 15 December 2023 1,106,842 $0.83 nil (1) 2024 (EPS CAGR) 15 December 2023 737,894 $1.83 nil (1) 2024 (Service rights) 15 December 2023 1,117,289 $1.83 nil (1) (1). These performance rights vest and can be exercised at the end of the relevant service and performance period, subject to meeting the relevant performance condition. The Board determines whether vesting occurs or not. Any performance rights that have not vested following the final applicable performance period lapse. 2024 (TSR CAGR) 2023 (TSR CAGR) Share Price $1.83 $2.60 Exercise price Nil Nil Expected volatility 45% 40% Expected life (years) 2.70 2.90 Expected dividend yield 4.00% 3.00% Risk-free interest rate 3.79% 3.20% Movements in performance rights during the period The consolidated entity recorded a share-based payments expense for performance rights of $1.163 million (2023: $0.251 million write-back) disclosed in the Consolidated Statement of Profit or Loss and Other Comprehensive Income under “Administrative expenses”. The following reconciles the performance rights outstanding at the beginning and end of the period: 52 weeks ended 30 June 2024 53 weeks ended 2 July 2023 TSR Number of rights EPS Number of rights Service Number of rights TSR Number of rights EPS Number of rights Service Number of rights Balance at beginning of the period 2,611,000 2,134,000 – 3,310,500 3,035,500 – Granted during the period 1,106,842 737,894 1,117,289 822,000 548,000 – Forfeited during the period (165,000) (110,000) – (366,000) (294,000) – Exercised during the period – – – (1,015,681) (1,155,500) – Lapsed during the period (1,180,000) (1,180,000) – (139,819) – – Balance at end of period 2,372,842 1,581,894 1,117,289 2,611,000 2,134,000 – Exercisable at end of period – – – – – – Baby Bunting Annual Report 2024 87 c. General Employee Share Plan (“GESP”) The consolidated entity has previously established the GESP which is intended to be part of the consolidated entity’s overall remuneration policy to reward Baby Bunting employees, from time to time. The GESP provides for grants of Shares to eligible employees of the consolidated entity up to a value determined by the Board. During the reporting period, no offers of shares (2023: 277,182 shares) were made under the GESP. In the prior reporting period, the fair value $0.782 million was fully expensed at the time of granting, as there are no performance or service conditions. d. Share-based payment tax reserve 30 Jun 2024 $’000 2 Jul 2023 $’000 Share-based payment tax reserve Balance at beginning of period 2 1,287 Tax effect of share-based payments1 – (1,440) Transfer to retained earnings2 – 155 Balance at end of period 2 2 1. In 2023, $1.440 million represents a decrease in future income tax benefits recognised in share-based payment tax reserve that is in excess of any future benefits relating to the cumulative share-based payment expense recognised in profit or loss. This decrease in the reserve reflects the unlikelihood of performance rights vesting, relative to what was estimated as at the last reporting date, plus the addition of the 2023 performance rights granted to executives in December 2022 under the Company’s Long Term Incentive Plan. 2. In 2023, performance rights of 2,171,181 vested under the Company’s Long Term Incentive Plan with a market value of $5.798 million. The balance transferred to retained earnings represented the income tax payable recorded in the reserves associated with share-based payments that vested in the current period. Note 23: Related Party Transactions The immediate parent and ultimate controlling party of the consolidated entity is Baby Bunting Group Limited (incorporated in Australia). Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the consolidated entity and other related parties are disclosed below. a. Loans to and from key management personnel and directors As at the end of the current reporting period, no loans were outstanding to or from key management personnel or directors of the consolidated entity (2023: nil). b. Key management personnel compensation The aggregate compensation made to directors and KMP of the Company and the consolidated entity is set out below: 2024 $ 2023 $ Short-term employment benefits 1,807,737 1,803,922 Post-employment benefits 119,021 123,334 Other long-term benefits (7,933) 59,323 Termination benefits1 – 467,571 Share-based payments 467,105 50,950 Total 2,385,930 2,505,100 1. This figure reflects the accrual for amounts that Matt Spencer received in respect of the cessation of his employment, which occurred on 31 December 2023. Matt Spencer ceased as a director of the Company on 2 June 2023. 88 Financial report for the 52 weeks ended 30 June 2024 Continued Note 24: Commitments for expenditure Capital commitments The consolidated entity has capital commitments totalling nil (2023: nil). Note 25: Financial instruments – Fair values and risk management The consolidated entity’s activities expose it to a variety of financial risks, including market risk (foreign currency and interest rate risk), liquidity risk and credit risk. The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. There have been changes to the consolidated entity’s exposure to financial risks or the manner in which it manages and measures these risks from the previous period. The consolidated entity holds the following financial assets and liabilities at reporting date: 2024 $’000 2023 $’000 Financial assets Cash and cash equivalents 9,525 4,997 Other receivables 3,968 3,451 Derivatives designated as hedging instruments1 – 185 Total 13,493 8,633 Financial liabilities Trade and other payables 43,067 45,371 Other liabilities 1,828 1,782 Borrowings 22,570 11,209 Lease liability 152,843 164,353 Total 220,308 222,715 1. Derivatives designated as hedging instruments reflect the positive change in fair value of foreign exchange forward contracts, designated as cash flow hedges to hedge highly probable inventory purchases in US dollars (USD). a. Market risk i. Foreign exchange risk The majority of the consolidated entity’s operations are transacted in the functional currency of the Company, AUD, and therefore exposure to foreign exchange risk is limited to around 17.0% of goods which are purchased in a foreign currency. Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency). The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments is foreign currency risk. Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of forecast purchases in US dollars. These forecast transactions are highly probable, and they comprise about 15.9% of the Company’s total expected purchases. The foreign exchange forward contract balances vary with the level of expected foreign currency purchases and changes in foreign exchange forward rates. Baby Bunting Annual Report 2024 89 There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange forward contracts match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange forward contracts are identical to the hedged risk components. To test the hedge effectiveness, the Company uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks. The hedge ineffectiveness can arise from: • Differences in the timing of the cash flows of the hedged items and the hedging instruments; • Different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments; • The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and hedged items; • Changes to the forecasted amount of cash flows of hedged items and hedging instruments. The Company manages its foreign currency risk by hedging transactions that are expected to occur based on known purchases. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of the derivative to match the terms of the hedged exposure. For hedges of known transactions, the derivative covers the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting payable that is denominated in the foreign currency. At 30 June 2024, the Company had no hedges for future purchases. Maturity Less than 1 month 1 to 3 months 3 to 6 months 6 to 9 months 9 to 12 months Total As at 30 June 2024 Foreign exchange forward contracts (highly probably forecast purchase) Notional amount (in $AUD’000) – – – – – – Average forward rate (AUD/USD) – – – – – – As at 2 July 2023 Foreign exchange forward contracts (highly probably forecast purchase) Notional amount (in $AUD’000) 3,528 3,359 – – – 6,887 Average forward rate (AUD/USD) 0.6842 0.6846 – – – ii. Cash flow and fair value interest rate risk The consolidated entity is exposed to interest rate risk as it borrows funds at floating interest rates. Any increase in interest rates will impact the consolidated entity’s costs of servicing these borrowings, which may adversely impact its financial position. 90 Financial report for the 52 weeks ended 30 June 2024 Continued iii. Summarised sensitivity analysis The following table summarises the sensitivity of the consolidated entity’s financial assets and financial liabilities to interest rate risk. The consolidated entity is using a sensitivity of 2.5% (2023: 2.5%) as management considers this to be reasonable having regard to historic movements in interest rates. A positive number represents an increase in profit and a negative number a decrease in profit. Foreign exchange risk Change in USD rate -2.5% +2.5% At 2 July 2023 Carrying amount $’000 Profit $’000 Profit $’000 Financial assets Other financial assets 6,888 (172) 172 Total increase/(decrease) – (172) 172 Foreign exchange risk Change in USD rate -2.5% +2.5% At 30 June 2024 Carrying amount $’000 Profit $’000 Profit $’000 Financial assets Other financial assets – – – Total increase/(decrease) – – – Interest rate risk -2.5% +2.5% At 2 July 2023 Carrying amount $’000 Profit $’000 Profit $’000 Financial liabilities Borrowings – CML Facility 11,209 280 (280) Total increase/(decrease) – 280 (280) Interest rate risk -2.5% +2.5% At 30 June 2024 Carrying amount $’000 Profit $’000 Profit $’000 Financial liabilities Borrowings – CML Facility 22,570 564 (564) Total increase/(decrease) – 564 (564) Baby Bunting Annual Report 2024 91 b. Liquidity risk Ultimate responsibility for liquidity risk management rests with the Board, who assess the consolidated entity’s short, medium and long term funding and liquidity management requirements. The consolidated entity manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities and by continuously monitoring forecast and actual cash flows. Financing arrangements The consolidated entity has access to the following undrawn borrowing facilities at the end of the reporting period: 2024 2023 Limit $’000 Utilised $’000 Limit $’000 Utilised $’000 CML Facility 70,000 22,570 70,000 11,209 Bank Guarantee Facility 8,000 2,375 8,000 2,816 Total Facility 78,000 24,945 78,000 14,025 Maturities of financial assets and financial liabilities The following tables detail the consolidated entity’s remaining contractual maturity for its financial assets and liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the consolidated entity can be required to pay. The table includes both principal and estimated interest cash flows. Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at the reporting date. Maturity At 30 June 2024 Less than 6 months $’000 6 – 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total Weighted average effective interest rate % Financial assets Cash and cash equivalents 9,525 – – – – 9,525 4.10% Other receivables 3,968 – – – – 3,968 Other financial assets – – – – – – Total 13,493 – – – – 13,493 Financial liabilities Trade and other payables 43,067 – – – – 43,067 Other liabilities 1,828 – – – – 1,828 Lease liability 18,720 18,756 62,734 45,687 28,720 174,617 Borrowings – CML facility – – – 22,570 – 22,570 5.86% Total 63,615 18,756 62,734 68,257 28,720 242,082 92 Financial report for the 52 weeks ended 30 June 2024 Continued Maturity At 2 July 2023 Less than 6 months $’000 6 – 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total Weighted average effective interest rate % Financial assets Cash and cash equivalents 4,997 – – – – 4,997 3.85% Other receivables 3,451 – – – – 3,451 – Other financial assets 185 – – – – 185 – Total 8,633 – – – – 8,633 Financial liabilities Trade and other payables 45,371 – – – – 45,371 – Other liabilities 1,782 – – – – 1,782 – Lease liability 17,480 17,453 66,176 47,546 41,025 189,680 – Borrowings – CML facility – – – 11,209 – 11,209 5.70% Total 64,633 17,453 66,176 58,755 41,025 248,042 c. Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has endeavoured to minimise its credit risk by dealing with creditworthy counterparties and use of counterparty account based credit limits which are regularly reviewed against historical spending patterns for appropriateness. The consolidated entity does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any allowance for impairment, represents the consolidated entity’s maximum exposure to credit risk. d. Fair value of financial instruments The carrying amount of financial assets and financial liabilities recorded in the financial statements approximate their fair values. Baby Bunting Annual Report 2024 93 Note 26: Notes to the statement of cash flows a. Reconciliation of profit for the period to net cash flows from ordinary activities 2024 $’000 2023 $’000 Profit after income tax 1,696 9,854 Non cash expenses and other adjustments: Depreciation and amortisation 38,510 36,469 Share-based payments and tax reserves 1,163 (755) Changes in assets and liabilities: Decrease/(Increase) in other receivables (516) 1,851 Decrease/(Increase) in other assets 758 956 Decrease/(Increase) in inventories 3,620 (1,378) Decrease/(Increase) in deferred tax assets (1,793) 2,484 Increase/(Decrease) in trade and other payables (1,557) (7,184) Increase/(Decrease) in provisions (1,054) 1,020 Increase/(Decrease) in income tax assets/liability 728 (683) Increase/(Decrease) in other financial liabilities (1,496) 370 Net cash provided by operating activities 40,059 43,004 b. Reconciliation of Cash and Cash equivalents For the purposes of the statement cash flows, cash at the end of the financial period as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: 2024 $’000 2023 $’000 Cash on hand 93 88 Cash and cash equivalents 9,432 4,909 Total 9,525 4,997 94 Financial report for the 52 weeks ended 30 June 2024 Continued Note 27: Parent entity disclosures As at, and throughout, the 52 weeks ended 30 June 2024 the parent entity of the consolidated entity was Baby Bunting Group Limited. Parent Entity 2024 $’000 2023 $’000 Result of parent entity: Profit for the period 9,612 10,000 Other comprehensive income – – Total comprehensive income for the period 9,612 10,000 Financial position of parent entity at period end: Current assets – – Non-current assets 97,134 96,425 Total assets 97,134 96,425 Current liabilities 1,303 1,303 Non-current liabilities – – Total liabilities 1,303 1,303 Total equity of the parent entity comprising of: Issued capital 86,357 86,357 Reserves – – Retained earnings 9,474 8,765 Total equity 95,831 95,122 The Company does not have any contractual commitments for the acquisition of property, plant and equipment (2 July 2023: nil). The Company does not have any contingent liabilities (2 July 2023: nil). The Company has entered into a deed of support with its wholly-owned subsidiary, Baby Bunting NZ Limited, under which it agrees to provide any necessary financial support to its subsidiary to ensure it is able to pay its debts as they become due in the normal course of business. Baby Bunting Annual Report 2024 95 Note 28: Group entities Baby Bunting Group Limited has three 100% owned subsidiaries, Baby Bunting Pty Ltd, Baby Bunting EST Pty Ltd and Baby Bunting NZ Limited. The investment in Baby Bunting Pty Ltd is $8,891,700 which represents the issued capital of the entity, together with the value of non-cash costs associated with the acquisition of the business. The Company and Baby Bunting Pty Ltd have entered into a Deed of Cross Guarantee. Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the wholly-owned subsidiary (Baby Bunting Pty Ltd) is relieved from the Corporations Act 2001 requirements for the preparation, audit and lodgment of Financial Reports. The effect of the deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of the subsidiary under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. Subsidiaries listing Proportion of ownership interest and voting power held by the Company Name of subsidiary Principal activity Place of incorporation and operation June 2024 June 2023 Baby Bunting Pty Ltd1 Retailing of baby merchandise in Australia Australia 100% 100% Baby Bunting EST Pty Ltd2 Trustee of the trust established in connection with the Company’s employee share plans Australia 100% 100% Baby Bunting NZ Limited Retailing of baby merchandise in New Zealand New Zealand 100% 100% 1. This wholly-owned subsidiary has entered into a deed of cross guarantee with Baby Bunting Group Limited. Baby Bunting Pty Ltd became a party to the deed of cross guarantee on 19 June 2008. 2. Baby Bunting EST Pty Ltd has no material net assets or profit and the financial information disclosed in this report does not include Baby Bunting EST Pty Ltd. Closed Group Disclosure The members of the closed group are the Company and Baby Bunting Pty Ltd. The Consolidated Statement of Profit or Loss and Other Comprehensive Income, summary of movements in consolidated retained earnings and the Consolidated Statement of Financial Position of the entities that are members of the closed group are as follows: 96 Financial report for the 52 weeks ended 30 June 2024 Continued Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2024 2024 $’000 2023 $’000 Revenue 490,991 521,013 Cost of sales (310,983) (326,413) Gross profit 180,008 194,600 Other Income 400 – Store expenses (110,810) (108,794) Marketing expenses (8,464) (7,442) Warehousing expenses (9,971) (9,752) Administrative expenses (32,695) (36,545) Project expenses (1,330) (4,745) Restructuring costs (1,438) – Finance expenses (8,558) (8,485) Profit before tax 7,142 18,837 Income tax expense (2,145) (6,396) Profit after tax 4,997 12,441 Other comprehensive income for the period Net gain/(loss) on cash flow hedges (129) (101) Income tax effect relating to the components of OCI – (55) Total comprehensive income for the period (129) (156) Profit for the period attributable to: Equity holders of Baby Bunting Group Limited 4,868 12,285 2024 $’000 2023 $’000 Summary of movement in consolidated retained earnings Retained earnings at the beginning of the year 8,283 11,560 Profit for the year 4,997 12,441 Dividend provided for or paid (8,904) (15,563) Transfer to retained earnings (8) (155) Retained earnings at the end of the year 4,368 8,283 Baby Bunting Annual Report 2024 97 Consolidated Statement of Financial Position as at 30 June 2024: 2024 $’000 2023 $’000 Current assets Cash and cash equivalents 8,673 4,694 Trade and Other receivables 11,517 6,827 Inventories 89,547 95,242 Current tax assets – 96 Other financial assets – 185 Other assets 3,441 3,849 Total current assets 113,178 110,893 Non-current assets Plant and equipment 22,166 27,228 Intangibles 7,098 6,473 Goodwill 45,321 45,321 Loan to associate 10,740 6,973 Right of use asset 119,252 139,368 Deferred tax assets 7,215 6,355 Total non-current assets 211,792 231,718 Total assets 324,970 342,611 Current liabilities Trade and other payables 40,904 44,569 Other liabilities 4,583 6,093 Current tax liabilities 631 – Lease liabilities 34,522 32,763 Provisions 5,618 6,450 Total current liabilities 86,258 89,875 Non-current liabilities Borrowings 22,570 11,209 Lease liabilities 105,479 126,648 Provisions 1,953 2,240 Total non-current liabilities 130,002 140,097 Total liabilities 216,260 229,972 Net assets 108,710 112,639 Equity Issued capital 87,650 88,695 Reserves 16,692 15,661 Retained earnings 4,368 8,283 Total equity 108,710 112,639 98 Financial report for the 52 weeks ended 30 June 2024 Continued Note 29: Earnings per share 2024 cents per share 2023 cents per share Basic earnings per share from continuing operations1 1.3 7.4 Diluted earnings per share from continuing operations1 1.2 7.1 1. In the current and comparative reporting periods there were no discontinued operations. a. Basic earnings per share Basic earnings per share is calculated by dividing the profit for the period attributable to members of the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 2024 $’000 2023 $’000 Earnings used in the calculation of basic earnings per share from continuing operations1 1,696 9,854 Number Number Weighted average number of ordinary shares for the purposes of basic earnings per share 134,478,888 133,884,366 1. In the current and comparative reporting periods there were no discontinued operations. b. Diluted earnings per share Diluted earnings per share is calculated by dividing the profit attributable to members of the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. The earnings used in the calculation of diluted earnings per share are as follows: 2024 $’000 2023 $’000 Earnings used in the calculation of diluted earnings per share from continuing operations1 1,696 9,854 1. In the current and comparative reporting periods there were no discontinued operations. The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Number Number Weighted average number of ordinary shares for the purposes of diluted earnings per share2 138,975,747 138,437,063 2. The weighted average number of shares takes into account the weighted average effect of performance rights granted during the year. The following table reflects the share data used in the basic and diluted earnings per share calculations: Number Number Weighted average number of ordinary shares for basic earnings per share 134,478,888 133,884,366 Effects of dilution from Share options 4,496,859 4,552,697 Weighted average number of ordinary shares adjusted for the effect of dilution 138,975,747 138,437,063 Baby Bunting Annual Report 2024 99 Note 30: Remuneration of auditors 2024 $’000 2023 $’000 Assurance Services Review of the financial report for the half-year 61,250 55,075 Audit of the period-end financial report 183,750 165,225 245,000 220,300 Tax and Consulting Services Taxation services 24,900 19,500 Remuneration advisory services 6,000 8,317 30,900 27,817 Total remuneration 275,900 248,117 The auditors of the consolidated entity and the Company are Ernst & Young. From time to time, Ernst & Young provides other services to the consolidated entity and the Company, which are subject to the corporate governance procedures adopted by the Company. Note 31: Events after balance sheet date There have been no events subsequent to the date of this report which would have a material effect on the financial report of the consolidated entity at 30 June 2024. 100 Financial report for the 52 weeks ended 30 June 2024 Continued Consolidated entity disclosure statement for the 52 weeks ended 30 June 2024 Entity Name Entity Type Body corporate country of incorporation Body corporate % of share capital held Country of tax residence Baby Bunting Pty Ltd Body corporate Australia 100% Australia Baby Bunting EST Pty Ltd Body corporate Australia 100% Australia Baby Bunting NZ Limited Body corporate New Zealand 100% New Zealand Baby Bunting Annual Report 2024 101 Directors’ declaration The Directors declare that: (a) in their opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; (b) in their opinion, the attached financial statements and notes are in compliance with International Financial Reporting Standards, as stated in Note 2 to the financial statements; (c) in their opinion, the attached financial statements and notes of the Company and its subsidiaries (collectively the Group) there to are in accordance with the Corporations Act 2001, including compliance with the Australian Accounting Standards and the Corporations Regulations 2001 and giving a true and fair view of the Group’s financial position as at 30 June 2024 and performance for the period ended on that date; (d) in their opinion, the consolidated entity disclosure statement required by section 295(3A) of the Corporations Act is true and correct; and (e) the Directors have been given the declarations required by section 295A of the Corporations Act 2001. In the Directors’ opinion, there are reasonable grounds to believe that the Company and its subsidiary which have entered into the Deed of Cross Guarantee, as detailed in Note 28 to the financial statements will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed of Cross Guarantee. Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001. On behalf of the Directors Melanie Wilson Chair 20 August 2024 102 Auditor’s independence declaration A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Audit or’s Independence Declarat ion t o t he Direct ors of Baby Bunt ing Group Limit ed As lead auditor for the audit of Baby Bunting Group Limited for the 52 week period ended 30 June 2024, I declare to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; (b) no contraventions of any applicable code of professional conduct in relation to the audit; and (c) No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Baby Bunting Group Limited and the entities it controlled during the financial year. Ernst & Young Tony Morse Partner 20 August 2024 Baby Bunting Annual Report 2024 103 Independent auditor’s report A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Independent Audit or's Report t o t he Members of Baby Bunt ing Group Limit ed Report on the audit of the financial report Opinion We have audited the financial report of Baby Bunting Group Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2024, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the 52 week period then ended, notes to the financial statements, including a summary of material accounting policies, the consolidated entity disclosure statement and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2024 and of its consolidated financial performance for the 52 week period ended on that date; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. 104 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 2 Carrying value of inventories Why significant How our audit addressed the key audit matter As at 30 June 2024, the Group held $94.4 million in inventories representing 28% of total assets of the Group. As detailed in Note 2(h) of the financial report, inventories are valued at the lower of cost and net realisable value. The cost of inventory is determined using a weighted average cost approach adjusted for volume rebates and settlement discounts. Judgement was required to be exercised by the Group to determine the net realisable value for items which may be ultimately sold below cost. These judgements include consideration of expectations for future sales based on historical experience. Given the process and judgement involved in determining the cost and carrying value of inventories, this was considered a key audit matter. ► Assessed the appropriateness of the Group’s accounting policies in relation to inventory including volume rebates and settlement discounts in accordance with Australian Accounting Standards. ► Assessed the design and operating effectiveness of relevant controls used by the Group to record the purchasing of inventories and the costing of inventories. ► Assessed the accuracy of the Group’s inventory costing model and tested the cost price of inventory recorded on a sample basis. ► Assessed the effectiveness of controls in place relating to the recognition and measurement of rebate and settlement discount amounts and tested a sample of rebates and discounts to individual supplier agreements. ► Assessed the basis for inventory provisions recorded by the Group for slow moving inventories and stock losses. In doing so, we examined the Group’s process for identifying slow moving inventories, negative margin sales, historical stock loss rate trends and expected costs to sell. We assessed how these trends impacted the determination of the inventory provisions recorded. ► Considered sales subsequent to year end in assessing the value of inventories at balance date by comparing the actual selling prices to the carrying value for a sample of inventories. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2024 Annual Report, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. Baby Bunting Annual Report 2024 105 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 3 If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of: a. The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; and; b. The consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of: i The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and ii The consolidated entity disclosure statement that is true and correct and is free of misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. 106 Independent auditor’s report Continued A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 4 Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 43 to 57 of the directors' report for the 52 week period ended 30 June 2024. In our opinion, the Remuneration Report of Baby Bunting Group Limited for the 52 week period ended 30 June 2024, complies with section 300A of the Corporations Act 2001. Baby Bunting Annual Report 2024 107 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 5 Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Tony Morse Partner Melbourne 20 August 2024 108 Independent auditor’s report Continued Baby Bunting Group Limited has one class of shares on issue (being fully paid ordinary shares). There are 134,906,489 shares on issue. All of the Company’s shares are listed on the Australian Securities Exchange. There is no current on-market buy-back. Twenty Largest Shareholders Name Number of shares % of shares 1 J P Morgan Nominees Australia Pty Limited 28,095,507 20.83 2 HMC Capital Partners Holdings Pty Ltd16,734,518 12.40 3 HSBC Custody Nominees (Australia) Limited 14,204,169 10.53 4 Citicorp Nominees Pty Limited 12,423,276 9.21 5 UBS Nominees Pty Ltd 4,355,210 3.23 6 BNP Paribas Nominees Pty Ltd 3,343,116 2.48 7 Warbont Nominees Pty Ltd 2,880,707 2.14 8 Fiddian Teal Nominees Pty Ltd 1,229,741 0.91 9 HSBC Custody Nominees (Australia) Limited-GSI EDA 1,190,000 0.88 10 HSBC Custody Nominees (Australia) Limited 1,174,647 0.87 11 Mr Matthew Gerald Spencer 1,007,244 0.75 12 BNP Paribas Noms Pty Ltd 827,869 0.61 13 Mirrabooka Investments Limited 775,467 0.57 14 Maple and Redwood Pty Ltd 671,264 0.50 15 Neweconomy Com Au Nominees Pty Limited <900 Account> 562,456 0.42 16 Shankland Super Pty Ltd 510,024 0.38 17 Fergus & Co Pty Ltd 488,974 0.36 18 Michael Pane 479,444 0.36 19 Netwealth Investments Limited 473,578 0.35 20 Baby Bunting EST Pty Ltd 467,289 0.35 Total 91,894,500 68.12 Unmarketable parcels There were 1,774 holdings of less than a marketable parcel (less than $500 in value or less than 360 shares) based on the closing market price of $1.39 per share at 15 July 2024. Baby Bunting Annual Report 2024 109 Shareholder information as at 15 July 2024 Distribution of Shareholders and Shareholdings Range Total holders % of total holders Number of shares % of shares 1 – 1,000 3,686 44.9 1,610,706 1.19 1,001 – 5,000 2,859 34.8 7,222,612 5.35 5,001 – 10,000 824 10.0 6,209,081 4.60 10,001 – 100,000 765 9.3 18,799,875 13.94 100,001 and over 70 0.9 101,064,215 74.91 Total 8,204 100.0 134,906,489 100.0 Percentage totals may not add due to rounding. Substantial shareholders As at 15 July 2024, the substantial holders (as disclosed in substantial holdings notices given to the Company) are: Name Date of most recent notice Number of shares Relevant interest AustralianSuper Pty Ltd 10 Sept 2021 17,710,679 13.65% HMC Capital Limited 5 June 2024 16,613,457 12.31% Superannuation and Investments HoldCo Pty Ltd 28 June 2024 7,612,009 5.64% Commonwealth Bank of Australia 28 June 2024 7,612,009 5.64% KKR Entities 1 July 2024 7,612,009 5.64% Yarra Capital Management Limited 8 September 2023 6,862,617 5.09% Voting rights of ordinary shares The Company’s Constitution sets out the voting rights attached to ordinary shares. In summary, shareholders may vote at a meeting of shareholders in person, directly or by proxy or attorney and, in the case of a shareholder that is a company, also by representative. On a show of hands, a shareholder has one vote. On a poll, a shareholder has one vote for every fully paid share held. Performance rights The Company has unquoted performance rights on issue. As at 15 July 2024, there were 11 holders of performance rights. There are no voting rights attached to performance rights. 110 Shareholder information Continued Corporate directory Registered Office Baby Bunting Group Limited 153 National Drive Dandenong South VIC 3175 (03) 8795 8100 Directors Melanie Wilson Mark Teperson Gary Levin Donna Player Gary Kent Francine Ereira Stephen Roche Company Secretary Corey Lewis Investor Relations Darin Hoekman Chief Financial Officer (03) 8795 8100 Shareholder Enquiries Share Registry Computershare Investor Services Pty Ltd GRP Box 2975 Melbourne VIC 3001 1800 850 505 (within Australia) +61 3 9415 4000 (outside Australia) Auditor Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Securities Exchange Listing Baby Bunting Group Limited shares are listed on the Australian Securities Exchange (ASX) (ASX code: BBN) Investor website investors.babybunting.com.au Online store babybunting.com.au babybunting.co.nz Baby Bunting Annual Report 2024 111