FY24
annual
report
03 FY24 Group highlights
04 FY24 marketplace highlights
06 Chairman’s message
08 FY24 CEO review
10
Social Impact and Sustainability
14
Board of Directors
16
Group Leadership Team
18
Directors’ report
27
Auditor’s Independence Declaration
28
Letter from the People, Remuneration
and Nomination Committee
29 Remuneration Report
40 Financial Report
74
Consolidated Entity Disclosure Statement
75
Directors’ Declaration
76
Independent Auditor’s Report
82
Shareholder Information
84
Corporate Information
Contents
Important Information
This report covers Articore Group Limited as a consolidated entity
consisting of Articore Group Limited and its controlled entities (referred
to in this report as Articore or the Group). Articore is a company limited
by shares, incorporated and domiciled in Australia (ACN 119 200 592).
This Report is a summary of the Group’s operations and activities for
the 12-month period ended 30 June 2024 and financial position as
at 30 June 2024. This report covers the Group’s global operations,
including subsidiaries, unless otherwise noted. A reference to the
Group, the Company, we, us and our and similar expressions refer
collectively to Articore Group Limited and its related bodies corporate.
Forward-looking statements
This report contains forward-looking statements in relation to Articore,
including statements regarding the Group’s intent, belief, goals,
objectives, initiatives, commitments or current expectations with respect
to the Group’s business and operations, market conditions, results
of operations and financial conditions, products in research, and risk
management practices. Forward-looking statements can generally be
identified by the use of words such as “forecast”, “estimate”, “plan”,
“will”, “anticipate”, “may”, “believe”, “should”, “expect”, “project,”
“intend”, “outlook”, “target”, “assume” and “guidance” and other similar
expressions. The forward-looking statements are based on the Group’s
good faith assumptions as to the financial, market, risk, regulatory and other
relevant environments that will exist and affect the Group’s business and
operations in the future. The Group does not give any assurance that the
assumptions will prove to be correct. The forward-looking statements involve
known and unknown risks, uncertainties and assumptions and other important
factors, many of which are beyond the control of the Group, that could cause
the actual results, performances or achievements of the Group to be materially
different to future results, performances or achievements expressed or implied
by the statements. Factors that could cause actual results to differ materially
include: changes in government and policy; actions of regulatory bodies and other
governmental authorities such as changes in taxation or regulation (or approvals
under regulation); the effect of economic conditions; technological developments;
and geopolitical developments. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as at the date of the presentation. The
Group disclaims any responsibility for the accuracy or completeness of any forward-
looking statement. Except as required by applicable laws or regulations, the Group does
not undertake any obligation to publicly update or revise any of the forward-looking
statements or to advise of any change in assumptions on which any such statement
is based. Any projections or forecasts included in this Report have not been audited,
examined, or otherwise reviewed by the independent auditors of the Group.
Non-IFRS financial information
References to AASB refer to the Australian Accounting Standards Board, and IFRS refers to the
International Financial Reporting Standards. There are references to IFRS and non-IFRS financial
information in this Report. Non-IFRS financial measures are financial measures other than those
defined or specified under any relevant accounting standard and may not be directly comparable with
other companies’ information. Non-IFRS financial measures are used to enhance the comparability
of information between reporting periods and enable further insight and a different perspective into
the financial performance. Non-IFRS financial information should be considered in addition to, and is not
intended to be a substitute for, IFRS financial information and measures. Non-IFRS financial measures are
not subject to audit or review.
Group employee numbers
as at 30 June 2024
Australia 92
USA 135
Europe 10
2
Articore Group • FY24 Annual Report
FY24 Group highlights
Operational highlights
Selling artists2
0.7m
FY23: 0.7m
Customers
6.7m
FY23: 7.5m
Designs sold3
5.5m
FY23: 6.2m
Financial highlights
Artist
revenue1
$69.9m
FY23: $87.6m
-20%
Gross profit
margin
42.9%
FY23:
37.3%
GPAPA margin
25.6%
FY23:
20.9%
Operating
EBITDA1
$10.0m
FY23: -$31.8m
+41.8m
GPAPA1
$108.3m
FY23: $97.6m
+11%
Gross
profit1
$181.7m
FY23: $174.2m
+4%
Marketplace
revenue1
$423.1m
FY23: $467.5m
-9.5%
Closing
cash balance
$36.9m
30 June 2023:
$35.7m
Geographic Diversity
(% of gross transaction value)
North America
71%
Europe and
United Kingdom
22%
Australia and
New Zealand
7%
May represent multiple third-party fulfillers.
46
third-party
fulfiller sites
1. Non-IFRS measures are presented to provide readers a better understanding of Articore’s financial performance. The non-IFRS measures are unaudited, however, they have been derived
from the audited financial statements. The non-IFRS measures are presented as “underlying”, as the statutory results include a one-off release of an accrual that has been excluded for the
non-IFRS measures in this report. This is for the purpose of assessing the Group’s FY24 performance on a like-for-like basis. Please see Table 1 on page 19 for an explanation of how these
numbers are calculated. All references in this Report to Gross Profit, GPAPA, Operating EBITDA and EBITDA are to the underlying version of these numbers, as calculated in Table 1 on page 19.
2. Number of artists who sold a product printed with their art during the reporting period
3. Number of artists’ designs that have sold on at least one product during the reporting period.
3
Articore Group • FY24 Annual Report
Our marketplaces
The Group owns and operates two independent global marketplaces.
FY24 operational metrics
Selling artists
575k
FY23: 569k
Artists’ revenue
$51.2m
FY23: $65.0m
Customers
4.2m
FY23: 5.0m
Designs sold
4.1m
FY23: 4.8m
FY24 financial highlights
FY24
Marketplace
revenue
$241.3m
FY23: $290.7m
-17%
Gross
profit
$103.3m
FY23: $104.9m
-2%
Operating
EBITDA
$14.8m
FY23: -$17.6m
+$32.4m
GPAPA
$69.0m
FY23: $65.9m
+5%
GPAPA margin
28.6%
FY23: 22.7%
Gross profit
margin
42.8%
FY23: 36.1%
Marketplace
revenue
contribution
FY23: 62%
GPAPA
contribution
FY23: 67%
57%
64%
4
Articore Group • FY24 Annual Report
FY24 operational metrics
Selling artists
136k
FY23: 96k
Artists’ revenue
$18.7m
FY23: $22.6m
Customers
2.4m
FY23: 2.5m
Designs sold
1.5m
FY23: 1.4m
FY24 financial highlights
FY24
Marketplace
revenue
$181.8m
FY23: $176.8m
+3%
Gross
profit
$78.4m
FY23: $69.2m
+13%
Operating
EBITDA
$5.6m
FY23: -$3.1m
+$8.7m
GPAPA
$39.3m
FY23: $31.7m
+24%
GPAPA margin
21.6%
FY23: 18.0%
Gross profit
margin
43.1%
FY23: 39.1%
Marketplace
revenue
contribution
FY23: 38%
GPAPA
contribution
FY23: 33%
43%
36%
5
Articore Group • FY24 Annual Report
(1)
Underlying cash flow defined as operating EBITDA plus net interest earned, less lease related expenses, payments for capitalised development costs and property, plant and
equipment (PPE).
At the start of FY24, our central objective
was to restore positive underlying cash
flow. It is a testament to the strength and
commitment of our team that we were able
to finish the year with underlying cash flow(1)
of $0.9 million, a $47.8 million improvement
on FY23. At the same time, we stabilised the
business and returned to profitability with
Gross Profit, GPAPA and operating EBITDA all
above FY23.
The improvement in our performance has
been achieved through a disciplined focus
on unit economics, driving profitability across
the Group. During the year, we also realised
the full benefit of cost reduction initiatives
implemented in FY23 while also maintaining
strong cost discipline. Perhaps most
impressively, this was accomplished against
a backdrop of soft trading conditions as
consumers continued to be impacted by cost
of living pressures across our core markets.
Board Renewal
During the year, the renewal that we have
seen across the business continued at Board
level. In September 2023, we announced
that long standing non-executive director,
Jenny Macdonald, would step down following
the 2023 Annual General Meeting. Jenny
made an important contribution to the Group
over almost six years, especially as Chair
of the Audit and Risk Committee. We thank
Jenny for her service and wish her well in her
future endeavours.
Following an extensive search, Robin Low
was appointed to the Board in March 2024.
Robin is a highly experienced non-executive
director and Audit and Risk Committee
Chair. Robin’s strong financial expertise and
extensive ASX-listed experience are proving
highly valuable and also complementing our
existing director skillset.
On 1 July 2024, we announced that Robin
Mendelson would also join the Board. Robin
brings deep operational and e-commerce
experience following a 20-year career with
Amazon.com. As Head of Amazon’s US Media
Consumer Group, Robin delivered multi-year
revenue and earnings growth across the US
multi-billion dollar division through customer-
focused innovation, product development,
supply chain optimisation and continuous
operational improvements. Robin is also a
highly experienced non-executive director
and we were delighted to welcome her to
Articore.
FY24 has been a year of change for our Company with a
new name, leadership team and operating structure. We
have made significant progress under Martin’s leadership,
returning both marketplaces and the Articore Group to a
positive underlying cash flow position.
Chairman’s
message
6
Articore Group • FY24 Annual Report
Launch of on-market share
buyback program
In May 2024, we launched an on-market
share buyback program which has a maximum
value of $5 million over a period of up to 12
months. The Board believes the buyback
represents an efficient use of capital given
the Group’s strengthened balance sheet
and turnaround in profitability. At 30 June
2024, the Group had cash of $36.9 million
and no debt. The buyback program further
reflects our confidence in the Group’s
future performance and our commitment to
maximising shareholder returns.
Ongoing commitment to
sustainability
Sustainability remains an integral part of
our business and reflects the way in which
we operate. Our sustainability goals are
aligned with the expectations of our artists,
their customers, our employees and our
shareholders and drive commercial outcomes
over the short and long term.
Articore’s marketplaces economically
empower artists and offer platforms for free
expression resulting in two visible social
impacts that directly connect to the United
Nations’ Sustainable Development Goals and
the Universal Declaration of Human Rights.
These outcomes are an inherent part of our
business and are as important in 2024 as
when we launched nearly two decades ago.
This year, in connection with our transition
to the Group operating model, we have
taken the opportunity to further centre our
environmental, social, and governance
strategy around this founding purpose,
which we now refer to as Social Impact &
Sustainability.
Importantly, we continue to believe in the
value of an open marketplace and freedom
of expression within key policy guidelines.
This is captured in Articore’s mission: liberate
human creativity. We will, of course, continue
to meet a range of stakeholder expectations
including the transition from voluntary to
mandatory sustainability reporting most
recently announced by the AASB.
Outlook
As we look ahead, there is much to be
excited about. We have a leadership team
and operating structure in place that
provides us with a solid foundation and
the capability to scale our business. We
exit FY24 in a strong financial position and
are sustainably cash flow positive. Our
immediate priority will be to deliver profitable
revenue growth across both of our existing
marketplaces. Beyond that, we will explore
growth opportunities in new geographies
and products, as well as potential new
lines of business that are closely aligned to
our strategy, and leverage the significant
strategic assets at the Group’s disposal.
In closing, I would like to thank my fellow
Directors, the Executive Leadership Team
and the Group’s employees for their hard
work and commitment this year. And finally,
to you, our shareholders, thank you for your
ongoing support.
Anne Ward
Chairman
7
Articore Group • FY24 Annual Report
New name and structure
positions the Group for
growth
In October 2023, shareholders approved
changing the Company’s name to Articore
Group Limited. This was an important
development with the new name reflecting
the new operating structure implemented
at the end of FY23. It also clearly identifies
the Group as a collective of branded
marketplaces, highlighting our ambition to
expand over time by adding new operating
companies, in addition to growing the two
existing marketplaces.
During the year, the new structure provided
greater insights into the performance of
each marketplace, facilitating the sharing
of knowledge and expertise across the
two businesses. It was accompanied by
significant renewal at the leadership level
which I believe has been central to our
performance this year and gives us the
capabilities to take advantage of strategic
opportunities in the future.
As part of this change, we introduced
segment reporting from the 1HFY24 providing
our investors with more information on the
individual performance of the Redbubble and
TeePublic marketplaces than we have in the
past.
Delivered a significant
turnaround in FY24
When I returned to the CEO role in March
2023, my primary objective was to restore
the Group to a positive underlying cash
flow position. Although market conditions
remained challenging in FY24, our focus on
maximising Gross Profit After Paid Acquisition
(GPAPA) combined with ongoing cost
discipline delivered positive underlying
cash flow of $0.9m, which was a $47.8m
turnaround on FY23. This was a pleasing
result and a necessary first step as we work
towards achieving profitable revenue growth.
In FY24, we achieved significant growth and
margin expansion in Gross Profit, GPAPA
and operating EBITDA due to a sustained
improvement in unit economics and a
restructuring of our cost base. We focused
on a narrow set of priorities across the two
marketplaces which included the adjustment
of base prices, introduction of artists tiers
and optimisation of their supply chains.
We also implemented changes to our paid
marketing strategy to drive effectiveness
while maintaining a disciplined approach to
being profitable on first order. As a result,
both marketplaces delivered growth in GPAPA
and positive underlying cash flow in FY24.
Our FY24 GPAPA margin of 25.6% for the
Group was at the high end of guidance
provided in February 2024 (24-26%) and
operating expenditure of $98.3m was
towards the lower end of the guidance range
provided ($97m-$100m). As a team, we
have demonstrated considerable discipline
in achieving this improvement in underlying
profitability by focusing on fundamentals;
ensuring we acquire customers in an
economically viable manner and that our
margins are strong and operating costs
contained. At the same time, we have been
careful to maintain adequate resources to
allow us to continue to invest in areas that we
expect will drive growth going forward.
Group MPR was 9.5% lower in FY24 on pcp
with the rate of decline in MPR moderating
as we moved through the second half in line
with our guidance. This reflected the Group’s
continued focus on profitable revenue over
volume as well as the short-term disruption
to Redbubble’s MPR as the marketplace
adjusted its paid marketing strategy in
3QFY24. We are now seeing the intended
benefits of these changes.
We exited FY24 in a strong financial position
with closing cash of $36.9m (FY23: $35.7m)
and no debt. Our confidence in the Group’s
future performance and focus on maximising
shareholder returns was demonstrated in May
2024 when we announced the launch of an
on-market buyback program.
I am delighted to present the CEO’s review for the Articore
Group’s FY24 annual report, the first under our new
name. FY24 has been an important year as we returned
to positive underlying cash flow and delivered a number
of initiatives to drive profitability across our marketplaces,
Redbubble and TeePublic.
FY24
CEO review
8
Articore Group • FY24 Annual Report
Redbubble returns to
profitability
In FY24, Redbubble reported $14.8m in
operating EBITDA, a $32.4m turnaround
on pcp. This was achieved by focusing
on growth in absolute GPAPA which was
up 5% on pcp to $69.0m, and a $29.3m
(35.1%) reduction in operating expenses.
Redbubble’s FY24 GPAPA margin increased
by 590 basis points to 28.6% driven
primarily by the introduction of artist account
categories and associated fees for some
accounts, ongoing benefits from the
implementation of a dynamic order routing
system (DORS) in 2HFY23 and adjustments to
base prices.
It also reflected the reduction in paid
marketing spend as the marketplace
adopted a more disciplined approach
of being profitable on first order. In
3QFY24, the Redbubble marketplace
implemented significant changes to its paid
marketing strategy to enable it to scale
its paid marketing spend. Although the
implementation of this strategy was initially
disruptive, the anticipated benefits have
started to take effect with the rate of MPR
decline moderating to 14% on pcp in 4QFY24
compared to 17% for the full year.
Looking ahead to FY25, returning the
Redbubble marketplace to profitable revenue
growth will be a core focus.
TeePublic achieves
revenue growth and margin
expansion
In FY24, TeePublic drove margin expansion
while also delivering marketplace revenue
growth. TeePublic’s MPR increased by 3% on
pcp to $181.8m, representing 43% of Group
MPR compared to 38% in the prior year.
Gross profit increased by 13% to $78.4m and
its gross profit margin was 400 basis points
higher at 43.1%. This improvement was
driven by the optimisation of its service fees,
the introduction of artist fees for apprentice
accounts and increased allocation of volume
to more cost-effective third party fulfillers.
TeePublic’s GPAPA was $39.3m in FY24, up
24% on pcp and its GPAPA margin of 21.6%,
was up 370 basis points. The TeePublic
marketplace delivered operating EBITDA of
$5.6m, representing a $8.7m turnaround on
FY23.
TeePublic also rolled out several initiatives
to improve customer experience which
included adding content categories to
assist customers to initiate and narrow
search results, launching a gifting model and
expanding its product range.
As we move into a new financial year,
TeePublic is in a strong position to explore
opportunities to grow through expansion into
new geographies and products.
Communities who share
our Values
Articore operates marketplaces that are
respectful, supportive, and encourage
community. Our global art marketplaces
impact millions of people and our Content
Safety policies, operational workflows,
and technological tools are designed to
achieve the right balance between freedom
of expression and the potential for user-
generated content to do real harm. Creators
must follow our guidelines and marketplace
participants are encouraged to flag content
they feel violates TeePublic or RedBubble
policy guidelines.
In FY24, we launched two Centres of
Excellence (CoEs) that demonstrate our
commitment to innovation, knowledge
sharing, and cross-team collaboration. At
present, these centres are focused on two
key themes: Artificial Intelligence (AI) and
Social Impact. As with our Affinity Groups,
these centres bring members from across the
Group together, leveraging diverse expertise
and perspectives.
During the year, the Group continued to
embrace AI across all areas of the business
to reduce cost and improve the consumer
experience. For example, in customer
acquisition, AI has enabled us to enhance
marketing campaigns from a relevance and
customer matching perspective. We are
also using AI in vector search, analysing
and matching images to search enquiries to
build customer engagement. It is particularly
useful across our content library, detecting
duplication and defining and categorising
content into a hierarchy of themes.
Outlook
Articore exited FY24 in a strong financial
position and our immediate priority is
to leverage the Group’s assets to drive
sustainable and profitable revenue growth.
In FY25, we expect to deliver GPAPA margin
of 24-26%, operating expenditure of
$96m-$100m and positive underlying cash
flow.
We will build on the solid foundation
established in FY24 to deliver the next phase
of growth which will focus on extracting
maximum value from both marketplaces while
maintaining cost discipline and maximising
synergies across the Group.
This will enable us to invest in opportunities
that leverage our distinctive assets
including our well established and growing
base of global creators and their content,
global fulfillment network and superior unit
economics.
By the end of FY25, we aim to have gone
beyond the existing marketplaces in pursuit
of our vision of being the global leader
for connecting digital creators with their
customers.
I would like to conclude by thanking the
Board for their guidance and counsel during
the year. I would also like to acknowledge the
hard work and dedication of our incredible
team.
FY24 marks the completion of my first
financial year back in the business; I am proud
of what we have achieved together and
excited for the journey ahead. Finally, thank
you to our shareholders for your ongoing
support.
Martin Hosking
Co-Founder, CEO
and Managing Director
9
Articore Group • FY24 Annual Report
Social Impact
& Sustainability
Social impact is a cornerstone of our business. 10 years
ago, our founder and CEO commented “...we started with
the simplest of all propositions - that there were a lot of
people who see themselves as an artist, but lack access to
markets and tools...” A decade later, providing spaces that
allow artists and creatives to be globally seen, heard, and
valued remains our focus.
You brought tears to my eyes.
I have loved art from a young
age. My family always told me to
pursue other careers because
they said I couldn’t make a living
from it… I had almost given up
my dreams of being an artist, but
TeePublic changed that.
The Mindful Maestra
(Artist on TeePublic)
Pick any subject you like, and I bet you’ll be
able to find art on that subject, created in a
style that appeals to you. Not only that, but
you can usually find the art you like on tee
shirts, wall art, mugs, notebooks, magnets,
and a bunch of other items.
Customer of an artist on Redbubble
FY24 Highlights
ɬ Artists earned $59m(1) on Articore marketplaces
ɬ 6.7m customers in over 170 countries purchasing
Gross Transaction Value (GTV)(2) of $535m of
unique art on our marketplaces
ɬ Continued engagement with artist-focused
non-profits (ARTivism; Girl Child Art Foundation,
Society of Illustrators)
ɬ 100% of third-party fulfillers independently
audited to human rights standards
ɬ Four Employee Affinity Groups (LGBTQIA+ Affinity
Group, Neurodiversity Affinity Group, Parents
Affinity Group, Carers Affinity Group)
ɬ Social Impact and Artificial Intelligence Centres
of Excellence
(1)
Artist earnings is shown net of any fees charged to Artists.
(2) Gross Transaction Value (GTV) represents total receipts from customers less fraud,
refunds and chargebacks.
10
Articore Group • FY24 Annual Report
Creating Value for
Artists and Creatives
The free expression of art brings joy, explores
meaning, opens hearts and minds, and sparks
hope. This position is at the core of how our
marketplaces operate. It’s also where we
note the direct relationship of our business
model with the UN Universal Declaration
of Human Rights (Article 19), which states,
“Everyone has the right to freedom of opinion
and expression...” This might seem simple or
common sense, but putting this into practice
as a part of a global business serving a
diverse group of stakeholders is challenging
and not without constant dialogue, learning,
and improvement. Articore’s Content Safety
program is a foundational part of making this
possible.
Content Safety
Articore operates marketplaces that are
respectful, supportive, and encourage
community. Our content safety policies,
operational workflows, and technological
tools are designed to help strike the right
balance between freedom of expression
and the potential for user-generated content
to lead to real world harm. Artists must
follow our User Agreement and Community
Guidelines which aims to strike this balance.
Any marketplace participant is empowered to
flag content they feel violates TeePublic or
Redbubble guidelines.
As an associate member of Australia-
based Digital Industry Group (DIGI) and an
original signatory of their Code of Practice
on Disinformation and Misinformation,
Redbubble - given its offices and operations
are based in Australia - has proactively
contributed to shaping industry standards
and best practices around content safety. As
a part of this voluntary initiative, Redbubble
produces an annual transparency report
summarising the approaches Redbubble
takes to detect and remove misinformation
and disinformation, which mitigates the
risk of harmful content and accounts that
consumers could be exposed to on its
marketplace.
Product Quality
In addition to promoting safe and freely
expressed art on our marketplaces, we also
invest in preserving the integrity of each
artists’ work when it moves from digital to
physical medium - such as when art sold on
Redbubble or TeePublic is printed onto a
greeting card or t-shirt by third-party fulfillers.
Art purchased from artists on Redbubble
and TeePublic is made one item at a time
by a community of independent printing
businesses and only after each individual
order is placed, which means consistently
delivering to the high quality standards
artists and their customers every individual
customer expects.
Each physical product type is only made
available for artists to sell on Redbubble and
TeePublic after safety and compliance testing
of relevant samples by a globally-recognised,
third party laboratory. Beyond safety and
compliance, third-party fulfillers are also
expected to meet the quality expectations
of artists and their customers. Each product
type is routinely re-assessed for product
quality and compliance. In the event a quality
or compliance issue is detected, immediate
action is taken to notify the third-party fulfiller
that manufactured the product and to limit or
terminate order volume to such fulfiller until
they can verify that they have addressed the
issue.
Visually delicious!! Quality, pricing and delivery
is consistently excellent. You can find just about
anything you can imagine. T shirt options are
limitless and suit all personalities. Overall a playful
place to shop! Great site to find gifts as well!
Customer of an artist on Redbubble
I love your company
and your philosophy.
Products are unmatched
and great customer
service.
Customer of an artist on
Redbubble
11
Articore Group • FY24 Annual Report
Supporting
Employees
Engagement
In FY24, we undertook a Group-wide
demographic survey along with our regular
employee engagement survey. The surveys
enable us to continuously support and
promote workforce diversity and to ensure
employees have the opportunity to regularly
provide feedback.
Year on year, we set a high bar for employee
engagement levels that we expect our
leaders and people programs to develop
and maintain. We have a long-standing
engagement objective of 75% across our
group, knowing that an engaged workforce
drives a higher probability of delivering
the organisation’s objectives. We formally
assess our engagement twice a year and are
currently meeting our target in all parts of our
business.
These positive results can be attributed
to our commitment to transparent and
honest communications, recruitment and
development of strong leaders and a
cadence of OKR setting across our teams.
Our team members value knowing the
contribution expected of them and receiving
recognition for achievements they deliver.
I love that the
Neurodiversity Affinity
Group creates a space
to share resources
on accessibility,
accommodations, and
advocacy to better
support employees
inside and outside of
work.
Sarah Christian
Artist Support Manager
The Social Impact
Center of Excellence
keeps Articore team
members grounded
in the mission that is
honouring art and the
artists who create it.
Being a part of this CoE
has helped me think
more about how we can
have a broader social
impact and I am so
excited to see what we
accomplish.
Kaleigh Miller
Senior Director of Product
Quality, Safely and Compliance
Social Impact and Sustainability (continued)
Affinity Groups and
Centres of Excellence
Several people-centred initiatives are in
place to help our employees collaborate.
Our Affinity Groups (LGBTQIA+, Parents,
Carers, and Neurodiversity) - which include
employees from across the Group - build
community, offer support, and encourage
dialogue.
These groups allow employees to connect in
person and over Slack and share interests,
identities, or goals: creating a more inclusive
and supportive workplace.
In FY24, we proudly launched two Centers
of Excellence (CoEs) that embody our
commitment to innovation, knowledge
sharing, and cross-team collaboration.
The CoE’s reflect specific future-state and
purpose-led themes: Artificial Intelligence
(AI) and Social Impact. As with our Affinity
Groups, these CoEs bring together members
from across the Group, leveraging diverse
expertise and perspectives.
12
Articore Group • FY24 Annual Report
Social Impact
& Sustainability Timeline
Extending Our Values
through Supply
Chains
As a digital marketplace, environmental
impacts, such as waste, are different
compared to traditional mass production and
retail settings. Our marketplaces showcase
products digitally and use third-party fulfillers
for print-on-demand manufacturing. This
means our model does not include waste via
unsold stock of pre-printed merchandise.
When customers buy art on Redbubble or
TeePublic, their orders are printed only after
the order is received, which means there are
no warehouses filled with mass produced art.
Our marketplace model also reduces the
physical distances finished products travel to
reach customers. Redbubble and TeePublic
route orders to fulfillers located closest to
customers. Rather than shipping orders
across oceans, digital art is transmitted to
be fulfilled locally, avoiding the need for
international air transportation. An additional
win this model delivers is the support of
businesses and jobs in regions where
customers order from. As an example,
98.83% of Redbubble marketplace shipments
in FY 2024 were fulfilled in the same region
as the customer, an increase from 97.92% in
FY 2023.
This is not to suggest our model is
completely absent of waste, which can be
generated during manufacturing, packaging,
delivery, and end use by marketplace
participants. Reprints and returns are
the primary sources of waste, which is
complicated by the uniqueness of each
product. High-quality products help by lasting
longer and reducing returns. As described in
the Product Quality section, the Group sets
clear expectations with third-party fulfillers
around product and print quality, which
delivers a variety of wins, including minimising
waste. In FY2024, Redbubble reduced its
return rate by 16.3% (FY2024 return rate
1.13% vs FY2023 return rate 1.35%).
Redbubble team members reached out to us in late 2015
as they wanted to localise the fulfilment of apparel, as
previously shirts were being sent from the States. We are
now proudly Australia’s largest print on demand fulfilment
company, employing between 65 to 140 people
(depending on the season)...Our strength is definitely our
people, we work hard on recruiting, and we spend a lot
of time on training and our company culture.
Sam Fraser (Owner of Fulfiller QTcO)
Carbon Emissions Chart
Time period
Scope 1
Scope 2
FY24
19mT Co2e
106mT Co2e
Supply Chain Integrity
Liberating human creativity should uplift
all people who take part in that process.
The well-being of supply chain workers is
another area we’ve continued to prioritise
through policy, engagement, training,
and independent, third-party auditing. All
third-party fulfillers who participate in the
Redbubble and TeePublic marketplaces
open their facilities to independent audits
according to international labour standards.
The primary way we share our expectations
and then evaluate whether those
expectations are being met is through
engagement and independent, third
party audits. These audits assess fair
compensation, working hours, safety, worker
protection, and other aspects of ethical
business behaviour.
In 2024, we introduced amfori’s Business
Social Compliance Initiative (BSCI) as
Articore’s global social audit standard. BSCI
(launched in 2003) aligns with globally
accepted standards, such as the International
Labour Organization, Organisation for
Economic Co-operation and Development,
United Nations Guiding Principles on
Business and Human Rights. BSCI also
enables marketplace fulfillers to take more
responsibility for their own performance
through BSCI self-assessment tools.
Governance framework
for Social Impact &
Sustainability
Articore Group values sustainable and
responsible business activities as an
important long-term driver of performance
and stakeholder value. Governance of Social
Impact & Sustainability within the Group sits
with the following personnel:
• Articore’s Board has ultimate oversight
of, and accountability for Social Impact
& Sustainability within the Group, which
includes strategy, reporting, materiality
assessments, and action plans.
• The Group Vice President of Social Impact
& Sustainability reports to the Group Chief
People & Culture Officer and is responsible
for both articulating the Group’s Social
Impact & Sustainability strategy and
partnering across Articore and its operating
companies to execute Social Impact &
Sustainability programs and initiatives.
• Group and operating company leaders
are responsible for executing various
Social Impact & Sustainability initiatives
that ladder up to the Social Impact &
Sustainability strategy.
Social Impact & Sustainability risks are
assessed and managed in accordance
with Articore’s enterprise risk management
framework. More information is available
in the Group’s Corporate Governance
Statement. Articore’s governance policies
and statements, including on the topics of
diversity and modern slavery, are available on
our website.
2024
2023
2022
2021
2020
2018
2015
ICAAD (ARTivism)
Girl Child Art Foundation
amfori
Business for
Social Responsibility
UN WOMEN
Climate Neutral
International
Rescue
Committee
Launch Housing
3Degrees
Charlie Hebdo /
Reporters without Borders
13
Articore Group • FY24 Annual Report
Ben Heap
Independent
Non-executive Director
Appointed: 20 April 2020
Board Committees: Audit and Risk;
People, Remuneration, Nomination and
Culture (Chair); Disclosure
Ben is a Sydney-based non-executive
director. He has served on the boards
of a range of public and private
companies. He finished his full time
executive career in 2013 as CEO of
UBS Global Asset Management based
in Sydney, Australia having previously
served as a managing director and
regional leader with UBS in New York.
Ben has wide-ranging experience in
asset and capital management roles in
the finance sector and in technology
and digital businesses. He is also a
founding partner of H2 Ventures,
a privately held venture capital
investment firm, and recognised
for his extensive experience with
entrepreneurial founders and high
growth companies.
Ben holds bachelor degrees
in science (mathematics) and
commerce (finance) from the
University of NSW and is a graduate
of the Australian Institute of Company
Directors (GAICD).
Directorships of other listed entities
in the last three years:
Pendal Group Ltd (ASX:PDL) – March
2022 to January 2023
Star Entertainment Group Ltd
(ASX:SGR) – May 2018 to March 2023
Greg Lockwood
Independent
Non-executive Director
Appointed: 1 June 2015
Board Committees: Audit and Risk;
Disclosure
Greg was appointed as a Non-executive
Director with effect from June 2015.
Greg is a partner of Piton Capital,
which is a shareholder in Articore. In
1999, Greg founded UBS Capital’s early
stage venture investing activities in
Europe. Subsequently, he co-founded
Piton Capital, the London-based
venture capital fund specialising in
marketplaces and business models with
network effects.
Prior to his venture capital activities,
Greg worked in telecommunications
corporate finance with UBS in London
and Zurich and held operating roles in
classified media publishing in Toronto.
Greg has an Honours Business degree
from the University of Western Ontario,
and a Master’s degree in management
from the Kellogg Graduate School of
Management.
Directorships of other listed
entities in the last three years: Nil
Martin Hosking
Co-Founder, Group CEO
and Managing Director
Appointed: 10 April 2006
Board Committees: Disclosure
Martin co-founded the creative
marketplace, Redbubble, in 2006.
It is now part of the Articore Group
of which he is the Group CEO and
Managing Director. He is Chair of the
Management Board of the Melbourne
Theatre Company and is involved with
Melbourne and Monash Universities
through his charitable organisation,
Three Springs Foundation.
Martin has had a distinguished
career in technology spanning three
decades. He was the lead investor and
Chair of Aconex, a SaaS provider to
construction firms acquired by Oracle
in 2019 after listing on the ASX. He was
part of the founding team of NASDAQ-
listed search company, LookSmart.
Martin started his career with the
Department of Foreign Affairs and
Trade, where he served in Egypt and
Syria, before joining McKinsey. He has
a BA (Hons) from Melbourne University
and an MBA from Melbourne Business
School, where he has also lectured.
He is a graduate of the AICD.
Directorships of other listed entities
in the last three years: Nil
Anne Ward
Independent
Non-executive Chairman
Appointed: Non-Executive Director
from 22 March 2018, Chair from
31 March 2020
Board Committees: Audit and Risk;
People, Remuneration, Nomination and
Culture; Disclosure (Chair)
Anne is a highly experienced company
director with extensive experience
in business management, strategy,
finance, risk and governance across a
range of industries including financial
services, technology, healthcare,
government, education and tourism.
In addition to chairing Articore, Anne
is independent Chairman of The Star
Entertainment Group Ltd (ASX:SGR)
and a Director of the Foundation for
Imaging Research. Anne was formerly
independent Chairman of Symbio
Holdings Ltd (ASX:SYM), Chairman of
Colonial First State Investments Ltd,
Chairman of Qantas Superannuation
Ltd, Chairman of Zoos Victoria
and a director of MYOB Group Ltd
(ASX:MYO), Flexigroup Ltd (ASX:HUM),
the Transport Accident Commission,
Epworth Hospital and the Brain
Research Institute. Prior to becoming
a professional director, Anne was a
commercial lawyer for 28 years and
was General Counsel for Australia
at the National Australia Bank and a
partner at Minter Ellison in Melbourne.
Anne holds a Bachelor of Laws and a
Bachelor of Arts from the University
of Melbourne and is a Fellow of
the Australian Institute of Company
Directors and a Life Member of ASFA.
Directorships of other listed entities
in the last three years:
The Star Entertainment Group Ltd
(ASX:SGR) – November 2022 to
present
Symbio Holdings Ltd (formerly MNF
Group Ltd) (ASX:SYM) – July 2021 to
February 2024
Crown Resorts Ltd (ASX:CWN) –
January 2022 to June 2022
Board of Directors
14
Articore Group • FY24 Annual Report
Bob Sherwin
Independent
Non-executive Director
Appointed: 1 November 2022
Board Committees: People,
Remuneration, Nomination and Culture;
Disclosure
Bob was appointed a Director in
November 2022. Bob is a highly
accomplished executive with
significant experience in online
marketing, ecommerce and scaling
marketplace businesses. Bob
was the Chief Marketing Officer
of Wayfair and its full family of
brands globally. Wayfair is one of
the world’s largest destinations for
home furnishings, housewares and
home improvement goods. Bob
spent over a decade at Wayfair
building the full-funnel marketing
capabilities, establishing Wayfair as
a household name, and increasing
sales more than 20 times during his
tenure. Bob led global marketing
strategy and execution, physical
retail, sales, consumer financing,
and home services, while also
managing over USD1 billion in
advertising spend.
After leaving Wayfair in 2023,
Bob joined ZOE as the first Chief
Marketing Officer and Head of US
Market. Headquartered in Boston
and London.
Previously, Bob was a strategy
consultant at McKinsey & Co.
Bob received his MBA from
Northwestern’s Kellogg School
of Management, his Masters in
Engineering Management from the
McCormick School of Engineering,
and his Bachelor’s degree in
Finance and Economics from The
College of William and Mary.
Directorships of other listed
entities in the last three years: Nil
Robin Low
Independent
Non-executive Director
Appointed: 18 March 2024
Board Committees: Audit and Risk
(Chair); People, Remuneration,
Nomination and Culture; Disclosure
Robin is an experienced non-
executive director and ASX audit
and risk committee chair and has
worked across a broad range of
industries including technology, retail,
insurance and financial services and
has experience in data collection and
analysis, artificial intelligence (AI) and
customer experience.
Robin is currently a non-executive
director and either Audit or Audit
and Risk Committee Chair at Appen
Limited (ASX:APX), Guide Dogs NSW/
ACT and the Sax Institute. She was
formerly a non-executive director
and Audit and Risk Committee Chair
of IPH Limited (ASX: IPH), AUB Group
Limited (ASX:AUB), Marley Spoon SE
(ASX:MMM), CSG Limited (ASX:CSV)
and Australian Reinsurance Pool
Corporation. She is a Fellow of the
Institute of Chartered Accountants and
a Fellow of the Australian Institute of
Company Directors. Prior to becoming
a non-executive director, Ms Low
was a partner at PwC for more than 17
years. She is a former Deputy Chair of
the Auditing and Assurance Standards
Board.
Directorships of other listed entities
in the last three years:
Appen Limited (ASX:APX) – October
2014 to present
IPH Limited (ASX: IPH) – October 2014
to April 2024
AUB Group Limited (ASX:AUB) –
January 2014 to November 2023
Marley Spoon SE (ASX:MMM) –
January 2020 to September 2023
Robin Mendelson
Independent
Non-executive Director
Appointed: 1 July 2024
(subsequent to year end)
Board Committees: Nil
Robin is a highly accomplished
executive and non-executive
director with a proven track record
of building, scaling, and transforming
complex technology businesses.
Over her 20-year career at Amazon.
com, she led high-performance
teams across finance, product
development, marketing, and pricing,
driving success in diverse business
models including direct-to-consumer,
marketplace, SaaS, and B2B. As Head
of Amazon’s US Media Consumer
Group, Robin delivered multi-year
revenue and earnings growth across
the multi-billion dollar division through
customer-focused innovation,
product development, supply
chain optimization, and operational
excellence.
Currently, Robin serves on the boards
of Mynd.ai (NYSE: MYND), where she
is a member of the Compensation and
Audit Committees, as well as Mainstay,
an EdTech SaaS platform, and
Acadeum, a higher education course-
sharing marketplace. She serves on
the Board of Governors of the Yale
Alumni Association and is an advisory
board member at Yale’s Broad
Center. Robin holds an MBA from Yale
University, a BA from Duke University,
and is a National Association of
Corporate Directors (NACD) Certified
Director and a board member of
NACD’s Northwest Chapter.
Directorships of other listed entities
in the last three years:
Mynd.ai Inc. (NYSE:MYND) –
December 2023 to present
15
Articore Group • FY24 Annual Report
Group Leadership Team
Martin co-founded the creative marketplace,
Redbubble, in 2006. It is now part of the
Articore Group of which he is the Group CEO
and Managing Director. He is Chair of the
Management Board of the Melbourne Theatre
Company and is involved with Melbourne and
Monash Universities through his charitable
organisation, Three Springs Foundation.
Martin has had a distinguished career in
technology spanning three decades. He was
the lead investor and Chair of Aconex, a SaaS
provider to construction firms acquired by
Oracle in 2019 after listing on the ASX. He was
part of the founding team of NASDAQ-listed
search company, LookSmart.
Martin started his career with the Department
of Foreign Affairs and Trade, where he served
in Egypt and Syria, before joining McKinsey.
He has a BA (Hons) from Melbourne University
and an MBA from Melbourne Business School,
where he has also lectured. He is a graduate
of the AICD.
Rob was appointed the Group’s Chief
Financial Officer (CFO) in March 2023. He
was previously CFO of Domain Group, a S&P/
ASX 200 company, which operates a leading
property marketplace in Australia. Rob was
appointed as Domain Group CFO prior to the
separation of the business from Fairfax Media
and the listing of Domain on the ASX.
Prior to this, Rob was Group General Manager,
Finance at Fairfax Media where he led a
Finance Transformation program as well as
contributing to the broader Fairfax business
transformation.
Earlier in his career, Rob held several senior
finance positions at Vodafone Group in the
UK and Vodafone Hutchison Australia, having
qualified as a Chartered Accountant with audit
firm Kingston Smith in London. Rob is a Fellow
of the Institute of Chartered Accountants in
England and Wales (ICAEW) and is a member of
the Australian Institute of Company Directors
(AICD).
Adam joined Articore in September 2023
as CEO, Redbubble. Adam has built highly-
successful growth businesses in ecommerce,
retail, fashion, healthcare, banking, travel, and
auto. Most recently he was General Manager
International at Poshmark, a leading social
marketplace for new & secondhand clothing.
Adam has previously held ecommerce
leadership roles at Volvo Cars, Walgreens, and
Claire’s Stores. He was a strategy consultant
at The Boston Consulting Group, and studied
Economics at Cornell University. Adam is
based in the San Francisco Bay Area.
Martin Hosking
Rob Doyle
Adam Crouch
Co-Founder/Group CEO/
Managing Director
Group Chief Financial Officer
Chief Executive Officer,
Redbubble
16
Articore Group • FY24 Annual Report
Vivek joined Redbubble Group in June 2022
as CEO, TeePublic. Vivek has more than 20
years of ecommerce, direct to consumer,
and digital marketing experience. Vivek
has led ecommerce businesses across
retail, consumer goods, digitally native, and
marketplaces spanning companies including
Barnes & Noble, Newell Brands, UrbanStems,
and UPS.
In his early career, Vivek worked in technology
consulting for several years. Vivek has an
electrical engineering degree and an MBA from
the University of North Carolina. He is based in
New York.
Jimmy leads the legal and policy teams at
Articore and advises across all of its global
businesses and markets. Jimmy joined Articore
in 2014, serving as Assistant General Counsel
and Deputy General Counsel before being
appointed to Chief Legal Officer in 2022.
Prior to Articore, Jimmy practised law in the
San Francisco Bay Area offices of Covington
& Burling LLP and Simpson Thacher & Bartlett
LLP. There, he advised high-growth tech
companies in numerous strategic partnerships,
intellectual property licenses, M&A deals, and
securities offerings with an aggregate deal
value of over $20 billion.
Jimmy holds a Bachelor of Arts in Economics
from the University of Memphis, where he
graduated magna cum laude, and a Juris
Doctor from the Duke University School of
Law, where he was an editor of the Duke Law
Journal.
Meahan joined Redbubble in October 2021 as
Chief People and Culture Officer. Meahan was
most recently Chief People Officer at Afterpay,
before that MessageMedia and earlier she
spent 10 years in the same role at SEEK Ltd.
Meahan has experience leading global P&C
Functions supporting teams in the US, Canada,
Europe, South America, Asia and Africa.
Meahan holds a Bachelor of Business (HR
Management) and a Post Graduate Diploma in
Psychology.
Vivek Kumar
Meahan Callaghan
James Toy
Chief Executive Officer,
TeePublic
Chief People and
Culture Officer
Chief Legal Officer
17
Articore Group • FY24 Annual Report
Directors’ Report
Your Directors present their report on the consolidated entity, consisting of Articore Group Limited (the Company or Articore) and the entities it controlled
during the financial year ended 30 June 2024 (referred to hereafter as the Articore Group or Group).
Directors
The following persons were Directors of the Company during the 2024 financial year and to the date of this Report:
Martin Hosking
Group CEO and Managing Director
Anne Ward
Chair, Independent Non-executive Director
Ben Heap
Independent Non-executive Director
Greg Lockwood
Independent Non-executive Director
Bob Sherwin
Independent Non-executive Director
Robin Low
Independent Non-executive Director (appointed 18 March 2024)
Robin Mendelson
Independent Non-executive Director (appointed 1 July 2024)
Jennifer (Jenny) Macdonald
Independent Non-executive Director (resigned effective 24 October 2023)
Principal activities
The Articore Group owns and operates the leading global online marketplaces, Redbubble.com and TeePublic.com. These marketplaces facilitate artists’
design and sale of a range of products printed with the artists’ artwork to their customers worldwide. The products are produced and shipped by third party
service providers (i.e. product manufacturers, printers and shipping companies) referred to as fulfillers. There was no significant change in the nature of
Articore Group’s activities during the year.
Review of operations
A summary of financial results(1) (with year on year (YoY) growth rates, where applicable) is set out below:
• Marketplace Revenue of $423.1 million, down 9.5% from FY23
• Underlying Gross Profit of $181.7 million, up 4% from FY23
• Underlying Gross Profit after Paid Acquisition (GPAPA) of $108.3 million, up 11% from FY23
• An underlying Operating EBITDA profit of $10.0 million, compared to a loss of $31.8 million in FY23
• A net loss after tax (NPAT) of $8.8 million, compared to a loss of $54.2 million in FY23
• An underlying positive cash flow(2) of $0.9m, compared to an underlying cash outflow of $46.9m in FY23
• A closing cash balance as at 30 June 2024 of $36.9 million
(1)
Please see Table 1 on following page of the Directors’ Report for explanation of underlying Gross Profit, underlying Gross Profit after Paid Acquisition and underlying Operating EBITDA.
(2) Underlying cash flow defined as operating EBITDA plus net interest earned, less lease related expenses, payments for capitalised development costs and property, plant and equipment
(PPE)
18
Articore Group • FY24 Annual Report
A reconciliation of reported results to non-IFRS numbers in this Directors’ Report is set out below. Non-IFRS measures are presented to provide readers
a better understanding of the Articore Group’s financial performance. The non-IFRS measures are unaudited, however, they have been derived from the
audited financial statements.
Table 1: Reconciliation of reported results to non-IFRS (1) numbers
FY2024
FY2023
$’m (2)
$’m (2)
Marketplace revenue
423.1
467.5
Artists' revenue
69.9
87.6
Total reported revenue from contracts with customers
493.0
555.1
Artists' expenses (3)
(56.2)
(85.9)
Fulfiller expenses
(252.4)
(295.0)
Underlying adjustment (4)
(2.7)
-
Underlying Gross profit (4)
181.7
174.2
Gross profit margin on Marketplace revenue
42.9%
37.3%
Paid acquisition costs
(73.4)
(76.6)
Underlying Gross Profit After Paid Acquisition costs (GPAPA) (4)
108.3
97.6
Underlying GPAPA% (on Marketplace revenue) (4)
25.6%
20.9%
Employee and contractor costs (excluding share-based payments expense)
(63.7)
(82.4)
Marketing expenses (excluding paid acquisition costs shown above)
(1.5)
(9.3)
Operations, administration and technology expenses
(33.1)
(37.8)
Underlying Operating Earnings Before Interest, Tax, Depreciation and Amortisation (Operating EBITDA) (4)
10.0
(31.8)
Share-based payments expense
(6.0)
(5.6)
Other expenses (excluding interest expenses)
(0.5)
(3.3)
Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) (4)
3.5
(40.7)
Depreciation and amortisation
(13.8)
(10.7)
Underlying Earnings before interest and tax (EBIT) (4)
(10.3)
(51.4)
Interest expenses
(0.6)
(0.3)
Interest income
0.8
0.2
Underlying Total underlying profit/(loss) before income tax (4)
(10.1)
(51.6)
Income tax benefit/(expense)
(1.4)
(2.6)
Underlying Total underlying profit/(loss) after income tax (4)
(11.6)
(54.2)
Add back underlying adjustment to reconcile to statutory results (4)
2.7
-
Reported total profit/(loss) for the year in Statutory Financial Statements
(8.8)
(54.2)
(1)
Non-IFRS measures are presented to provide readers a better understanding of Articore’s financial performance. Non-IFRS measures include underlying gross profit, underlying GPAPA,
underlying Operating EBITDA, underlying EBITDA, underlying EBIT, underlying profit/(loss) before income tax and underlying profit/(loss) after income tax. The non-IFRS measures are
unaudited, however, they have been derived from the audited financial statements.
(2) For presentation purposes, numbers have been rounded to millions of dollars, however calculations and totals are based on unrounded numbers.
(3) Artists’ expenses comprise artists’ revenue less marketplace fees and charges recovered from artists.
(4) The statutory results include a one-off release of an accrual that has been excluded for the non-IFRS measures in this Directors Report. This is for the purpose of assessing the Group’s FY24
performance on a like-for-like basis. This table shows the impact this has on underlying gross profit, underlying GPAPA, underlying Operating EBITDA, underlying EBITDA, underlying EBIT,
underlying profit/(loss) before income tax and underlying profit/(loss) after income tax. All references in this Directors’ Report to Gross Profit, GPAPA, Operating EBITDA and EBITDA are to
the underlying version of these numbers shown in the table above.
19
Articore Group • FY24 Annual Report
Directors’ Report (continued)
FY24 has been an important year for the Group with a new name,
leadership team and operating structure delivering a significant turnaround
in the business. At the start of the year, the Group’s central objective
was to return to a positive underlying cash flow position. Although market
conditions were challenging, the Group’s focus on maximising Gross Profit
After Paid Acquisition (GPAPA) combined with ongoing cost discipline
delivered positive underlying cash flow of $0.9m, which was a $47.8m
turnaround on the prior year. This was a pleasing result and a necessary
first step as the company works towards achieving profitable revenue
growth.
Across FY24, significant growth and margin expansion was achieved in
Gross Profit, GPAPA and Operating EBITDA due to a sustained improvement
in unit economics and a restructuring of the cost base. The Group focused
on a narrow set of priorities across the two marketplaces which included
the adjustment of base prices, introduction of artists tiers and optimisation
of their supply chains. Changes were also implemented to paid marketing
strategy to drive effectiveness while maintaining a disciplined approach
to being profitable on first order. With a GPAPA margin of 25.6% (FY23:
20.9%) and operating expenditure of $98.3m (FY23: $129.4m) the Group
has demonstrated considerable discipline in achieving the improvement in
underlying profitability by focusing on fundamentals; ensuring customers
are acquired in an economically viable manner and that margins are strong
and operating costs contained. At the same time, the Group has been
careful to maintain adequate resources to allow continued investment in
areas that are expected to drive growth going forward.
Group Marketplace Revenue (MPR) was 9.5% lower in FY24 than FY23,
with the rate of decline in MPR moderating through the second half of the
year. This reflected the Group’s continued focus on profitable revenue
rather than volume as well as the short-term disruption to Redbubble’s
MPR as the marketplace adjusted its paid marketing strategy in the third
quarter. It is now seeing the benefits of these changes.
The Group has exited FY24 in a strong financial position with closing cash
of $36.9m (FY23: $35.7m) and no debt. In May, the Company announced
the launch of an on-market buyback program which has a maximum value
of $5 million over a period of up to 12 months. The buyback program
further reflects management and the Board’s confidence in the Group’s
future performance and its commitment to maximising shareholder returns.
Further information on the performance of the two marketplace is provided
below.
Redbubble
In FY24, the Redbubble marketplace reported $14.8m in operating EBITDA,
a $32.4m turnaround on the prior year. This was achieved by focusing on
growth in absolute GPAPA which was up 5% on the prior year to $69m,
and a $29.3m (35.1%) reduction in operating expenses. Redbubble’s FY24
GPAPA margin increased by 590 basis points to 28.6% driven primarily by
the introduction of artist account categories and associated fees for some
accounts, ongoing benefits from the implementation of a dynamic order
routing system (DORS) that was first implemented in the second half of
FY23, and adjustments to base prices.
It also reflected a reduction in paid marketing spend as the marketplace
adopted a more disciplined approach of being profitable on first order.
In the third quarter, the Redbubble marketplace implemented significant
changes to its paid marketing strategy to enable it to scale its paid
marketing spend. These changes took time to settle and contributed to
MPR decreasing by 17% in FY24 compared to the prior period, although
the rate of decline in MPR moderated to 14% in the fourth quarter of FY24
as the anticipated benefits started to take effect.
TeePublic
In FY24, TeePublic drove margin expansion while also delivering
marketplace revenue growth. TeePublic’s MPR increased by 3% to
$181.8m, representing 43% of Group MPR compared to 38% in the prior
year. Gross profit increased by 13% to $78.4m and its gross profit margin
was 400 basis points higher at 43.1%. This improvement was driven by
the optimisation of its service fees, the introduction of artist fees for
apprentice accounts and increased allocation of volume to more cost-
effective third party fulfillers.
TeePublic’s GPAPA was $39.3m in FY24, up 24% on FY23 and its GPAPA
margin of 21.6%, was up 370 basis points. The TeePublic marketplace
delivered operating EBITDA of $5.6m, a $8.7m turnaround on FY23.
TeePublic also rolled out several initiatives to improve customer
experience which included adding content categories to assist customers
to initiate and narrow search results, launching a gifting model and
expanding its product range.
Business strategies and future developments
In FY24, the Group achieved a significant improvement in the business
with an important first step being to return the Group to positive underlying
cash flow. As we continue this turnaround process, the task in FY25 is
to leverage the Group’s assets to achieve sustainable, profitable revenue
growth.
The Group has a leadership team and operating structure in place that
provides a solid foundation and the capability to scale the business. The
Group exits FY24 in a strong financial position and is sustainably cash flow
positive. The Group has distinctive assets in its established and growing
base of global creators and their content, its scaled and growing fulfilment
network and its superior unit economics.
In FY25 the Group is expected to remain cash flow positive while
extracting maximum value from both marketplaces by profitably scaling
paid marketing, geographic expansion and the introduction of new
products and line extensions. This combined with continued cost
discipline and the maximisation of synergies across the Group will enable
us to invest in opportunities to serve new and existing creators outside the
two marketplaces. By the end of FY25, we aim to have gone beyond the
existing marketplaces in the pursuit of our vision of being the global leader
for connecting digital creators with their customers.
Significant changes in the state of affairs
In the Directors’ opinion, there have been no significant changes in the
state of affairs of Articore Group during the 2024 financial year.
Significant events after end of the 2024
financial year
In the Directors’ opinion there have been no matters or circumstances
arising since the end of the 2024 financial year that has significantly
affected, or may significantly affect:
• Articore Group’s operations in future financial years;
• the results of those operations in future financial years; or
• Articore Group’s state of affairs in future financial years.
Dividends
No dividends were paid or declared since the start of the 2024 financial
year. The Board does not expect to pay a dividend in the short to medium
term.
20
Articore Group • FY24 Annual Report
Environmental Regulations and Performance
Articore Group’s operations are not regulated by any significant
environmental regulation under a law of the Commonwealth of Australia or
of a State or Territory.
Social Impact and Sustainability
Articore’s marketplaces economically empower artists and offer platforms
for free expression resulting in two visible social impacts that directly
connect to the United Nations’ Sustainable Development Goals and
the Universal Declaration of Human Rights. These outcomes are an
inherent part of our business and are as important in 2024 as when the
company launched nearly two decades ago. This year, in connection
with the transition to the Group operating model, the Group has taken the
opportunity to further centre our environmental, social, and governance
strategy around this founding purpose, which is now referred to as Social
Impact & Sustainability.
Importantly, the Group continues to believe in the value of an open
marketplace and freedom of expression within key content guidelines. This
is captured in Articore’s mission: liberate human creativity.
The Group’s global art marketplaces impact millions of people and our
content safety policies, operational workflows, and technological tools
are designed to achieve the right balance between freedom of expression
and the potential for user-generated content to lead to real world harm.
Creators must follow our guidelines and marketplace participants are
encouraged to flag content they feel violates TeePublic or Redbubble
guidelines.
Highlights:
• Artists earned $59m(1) on Articore marketplaces
• 100% of third-party fulfillers independently audited to human rights
standards
• Four Employee Affinity Groups (LGBTQIA+ Affinity Group, Neurodiversity
Affinity Group, Parents Affinity Group, Carers Affinity Group)
• Social Impact and Artificial Intelligence Centres of Excellence
• Support for art-focused non-profits
Risk Management
The Articore Group seeks to ensure that a consistent and integrated
approach to managing risk is established at all levels and is embedded in
its processes and culture. This enables the Group to take and manage risk
in ways that will generate and protect shareholder value.
The Group’s risk appetite is intended to foster a culture of action and
commercial experimentation. The Board is aware that an overly cautious
approach to risk may have a harmful impact on the achievement of
strategic objectives. For this reason, the Board directs management
to embrace strategic risk and actively innovate for the future while
maintaining tight operational controls.
The Board is ultimately responsible for ensuring risk management
processes are in place and operating effectively, while the Audit and
Risk Committee is responsible for overseeing the Group’s ongoing risk
management program and any key supporting policies and procedures.
The Group CEO and the Executive Team are responsible for managing and
embedding risk management practices throughout the Group.
The Group continuously reviews its risk management framework to ensure
that it remains fit for purpose and provides assurance to the Board that risk
is being managed effectively throughout the Group.
Principal risks
The following are key risks that may impact the Group’s financial and
operating results in future periods.
Strategic and competition risk
The Group’s marketplaces operate in a competitive landscape alongside
other online marketplaces and e-commerce websites with competing
offerings and geographically diverse presences. There is the potential
for the Group’s business to be disrupted by new technologies, such as
artificial intelligence, or new business models in the market segments in
which it does business, such as new or existing user-generated content
platforms and online marketplaces. The Group may also be unable to
find economies of scale and capitalise on strategic synergies among its
business units that create efficiency and reduce operating expenses.
The Group manages these risks in various ways, including by focusing on
ensuring that its marketplaces provide a competitive offering for artists
and their customers.
Risk from macroeconomic uncertainty and shifts in
consumer trends
The Group is subject to macroeconomic and environmental risks that
may affect global supply chains and consumer demand, including
sustained or short-term reductions in demand for online shopping
generally or the product categories available to be sold on the Group’s
marketplaces. As a result of global events (including those related to
pandemics, war, environmental changes, and political and economic
instability), key geographies are experiencing, or may experience in the
future, supply chain disruptions and economic slowdowns of uncertain
severity and duration, which may affect discretionary consumer spending
and consumer disposable income. The print-on-demand industry is
characterised by rapidly changing technology, new service and product
offerings, industry consolidation and evolving consumer demands, and
the Group relies on consumer trends toward de-branded, made-to-order
creative and personalised products and consumer demand for the type
of content and products sold by artists on the Group’s marketplaces.
Although these risks are largely outside of the Group’s control, it manages
them in various ways, including by seeking diversity in product mix,
geographic presence and the third-party fulfilment network.
Dependence on third parties who provide services on
the Group’s marketplaces
The Group’s online marketplaces depend on a network of third-party
payment processors and fulfillers, which are independently operated
businesses that participate in its marketplaces. The Group’s marketplaces
depend on third-party fulfillers to produce products that artists want to
print their art on and sell, but the Group does not enter into manufacturing
contracts with fulfillers and does not control them or have complete
visibility into their business activities, including their upstream supply
chains, their labour practices, and the raw materials and product blanks
they choose to source. The Group manages these risks in various
ways, including by setting clear expectations with fulfillers that promote
safe products and ethical labour practices, engaging independent labs
and auditors to conduct periodic safety testing and ethics audits for
the marketplaces, and limiting or terminating fulfiller participation in its
marketplaces when they do not meet marketplace expectations.
Dependence on scaling of underlying platform
technology and related third-party services
The Group relies on platform technology infrastructure and the services
of third-party service providers to operate its business at scale, including
for providing artists with the continuous ability to upload their content
and sell products, store the library of artist images and related data,
enabling search and discovery of content by artists’ customers, facilitating
the resolution of customer service issues for artists and customers,
providing availability of native apps to mobile users, facilitating onsite and
offsite marketing by artists, routing of orders to third-party fulfillers, and
processing of sales transactions. The technology underlying the Group’s
marketplaces is complex, and internet service providers operate much of
the platform infrastructure. The Group is reliant on the relationships with
these service providers but lacks detailed visibility and control of these
providers’ business activities. The Group manages these risks in various
ways, including by conducting diligence on service providers and by
consistently investing in eliminating platform and technology constraints.
(1)
Artist Earnings is shown net of any fees charged to Artists
21
Articore Group • FY24 Annual Report
Directors’ Report (continued)
Offsite promotion risk
The Group’s marketplaces obtain a significant number of visits via web
search engines. The algorithms and ranking criteria applied by these
search platforms are unknown to the Group, subject to change at any
time, and outside of its control, and it does not have access to complete
information on the methods used to rank its marketplaces and webpages.
Similarly, the Group facilitates artists’ offsite promotion via third-party
advertising platforms and social networks. Increased competition for
limited advertising space could increase the cost of acquiring customers
for artists and reduce the effectiveness of acquisition spend, and the
Group may be unable to develop or maintain a meaningful presence on
important social networks. The Group manages these risks in various ways,
including by focusing on improving user and crawler navigation experience
and site speed, and diversification of customer acquisition sources to
reduce reliance on third-party search engines.
Litigation risk
The Group is the owner and operator of online marketplaces through which
it provides online facilitation services to third parties. The Group regularly
receives notices alleging infringement of third-party intellectual property
rights or similar rights, or breach of consumer protection laws by the Group
or by sellers on the marketplaces, and a number of these complaints have
resulted in litigation. The Group manages these risks in various ways,
including by maintaining a compliance program that covers compliance
with applicable online intermediary safe harbour laws, intellectual
property laws, privacy and consumer laws, and other similar laws in
relevant jurisdictions; responding expeditiously to takedown notices from
intellectual property rights holders; engaging in collaborative relationships
with rights holders to help enforce and monetize their rights; developing
automated platform software to manage content at scale; holding
appropriate levels of insurance; and building Group’s litigation capabilities.
Data security and cyberattack risk
The Group collects, transmits, and stores personal and financial information
provided by artists, their customers and other website users. The Group
also transmits personal and financial information of artists, customers and
other website users to various third-party suppliers of services, including
‘Software-as-a-Service’ and ‘Infrastructure-as-a-Service’ providers and
other cloud-based technology providers. Furthermore, the Group’s
technology platforms may be disrupted by cyberattacks, targeted hacking
attacks, distributed denial of service attacks, malware or ransomware,
or other disruptive attacks. The Group’s marketplaces are also exposed
to the risk of disruption of internet services generally, including failure or
disruption of the systems of external service providers and other third
parties, like payment processors, advertising platforms, and infrastructure
services. The Group manages these risks in various ways, including
by conducting data security diligence on third party service providers;
developing and testing disaster recovery capabilities and procedures;
implementing high availability infrastructure and architectures; continually
monitoring its systems for signs of poor performance, intrusion or
interruption; and maintaining appropriate data management, security and
compliance policies, procedures and practices.
Breach of privacy, consumer, and data protection laws
The Group is subject to applicable privacy and data protection laws
worldwide, including the General Data Protection Regulation in the EU,
the Australian Privacy Act 1988, and privacy laws in the United States,
such as the California Consumer Privacy Act. The Group manages these
risks in various ways, including by maintaining a global legal and regulatory
compliance program and implementing appropriate privacy and data
security measures, including preventative, detective and responsive
capabilities, such as a data breach response plan.
Failure to attract and retain talent
The Group’s future success depends, to a significant extent, on its ability
to attract and retain skilled talent aligned to the current and evolving
capability needs. There is substantial competition for talent in our industry
and so the Group may incur increasing costs to attract and retain them.
The Group manages these risks in various ways, including by reviewing
the strategy and investment in employee engagement, compensation
management and career development.
Inability to attract and retain artists and their customers
The Group’s revenues and success of its growth initiatives depend upon
attracting and retaining artists who upload content that adds value to the
marketplaces and that consumers want to purchase and upon attracting
customers for artists who convert into new and repeat purchasers. This is
dependent on having and maintaining a brand and marketplace experience
that are appealing and satisfying to these artists and their customers.
The Group manages these risks in various ways, including by continuing
to ensure there is a strong value proposition for artists to join and remain
in the marketplace due to quality of the service offered and through the
resultant sales they can generate.
Loss of marketplace trust
It is important to the Group’s mission that its marketplaces remain
trustworthy to the public, the artists, their customers, third-party fulfillers,
regulators, and to those with whom we have commercial relationships.
Marketplace trust could be undermined by negative publicity, the
upload of obscene, illegal or allegedly infringing content, a decrease in
the proportion of content that adds value to the marketplaces and that
consumers want to purchase, an increase in fraudulent account activity or
transactions, inability to implement and administer policies that foster trust,
or inability to meet the Group’s social impact and sustainability obligations
and commitments. The Group manages these risks in various ways,
including by moderating user-generated content that violates Group’s
policies or the law, terminating accounts that repeatedly violate Group’s
policies or the law, investing in anti-fraud software, and continuously
improving Group’s policies and how those policies are administered.
Risk from global legal compliance
The Group is directly or indirectly affected by continuously evolving, and
sometimes conflicting, laws and regulations in Australia, the United States,
Canada, Europe and other relevant jurisdictions around the world – at the
country, region, state and local levels – including laws and regulations
that pertain to intellectual property, e-commerce marketplaces, online
intermediaries, user-generated content and censorship, online safe
harbours from liability, consumer protection, seller verification, taxation,
treatment of deferred losses, privacy, email marketing, web accessibility,
online payment systems, securities, social impact and sustainability,
artificial intelligence, and data protection. The Group manages these risks
in various ways, including by participating in industry and legislative policy
groups to stay abreast of new and evolving laws and by maintaining a
global legal and regulatory compliance program.
Tax risk
The application of indirect taxes – such as goods and services tax, sales
and use tax and value added tax – to online marketplaces, sellers and
their customers is a global, evolving and complex issue. At any given
time, one or more jurisdictions (whether state or federal) may review or
investigate compliance with withholding laws, indirect tax laws, and other
tax laws, seek to impose additional reporting, record-keeping, indirect tax
collection obligations, or other tax-related requirements on the Group’s
online marketplaces. The Group manages these risks in various ways,
including by maintaining robust tax compliance and governance systems
and procedures, engaging external advisers for expert advice where
appropriate and monitoring global taxation developments relevant to the
Group.
Foreign exchange risk
The Group’s financial performance is denominated and reported in
Australian dollars. Accordingly, the Group’s financial performance is
exposed to exchange rate movements in the currencies (other than
the Australian dollar) in which it receives revenues and/or incurs costs,
especially because the United States of America is its largest market.
The Group’s financial position, as measured by the assets and liabilities
it carries on its balance sheet, is denominated and reported in Australian
dollars. Some of the underlying assets and liabilities may, however, be
recorded in other foreign currencies. The Group manages these risks
in various ways, including by settling liabilities in the native currency of
the transaction, creating a strong natural hedge, and converting foreign
currency cash balances where needed to match expected funding
requirements.
22
Articore Group • FY24 Annual Report
Key management personnel during the 2024
financial year and since the end of that
financial year
The “Key Management Personnel” for the purposes of the 2024
Remuneration Report have been determined to be the current Articore
Group Limited directors and the following members of the Articore
Executive Team:
• Martin Hosking - Group CEO and Managing Director
• Rob Doyle - Group Chief Financial Officer
Information on Directors
At the date of this report, the Board comprises five Independent Non-
executive Directors and one Managing Director, who collectively have a
diverse range of skills and experience.
Details of current Directors, their experience, qualification, special
responsibilities and directorships of other listed entities are set out below.
Directors’ qualifications and experience
Ms Anne Ward
Independent Non-Executive Chairman
Appointed: Non-Executive Director from 22 March 2018, Chair from 31
March 2020
Board Committees: Audit and Risk; People, Remuneration, Nomination and
Culture; Disclosure (Chair)
Anne is a highly experienced company director with extensive experience
in business management, strategy, finance, risk and governance across
a range of industries including financial services, technology, healthcare,
government, education and tourism. In addition to chairing Articore,
Anne is independent Chairman of The Star Entertainment Group Ltd
(ASX:SGR) and a Director of the Foundation for Imaging Research. Anne
was formerly independent Chairman of Symbio Holdings Ltd (ASX:SYM),
Chairman of Colonial First State Investments Ltd, Chairman of Qantas
Superannuation Ltd, Chairman of Zoos Victoria and a director of MYOB
Group Ltd (ASX:MYO), Flexigroup Ltd (ASX:HUM), the Transport Accident
Commission, Epworth Hospital and the Brain Research Institute. Prior to
becoming a professional director, Anne was a commercial lawyer for 28
years and was General Counsel for Australia at the National Australia Bank
and a partner at Minter Ellison in Melbourne. Anne holds a Bachelor of
Laws and a Bachelor of Arts from the University of Melbourne and is a
Fellow of the Australian Institute of Company Directors and a Life Member
of ASFA.
Directorships of other listed entities in the last three years:
The Star Entertainment Group Ltd (ASX:SGR) – November 2022 to present
Symbio Holdings Ltd (formerly MNF Group Ltd) (ASX:SYM) – July 2021 to
February 2024
Crown Resorts Ltd (ASX:CWN) – January 2022 to June 2022
Martin Hosking
Co-Founder, Group CEO and Managing Director
Appointed: 10 April 2006
Board Committees: Disclosure
Martin co-founded the creative marketplace, Redbubble, in 2006. It is
now part of the Articore Group of which he is the Group CEO and Managing
Director. He is Chair of the Management Board of the Melbourne Theatre
Company and is involved with Melbourne and Monash Universities through
his charitable organisation, Three Springs Foundation.
Martin has had a distinguished career in technology spanning three
decades. He was the lead investor and Chair of Aconex, a SaaS provider
to construction firms acquired by Oracle in 2019 after listing on the ASX.
He was part of the founding team of NASDAQ-listed search company,
LookSmart.
Martin started his career with the Department of Foreign Affairs and Trade,
where he served in Egypt and Syria, before joining McKinsey. He has a BA
(Hons) from Melbourne University and an MBA from Melbourne Business
School, where he has also lectured. He is a graduate of the AICD.
Directorships of other listed entities in the last three years:
Nil
Ben Heap
Independent Non-Executive Director
Appointed: 20 April 2020
Board Committees: Audit and Risk; People, Remuneration, Nomination and
Culture (Chair); Disclosure
Ben is a Sydney-based non-executive director. He has served on the
boards of a range of public and private companies. He finished his full time
executive career in 2013 as CEO of UBS Global Asset Management based
in Sydney, Australia having previously served as a managing director and
regional leader with UBS in New York.
Ben has wide-ranging experience in asset and capital management roles
in the finance sector and in technology and digital businesses. He is
also a founding partner of H2 Ventures, a privately held venture capital
investment firm, and recognised for his extensive experience with
entrepreneurial founders and high growth companies.
Ben holds bachelor degrees in science (mathematics) and commerce
(finance) from the University of NSW and is a graduate of the Australian
Institute of Company Directors (GAICD).
Directorships of other listed entities in the last three years:
Pendal Group Ltd (ASX:PDL) – March 2022 to January 2023
Star Entertainment Group Ltd (ASX:SGR) – May 2018 to March 2023
Greg Lockwood
Independent Non-Executive Director
Appointed: 1 June 2015
Board Committees: Audit and Risk; Disclosure
Greg was appointed as a Non-executive Director with effect from June
2015. Greg is a partner of Piton Capital, which is a shareholder in Articore.
In 1999, Greg founded UBS Capital’s early stage venture investing activities
in Europe. Subsequently, he co-founded Piton Capital, the London-based
venture capital fund specialising in marketplaces and business models with
network effects.
Prior to his venture capital activities, Greg worked in telecommunications
corporate finance with UBS in London and Zurich and held operating roles
in classified media publishing in Toronto. Greg has an Honours Business
degree from the University of Western Ontario, and a Master’s degree in
management from the Kellogg Graduate School of Management.
Directorships of other listed entities in the last three years:
Nil
Bob Sherwin
Independent Non-Executive Director
Appointed: 1 November 2022
Board Committees: People, Remuneration, Nomination and Culture;
Disclosure
Bob was appointed a Director in November 2022. Bob is a highly
accomplished executive with significant experience in online marketing,
ecommerce and scaling marketplace businesses. Bob was the Chief
Marketing Officer of Wayfair and its full family of brands globally. Wayfair is
one of the world’s largest destinations for home furnishings, housewares
and home improvement goods. Bob spent over a decade at Wayfair
building the full-funnel marketing capabilities, establishing Wayfair as a
household name, and increasing sales more than 20 times during his
tenure. Bob led global marketing strategy and execution, physical retail,
sales, consumer financing, and home services, while also managing over
USD1 billion in advertising spend.
After leaving Wayfair in 2023, Bob joined ZOE as the first Chief Marketing
Officer and Head of US Market. Headquartered in Boston and London,
ZOE is a leader in the health and wellness category, with the mission of
leveraging its world-leading science to help improve the health of millions
through its at-home testing and personalized nutrition membership
platform.
Previously, Bob was a strategy consultant at McKinsey & Co. Bob received
his MBA from Northwestern’s Kellogg School of Management, his Masters
in Engineering Management from the McCormick School of Engineering,
and his Bachelor’s degree in Finance and Economics from The College of
William and Mary.
Directorships of other listed entities in the last three years:
Nil
23
Articore Group • FY24 Annual Report
Directors’ Report (continued)
Robin Low
Independent Non-Executive Director
Appointed: 18 March 2024
Board Committees: Audit and Risk (Chair); People, Remuneration,
Nomination and Culture; Disclosure
Robin Low was appointed as a non-executive Director and Chair of the
Audit and Risk Committee in March 2024.
Robin is an experienced non-executive director and ASX audit and risk
committee chair and has worked across a broad range of industries
including technology, retail, insurance and financial services and has
experience in data collection and analysis, artificial intelligence (AI) and
customer experience.
Robin has been a non-executive director for a number of ASX-listed
companies with significant international operations and is currently a
non-executive director and either Audit or Audit and Risk Committee Chair
at each of Appen Limited (ASX:APX), Guide Dogs NSW/ACT and the Sax
Institute. She was formerly a non-executive director and Audit and Risk
Committee Chair of IPH Limited (ASX: IPH), AUB Group Limited (ASX:AUB),
Marley Spoon SE (ASX:MMM), CSG Limited (ASX:CSV) and Australian
Reinsurance Pool Corporation. She is a Fellow of the Institute of Chartered
Accountants and a Fellow of the Australian Institute of Company Directors.
Prior to becoming a non-executive director, Ms Low was a partner at PwC
for more than 17 years. She is a former Deputy Chair of the Auditing and
Assurance Standards Board.
Directorships of other listed entities in the last three years:
Appen Limited (ASX:APX) – October 2014 to present
IPH Limited (ASX: IPH) – October 2014 to April 2024
AUB Group Limited (ASX:AUB) – January 2014 to November 2023
Marley Spoon SE (ASX:MMM) – January 2020 to September 2023
Robin Mendelson
Independent Non-Executive Director
Appointed: 1 July 2024 (subsequent to year end)
Board Committees: Nil
Robin is a highly experienced senior executive, and non-executive director
with a proven track record of building, scaling and transforming complex
technology businesses. In a 20-year career with global e-commerce
leader Amazon.com, she led high-performance teams in finance, product
development, marketing, pricing and other essential functions spanning
diverse business models such as direct-to-consumer, marketplace,
software-as-a-service (SaaS) and business-to-business.
As Head of Amazon’s US Media Consumer Group, Robin delivered multi-
year revenue and earnings growth across the US multi-billion dollar division
through customer-focused innovation, product development, supply chain
optimisation and continuous operational improvements.
Currently, Robin serves as a Director of Mynd.ai (NYSE:MYND), where she
is a member of the Compensation and Audit Committees. She also holds
directorships at Mainstay, an EdTech SaaS platform; Acadeum, an EdTech
higher education course-sharing marketplace; and co-chairs TeachUNITED,
an organisation dedicated to enhancing educator capabilities in rural
communities in the US and internationally.
Robin is also a member of the Advisory Board of the Broad Center at the
Yale University School of Management and the Board of Governors of
the Yale University Alumni Association. She is a National Association of
Corporate Directors (NACD) Certified Director and a board member of
NACD’s Northwest Chapter.
Robin holds an MBA from Yale University and a Bachelor of Arts from Duke
University. She was also a Senior Fellow at the Advanced Leadership
Initiative at Harvard University where she co-authored Harvard Business
Review case studies and served as a Senior Editor and Writer at the
Harvard Social Impact Review.
Directorships of other listed entities in the last three years:
Mynd.ai Inc. (NYSE:MYND) – December 2023 to present
Board and Committee Meetings
- attendance during FY24
The Board met 12 times during the year ended 30 June 2024. Board and
Committee attendance is set out in the table below.
All Directors may attend Board and Committee meetings even if they are
not a member of the particular Committee. The table does not include
attendance of Directors at meetings of Committee of which they are not a
member.
Board
Audit and Risk
Committee (ARC)
People,
Remuneration
and Nomination
Committee (PRNC)
Held
whilst in
office
Attended
whilst in
office
Held
whilst
an ARC
member
Attended
whilst
an ARC
member
Held
whilst
an PRNC
member
Attended
whilst
an PRNC
member
Anne Ward (1)
12
11 (2)
6
6
5
5
Martin Hosking
12
12
-
-
-
-
Greg Lockwood
12
12
6
6
-
-
Jenny
Macdonald (3)
5
4
2
2
2
2
Bob Sherwin
12
11 (4)
-
-
4
3
Ben Heap
12
12
6
6
6
6
Robin Low (5)
3
3
2
2
2
2
(1)
Anne Ward is a member of the PRNC ex-officio by virtue of her position as Board Chair.
(2) Anne Ward was granted a leave of absence for the Board meeting she did not attend.
(3) Jenny Macdonald resigned as a Director effective 24 October 2023.
(4)
Bob Sherwin was granted a leave of absence for the Board meeting he did not attend.
(5) Robin Low was appointed as a Director effective 18 March 2024.
Directors’ interests in shares and options
Name
Shareholdings
Options
outstanding
Share appreciation
rights outstanding
Anne Ward
320,714
-
-
Martin Hosking
40,000,000
-
-
Ben Heap
500,000
222,060
2,656,693
Greg Lockwood
6,465,131
-
-
Bob Sherwin
200,000
-
-
Robin Low
-
-
-
Robin Mendelson
-
-
-
Total interests
47,485,845
222,060
2,656,693
Retirement, election, continuation in office
of Directors
Under the Company’s constitution, Directors cannot serve beyond three
years or the third AGM after their appointment, whichever is longer,
without submitting for re-election by the Company. A retiring Director
is eligible for re-election without needing to give any prior notice of an
intention to submit for re-election and holds office as a Director (subject
to re-election) until the end of the general meeting at which the Director
retires.
24
Articore Group • FY24 Annual Report
Company Secretaries
Articore Group’s Company Secretaries are Ms Carlie Hodges (appointed 31
October 2022) and Mr Harry Pratt (appointed 15 February 2024).
Carlie Hodges is an Executive Director at cdPlus Corporate Services
(cdPlus), which provides outsourced corporate governance and company
secretarial services to both private and public companies in Australia. In
addition, she is a Senior Associate at Coghlan Duffy Lawyers. Carlie is
also the Company Secretary of Top Shelf International Holdings Limited,
Bod Science Limited and Damstra Holdings Ltd. Carlie holds a Bachelor of
Science and Bachelor of Laws from Deakin University, a Master of Arts in
Medical Ethics and Law from King’s College London, a Graduate Diploma of
Applied Corporate Governance from the Governance Institute of Australia
and is admitted as a solicitor in the state of Victoria.
Harry Pratt is an Associate at cdPlus, as well as a Senior Associate at
Coghlan Duffy Lawyers. Harry is also the Company Secretary of Top Shelf
International Holdings Limited. Harry holds a Bachelor of Arts and Bachelor
of Laws from Deakin University, a Graduate Diploma of Legal Practice from
the College of Law and is admitted as a solicitor in the state of Victoria.
Details of share options, share appreciation
rights and performance rights
The following table shows the total numbers of ordinary shares in the
Company subject to options, share appreciation rights or performance
rights as at the date of this Report:
Type of Equity Security
Number Outstanding
Last Expiry Date
Share Options
7,521,912
01-Dec-2030
Share Appreciation Rights (1)
16,926,551
01-May-2030
Restricted Stock Units (2)
7,147,920
Total
31,596,383
(1)
Share Appreciation Rights (SARs) entitle the holder to equity equal to the appreciation of
the Group’s share price over a defined period. There is not a 1 to 1 relationship with the
number of SARs on issue and the number of shares that will be issued upon exercise.
(2) Restricted Stock Units (RSUs) granted do not have an expiry date. Ordinarily these
vest and are settled according to a participants’ vesting schedule, and any outstanding
restricted stock units are otherwise forfeited when a participant no longer satisfies the
service conditions in their agreement.
Holders of options, share appreciation rights or restricted stock units do
not, by virtue of their holdings, have any pre-emptive right to participate in
any share issue of the Company or any related body corporate.
The Financial Report contains details of the total number of ordinary
shares in the Company issued following exercise of options and vesting of
restricted stock units during the 2024 financial year. The following table
shows the total number of ordinary shares in the Company issued following
exercise of options and vesting of restricted stock units since the end of
the 2024 financial year, to the date of this Report:
Number
Exercise
price paid $
Settlement of vested restricted stock units
-
-
Exercise of options
11,000 -
Total
11,000
-
No amounts remain unpaid in respect of the shares issued, as outlined
above.
Indemnification and insurance of officers
The Company has entered into Deeds of Indemnity with all its Directors
in accordance with the Company’s constitution. The Company has paid a
premium to insure the Directors, Officers and Managers of Articore Group
entities. The insurance contract requires that the amount of the premium
paid is confidential.
Proceedings against entities within the
Group
Although the Group is strictly an online intermediary that provides online
facilitation services to third parties via its marketplaces, and Group
does not sell or manufacture the products sold by artists through its
marketplaces, it periodically receives notices alleging infringement of third-
party copyright, trademarks, other intellectual property rights or publicity
rights or breach of consumer protection laws. This is not uncommon for
marketplaces that host user-generated content, nor is it uncommon within
the United States of America business environment where the majority of
such claims arise. As at the date of these financial statements, there are
current lawsuits filed against the Group that relate to alleged intellectual
property infringement and/or breach of consumer laws. As at reporting
date, there is no certainty that the Group either holds any obligations in
relation to these actions and/or there is any likelihood of outflows (or
inflows from insurance recoveries where applicable) of cash or other
resources in respect of them, should any of the actions ultimately be
successful (at first instance or on appeal, as applicable).
The Group does not currently consider that any of the current proceedings
are likely to have a material adverse effect on the business or financial
position of the Group.
The Group is not aware of any other material threats of civil litigation
proceedings, arbitration proceedings, administration appeals, or criminal or
governmental prosecutions in which entities within the Group are directly
or indirectly concerned.
Group CEO and Group CFO declaration
The Group CEO and Group CFO have provided a written statement to
the Board in accordance with Section 295A of the Corporations Act.
With regard to the financial records and systems of risk management
and internal compliance in this written statement, the Board received
assurance from the Group CEO and Group CFO that the declaration was
founded on a sound system of risk management and internal control, and
that the system was operating effectively in all material aspects in relation
to the reporting of financial risks.
Remuneration Report
The Remuneration Report is set out on pages 29 to 39 and forms part of
the Directors’ Report for the financial year ended 30 June 2024.
Rounding of amounts
The amounts contained in the Financial Report have been rounded to the
nearest $1,000 (where rounding is applicable) where noted ($000) under
the option available to the Company under ASIC Legislative Instrument
2016/191. The Company is an entity to which the Legislative Instrument
applies.
Auditor
Ernst & Young was appointed as the Group’s Auditor on 25 November 2014
and continues in office in accordance with section 327 of the Corporations
Act 2001.
To the extent permitted by law, the Company has agreed to indemnify
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 end of the 2024 financial year.
25
Articore Group • FY24 Annual Report
Directors’ Report (continued)
Non-audit services
During the year Ernst & Young has not performed any other services in
addition to its audit responsibilities. The Directors are satisfied that the
provision of non-audit services by Ernst & Young in the prior year did
not compromise the auditor independence requirements set out in the
Corporations Act. All non-audit services were subject to the Group’s
External Audit Policy and do not undermine the general principles
relating to auditor independence set out in APES 110 Code of Ethics for
Professional Accountants as they did not involve reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity
for the Group, or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the Group and its related
practices for non-audit services provided throughout the 2024 and 2023
financial years are set out below.
Non-audit services
2024
2023
$
$
Fees to Ernst & Young (Australia)
Category 3: Fees for Other Assurance
services and Agreed Upon Procedures:
Other assurance services and agreed upon
procedures
-
64.480
Category 4: Fees for Non-Audit services:
Assistance in developing the Group's ESG
strategy
-
113,300
Taxation services
-
6,000
Fees to overseas member firms of
Ernst & Young (Australia)
Taxation services
-
-
Total
-
183,780
Fees for Audit services
Details of the amounts paid to the auditor for audit services provided
throughout the 2024 and 2023 financial years are set out in Note 25 to the
Consolidated Financial Statements.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration, as required under
section 307C of the Corporations Act, is set out on page 27. The Auditor’s
Independence Declaration forms part of the Directors’ Report.
The Directors’ Report is made in accordance with a resolution of the
Directors of the Company.
Anne Ward
Chair
21 August 2024
26
Articore Group • FY24 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
22
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
Auditor’s independence declaration to the directors of
Articore Group Limited
As lead auditor for the audit of the financial report of Articore Group Limited for the financial year
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 Articore Group Limited and the entities it controlled during the
financial year.
Ernst & Young
Ashley Butler
Partner
21 August 2024
Auditor’s Independence
Declaration
27
Articore Group • FY24 Annual Report
Letter from the People,
Remuneration and
Nomination Committee
(1)
Dear Shareholder,
On behalf of the Board, I am pleased to present our FY24 Remuneration Report.
Ongoing alignment of structure, strategy and remuneration
Articore Group’s new operating structure was formalised in FY24. In step with these overarching changes, the People, Remuneration and Nomination
Committee has continued to refine the Group’s remuneration framework during the year, implementing the changes highlighted in our FY23 report.
In FY24, the Group introduced a new short-term incentive, to replace the base equity component of the Group Executive Compensation Program. The
new short-term incentive is an at-risk cash based award, tied to financial targets to drive individual and collective performance. The change was effective 1
October 2023.
In line with this change, the Group CEO and Group CFO were awarded 50% of their possible short-term incentive, reflecting the Group’s return to positive
underlying cash flow but not the additional financial hurdles relating to underlying cash flow at budget level.
Non-executive Director’s fees
In FY23, the Committee reviewed fees paid to non-executive Directors and the Board resolved to reduce these by 20% temporarily, to align with the
significant cost-reduction initiatives implemented across the Group and to reflect the Group’s smaller market capitalisation. In FY24, the Board resolved to
set this as the new fee level for Directors.
A return to high-levels of employee engagement
Over the last 18 months, we had to make some difficult decisions to rightsize our employee base to reflect changing economic conditions and to align with
our new operating structure. This was challenging for our teams and had a significant impact on the Group’s employee engagement scores.
Pleasingly, in our most recent all-employee survey, conducted in May 2024, employee engagement was 77% as a weighted average across the Group,
16 percentage points above our November 2023 result, and above historical levels. This is a strong indication that our employees understand the rationale
for change and support the Group’s strategic direction.
Our continued commitment to diversity and inclusion
Ensuring the Group’s diversity, across all levels, remained a focus in FY24. In FY24, we continued to achieve gender diversity across our employee group
and to meet our target of 40% or greater representation of women in senior leadership.
We undertook our annual gender pay gap review during the year and were pleased to see that we maintained our strong track record of pay parity. At
Articore Group, we annually test where there are employees in the same roles, that there are no differences based on gender. This year we can again
report a zero pay gap from that test.
We remain committed to our publicly communicated goals regarding gender representation in the Articore Group and are actively taking steps to work
towards them.
Ben Heap
Chair of the People, Remuneration
and Nomination Committee
(1)
Please note that the letter from the People and Nomination Committee is unaudited. The audited remuneration report follows this letter.
28
Articore Group • FY24 Annual Report
In this Remuneration Report the following
definitions are used:
• Articore Group or the Group means
Articore Group Limited (ACN 119 200
592) and, where relevant, its controlled
entities;
• Board means the Board of Directors of
Articore Group;
• Committee means the People,
Remuneration and Nomination Committee
of the Board of Articore Group;
• Executives means the members of the
Group Leadership Team;
• NED means the Non-executive Directors
of the Group; and
• GECP means the Group Executive
Compensation Program.
Remuneration Report
(Audited)
Introduction
This Remuneration Report (Report) sets out the Group’s executive
remuneration framework, as well as the remuneration arrangements for
the Group’s key management personnel (KMP) for the year ended 30
June 2024.
The Report has been prepared and audited based on the requirements
of the Corporations Act 2001 (Cth) (The Corporations Act) and its
Regulations.
Contents
1. Remuneration Report Overview
30
2. Remuneration Strategy
30
3. How Remuneration is Governed
30
4. Company Performance in FY24
32
5. Executive Remuneration
32
6. Non-Executive Director Remuneration
35
7. Statutory Reporting for FY24
36
8. Other information
37
29
Articore Group • FY24 Annual Report
Remuneration Report (continued)
1. Remuneration Report Overview
The Directors present the Remuneration Report (Report) for the Group for the financial year ended 30 June 2024 (FY24). This Report forms part of the
Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001.
The Report details the remuneration arrangements for Key Management Personnel (KMP), those persons who have authority and responsibility for planning,
directing and controlling the activities of the Group.
The table below outlines the KMP of Group during FY24:
Classification
Name
Position
NED
Anne Ward
Independent Non-executive Chair
Ben Heap
Independent Non-executive Director
Greg Lockwood
Independent Non-executive Director
Jennifer (Jenny) Macdonald
Independent Non-executive Director until 24 October 2023
Robert (Bob) Sherwin
Independent Non-executive Director
Robin Low
Independent Non-executive Director from 18 March 2024
Executive KMP
Martin Hosking
Group CEO and Managing Director
Rob Doyle
Group CFO
Robin Mendelson was appointed as an Independent Non-executive Director on 1 July 2024 (following the end of the financial year) and will be a KMP as of
this date.
2. Remuneration Strategy Overview
Our remuneration strategy is designed to support the Group’s business strategy and drive sustainable outperformance over the long term. The
remuneration strategy is subject to ongoing improvement to ensure it maintains the strongest alignment possible with shareholder experience and with
contemporary executive compensation philosophy and practice.
The GECP applies to members of the Group’s Executives, and other invited senior leaders, and provides a strong foundation to attract and retain talent and
align them with building long-term value for shareholders. The GECP structure is positioned to be competitive when looking to attract and retain key talent,
domestically and internationally.
The objectives of the GECP are to:
• Attract and retain exceptional talent in highly competitive, highly mobile global markets;
• Align executive performance with Group’s financial goals with a long term incentive (LTI) heavily aligned to the creation of long-term value for
shareholders; and
• Attach performance expectations of the leadership team to shared Objectives and Key Results (OKRs) consistent with the Group’s corporate strategy.
Shareholder alignment is continually demonstrated through the GECP model, with executives having considerable and direct alignment with that of the
shareholders.
We are committed to engaging with our shareholders and other key stakeholders in relation to the Company’s remuneration strategy and to continuously
improving the effectiveness of our remuneration arrangements.
3. How Remuneration is Governed
3.1 People, Remuneration and Nomination Committee Role
The role of the Committee is to ensure that the Group has appropriate remuneration and retention strategies to attract and retain high-quality talent, both
locally and globally, to enable the Company to execute its purpose, vision and mission, in order to build long-term value for shareholders.
The members of the Committee during FY24 were:
• Ben Heap Independent Non-Executive Chair
• Anne Ward Independent Non-Executive Member
• Bob Sherwin Independent Non-Executive Member
• Jenny Macdonald Independent Non-Executive Member (until 24 October 2023)
• Robin Low Independent Non-Executive Member (from 18 March 2024)
30
Articore Group • FY24 Annual Report
Articore Group Board
• Overall responsibility for the remuneration strategy and outcomes for executives and non-executive directors
• Reviews and approves recommendations from the People, Remuneration and Nomination Committee
People, Remuneration and Nomination Committee (PRNC)
• The Committee makes recommendations to the Board on remuneration strategy, governance and policy
• The Committee is responsible for reviewing and advising the Board on remuneration policies and practices. This Committee also
reviews and advises the Board on the design and implementation of performance packages, superannuation entitlements, termination
entitlements and fringe benefit policies
• The Committee also manages the nomination process for Board members and the process for the selection of the CEO
• The remuneration for Directors, the CEO, CFO and other Executives is reviewed by the Committee which then provides
recommendations to the Board
Management
Provides information to the PRNC in relation to:
• Incentive targets and outcomes
• Remuneration Policy
• Short and long term incentive participation eligibility
• Individual remuneration and contractual arrangements for
Executives
• Annual performance reviews and target setting
Remuneration Advisors
• Provide external independent advice, information and
recommendations relevant to remuneration decisions
• The Committee periodically engages the services of
independent external consultants to provide insights on
KMP remuneration trends, regulatory and governance
updates, pros and cons of possible alternatives, and market
data. No remuneration recommendations as defined in
Section 9B of the Corporations Act 2001 were obtained
during FY24
3.2 Remuneration Benchmarking
The quantum of both fixed salary and the total remuneration package are positioned having consideration for benchmarking data, relevant market
conditions and sentiment, the trajectory of the company’s growth, strategic objectives, competency and skill set of individuals, scarcity of talent, changes
in role complexities and the geographical spread of the company and of the relevant talent pool.
Benchmarking is conducted by using reliable market surveys that are appropriate for our business and where not available, is undertaken independently and
set with reference to market capitalisation, and with reference to industry sector and levels of business complexity, as determined by external advisors, in
collaboration with the Committee each year.
3.3 Clawback of Remuneration
In the event of serious misconduct or a material misstatement of Group’s financial statements, the Board has the discretion to reduce, cancel or clawback
any unvested equity or other long-term incentives.
3.4 Standard Employment Arrangements
Executives are employed on open-ended individual employment agreements that set out the terms of their employment. Each Agreement varies according
to the individual Executive but typically includes:
• Termination provisions incorporating appropriate notice periods, in the case of the Group CEO (three month) and CFO (six-month) notice periods (to
manage business continuity risk during any executive transition);
• Performance, Intellectual Property and confidentiality obligations on the part of both the employer and employee;
• Limited non-solicitation and post-employment restriction provisions; and
• Eligibility to participate in the GECP (or other transitional compensation plans).
31
Articore Group • FY24 Annual Report
Remuneration Report (continued)
4. Company Performance in FY24
4.1 Performance against Financial Metrics
Key indicators (1)
FY24
FY23
FY22
FY21
FY20
CAGR (2)
Total Revenue ($'m)
493.0
555.1
573.4
657.3
416.3
4%
Marketplace Revenue ($'m)
423.1
467.5
482.6
553.3
348.9
5%
Artist Revenue ($'m)
69.9
87.6
90.8
104.0
67.4
1%
Gross profit (GP) ($'m)
181.7
174.2
183.1
222.7
134.4
8%
Gross profit after paid acquisition (GPAPA) ($'m)
108.3
97.6
106.7
151.5
94.5
3%
Earnings before Interest, taxes, depreciation and amortisation (EBITDA) ($'m)
3.5
(40.7)
(11.2)
52.7
5.1
(9%)
Cash balance ($'m)
36.9
35.7
89.1
98.7
58.1
(84%)
Share price at year end ($)
0.42
0.37
0.90
3.61
2.06
(33%)
(1)
The non-IFRS metrics in the table above such as GP and GPAPA are defined in table 1 on page 19 of the Directors’ Report. The non-IFRS measures are unaudited, however, they have been
derived from the audited financial statements.
(2) Compound Annual Growth Rates (CAGR) are shown for the period since FY20.
5. Executive Remuneration
5.1 Remuneration Objectives and Strategy
The Group’s vision is to grow the business and deliver long-term value for shareholders. The Group operates in four highly competitive global talent markets
- Melbourne, San Francisco, New York and Berlin. Attracting and retaining talent in these markets must be supported by a compelling remuneration strategy.
The GECP is designed to attract, motivate and retain proven, global executive talent who will successfully execute the Group’s vision and strategy in a
manner that aligns with the company’s values. The GECP recognises compensation needs to be positioned to extract mid-career executives on a strong
earnings trajectory from roles in companies that provide them with the experience that the Group needs.
The practice of setting annual OKRs for Executives continues and performance is tracked against these. Performance against these objectives, along with
total company performance and operating company performance informs annual compensation reviews for all Executives.
Executive remuneration levels are reviewed regularly by the Committee with reference to the Group’s remuneration strategy, company performance, talent
competitor market activity and external benchmarks.
LINK
EXECUTIVE PERFORMANCE WITH
ARTICORE GROUP’S FINANCIAL
GOALS
MOTIVATE
EXECUTIVES TO CREATE
SUSTAINABLE, LONG-TERM
VALUE FOR SHAREHOLDERS
ALIGN
THE LEADERSHIP TEAM BY
PROVIDING CONSISTENT GOALS
WHICH ENCOURAGE A LONG-
TERM FOCUS
ATTRACT
& RETAIN
EXCEPTIONAL TALENT IN
GLOBALLY COMPETITIVE, HIGHLY
MOBILE MARKETS
32
Articore Group • FY24 Annual Report
5.2 Elements of Remuneration
The following remuneration mix summarises the key components that make up the GECP.
Martin Hosking (Group CEO & Managing Director) – Commencement contract date 17 April 2023
Fixed Salary
$400,000 inclusive of superannuation
Short Term Incentive (STI)
$200,000 (50% of fixed salary)
Long-Term Incentive (LTI)
$600,000 (150% of fixed salary)
Rob Doyle (Group CFO) – Commencement contract date 13 December 2022
Fixed Salary
$600,000 base salary, plus superannuation calculated on base salary
Short Term Incentive (STI)
$300,000 (50% of base salary)
Long-Term Incentive (LTI)
$600,000 (100% of base salary)
Fixed Salary
Fixed compensation including allowances, retirement benefits and other benefits, unless otherwise specified.
FY24 Short Term Incentive (STI)
An annual at-risk cash incentive linked to both Group and Operating Company financial performance. This STI replaced the previous Base Equity grant that
was in effect until 30 September 2023 and as such it was pro-rate in FY24, from 1 October 2023 to end June 2024. From FY25 this will be a full year annual
cash incentive.
The STI component of the GECP operates as outlined below:
STI instrument
Cash incentive.
Amount
The amount of the STI granted to Executives is calculated as a percentage of base salary.
Grant date
For FY24, the grant was made on 1 October following the setting of total compensation for the year.
Performance hurdles &
conditions
The first half of the STI will pay if Group underlying cash flow(1) is positive, net of the STI payment.
The second half of the STI will pay as follows:
• for Redbubble Marketplace Executives: if budgeted underlying cash flow for the Redbubble Operating Company is
achieved.
• for TeePublic Executives: if budgeted underlying cash flow (1) for the TeePublic Operating Company is achieved.
• for Group Executives (including Executive KMP), if budgeted underlying cash flow (1) for the Group is achieved.
The Board will maintain discretion in respect of any STI payment and may use its discretion to allocate a partial payment in
the event STI performance at a level that is at least 80% of the relevant targets.
Importantly, the STI will only be payable to the extent Group actual underlying cash flow is positive, after the allocation of any
STI (referred to as a “Group Gate”).
The STI for FY24 will be paid following the release of audited results, expected to be in September 2024, and will be paid in
cash.
Termination
Should a participant exit during the STI performance period their STI will lapse. The Board retains complete discretion in
these matters.
(1)
Underlying cash flow defined as operating EBITDA plus net interest earned, less lease related expenses, payments for capitalised development costs and property, plant and equipment
(PPE).
33
Articore Group • FY24 Annual Report
Remuneration Report (continued)
FY24 Long-Term Incentive (LTI)
Compensation that rewards senior leaders for creating appreciation in the value of the Group for shareholders. Share Appreciation Rights (SARs) have no
value unless the Executive remains with the business for a minimum of three years and enterprise value grows at a rate that provides shareholders with
attractive returns.
The LTI component of the GECP operates as outlined below:
LTI instrument
Share Appreciation Rights (SARs)
Grant quantum
The grant quantum of the LTI award to Executives is calculated as a percentage of base salary.
Grant date
Grants are made on 1 October of the relevant year following the setting of total compensation for the year and Board
approval except for the Managing Director whose grants have to be approved at the AGM.
Vesting date & conditions
The LTI vests on the earlier of either the third, fourth, or fifth anniversaries following the grant date subject to:
• The Executive remaining employed with the Group (referred to as time vesting); and
• The achievement of a compounding target of 10% Total Shareholder Return (TSR) per annum on either the third, fourth or
fifth anniversaries following the grant date.
The compounding return target is to be determined based on a 10% per annum Total Shareholder Return (TSR) from the time
of grant. TSR is calculated as the total of the share price appreciation plus any dividends paid during the period. TSR has
been chosen as the appropriate target so that Executives are fully aligned with shareholders.
Disposal restriction period
The disposal restriction period ends 12 months following vesting. The holding period remains in place even if employment
ends.
Termination
Should a participant exit during the LTI vesting period, participants will retain pro-rata retention of LTI awards that have yet to
vest. Pro-rata retention has the following conditions:
• The employee must have been part of the GECP LTI program for at least three years;
• The employee must not be considered a ‘bad leaver’;
• The employee must have served at least 12 months of a grant’s vesting period to be entitled to a pro-rata portion;
• The award retained will be pro-rata for the number of months since that award was granted and the employee’s
resignation, divided by the total number of months until first testing of that award;
• The pro-rata award remains subject to all testing, disposal restriction and other conditions; and
• Once an award has achieved its TSR hurdle and has vested, the (former) employee will have 90 days to exercise before
the equity expires.
The Board retains complete discretion in these matters.
Strike price
Strike price is set on 1 October based on a 30-day volume-weighted average price (VWAP).
The Board retains Board discretion in respect of adjusting the strike price if it considers there have been unusual trading
circumstances within the 30-day period.
For FY24 the strike price was $0.5066
SARs valuation is used for
the allocation of equity
The dollar amount of equity is converted to SARs at the fair market value determined at the beginning of the grant period
based on a Black Scholes valuation of the SAR.
The Black Scholes valuation will use the 30 (calendar) day VWAP calculated on 1 October and be calculated on an ‘unhurdled’
basis i.e. valued for the purposes of equity allocation as if there was no performance hurdle.
The accounting valuation of the award for expensing purposes is governed by AASB 2 - Share-Based Payment. A Monte
Carlo simulation model is used that takes into account the probability of performance hurdles being achieved.
Expiration
The SARs expire six years from the grant date and therefore the SARs must be exercised by this point or they lapse.
Upon resignation or termination, the exercise period for SARs ends 90 days following the date of resignation or termination
unless the Board decides otherwise.
Hedging
Executives are prohibited from hedging under the Group’s Share Trading Policy and clawback under existing rules.
Clawback
In the event of serious misconduct or a material misstatement of Group’s financial statements, the Board has the discretion
to reduce, cancel or clawback LTI’s to the extent that the law will allow.
Change of Control
The early vesting of any unvested awards may be permitted by the Board in other limited circumstances such as a change
in control of Articore Group. In these circumstances, the Board will determine the timing and proportion of any unvested
awards that vest.
34
Articore Group • FY24 Annual Report
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Legend
Exercise condition testing period
Exercise condition achieved
Exercise condition not achieved
Exercise condition requirement
(10% CAGR)
Period 2
Period 1
Period 3
Period 4
Period 5
Share price of 133%
of strike price
Share price of 146%
of strike price
Share price of 161%
of strike price
Executive can exercise, if year 3 conditions are met
Executive can exercise,
if year 4 conditions are met
Executive
can exercise,
if year 5 conditions
are met
Vesting and exercise periods of the LTI
5.3 STI and LTI Outcomes
The STI award for Executive KMP was 50% of their short-term incentive noting the STI award for FY24 was for the pro-rata period from 1 October 2023 to
30 June 2024. No LTI awards for Executive KMP have vested during the year (the grants have a minimum 3-year vesting period).
6. Non-executive Director (NED) Remuneration
6.1 NED Remuneration Policy
The Group seeks to attract and retain high-calibre Non-Executive Directors who will provide good governance, strong oversight, independence, a range of
skills and alignment of interests with long-term share price appreciation.
During FY23, the Board resolved to reduce fees by 20% temporarily, effective 1 June 2023. This level of fees was subsequently affirmed by the Board
as the new fee level, and has been in effect throughout the financial year. The table below shows the annual remuneration amounts in respect to Non-
Executive Directors.
Position
Board
Audit & Risk
Committee
People, Remuneration
& Nomination Committee
$ AUD
$ AUD
$ AUD
Chair (1)
$212,000
$24,000
$24,000
Member (2)
$96,000
$12,000
$12,000
(1)
The Chair of the Board receives no additional remuneration for being a member of any committee.
(2) US resident NEDs are paid Board fees of USD $96,000 and committee member fees of USD $12,000.
All Board fees are paid entirely in cash (and therefore, no deferred equity grants were made to NEDs in FY24).
The above fees apply to all of the Group’s NEDs, except for Mr Lockwood. Mr Lockwood is a partner with Piton Capital, a private equity firm with a
shareholding in the Group. Mr Lockwood receives no remuneration from the Group, in accordance with Piton Capital’s policy that their partners do not
accept remuneration for external board positions.
Mr Sherwin also receives remuneration of USD $30,000 per annum for additional services provided to the Group. These services include additional advice,
counsel and mentoring to executives domiciled in North America. Mr Sherwin does not participate in management functions or decisions. The Directors are
satisfied these additional services do not impact Mr Sherwin’s independence.
6.2 Maximum Aggregate NED Fee Pool
The total amount paid to all NEDs for their services must not exceed in aggregate in any financial year the amount fixed by shareholders in a general
meeting, currently set at $1,200,000 which has remained unchanged since the Company’s IPO in 2016. Any changes to this amount in the future will
require approval by shareholders in a general meeting in accordance with the ASX Listing Rules.
6.3 Other Information
NEDs are reimbursed for all reasonable travel and other expenses properly incurred by them in attending Board meetings or any meetings of committees of
the Board, in attending any general meetings of the Group or otherwise in connection with the business or affairs of the Group. NEDs may be paid additional
or special remuneration if they, with the approval of the Board, perform any extra services or make special exertions for the benefit of the Group.
There are no retirement benefit schemes for Directors.
The remuneration of the NEDs in FY24 is set out in detail in section 7.2.
35
Articore Group • FY24 Annual Report
Remuneration Report (continued)
7. Statutory Reporting for FY24
7.1 Executive KMP remuneration for the year ended 30 June 2024
The following table shows details of the nature and amount of each element of remuneration paid or awarded to Executives for services provided during
the year while they were Executive KMP.
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Share-based payments
Cash
salary (1)
Cash
bonus (2)
Super-
annuation (3)
Long
service
leave (4)
Limited
recourse loan
(In-substance
share
options) (5)
Share
options
(Time
based) (6)
Share
appreciation
rights
(Performance
based)(7)
Total
remun-
eration
Performance
-related (8) (9)
$
$
$
$
$
$
$
$
%
Executive Director
Martin Hosking
2024
351,112
83,250
27,500
7,523
-
107,244
297,949
874,578
44%
2023
104,260
-
10,233
135
-
21,551
27,462
163,641
17%
Former Chief Executive Officer
Michael Ilczynski
(resigned as CEO on
27 Mar 23)
2024
-
-
-
-
-
-
-
-
NM
2023
585,311
-
27,500
(1,814)
(212,067)
104,712
(459,955)
43,687
NM
Other Executive KMP
Robert Doyle
2024
660,877
124,875
27,500
12,611
-
261,265
222,510 1,309,638
27%
2023
90,503
-
8,844
81
-
86,514
27,462
213,404
13%
Mark Hall
(appointed as interim
CFO from 5 Dec 22 to
24 Mar 23)
2024
-
-
-
-
-
-
-
-
NM
2023
127,385
-
13,169
-
-
-
-
140,554
NM
Emma Clark
(resigned as CFO on
23 Dec 22)
2024
-
-
-
-
-
-
-
-
NM
2023
189,087
-
21,203
(6,496)
-
60,667
(319,501)
(55,040)
NM
Total
2024
1,011,989
208,125
55,000
20,134
-
368,509
520,459 2,184,216
2023 1,096,546
-
80,949
(8,094)
(212,067)
273,444
(724,532)
506,246
(1)
Includes base salary, excess superannuation (refer to footnote 3) and short term compensated absences, such as annual leave entitlements accrued.
(2) Represents cash bonus accrued for the year plus any relevant superannuation payable on such bonus.
(3) Staff can elect to have their superannuation capped at $27,500 (2023: $27,500), with any amount above this included in cash salary.
(4) Australian executives are entitled to annual leave (refer to footnote 1) and long service leave. The annual charge reflects long service leave accrued (or lapsed) during the period.
(5) The accounting standard, AASB 2 – Share Based Payment, requires limited recourse loans for the purchase of shares to be treated (for accounting) as an option. Amounts disclosed
represent the deemed in-substance option cost for the limited recourse loan provided to Michael Ilczynski to acquire Articore shares. The fair value of in-substance options is ascertained
using the Black-Scholes model and is amortised over the loan period. Michael Ilczynski’s resignation in FY23 resulted in the in-substance option grant being forfeited. All previously
recognised expense relating to in-substance option grant for his services as a KMP was reversed in FY23.
(6) Amounts disclosed reflect the value of remuneration consisting of options, based on the value of options expensed during the year. The fair value of options is ascertained using the Black-
Scholes model and is amortised over the vesting period.
(7)
Amounts disclosed reflect the value of remuneration consisting of share appreciation rights (SARs), based on the value of SARs expensed during the year. The fair value is ascertained using
the Monte Carlo options model and is amortised over the vesting period.
(8) Share appreciation rights with a performance condition are all considered to be performance-related remuneration, based on their nature at grant date.
(9) NM refers to not measurable. Performance related remuneration for former CEO and CFO is not measurable due to their resignations in FY23.
(10) In FY23, Martin Hosking was appointed as Group CEO and Managing Director. Martin Hosking was allocated share options and share appreciation rights which were subject to shareholder
approval. In FY23, for accounting purposes the instruments were accounted for under AASB 2: Share based payments using the 30 June 2023 share price as a value proxy until shareholder
approval was received. Shareholder approval was received at the Annual General Meeting in FY24 and the allocated share options and share appreciation rights accounting values were
updated to reflect their fair values.
36
Articore Group • FY24 Annual Report
7.2 NED Remuneration for the year ended 30 June 2024
Short-term benefits
Post-employment
benefits
Director Fees (1)
Other Fees
Superannuation
Total
$
$
$
$
Non-Executive Directors
Ben Heap (2)
2024
123,673
-
13,604
137,277
2023
146,833
-
15,417
162,250
Greg Lockwood (3)
2024
-
-
-
-
2023
-
-
-
-
Jenny Macdonald (4)
2024
37,505
-
4,126
41,631
2023
146,833
-
15,417
162,250
Anne Ward
2024
190,991
-
21,009
212,000
2023
235,822
-
24,761
260,583
Bob Sherwin (5)
2024
157,171
42,726
-
199,897
2023
115,192
29,528
-
144,720
Robin Low (6)
2024
36,133
-
3,975
40,108
2023
-
-
-
-
Total
2024
545,473
42,726
42,714
630,913
2023
644,680
29,528
55,595
729,803
(1)
All Board fees are paid in cash.
(2) Ben Heap also received fees for chairing the Audit and Risk Committee during the period 25 October 2023 to 17 March 2024.
(3) Greg Lockwood is a partner with Piton Capital, a private equity firm with a shareholding in Articore Group Ltd. Mr Lockwood receives no remuneration from the Group, in accordance with
Piton Capital’s policy that their partners do not accept remuneration for external board positions.
(4) Jenny Macdonald resigned on 24 October 2023.
(5) Bob Sherwin also receives remuneration for additional services provided to the Group. Refer to section 6 for further details.
(6) Robin Low was appointed effective 18 March 2024.
8. Other Information
8.1 Minimum Shareholding Expectation
The Board has set minimum shareholding expectations for the Directors and Executives to promote alignment between their interests and those of
shareholders. Details of Directors shareholdings are shown in table 8.4.
In the case of Executives, the design of the GECP ensures that all Executives progressively acquire shares or other equity instruments, so that they are
aligned in building long-term value for shareholders. The GECP operates to ensure that over time the Executives will acquire an equity exposure equal to or
greater in value than 100% of their annual base salaries.
In the case of NEDs, they are expected to progressively acquire shares, over a three-year period from the date of their appointment. Within this timeframe,
each NED is expected to hold shares equal in cost (being the cost to acquire the shares at the time they were acquired) to the annual base fee for that NED
at the time of their appointment.
Direct and indirect shares and equity instruments (such as Restricted Stock Units, Zero Priced Options and Share Appreciation Rights) count towards this
minimum shareholding target.
Share purchases are only permitted in accordance with the company’s Share Trading Policy.
37
Articore Group • FY24 Annual Report
Remuneration Report (continued)
8.2 Options and Share Appreciation Rights
The tables below disclose the number of share options and share appreciation rights granted, exercised, vested or forfeited during the year.
Option holdings
Share options do not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until their expiry date.
2024
Balance
at the start
of the year
Granted
during the
year as
compensation
Exercised
during
the year
Balance
at the end
of the year
Vested and
exercisable
at the end
of the year
Unvested
at the end
of the year
Vested
during
the year
Non-Executive Directors
Greg Lockwood
-
-
-
-
-
-
-
Jenny Macdonald (1)
-
-
-
-
-
-
-
Anne Ward
50,714
-
(50,714)
-
-
-
-
Ben Heap
-
-
-
-
-
-
-
Bob Sherwin
-
-
-
-
-
-
-
Robin Low (2)
-
-
-
-
-
-
-
Executive Director
Martin Hosking
-
222,060
-
222,060
222,060
-
222,060
Other Executive KMP
Robert Doyle
871,999
-
-
871,999
602,544
269,455
602,544
Total
922,713
222,060
(50,714)
1,094,059
824,604
269,455
824,604
(1)
Jennifer Macdonald resigned on 24 October 2023.
(2) Robin Low was appointed effective 18 March 2024.
Share Appreciation Rights holdings
Share appreciation rights do not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until their expiry
date.
2024
Balance
at the start
of the year
Granted
during the
year as
compensation
Exercised
during
the year
Balance
at the end
of the year
Vested and
exercisable
at the end
of the year
Unvested
at the end
of the year
Vested
during
the year
Executive Director
Martin Hosking
-
2,656,693
-
2,656,693
-
2,656,693
-
Other Executive KMP
Robert Doyle
973,664
1,683,029
-
2,656,693
-
2,656,693
-
Total
973,664
4,339,722
-
5,313,386
-
5,313,386
-
8.3 Shares issued on exercise of options/rights
2024
Nature of grant
Number of ordinary
shares on exercise of
options/rights
Exercise price
per option
Share price per
share at exercise /
settlement dates
Value at exercise /
settlement dates (1)
Non-Executive Director
Anne Ward
Options
50,714
$0.00
$0.60
$30,175
Total
50,714
$30,175
(1)
For options, value at exercise / settlement date is calculated as share price on exercise date less exercise price paid, multiplied by number of options exercised.
38
Articore Group • FY24 Annual Report
8.4 Shareholdings of Directors and Executive KMP
2024 - Articore Group Ltd ordinary shares (1)
Balance
at the start
of the year
Received on
exercise of
options / SARs
Purchase
of shares
Sale / transfer
of shares
Balance
at the end
of the year
Non-Executive Directors
Ben Heap (2) (8)
500,000
-
-
-
500,000
Greg Lockwood (3) (8)
6,465,131
-
-
-
6,465,131
Jennifer Macdonald (4)
278,048
-
-
-
278,048
Anne Ward (5) (8)
270,000
50,714
-
-
320,714
Bob Sherwin (9)
-
-
200,000
-
200,000
Robin Low (6) (9)
-
-
-
-
-
Executive Director
Martin Hosking (7) (8)
40,000,000
-
-
-
40,000,000
Other Executive KMP
Robert Doyle (9)
-
-
-
-
-
Total
47,513,179
50,714
200,000
-
47,763,893
(1)
Includes shares held directly, indirectly and beneficially by KMP.
(2) The shares attributable to Ben Heap are held by Eighty Two Capital Pty Ltd.
(3) The shares attributable to Greg Lockwood are held by Piton Capital Venture Fund II LP and Piton Capital Investments Cooperatief B.
(4) Jennifer Macdonald resigned on 24 October 2023. The total balance represents her shareholding at the date she ceased to be a KMP.
(5) The shares attributable to Anne Ward are held in her personal name and by Walros Pty Ltd as trustee for the Anagnostou Super Fund.
(6) Robin Low was appointed effective 18 March 2024.
(7)
The shares attributable to Martin Hosking are held in his personal name and by Jellicom Pty Ltd as trustee for the Three Springs Family Trust and by Three Springs Foundation Pty Ltd as
trustee for the Three Springs Foundation.
(8) The number of shares held by the Director/KMP has met the minimum shareholding expectation as set out in Section 8.1.
(9) Directors and KMPs have three years from the date of their appointment to progressively acquire shares and meet the Group’s minimum shareholding expectation (as set out in section 8.1).
This Director/KMP has not yet reached three years of employment with the Group.
8.5 Details of equity awards granted
Grant date
# of options
/ rights granted
Type of
equity
Vest
date (1)
Expiry
date (2)
Exercise
price
Unit value at
grant date
Total Value at
grant date (3)
Executive Director
Martin Hosking
24-Oct-23
222,060(4)
Options
01-Apr-24
01-Apr-29
$0.00
$0.58
$128,795
24-Oct-23
973,664(4)
SARs
01-Oct-25
01-Apr-29
$0.46
$0.34
$331,046
24-Oct-23
1,683,029
SARs
01-Oct-26
01-Oct-29
$0.51
$0.38
$639,551
Other Executive KMP
Robert Doyle
01-Oct-23
1,683,029
SARs
01-Oct-26
01-Oct-29
$0.51
$0.28
$471,248
Total
4,561,782
$1,570,640
(1)
The vesting of equity is subject to the KMP remaining in service with Articore Group Ltd as at the vest date and, in relation to the SARs, the total shareholder return hurdle being satisfied.
(2) For options and SARs, if the KMP leaves Articore Group Ltd service then the expiry date is brought forward to be 90 days after the employment end date.
(3) The value at grant date for options has been determined using the Black-Scholes valuation model. The value for share appreciation rights has been determined using the Monte Carlo
valuation model. For presentation purposes, share price has been rounded to two decimal places, however the value at grant date has been calculated based on unrounded numbers.
(4) In FY23 Martin Hosking was appointed as Group CEO and Managing Director and allocated 222,060 share options as Base Equity and 973,664 share appreciation rights as a Long Term
Incentive which were subject to shareholder approval. Shareholder approval was subsequently obtained at the Group’s AGM in October 2023 and the equity granted at this time. Base Equity
was phased out and not awarded in FY24.
39
Articore Group • FY24 Annual Report
Financial Report
41
Consolidated Statement of Comprehensive Income
42
Consolidated Statement of Financial Position
43
Consolidated Statement of Changes in Equity
45
Consolidated Statement of Cash Flows
46
Notes to the Consolidated Financial Statements
74
Consolidated Entity Disclosure Statement
75
Directors’ Declaration
76
Independent Auditor’s Report
Contents
40
Articore Group • FY24 Annual Report
Consolidated Statement
of Comprehensive Income
For the year ended 30 June 2024
Notes
2024
2023
$’000
$’000
Revenue from contracts with customers
Marketplace revenue
423,056
467,516
Artists’ revenue
69,934
87,606
Total revenue from contracts with customers
3
492,990
555,122
Operating expenses
Artists’ expenses (1)
(56,207)
(85,917)
Fulfiller expenses (2)
(252,399)
(295,049)
Employee and contractor costs
4
(69,658)
(87,984)
Marketing expenses
5
(74,857)
(85,818)
Operations, administration and technology expenses
6
(33,132)
(37,762)
Depreciation and amortisation
14, 15 & 16
(13,801)
(10,748)
Total operating expenses
(500,054)
(603,278)
Other income (3)
774
159
Other expenses (4)
7
(1,131)
(3,613)
Profit / (loss) before income tax
(7,421)
(51,610)
Income tax (expense) / benefit (5)
8
(1,416)
(2,570)
Total profit / (loss) for the year attributable to owners
(8,837)
(54,180)
Other comprehensive income / (loss)
Items that will be reclassified subsequently to profit or loss
Gain / (loss) on foreign currency translation
(268)
1,877
Total other comprehensive income / (loss) attributable to owners
(268)
1,877
Total comprehensive income / (loss) for the year attributable to owners
(9,105)
(52,303)
Profit / (loss) per share attributable to the ordinary equity holders of the company
Cents
Cents
Basic profit / (loss) per share
9
(3.14)
(19.59)
Diluted profit / (loss) per share
9
(3.14)
(19.59)
(1)
Artists’ expenses comprise artists’ revenue less marketplace fees and charges recovered from artists.
(2) Fulfiller expenses comprise product and printing, shipping and transaction costs.
(3) Other income includes finance income.
(4) Other expenses include interest on lease liabilities, losses recognised on derecognition of assets, losses on disposal of assets, and net foreign exchange losses.
(5) A portion of the income tax benefit applicable to the Group is recorded directly in equity. Please see note 8 for further details.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with accompanying notes.
41
Articore Group • FY24 Annual Report
Consolidated Statement
of Financial Position
As at 30 June 2024
Notes
2024
2023
$’000
$’000
Current assets
Cash and cash equivalents
10
36,897
35,721
Other receivables
11(b)
5,196
3,396
Prepayments
12
4,420
7,417
Current tax assets
8(b)
214
571
Other assets
13
3,112
4,173
Total current assets
49,839
51,278
Non-current assets
Property, plant and equipment
14
1,234
2,288
Intangible assets
15
70,902
75,170
Right of use assets
16
8,108
5,764
Prepayments
12
237
29
Deferred tax assets
8(d)
46
45
Other assets
13
140
144
Total non-current assets
80,667
83,440
Total assets
130,506
134,718
Current liabilities
Trade and other payables
17
51,733
53,341
Unearned revenue (1)
3
10,508
12,286
Employee benefit liabilities
18
2,248
1,822
Provisions
1,212
2,095
Lease liabilities
16
3,032
3,215
Total current liabilities
68,733
72,759
Non-current liabilities
Lease liabilities
16
6,442
3,791
Employee benefit liabilities
18
89
92
Provisions
130
56
Deferred tax liabilities
8(d)
2,060
784
Total non-current liabilities
8,721
4,723
Total liabilities
77,454
77,482
Net assets
53,052
57,236
Equity
Contributed equity
19(b)
169,496
164,458
Treasury reserve
19(b)
(2,352)
(2,104)
Share based payments reserve
14,460
14,329
Foreign currency translation reserve
1,655
1,923
Accumulated losses
(130,207)
(121,370)
Total equity
53,052
57,236
(1)
Unearned revenue represents the value of goods paid for by customers that are not yet delivered.
The above Consolidated Statement of Financial Position should be read in conjunction with accompanying notes.
42
Articore Group • FY24 Annual Report
Consolidated Statement
of Changes in Equity
For the year ended 30 June 2024
Notes
Contributed
equity
Treasury
reserve (1)
Share based
payments
reserve
Foreign
exchange
translation
reserve
Accumulated
losses
Total
$’000
$’000
$’000
$’000
$’000
$’000
Balance as at 1 July 2023
164,458
(2,104)
14,329
1,923
(121,370)
57,236
Profit / (loss) for the year
-
-
-
-
(8,837)
(8,837)
Other comprehensive income / (loss)
-
-
-
(268)
-
(268)
Total comprehensive loss / (loss) for the year
-
-
-
(268)
(8,837)
(9,105)
Exercise of share options
19(b)
-
-
-
-
-
-
Transfer to issued capital (2)
19(b)
5,857
-
(5,857)
-
-
-
Share based payments expense
4
-
-
5,975
-
-
5,975
Shares issued to Employee Share Trust
19(b)
2,750
(2,750)
-
-
-
-
Shares issued / allocated to participants (3)
19(b)
(2,585)
2,585
-
-
-
-
On-market share buy-back (4)
19(b)
(254)
(83)
-
-
-
(337)
Receivable for limited recourse loan settlement (5)
19(b)
-
-
13
-
-
13
Payment of withholding taxes (6)
19(b)
(730)
-
-
-
-
(730)
Income tax benefit recognised directly in equity
for Employee Share Trust deductions (7)
19(b)
-
-
-
-
-
-
Transfer to accumulated losses (8)
19(b)
-
-
-
-
-
-
Balance as at 30 June 2024
169,496
(2,352)
14,460
1,655
(130,207)
53,052
(1)
The Group operates an Employee Share Trust (the Trust) for the purpose of issuance of shares to participants on exercise of options / restricted stock units. The balance in the treasury
reserve represents the book value of shares held by the Trust for future issue to participants on exercise of options / restricted stock units. The Treasury Reserve also includes shares used
as security for the limited recourse loan provided to the former CEO in FY21.
(2) Transfer to issued capital on issuance of shares for exercised options / restricted stock units.
(3) Shares issued / allocated to participants from the Employee Share Trust.
(4) In FY24, the Group commenced an on-market share buy back. The share buy-back amount represents the total cost of 811,145 ordinary shares bought back. Out of the total ordinary shares
bought back, 611,145 shares were cancelled during the year and 200,000 shares were cancelled upon settlement subsequent to year end. For more details refer to note 19(b).
(5) The receivable amount represents the addition to the receivable balance based on the share price at 30 June 2024.
(6) Payment of withholding taxes to US tax authorities on issuance of restricted stock units funded by shares withheld.
(7)
A tax benefit was recognised directly in equity for income tax benefits relating to contributions to the Employee Share Trust in excess of the associated cumulative remuneration expense.
(8) The balance transferred to accumulated losses represents the income tax benefit recorded in the reserve for equity rights that were converted into shares in the current period.
The above Consolidated Statement of Changes in Equity should be read in conjunction with accompanying notes.
43
Articore Group • FY24 Annual Report
Consolidated Statement
of Changes in Equity (continued)
For the year ended 30 June 2023
Notes
Contributed
equity
Treasury
reserve (1)
Share based
payments
reserve
Foreign
exchange
translation
reserve
Accumulated
losses
Total
$’000
$’000
$’000
$’000
$’000
$’000
Balance as at 1 July 2022
162,526
(4,005)
13,347
46
(67,957)
103,957
Profit / (loss) for the year
-
-
-
-
(54,180)
(54,180)
Other comprehensive income / (loss)
-
-
-
1,877
-
1,877
Total comprehensive loss for the year
-
-
-
1,877
(54,180)
(52,303)
Exercise of share options
19(b)
4
-
-
-
4
Transfer to issued capital (2)
19(b)
4,732
-
(4,732)
-
-
-
Share based payments expense
4
-
-
5,607
-
-
5,607
Shares issued to Employee Share Trust
19(b)
1,170
(1,170)
-
-
-
-
Shares issued / allocated to participants (3)
19(b)
(3,718)
3,718
-
-
-
-
Receivable for limited recourse loan settlement (4)
19(b)
-
-
107
-
-
107
Payment of withholding taxes (5)
19(b)
(256)
-
-
-
-
(256)
Income tax benefit recognised directly in equity
for Employee Share Trust deductions (6)
19(b)
-
120
-
-
-
120
Transfer to accumulated losses (7)
19(b)
-
(767)
-
-
767
-
Balance as at 30 June 2023
164,458
(2,104)
14,329
1,923
(121,370)
57,236
(1)
The Group operates an Employee Share Trust (the Trust) for the purpose of issuance of shares to participants on exercise of options / restricted stock units. The balance in the treasury
reserve represents the book value of shares held by the Trust for future issue to participants on exercise of options / restricted stock units. The Treasury Reserve also includes shares used
as security for the limited recourse loan provided to the former CEO in FY21.
(2) Transfer to issued capital on issuance of shares for exercised options / restricted stock units.
(3) Shares issued / allocated to participants from the Employee Share Trust.
(4) The receivable amount represents the addition to the receivable balance based on the share price at 30 June 2023.
(5) Payment of withholding taxes to US tax authorities on issuance of restricted stock units funded by shares withheld.
(6) A tax benefit was recognised directly in equity for income tax benefits relating to contributions to the Employee Share Trust in excess of the associated cumulative remuneration expense.
(7)
The balance transferred to accumulated losses represents the income tax benefit recorded in the reserve for equity rights that were converted into shares in the current period.
The above Consolidated Statement of Changes in Equity should be read in conjunction with accompanying notes.
44
Articore Group • FY24 Annual Report
Consolidated Statement
of Cash Flows
For the year ended 30 June 2024
Notes
2024
2023
$’000
$’000
Cash flows from operating activities
Receipts from customers
537,822
613,311
Payments to artists
(56,897)
(81,387)
Payments to fulfillers
(251,630)
(294,892)
Payments to other suppliers and employees
(217,312)
(275,410)
Payments of interest
(482)
(343)
Receipts of interest
769
163
Income taxes received / (paid)
219
1,465
Net cash provided by / (used in) operating activities
12,489
(37,093)
Cash flows from investing activities
Payments for property, plant and equipment
14
(86)
(402)
Payments for development of intangible assets
(5,987)
(12,223)
Net cash provided by / (used in) investing activities
(6,073)
(12,625)
Cash flows from financing activities
Payments for lease liabilities
16
(2,949)
(3,425)
Proceeds from exercise of share options
19(b)
-
4
Payments of withholding taxes to US tax authorities on settlement of restricted
stock units funded by shares withheld
19(b)
(730)
(256)
Payments for share buy-back
19(b)
(253)
-
Net cash provided by / (used in) financing activities
(3,932)
(3,677)
Net increase / (decrease) in cash and cash equivalents held
2,484
(53,395)
Cash and cash equivalents at beginning of year
35,721
89,133
Effect of exchange rate changes on cash and cash equivalents
(1,308)
(17)
Cash and cash equivalents at the end of the financial year
36,897
35,721
The above Consolidated Statement of Cash Flows should be read in conjunction with accompanying notes.
45
Articore Group • FY24 Annual Report
Notes to the Consolidated
Financial Statements
1. Basis of preparation
47
2. Changes in material accounting policy information
48
Performance
3. Revenue from contracts with customers
48
4. Employee and contractor costs
48
5. Marketing expenses
48
6. Operations, administration and technology expenses
49
7. Other expenses
49
8. Income tax
49
9. Earnings per share
52
Cash
10. Cash and cash equivalents
53
11. Financial risk management
54
Assets
12. Prepayments
57
13. Other assets
57
14. Property, plant and equipment
58
15. Intangible Assets
59
16. Leases
61
Liabilities
16. Leases
61
17. Trade and other payables
62
18. Employee benefit liabilities
62
Equity
19. Contributed equity and reserves
62
Group structure
20. Interests in subsidiaries
64
21. Parent entity financial information
65
Unrecognised items
22. Commitments and contingencies
66
Others
23. Share-based payments
66
24. Related party transactions
68
25. Remuneration of auditors
69
26. Segment information
70
27. Events occurring after the balance sheet date
71
28. Other material accounting policy information
71
Contents
46
Articore Group • FY24 Annual Report
1. Basis of preparation
The consolidated financial statements of Articore Group Limited(1) and its controlled entities (the Group) for the year ended 30 June 2024 were authorised
for issue by a resolution of the Directors on 21 August 2024. Articore Group Limited (the Company or the parent), the owner of global online marketplaces
for independent creatives, is a for profit company incorporated and domiciled in Australia and whose shares are publicly traded on the Australian Stock
Exchange.
The Group, through its websites at Redbubble.com, TeePublic.com and three foreign language Redbubble.com websites, owns and operates the
Redbubble and TeePublic online marketplaces. These marketplaces facilitate artists’ design and sale of a range of products printed with the artists’ artwork
to their customers worldwide. The products are produced and shipped by third party service providers (i.e. product manufacturers, printers and shipping
companies) referred to as fulfillers.
These financial statements:
• are general purpose financial statements;
• cover Articore Group Limited and its controlled entities as the consolidated Group. Articore Group Limited is the ultimate parent entity of the Group;
• have been prepared in accordance with Australian Accounting Standards (AASBs) and interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001;
• comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);
• have been prepared on a going concern basis under the historical cost convention;
• are presented in Australian dollars with all values rounded off in accordance with the Australian Securities and Investments Commission 2016/191
Legislative Instrument, to the nearest thousand dollars or in certain other cases, nearest dollar, unless otherwise stated; and
• apply material accounting policy information consistently to all the years presented, unless otherwise stated. Comparatives are also consistent with prior
years, unless otherwise stated.
The preparation of financial statements requires the use of certain critical accounting estimates and exercise of significant judgement in the process of
applying the Group’s accounting policies. The areas involving a higher degree of judgement and use of estimates are disclosed in the relevant notes.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events
that may have a financial impact on the entity and that are believed to be reasonable under circumstances. The Group makes estimates and assumptions
concerning the future which may not equal the actual results.
Going concern
The financial report has been prepared on a going concern basis which contemplates the continuity of normal business activities and realisation of assets
and discharge of liabilities in the ordinary course of business. At 30 June 2024, the Group had total net assets of $53.1m (2023: $57.2m) and a net current
asset deficiency of $18.9m (2023: $21.5m). In assessing the going concern basis, the Group considered the following:
• The Group enacted cost-reduction measures in FY23 to substantially reduce operating expenditure. These measures were realised to full benefit in FY24
with the Group’s Consolidated Statement of Cash Flows showing positive operating cash flows of $12.5m (FY23: an operating outflow of $37.1m)
• The Group derives a working capital timing benefit from its operating model, whereby funds are received from consumers for the sale of goods by artists
before the goods are produced by third party fulfillers. Cash outflows to fulfillers occur at a later date, usually within 30 days. This assists in providing the
Group with short term cash liquidity.
• The Group operates two online marketplaces and invests in these marketplaces to generate future economic benefits. The payment for these
investments reduce the cash balance of the Group within current assets. These investments are expected to deliver long term benefits, but in the short
term they have contributed to the Group’s net current asset deficiency as the investment is recorded as a non-current asset.
• Included in the net current asset deficiency are items that are not a cash liability of the Group or items that are not expected to be paid out in the short
term. These include:
ɬ $10.5m of unearned revenue that is not a cash liability of the Group. This will be recognised in the Statement of Comprehensive Income as revenue in
the next financial year.
ɬ $3.0m of lease liabilities disclosed in current liabilities. The Group is required to report the corresponding right of use asset as a non-current asset.
ɬ $2.2m of employee benefit liabilities that are not expected to be paid out as a lump sum, but will be paid out in line with normal salary and wage
payments as employees take leave.
ɬ Artist payables of $19.3m are not expected to be paid out as a lump sum. Amounts are paid monthly only once an artist’s account balance exceeds
$20. Balances below $20 and more than $2 are paid annually in January each year.
• Forward cash flow forecast show the Group will continue to be able to fully pay its debts as and when they become due.
(1)
Redbubble Limited changed its name to Articore Group Limited during the year. A shareholder resolution that gave effect to the name change was passed at the Annual General Meeting on
24 October 2023.
47
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
2. Changes in material accounting policy information
There are no new or amended accounting standards that required the Group to change its accounting policies for the 2024 financial year.
3. Revenue from contracts with customers
The Group provides internet-based marketplace platforms and associated services to facilitate the design and sale by artists of goods printed with the
artists’ art to their customers worldwide. Artists use a suite of online tools to design products printed with their art and to display digital product previews
on online listing pages via the Group’s websites. The Group facilitates the artists’ promotion of their products by aggregating demand from buyers and by
leveraging platform scale to support favourable commercial terms for artists and their customers from third party suppliers, fulfillers and drop shippers, who
participate in Group’s marketplaces.
Under AASB 15 Revenue from Contracts with Customers the Group is the principal for accounting purposes in the sale of goods bearing artists’ designs.
Artists’ revenue from their sales is included in total revenue, and is recognised as artists’ expenses in operating expenses, net of any marketplace fees
incurred by the artist.
The Group has concluded that there is only one performance obligation for goods bearing the artists’ designs. Both the artist and the Group are involved
in satisfying the performance obligation. The performance obligation is satisfied (and therefore revenue is recognised) when control of the goods is
transferred to the customer, which is deemed to be when the product is delivered.
Amounts disclosed as revenue are net of trade discounts, returns, rebates, sales taxes, and transaction fraud relating to stolen or unauthorised use of
credit cards.
Critical accounting estimates and judgements
All of the unearned revenue balance of $12.3m as at 30 June 2023 was recognised as revenue during the FY24. Of the $10.5m unearned revenue balance
at 30 June 2024, $7.4m is expected to be recognised as revenue within the following month with the remaining balance expected to be recognised across
the rest of FY25. Where possible the Group uses delivery tracking information to calculate the volume of goods in transit at the end of the reporting period.
When delivery tracking information is not available the Group estimates the likely delivery timeframe using average delivery times and information from third-
party shipping fulfillers.
2024
2023
$’000
$’000
Australia
35,452
34,161
United States
347,578
395,967
United Kingdom
46,458
47,245
Rest of the world
63,502
77,749
Total revenue from contracts with customers
492,990
555,122
4. Employee and contractor costs
2024
2023
$’000
$’000
Salary costs
50,974
59,352
Contractor costs
9,659
14,703
Share-based payments expense (1)
5,975
5,607
Superannuation and other pension related costs (2)
3,050
4,166
Redundancy costs
-
4,156
Total employee and contractor costs
69,658
87,984
(1)
Includes reversal of share based payments expense of $1.3m (2023: $4.9m) due to forfeiture of awards of employees who departed the Group during the year.
(2) Includes contribution to 401K funds, which is the superannuation equivalent for the US subsidiaries, and contributions to pension funds in Germany.
5. Marketing expenses
2024
2023
$’000
$’000
Paid marketing (1)
73,401
76,565
Other marketing expenses (2)
1,456
9,253
Total marketing expenses
74,857
85,818
(1)
Paid marketing represents search and social paid marketing costs, paid on a per click basis.
(2) Other marketing expenses in FY23 include initial costs for the Group’s brand awareness project.
48
Articore Group • FY24 Annual Report
6. Operations, administration and technology expenses
2024
2023
$’000
$’000
Technology infrastructure and software costs
23,079
27,849
Other operations and administration expenses
10,053
9,913
Total operations, administration and technology expenses
33,132
37,762
7. Other expenses
2024
2023
$’000
$’000
Interest expense (1)
641
343
Loss on disposal/derecognition of assets (2)
137
2,833
Net foreign exchange loss
353
437
Total other expenses
1,131
3,613
(1)
Includes interest expenses on lease liabilities.
(2) Refer to Note 15 for further details on the capitalised development costs that were derecognised in FY23 and FY24.
8. Income tax
Recognition of tax expense / (benefit)
The tax expense recognised in the statement of comprehensive income relates to current income tax expense plus deferred tax expense (being the
movement in deferred tax assets and liabilities and unused tax losses during the year). The tax effect of share based payment awards granted is recognised
in current income tax expense, except to the extent that the total tax deductions are expected to exceed the cumulative remuneration expense.
In this situation, the excess of the associated current or deferred tax is recognised in equity and forms part of the treasury shares reserve.
Current and deferred tax is recognised as income or an expense and included in the income statement for the period except where the tax arises from a
transaction which is recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity
respectively.
Current tax
Current tax is the amount of income taxes payable / (recoverable) in respect of the taxable profit / (taxable loss) for the year and is measured at the amount
expected to be paid to / (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by
the end of the reporting period.
Current tax assets and liabilities are offset where there is a legally enforceable right to set off the recognised amounts and there is an intention either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
Deferred tax
Deferred tax is provided on temporary differences which are determined by comparing the carrying amounts of tax bases of assets and liabilities to the
carrying amounts in the consolidated financial statements.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent:
• it is probable that future taxable profits will be available against which the deductible temporary differences and losses can be utilised;
• the likelihood of achieving appropriate continuity of ownership levels and continuing to meet the relevant definitions of “same business” are met; and
• there are no changes in tax legislation that adversely affect the ability to realise the deferred tax asset benefits.
Deferred tax assets and liabilities are offset where they relate to income taxes levied by the same taxation authority and the intention is to realise the assets
and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or
recovered.
Critical accounting estimates and judgements
Current and deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue, expense and equity
items, the incurrence of tax losses and entitlement to non-refundable tax offsets. In evaluating the Group’s ability to recover deferred tax assets within the
jurisdiction from which they arise, the Group considers all available positive and negative evidence, including probability of achieving appropriate continuity
of ownership levels, likelihood of meeting relevant definitions of “same business”, expected reversals of temporary differences, projected future taxable
income and results of recent operations. This evaluation requires significant management estimates and judgments.
The Group has in aggregate $179.2m (2023: $173.9m) of unrecognised losses, $12.8m (2023: $12.6m) of unrecognised R&D tax offsets and $3.8m (2023:
$1.5m) of unrecognised timing differences. All of these items relate to the Australian tax jurisdiction. An unrecognised deferred tax asset of $67.8m exists
as at 30 June 2024 (2023: $65.2m), in relation to these items. These losses will be recognised at a future point in time when sustainable taxable income
can be reliably estimated.
49
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
(a) Income tax expense / (benefit) recorded in the Statement of Comprehensive Income
Recorded in the Statement of Comprehensive Income
2024
2023
$’000
$’000
Current tax
Current tax expense / (benefit)
209
390
Under / (over) provision in prior years
(79)
23
Deferred tax
Deferred tax expense / (benefit)
1,166
2,113
Under / (over) provision in prior years
120
44
Total income tax expense / (benefit) recorded in the Statement of Comprehensive Income
1,416
2,570
(b) Current tax assets / (liabilities)
The current tax asset is comprised of the following
2024
2023
$’000
$’000
Current tax expense recorded in the Statement of Comprehensive Income
(209)
(390)
Tax benefit recorded in equity (1)
-
120
Tax instalments made and refunds due for prior years
423
841
Total current tax asset
214
571
(1)
The tax effect of share based payment awards granted is recognised in current income tax expense, except to the extent that the total tax deductions exceed the cumulative remuneration
expense. The excess of the associated current or deferred tax is recognised in equity and forms part of the treasury shares reserve.
(c) Numerical reconciliation of income tax expense / (benefit) to prima facie tax payable
2024
2023
$’000
$’000
Profit / (loss) from ordinary activities before income tax expense / (benefit)
(7,421)
(51,610)
Income tax calculated @ 30%
(2,226)
(15,483)
Tax effect of amounts that are not deductible / (taxable) in calculating income tax:
Tax effect of foreign jurisdictions’ different tax rates
(118)
(488)
US income tax benefit due to exercise / disposition of employee stock options
413
457
Net Australian income tax benefit from funding the employee share trust
46
10
Tax effect of share based payment deduction recognised in equity
-
120
Research and development
(45)
(339)
Other non-deductible / non-assessable items
528
136
Effect of movements in foreign exchange
157
1,496
Under / (over) provision in prior year
41
67
Unrecognised tax losses and R&D tax offsets
2,620
16,594
Income tax expense / (benefit) attributable to loss from ordinary activities
1,416
2,570
8. Income tax (continued)
50
Articore Group • FY24 Annual Report
(d) Deferred tax asset / (liability)
Classification of deferred tax assets / (liabilities)
2024
2023
$’000
$’000
Deferred tax assets (1)
46
45
Deferred tax (liabilities)
(2,060)
(784)
Net deferred tax asset / (liability)
(2,014)
(739)
The balance comprises temporary differences attributable to:
2024
2023
$’000
$’000
Amounts recognised in profit or loss:
Employee benefits
178
741
Property, plant and equipment
(41)
(122)
Lease assets and liabilities
252
203
Unrealised FX
2,979
2,902
Intangible assets
(5,133)
(4,228)
US Carried Forward Tax Losses
-
137
Other items
(249)
(372)
Net deferred tax (liability) / assets
(2,014)
(739)
Movements:
Opening balance at 1 July
(739)
1,401
Credited / (debited) to the consolidated statement of comprehensive income
(1,326)
(2,157)
Exchange differences
51
17
Closing balance at 30 June
(2,014)
(739)
(1)
Deferred tax assets (DTAs) are recognised in relation to temporary differences that arise in jurisdictions where the Group is generating taxable income as it is probable that the tax benefit
associated with these DTAs will be realised. As noted above, the Group has unrecognised DTAs for tax losses which remain available for use but for which recognition is not currently
supportable. These DTAs may be recognised at a future point in time when there is sustainable evidence of taxable income in the relevant jurisdiction.
8. Income tax (continued)
51
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
9. Earnings per share
Basic earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted EPS
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the Company (after adjusting for the after income tax effect of
interest and other financing costs associated with the dilutive potential ordinary shares) by the weighted average number of ordinary shares outstanding
during the financial 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.
Basic and diluted earnings per share
The following table reflects the profit / (loss) and share data used in the basic and diluted EPS calculations:
2024
2023
$’000
$’000
Profit / (loss) attributable to the ordinary equity holders of the company used in
calculating basic and diluted earnings per share
(8,837)
(54,180)
Weighted average number of shares used as the denominator
2024
2023
Number (1)
Number (1)
Weighted average number of shares used as denominator in calculating basic earnings per share
281,817,257
276,619,241
Adjustments for calculation of diluted earnings per shares:
Add: Options
-
-
Add: Restricted stock units
-
-
Add: Share appreciation rights
-
-
Weighted average number of shares used as denominator in calculating diluted earnings per share
281,817,257
276,619,241
(1)
None of the options, restricted stock units and share appreciation rights that could be considered as potential ordinary shares have been included in determination of diluted EPS, since
they are anti-dilutive. Due to losses incurred, inclusion of potential ordinary shares in weighted average number of shares would increase the denominator used in calculating diluted EPS and
thereby reduce the loss per share.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of
these financial statements that would significantly impact the above calculations.
52
Articore Group • FY24 Annual Report
10. Cash and cash equivalents
2024
2023
$’000
$’000
Cash at bank and on hand
36,897
35,721
Total cash and cash equivalents
36,897
35,721
(a) Reconciliation of profit / (loss) for the year to net cash inflow / (outflow) from operating activities
Notes
2024
2023
$’000
$’000
Profit/(Loss) for the year
(8,837)
(54,180)
Non-cash items
(Recognition) / derecognition of net deferred tax asset
8(a)
1,286
2,157
Depreciation and amortisation
14,15 & 16
13,801
10,748
Amortisation of share-based payments
4
5,975
5,607
Net exchange differences
1,488
512
Net loss on the disposal / derecognition of property, plant and equipment and intangible assets
7
137
2,833
Income tax benefit recognised directly in equity for Employee Share Trust deductions
8(b)
-
120
Change in operating assets and liabilities
Net decrease / (increase) in trade and other receivables, prepayments and other assets
2,054
801
Net increase / (decrease) in current tax liabilities
357
1,655
Net increase / (decrease) in trade and other payables, employee benefit and other liabilities and provisions
(1,994)
(6,609)
Net increase / (decrease) in unearned revenue
(1,778)
(737)
Net cash provided by / (used in) operating activities
12,489
(37,093)
(b) Changes in liabilities arising from financing activities
Lease liabilities
Notes
2024
2023
$’000
$’000
Opening balance at 1 July
7,006
9,625
Cashflow from principal repayments
16
(2,949)
(3,425)
New leases
16
5,316
649
Interest expense incurred over rent free period
157
-
Foreign exchange movement
16
(56)
157
Closing balance 30 June 2024
9,474
7,006
53
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
11. Financial risk management
This note explains the Group’s financial risk management and how the exposure to these risks affects the Group’s future financial performance. The Group’s
risk management framework is maintained by senior management through delegation from the Board of Directors. The Board oversees and monitors senior
management’s implementation of the Group’s risk management framework. This is based on recommendations from the Audit and Risk Committee, where
appropriate. The risk management framework includes policies and procedures approved by the Board and managed by the Legal and Finance functions.
Financial assets
Notes
2024
2023
$’000
$’000
Cash and cash equivalents
10
36,897
35,721
Other receivables
11(b)
5,196
3,396
Security bonds
13
373
402
Total financial assets
42,466
39,519
Financial liabilities
Notes
2024
2023
$’000
$’000
Fulfiller payables
17
19,949
19,795
Artist payables
17
19,339
20,187
Staff payables
17
2,458
2,622
Other payables
17
6,704
7,402
Lease liabilities
16
9,474
7,006
Total financial liabilities
57,924
57,012
The carrying value of the assets and liabilities (excluding lease liabilities) disclosed in the table equals or closely approximates their fair value. Refer to note
16 for more information on lease liabilities.
(a) Market risk
Foreign exchange risk
The Group collects funds from customers in five currencies (USD, AUD, EUR, CAD and GBP) and maintains bank accounts in these currencies. The Group
has liabilities to fulfillers, artists and other suppliers in these currencies. Where possible, the Group settles its liabilities in the native currency hence creating
a partial natural hedge. Any surplus funds are converted into the required currencies’ operating accounts when management feels it is prudent to do so.
The net exposure to foreign currency financial instruments (expressed in AUD) held by the Group, which are largely held by the US subsidiaries whose
functional currency is USD and Articore Group Ltd whose functional currency is AUD, are as follows:
Net exposure asset / (liability) (expressed in $’AUD)
GBP
USD
EUR
CAD
Total
$’000
$’000
$’000
$’000
$’000
30 June 2024
(1,305)
(1,365)
(231)
10,007
7,106
30 June 2023
(323)
(1,181)
(262)
7,502
5,736
The aggregate net foreign exchange gains / (losses) recognised in profit or loss were:
2024
2023
$’000
$’000
Net foreign exchange loss included in other expenses
(353)
(437)
Total net foreign exchange losses recognised in profit / (loss) before income tax for the year
(353)
(437)
54
Articore Group • FY24 Annual Report
Foreign Currency Sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in exchange rates with all other variables held constant. The impact on the
Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities.
Effect on profit before tax (amounts shown in AUD)
Year
Change in FX rate
GBP
USD
EUR
CAD
Total
$’000
$’000
$’000
$’000
$’000
30 June 2024
+ 10%
(131)
(137)
(23)
1,001
711
- 10%
131
137
23
(1,001)
(711)
30 June 2023
+ 10%
(32)
(118)
(26)
750
574
- 10%
32
118
26
(750)
(574)
(b) Credit risk
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group faces primary credit
risk from potential default on receivables by payment service providers. The Group receives payments of the balance due from two of the three service
providers, every day, two to three days in arrears. The credit risk of balances held with the third party service provider is managed by regularly sweeping
funds out of the provider accounts into a portfolio of managed banking facilities held with highly rated and regulated financial institutions. Amounts owing
from payment service providers, which have a historic and expected minimal rate of default, are not recognised as cash at reporting date.
Cash and bank balances / other financial assets
As at 30 June 2024, the Group holds $26.1m (2023: $20.3m) of cash in interest bearing bank accounts that attract interest at normal rates and $10.8m
(2023: $15.4m) in non-interest bearing bank accounts.
The Group’s bank accounts are predominantly interest bearing accounts.
The other financial assets include certain other operational deposits over and above the deposits placed with banks as security. The banks with which
securities are held are reputable financial institutions and hence, the credit risk is considered low.
Other receivables
The Group is not exposed to any significant credit risk on account of other receivables. The Group accepts payments either via credit card platforms,
PayPal, Amazon Pay, Apple Pay or Buy Now Pay Later (BNPL) platforms. The other receivables balance as at 30 June 2024 represents amounts receivable
from these payment service providers and other non-trade receivable balances. It is believed that the credit risk from collections from payment service
providers is low.
2024
2023
$’000
$’000
Receivables from payment service providers
3,990
1,934
Other non-trade receivables
1,206
1,462
Total other receivables (1)
5,196
3,396
(1)
None of the other receivables are impaired or past due date. The Group does not hold any collateral in relation to these receivables.
The Group encounters credit card fraud typical of the industry in which it operates, representing less than 0.1% (2023: less than 0.1%) of marketplace
revenue.
11. Financial risk management (continued)
55
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash in accordance with forecast cash usage. Due to the dynamic nature of the underlying
business, flexibility in funding is maintained by ensuring ready access to the cash reserves of the business.
All financial liabilities (excluding lease liabilities) are current and anticipated to be repaid over the normal payment terms, usually 30 days for trade and other
payables (excluding Artist Payables) and within 12 months for other financial liabilities. Artist payables are paid to an Artist once their balance exceeds $20.
Balances below $20 and more than $2 are paid annually in January each year.
Maturities of financial liabilities
Financial liabilities owed by the Group at 30 June 2024 are $59.1m (2023: $57.3m). These items are based on contractual undiscounted payments. The
table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
Year ended 30 June 2024
Trade and
other
payables (1)
Lease
liabilities
Total
$’000
$’000
$’000
1 to 3 months
48,450
886
49,336
3 to 12 months
-
2,736
2,736
1 to 3 years
-
6,098
6,098
> 3 years
-
978
978
Total
48,450
10,698
59,148
(1)
Excludes sales taxes.
Year ended 30 June 2023
Trade and
other
payables (1)
Lease
liabilities
Total
$’000
$’000
$’000
1 to 3 months
50,006
941
50,947
3 to 12 months
-
2,576
2,576
1 to 3 years
-
3,433
3,433
> 3 years
-
335
335
Total
50,006
7,285
57,291
(1)
Excludes sales taxes.
(d) Capital management
The Group’s policy is to maintain a capital structure for the business which ensures sufficient liquidity, provides support for business operations, maintains
shareholder confidence and positions the business for future growth. The Group manages its capital structure and makes adjustments in light of changes in
economic conditions. The ongoing maintenance of the Group’s policy is characterised by ongoing cash flow forecast analysis and detailed budgeting which
is directed at providing a sound financial positioning for the Group’s operations and financial management activities. The Group is not subject to externally
imposed capital requirements.
11. Financial risk management (continued)
56
Articore Group • FY24 Annual Report
12. Prepayments
Current
Non-current
Consolidated
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Admin/Corporate/Operating
2,967
5,932
237
29
Licenses, dues and subscriptions
1,453
1,485
-
-
Total prepayments
4,420
7,417
237
29
13. Other assets
Current
Non-current
Consolidated
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Security bonds
233
258
140
144
Goods in transit (1)
2,879
3,915
-
-
Total other assets
3,112
4,173
140
144
(1)
Goods in transit represents the cost of goods that have been manufactured but are in transit to customers.
57
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
14. Property, plant and equipment
Plant and equipment is measured on a cost basis and carried at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the Group commencing from the time the
asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful
lives of the improvements. The depreciation rates used for each class of depreciable asset are shown below:
Class of Fixed Assets
Useful life
Leasehold improvements
Life of the applicable lease
Computer equipment
3 years
Furniture and equipment
2-5 years
At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted
for prospectively as a change in estimate.
Leasehold
improvements
Furniture and
equipment
Computer
equipment
Total
$’000
$’000
$’000
$’000
Cost
Balance at 1 July 2023
3,330
886
3,163
7,379
Additions
-
-
86
86
Disposals
(55)
-
(592)
(647)
Exchange differences
(62)
(18)
(16)
(96)
Balance at 30 June 2024
3,213
868
2,641
6,722
Balance at 1 July 2022
5,029
1,165
4,276
10,470
Additions
108
68
226
402
Disposals
(1,908)
(376)
(1,526)
(3,810)
Exchange differences
101
29
187
317
Balance at 30 June 2023
3,330
886
3,163
7,379
Accumulated depreciation
Balance at 1 July 2023
(2,178)
(547)
(2,366)
(5,091)
Charge for the year
(525)
(68)
(535)
(1,128)
Disposals
55
-
592
647
Exchange differences
62
12
10
84
Balance at 30 June 2024
(2,586)
(603)
(2,299)
(5,488)
Balance at 1 July 2022
(3,492)
(751)
(3,158)
(7,401)
Charge for the year
(517)
(127)
(671)
(1,315)
Disposals
1,908
356
1,526
3,790
Exchange differences
(77)
(25)
(63)
(165)
Balance at 30 June 2023
(2,178)
(547)
(2,366)
(5,091)
Net book value
As at 30 June 2024
627
265
342
1,234
As at 30 June 2023
1,152
339
797
2,288
Critical accounting estimates and judgements
At the end of each reporting period, the Group assesses whether there is any indication that any property, plant and equipment asset may be impaired. If
such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s
fair value less costs to dispose, and value in use, to the asset’s carrying amount.
Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately as a loss. Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
No items of property, plant and equipment have been impaired in the financial year ending 30 June 2024 (2023: $nil).
58
Articore Group • FY24 Annual Report
15. Intangible Assets
Capitalised development costs
Development expenditure is capitalised when future economic benefits are probable. The Group capitalises internal
engineering time spent on development of the Redbubble and TeePublic marketplace websites. Expenditure during
the research phase of a project is recognised as an expense when incurred. All costs for Software as a Service
(SaaS) are expensed.
Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. All of
the goodwill held by the Group is attributable to the TeePublic cash-generating unit (CGU).
Brand name
The brand name asset is measured at cost less accumulated impairment losses. The brand name asset is
attributable to the TeePublic cash-generating unit (CGU).
Amortisation
Amortisation is calculated to write off the cost of intangible assets using the straight-line method over their estimated useful lives and is recognised in profit
or loss. Goodwill is not amortised.
The estimated useful lives for current and comparative periods are as follows:
Capitalised development costs:
2–3 years
Goodwill (attributable to the TeePublic CGU):
Indefinite
Brand name asset (attributable to the TeePublic CGU):
Indefinite
The brand name asset is considered to have an indefinite useful life as it is expected to contribute to future economic benefits as the Group continues to
facilitate the sale of products under the brand name indefinitely.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if deemed necessary.
Critical accounting estimates and judgements
The Group assesses at the end of each reporting period whether there is any indication that capitalised development costs may be impaired. If any such
indication exists, the Group estimates the recoverable amount of those assets. There were no indicators of impairment in capitalised development costs in
FY24.
The Group assesses the recoverability of its goodwill and brand name in the TeePublic CGU annually. Recoverable amounts have been determined based
on a value in use calculation using cash flow projections over a 5 year period. The key assumptions in the calculation are as follows:
Key assumptions used in value in use calculations and sensitivity to changes in assumptions
(a) Growth rate
The business growth rate in year 1 is based on the next financial year’s budget. Growth in years 2 to 5 is based upon Management’s experience with the
historical growth of the business and expectations about future performance. Cash flows beyond the forecast period are projected using a growth rate of
3.4% (2023: 3.3%).
(b) Gross margins
Gross margins are based on historical values and expectations about future performance. These values are increased over the forecast period for
anticipated efficiency improvements as the business scales.
(c) Discount rates
The pre-tax discount rate applied to cash flow projections is 11.4% (2023: 10.1%). Discount rates represent the consideration of the time value of money
and the individual risks of the underlying assets. The discount rate calculation is based on the specific circumstances for the CGU and is derived from its
weighted average cost of capital (WACC). Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in
order to reflect a pre-tax discount rate.
59
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
Impairment
The Group performed an impairment test as at 30 June 2024. Using the above assumptions, it was concluded that the carrying value of the Group’s CGUs
does not exceed its value in use and therefore no impairment charge has been recognised. Sensitivity analysis has been completed which considered a
range of possible scenarios. There is no reasonably possible change in key assumptions used to determine the recoverable amount that would result in
impairment.
Brand name
Capitalised
development
costs
Goodwill
Total
$’000
$’000
$’000
$’000
Cost
Balance at 1 July 2023
7,168
71,940
53,662
132,770
Additions
-
6,033
-
6,033
Derecognition
-
(137)
-
(137)
Exchange differences
(74)
-
(558)
(632)
Balance at 30 June 2024
7,094
77,836
53,104
138,034
Balance at 1 July 2022
6,903
63,417
51,677
121,997
Additions
-
11,352
-
11,352
Derecognition (1)
-
(2,829)
-
(2,829)
Exchange differences
265
-
1,985
2,250
Balance at 30 June 2023
7,168
71,940
53,662
132,770
Accumulated amortisation
Balance at 1 July 2023
-
(57,600)
-
(57,600)
Charge for the year
-
(9,532)
-
(9,532)
Exchange differences
-
-
-
-
Balance at 30 June 2024
-
(67,132)
-
(67,132)
Balance at 1 July 2022
-
(51,251)
-
(51,251)
Charge for the year
-
(6,349)
-
(6,349)
Exchange differences
-
-
-
-
Balance at 30 June 2023
-
(57,600)
-
(57,600)
Net book value
As at 30 June 2024
7,094
10,704
53,104
70,902
As at 30 June 2023
7,168
14,340
53,662
75,170
(1)
As part of the cost saving initiatives enacted in FY23 the Group refocused its capitalised development work and derecognised projects to the value of $2.8m in the prior year.
15. Intangible Assets (continued)
60
Articore Group • FY24 Annual Report
16. Leases
(a) Group as a lessee
The Group leases various offices in Australia, the United States and Germany. Rental contracts are typically made for fixed periods of between 1 to 5 years
(2023: 1 to 5 years). Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Set out below are the
carrying amounts of right-of-use assets and lease liabilities and the movements during the period:
Right of use assets
2024
2023
$’000
$’000
Balance at 1 July
5,764
8,085
Additions
5,582
649
Depreciation and amortisation expense
(3,141)
(3,084)
Exchange differences
(97)
114
Balance as at 30 June
8,108
5,764
Lease liabilities
2024
2023
$’000
$’000
Balance at 1 July
7,006
9,625
Additions
5,316
649
Interest expense
639
341
Lease liability repayment
(3,431)
(3,766)
Exchange differences
(56)
157
Balance as at 30 June
9,474
7,006
Classification of lease liabilities
2024
2023
$’000
$’000
Current
3,032
3,215
Non-current
6,442
3,791
Total lease liabilities
9,474
7,006
Amounts recognised in the statement of cashflow
2024
2023
$’000
$’000
Operating – payments of interest
(482)
(341)
Financing – payments of principal
(2,949)
(3,425)
Total cash (outflow) relating to leases
(3,431)
(3,766)
The Group has several lease contracts that include an extension option. Management exercises significant judgement in determining whether these
extension options are reasonably certain to be exercised. Set out below are the undiscounted potential future rental payments relating to periods following
the exercise date of extension options that are not included in the lease term:
Within
five years
More than
five years
Total
$’000
$’000
$’000
Extension options not reasonably certain to be exercised
4,822
9,877
14,699
61
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
17. Trade and other payables
2024
2023
$’000
$’000
Fulfiller payables
19,949
19,795
Artist payables
19,339
20,187
Staff payables
2,458
2,622
Sales tax payables
3,283
3,335
Other payables (1)
6,704
7,402
Total trade and other payables
51,733
53,341
(1)
Other payables consist of operations, administration and marketing payables.
18. Employee benefit liabilities
Wages, salaries, annual and long service leave
A provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period.
Employee benefits that are expected to be settled within one year represent the amounts expected to be paid when the liability is settled. Employee
benefits expected to be settled more than twelve months after the end of the reporting period have been measured at the present value of the estimated
future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that
the employee may satisfy service period requirements. Cash flows are discounted using market yields at the reporting date on high quality corporate bonds
with terms to maturity that match the expected timing of cash flows.
Employee benefits are presented as current liabilities in the balance sheet if the Group does not have an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date regardless of the classification of the liability for measurement purposes under AASB 119 Employee
Benefits.
Changes in the measurement of the liability are recognised in the income statement.
Defined contribution schemes
Obligations for contributions to defined contribution superannuation plans are recognised as an employee benefit expense in the income statement in the
periods in which services are provided by employees.
Current
Non-current
2024
2023
2024
2023
$’000
$’000
$’000
$’000
Annual leave
1,765
1,545
-
-
Long service leave
331
277
89
92
Termination benefits
152
-
-
-
Total employee benefit liabilities
2,248
1,822
89
92
19. Contributed equity and reserves
(a) Share capital
Consolidated and parent entity
2024
2023
2024
2023
Shares
Shares
$’000
$’000
Ordinary shares (1) (2)
Issued and fully paid
282,172,143
277,720,223
169,413
164,458
Total share capital
282,172,143
277,720,223
169,413
164,458
(1)
In FY24, the Group commenced an on-market share buy-back. A total of 811,145 ordinary shares were bought back for a total cost of $0.3m during the year. Out of the total ordinary shares
bought back, 611,145 shares were cancelled in late June 2024 and 200,000 shares were cancelled upon settlement subsequent to year end.
(2) The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Company. On a show of hands at meetings of the Company, each holder of
ordinary shares has one vote in person or by proxy, and upon a poll each share is entitled to one vote. The Company does not have authorised capital or par value in respect of its shares.
62
Articore Group • FY24 Annual Report
(b) Movements in ordinary share capital and treasury reserve
Share Capital
Number
of shares
$’000
Balance at 1 July 2022
275,920,223
162,526
Exercise of options
-
4
Settlement of restricted stock units (RSUs)
-
-
Transferred from share based payments reserve
-
4,732
Shares issued to Employee Share Trust
1,800,000
1,170
Shares allocated to participants from the Employee Share Trust
-
(3,718)
Payment of withholding taxes to US tax authorities (1)
-
(256)
Balance at 30 June 2023
277,720,223
164,458
Exercise of options
-
-
Settlement of restricted stock units (RSUs)
-
-
Transferred from share based payments reserve
-
5,857
Shares issued to Employee Share Trust
5,000,000
2,750
Other shares issued
63,065
-
Shares bought back on-market and cancelled during the year
(611,145)
(254)
Shares allocated to participants from the Employee Share Trust
-
(2,585)
Payment of withholding taxes to US tax authorities (1)
-
(730)
Balance at 30 June 2024
282,172,143
169,496
(1)
Represents payment of withholding taxes accounted for as a deduction from equity in accordance with AASB 2 Share-based Payments.
Treasury Reserve
Number
of shares
$’000
Balance at 1 July 2022
(983,080)
(4,005)
Shares issued to Employee Share Trust and held in Treasury Reserve
(1,800,000)
(1,170)
Shares allocated to participants from the Employee Share Trust and released from treasury reserve
1,718,014
3,718
Income tax benefit for contributions to the Employee Share Trust in excess of the associated cumulative remuneration
expense
-
120
Transfer of the income tax benefit to accumulated losses for equity rights that were converted to shares in the current
period
-
(767)
Balance at 30 June 2023
(1,065,066)
(2,104)
Shares issued to Employee Share Trust and held in Treasury Reserve
(5,000,000)
(2,750)
Shares allocated to participants from the Employee Share Trust and released from treasury reserve
4,559,146
2,585
Share buybacks that were not yet settled at June 2024. These shares were cancelled upon settlement subsequent to
year end
(200,000)
(83)
Income tax benefit for contributions to the Employee Share Trust in excess of the associated cumulative remuneration
expense
-
-
Transfer of the income tax benefit to accumulated losses for equity rights that were converted to shares in the current
period
-
-
Balance at 30 June 2024
(1,705,920)
(2,352)
(c) Dividends
No dividends were declared or paid during the year (2023: $nil). The Group’s franking account balance is $nil (2023: $nil).
19. Contributed equity and reserves (continued)
63
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
(d) Nature and purpose of reserves
Share based payments reserve
The share-based payments reserve arises on issue of share options / restricted stock units as payment for services to board members and employees
(including senior executives).
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are recognised in the foreign currency translation reserve within other
comprehensive income. The cumulative amount is reclassified to the income statement when the foreign controlled entity to which it relates is disposed of.
Treasury reserve
The treasury reserve is used to hold the book value of shares held by the Employee Share Trust for future issue to participants on exercise of options /
restricted stock units. It also includes a limited recourse loan provided to the Group’s former CEO in FY21 to purchase Articore Group Ltd shares on-market.
The tax effect of tax deductions for contributions to the Employee Share Trust in excess of the associated cumulative remuneration expense is recorded
directly in equity and forms part of the treasury shares reserve. Amounts are transferred out of this reserve and into accumulated losses when the relevant
equity rights are converted into shares.
20. Interests in subsidiaries
Information about subsidiaries
The consolidated financial statements of the Group include:
Name of entity
Country of
incorporation
Principal activities
Equity holding
2024
Equity holding
2023
%
%
Redbubble Incorporated
USA
Provider of global sales, marketing and distribution facilitation
services in respect of the Redbubble marketplace
100
100
Redbubble UK Limited
UK
Marketing and distribution facilitation services in Europe
100
100
Redbubble Europe GmbH
Germany
Marketing and distribution facilitation services in Europe
100
100
Redbubble Canada
Processing Ltd
Canada
Payment processing facilitation services relating to Canadian dollar
transactions
100
100
TP Apparel LLC
USA
Provider of global sales, marketing and distribution facilitation
services in respect of the TeePublic marketplace
100
100
19. Contributed equity and reserves (continued)
64
Articore Group • FY24 Annual Report
21. Parent entity financial information
The financial information for the parent entity, Articore Group Limited(1) has been prepared on the same basis as the consolidated financial statements
except for investments in subsidiaries. They are recognised at cost in the financial statements of the parent entity.
(a) Summary financial information
Statement of financial position
2024
2023
$’000
$’000
Assets
Current assets
8,502
8,448
Non-current assets
43,763
48,943
Total assets
52,265
57,391
Liabilities
Current liabilities
19,300
18,853
Non-current liabilities
1,764
2,969
Total liabilities
21,064
21,822
Equity
Contributed equity
169,503
164,465
Share based payment reserve
14,541
14,410
Treasury reserve
(2,352)
(2,104)
Accumulated losses
(150,491)
(141,202)
Total equity
31,201
35,569
Profit / (loss) and other comprehensive income
Profit / (loss) for the year
(9,290)
(57,921)
Total comprehensive profit / (loss)
(9,290)
(57,921)
(b) Commitments
At 30 June 2024, the parent entity had contractual commitments of $14.2m (2023: $17.2m) that are not recognised as liabilities.
(c) Guarantees entered into by the parent entity
A bank guarantee of $0.9m exists as security for the Melbourne office lease. No liability is expected to arise. The parent entity did not enter into any new
guarantees for the financial year ended 30 June 2024 (2023: $0.9m).
(d) Contingent liabilities of the parent entity
Although the Group is strictly an online intermediary that provides online facilitation services to third parties via its marketplaces, and Group does not sell or
manufacture the products sold by artists through its marketplaces, it periodically receives notices alleging infringement of third-party copyright, trademarks,
other intellectual property rights or publicity rights or breach of consumer protection laws. This is not uncommon for marketplaces that host user-generated
content, nor is it uncommon within the United States of America business environment where the majority of such claims arise. As at the date of these
financial statements, there are current lawsuits filed against the Group that relate to alleged intellectual property infringement and/or breach of consumer
laws. As at reporting date, there is no certainty that the Group either holds any obligations in relation to these actions and/or there is any likelihood of
outflows (or inflows from insurance recoveries where applicable) of cash or other resources in respect of them, should any of the actions ultimately be
successful (at first instance or on appeal, as applicable).
(1)
Redbubble Limited changed its name to Articore Group Limited during the year. A shareholder resolution that gave effect to the name change was passed at the Annual General Meeting on
24 October 2023.
65
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
22. Commitments and contingencies
(a) Commitments
Other than the commitments mentioned in note 21(b), the Group has contractual commitments of $6.7m (2023: $3.5m) over the next 3 years with
technology infrastructure and software providers that are not recognised as liabilities.
(b) Contingent liabilities/assets of the Group
Legal claim contingencies
Although the Group is strictly an online intermediary that provides online facilitation services to third parties via its marketplaces, and Group does not sell or
manufacture the products sold by artists through its marketplaces, it periodically receives notices alleging infringement of third-party copyright, trademarks,
other intellectual property rights or publicity rights or breach of consumer protection laws. This is not uncommon for marketplaces that host user-generated
content, nor is it uncommon within the United States of America business environment where the majority of such claims arise. As at the date of these
financial statements, there are current lawsuits filed against the Group that relate to alleged intellectual property infringement and/or breach of consumer
laws. As at reporting date, there is no certainty that the Group either holds any obligations in relation to these actions and/or there is any likelihood of
outflows (or inflows from insurance recoveries where applicable) of cash or other resources in respect of them, should any of the actions ultimately be
successful (at first instance or on appeal, as applicable).
(c) Guarantees
Other than the bank guarantees mentioned in note 21(c), the Group has a bank guarantee of $0.25m as security for office premises (2023: $0.25m). No
liability is expected to arise.
23. Share-based payments
The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become
entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. In FY24, the
Group’s expense was $6.0m (2023: $5.6m) which includes reversal of $1.3m (2023: $4.9m) due to forfeiture of awards of employees who departed the
Group during the year.
The fair value of options with a strike price and share appreciation rights are ascertained using industry standard valuation models. A Black-Scholes pricing
model is used for options and the Monte Carlo simulation model is used for share appreciation rights. The amount to be expensed is determined by
reference to the fair value of the options or shares granted. This expense takes into account any market performance conditions and the impact of any
non-vesting conditions but ignores the effect of any service and non-market performance vesting conditions. Non-market vesting conditions are taken into
account when considering the number of options expected to vest and at the end of each reporting period, the Group revisits its estimate. Revisions to the
prior period estimate are recognised in the income statement and equity.
The fair value of zero priced options and restricted stock units approximates the fair market value of a Articore Group Ltd share at the grant date.
Critical accounting estimates and judgements
Some of the inputs to the pricing models require application of significant judgement.
The Black-Scholes and Monte Carlo simulation pricing models require inputs for the expected share price volatility of Articore Group Limited shares for a
period similar to the expected life of the options. The Group has used its historical share price volatility to estimate expected future volatility.
Options over ordinary shares
Articore Group Equity Incentive Plan for Australian and German employees
The “Articore Group Equity Incentive Plan” has been established to grant options over ordinary shares to Articore Group Limited employees (including
senior executives under the Articore Group Executive Compensation Model (RECM)).
The options are subject to service conditions and have a predetermined time-based vesting schedule. The grantees of options under this Plan may
exercise vested options at any time before the earlier of:
(a) a specified expiry date (generally 6 years from the grant date); and
(b) 90 days after ceasing to be an employee or contractor for the Group.
Some of the options have a zero exercise price, so as to be akin to performance rights or restricted stock units.
2014 Option Plan
Options to employees / contractors of the US subsidiaries are granted under this plan. The vesting conditions and expiry period under this plan are akin to
the Articore Group Equity Incentive Plan.
Limited recourse loans for the purchase of shares
The granting of limited recourse loans to purchase Articore Group Ltd shares is considered to be an in-substance option grant in accordance with AASB 2
Share Based Payment. An option pricing model is used to determine the fair value of the in-substance option and expensed in the financial statements over
the service period. In FY21 a limited recourse loan was provided to the former Chief Executive Officer (CEO). The former CEO does not have a beneficial
interest in the shares until the loan is repaid. The repayment of the loan principal plus accrued interest represents the exercise of the option, and returning
the shares as settlement of the loan is the expiry of an unexercised option. The resignation of the former CEO in FY23 resulted in the in-substance option
grant being forfeited.
All previously recognised expense relating to the in-substance option grant was reversed. A receivable has been recorded for the settlement of the loan
based on the share price at the end of each reporting period.
66
Articore Group • FY24 Annual Report
Restricted Stock Units (RSUs)
Restricted Stock Units are granted under the Restricted Share and Performance Rights Plan to certain employees including senior executives and
consultants. Once granted, the rights have a predetermined time-based vesting schedule. All the restricted stock units are subject to service conditions.
Share Appreciation Rights (SARs)
Share appreciation rights have been granted to the Group Chief Executive Officer and the Executive team.
(a) Movement
The table below summarises the movement in the number of options, restricted stock units and share appreciation rights during the year:
2024
2024
2023
2023
Number
WAEP ($) (1)
Number
WAEP ($) (1)
Options over ordinary shares
Outstanding at 1 July
6,093,093
0.25
3,805,508
3.17
Granted during the year (2)
3,990,312
-
8,512,891
-
Exercised during the year
(1,652,009)
-
(941,470)
0.00
Forfeited during the year
(369,147)
-
(4,318,269)
0.00
Expired during the year
(416,973)
1.00
(965,567)
1.15
Outstanding at 30 June
7,645,276
0.15
6,093,093
0.25
Exercisable at 30 June
3,873,595
0.29
2,265,147
0.68
Restricted stock units
Outstanding at 1 July
6,254,530
-
1,403,913
-
Granted during the year
6,488,420
-
8,208,154
-
Settled during the year
(4,552,583)
-
(1,178,137)
-
Forfeited during the year
(1,042,447)
-
(2,179,400)
-
Outstanding at 30 June
7,147,920
-
6,254,530
-
Share appreciation rights (SARs) (3)
Outstanding at 1 July
5,942,211
-
5,658,416
-
Granted during the year
13,971,417
-
8,204,276
-
Exercised during the year
-
-
-
-
Forfeited during the year
(2,957,914)
-
(6,115,029)
-
Expired during the year
(29,163)
-
(1,805,452)
-
Outstanding at 30 June
16,926,551
-
5,942,211
-
Exercisable at 30 June
-
-
-
-
(1)
WAEP stands for Weighted Average Exercise Price.
(2) 3,990,312 options granted during the year have a zero exercise price (2023: 8,512,891). The expiry period for options and RSU grants made during the current and prior year is 6 years.
(3) SARs do not have an exercise price, however they do have a base share price from which any share appreciation is measured. The weighted average base share price of all outstanding
SARs is $1.49 (2023: $1.17).
23. Share-based payments (continued)
67
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
(b) Additional disclosures
Weighted average fair value of
2024
2023
$
$
Share price at the date of exercise of options / settlement of restricted stock units during the year
0.48
0.60
Share options granted during the year
0.98
1.07
Share appreciation rights granted during the year
0.54
0.74
Restricted stock units granted during the year
1.07
1.36
Weighted average remaining contractual life of
2024
2023
(years)
(years)
Share options outstanding at the end of the year
4.63
5.06
Inputs to pricing models for options and SARs granted during the year (weighted average)
2024
2023
Expected volatility (%) (1)
78.26
75.52
Risk-free interest rate (%)
4.19
3.60
Expected life (years)
4.67
4.46
Expected dividend yield (%)
-
-
Fair market value of share price ($) (2)
0.47
0.64
(1)
The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual
outcome. The range of exercise prices for options outstanding at the end of the year is $nil to $1.56 (2023: $nil to $1.56).
(2) The fair market value of a share has been calculated using the closing price on grant date.
24. Related party transactions
(a) Compensation of the key management personnel of the Group
2024
2023
$
$
Short-term employee benefits
1,808,313
1,770,754
Post-employment benefits
97,714
136,544
Share-based employee benefits (1)
888,968
(663,155)
Other long-term benefits
20,134
(8,094)
Total transactions with key management personnel
2,815,129
1,236,049
(1)
FY23 includes the reversal of former CEO and CFO forfeited share-based employee benefits of $1m due to their resignations.
(b) Transactions with key management personnel
Bob Sherwin (Non-executive Director) was paid $42,726 (FY23: $29,528) as remuneration for additional services provided to the Group.
In FY23, Michael Ilczynski (former CEO) had a limited recourse loan arrangement with the Group that was provided to him upon appointment in FY21. The
limited recourse loan arrangement ended in FY23 as a result of the former CEO’s resignation in that year, please refer to note 23 for further details.
There were no other transactions with key management personnel in the current year.
(c) Transactions with related parties
There were no other related party transactions in the current and prior year.
23. Share-based payments (continued)
68
Articore Group • FY24 Annual Report
25. Remuneration of auditors
2024
2023
$
$
Fees to Ernst & Young (Australia)
Category 1: Fees for Audit services
Fees for auditing the statutory financial report of the parent covering the group
492,127
411,687
Category 3: Fees for Other Assurance services and Agreed Upon Procedures:
Other assurance services and agreed upon procedures
-
64,480
Category 4: Fees for Non-Audit services
Taxation services
-
6,000
Assistance in developing the Group’s ESG strategy
-
113,300
Remuneration of Ernst & Young Australia
492,127
595,467
Fees to other overseas member firms of Ernst & Young (Australia)
Category 4: Fees for other services:
Taxation services
-
-
Remuneration of other overseas member firms of Ernst & Young Australia
-
-
Total auditor’s remuneration
492,127
595,467
69
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
26. Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the Group CEO(1). The Group CEO is responsible for the
strategic direction and oversight of the Group through the monitoring of results and approval of strategic plans for the business. The Group has identified
its operating segments based on how its operations are internally managed.
Segment EBITDA is the measure utilised by the Group CEO to measure profitability. This is earnings before interest, tax, depreciation and amortisation.
Changes to operating segments
In the prior year, the Group aggregated the Redbubble and TeePublic online marketplaces to form a single reportable segment. Effective 1 July 2023, the
Group has restructured to more clearly define the Group function and the two operating companies, Redbubble and TeePublic. Following this restructure,
the internal reporting of the Group that is provided to the Group CEO has changed.
The Group has two reportable segments as follows:
Reportable segment
Nature of operations
Redbubble
Online marketplace for print on demand products
TeePublic
Online marketplace for print on demand products
Some head office costs are excluded from the two operating companies as they are not considered appropriate to be allocated to either Redbubble or
TeePublic. In our segment results, the ‘Other’ category includes such costs or functions that do not qualify as operating segments.
Due to changes in, and disaggregation of, internal reporting to the Group CEO arising from an organisational restructure in the current period more aligned
to the Group’s refreshed strategy, separate segment information is now provided for each of the operating segments.
The 2023 comparative segment information has been restated in accordance with the amended basis of reporting.
Year end 30 June 2024
Redbubble
TeePublic
Other
Consolidated
$’000
$’000
$’000
$’000
Marketplace revenue
241,277
181,779
-
423,056
Artists’ revenue
51,222
18,712
-
69,934
Total revenue from contracts with customers
292,499
200,491
-
492,990
Underlying EBITDA (1)
12,770
3,573
(12,814)
3,529
Depreciation and amortisation
10,449
2,468
884
13,801
Interest income
680
88
-
768
Interest expense
479
25
137
641
Underlying Profit/(loss) before income tax
2,522
1,168
(13,835)
(10,145)
Income tax expense/(benefit) (2)
-
-
-
1,416
Underlying Profit/(loss) after income tax attributable to owners
2,522
1,168
(13,835)
(11,561)
Add back underlying adjustment to reconcile to statutory accounts
2,724
-
-
2,724
Reported total profit/(loss) for the year in statutory financial statements
5,246
1,168
(13,835)
(8,837)
(1)
Underlying EBITDA excludes a one-off release of an accrual during the year. This is for the purpose of assessing the Group’s FY24 performance on a like-for-like basis and to ensure that the
amounts disclosed in the segment note are consistent with any non-IFRS profit measures disclosed in documents that accompany the consolidated financial statements.
(2) Income tax expense/(benefit) is assessed at an entity level.
(1)
In accordance with AASB 8 Operating Segments, the Group CEO has been identified as the Chief Operating Decision Maker (CODM) who allocates resources and assesses performance of
the operating segments.
70
Articore Group • FY24 Annual Report
Year end 30 June 2023
Restated
Redbubble
TeePublic
Other
Consolidated
$’000
$’000
$’000
$’000
Marketplace revenue
290,726
176,790
-
467,516
Artists’ revenue
64,979
22,627
-
87,606
Total revenue from contracts with customers
355,705
199,417
-
555,122
EBITDA
(24,164)
(5,177)
(11,341)
(40,682)
Depreciation and amortisation
7,863
2,247
638
10,748
Interest income
160
3
-
163
Interest expense
243
43
57
343
Profit/(loss) before income tax
(32,110)
(7,464)
(12,036)
(51,610)
Income tax expense/(benefit) (1)
-
-
-
2,570
Profit/(loss) after income tax attributable to owners
(32,110)
(7,464)
(12,036)
(54,180)
(1)
Income tax expense/(benefit) is assessed at an entity level.
27. Events occurring after the balance sheet date
There have been no significant events after the balance sheet date that require disclosure.
28. Other material accounting policy information
(a) Principles of consolidation
Subsidiaries are all entities over which the Group has control. Control is established when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully
consolidated from the date on which the Group gains control. They would be deconsolidated from the date that control ceases. A list of the subsidiaries is
provided in note 20 to the financial statements.
Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation.
Accounting policies of subsidiaries have been aligned where necessary to ensure consistency with the policies adopted by the Group.
(b) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration
transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related costs are expensed as incurred and included in operations and administration expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded
derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified
as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that
is a financial instrument and within the scope of AASB 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the
statement of profit or loss in accordance with AASB 9.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling
interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is
in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the
liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an
excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired
in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a single cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated
with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these
circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.
26. Segment information (continued)
71
Articore Group • FY24 Annual Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2024
(c) Foreign currency transactions
Functional and presentation currency
The functional currency of each of the Group’s entities is the currency of the primary economic environment in which that entity operates. The
consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction
first qualifies for recognition.
At the end of the reporting period:
• Foreign currency monetary items are translated using the closing exchange rate;
• Non-monetary items that are measured at historical cost are translated using the exchange rate at the date of the transaction; and
• Non-monetary items that are measured at fair value are translated using the exchange rate at the date when fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at exchange rates different from those at which they
were translated on initial recognition or in prior reporting periods are recognised through the profit or loss, except where they relate to an item of other
comprehensive income.
Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the
presentation currency (none of which has the currency of a hyperinflationary economy) as follows:
• Assets and liabilities for each balance sheet are translated at the closing exchange rate at the date of that balance sheet;
• Income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates; and
• All resulting exchange differences are recognised in other comprehensive income.
(d) Other income
Finance income
Finance income is recognised on an accruals basis using the effective interest method.
(e) Financial assets
Trade and other receivables and other financial assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial recognition, loans and trade and other receivables are measured at amortised cost using the effective interest method. Any
change in their value is recognised in the statement of comprehensive income.
The Group applies a simplified approach in calculating Expected Credit Losses (ECLs) in trade receivables. Therefore, the Group does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date, where appropriate, based on historical credit loss
experience and adjusted for forward-looking factors specific to the receivables and the economic environment.
The Group applies the general approach in calculating ECLs in other receivables. The Group tracks changes in credit risk and recognises a loss allowance
for lifetime expected credit losses if there has been a significant increase in credit risk (measured using the lifetime probability of default, based on
historical credit loss experience and adjusted for forward-looking factors specific to the receivables and the economic environment) since initial
recognition of the receivable. If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, a loss
allowance for 12-month expected credit losses is recognised.
(f) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a
separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of income net of any
reimbursement.
(g) Sales Tax (includes Goods and Services Tax (GST) and Value Added Tax (VAT))
Revenue, expenses and assets are recognised net of the amount of sales tax, except where the amount incurred is not recoverable from the Australian
Taxation Office (ATO) or other similar international bodies. Receivables and payables are stated inclusive of sales tax, where applicable. The net amount of
sales tax recoverable from, or payable to, the ATO or other similar international bodies, is included as part of receivables or payables in the statement of
financial position.
The statement of cash flows includes cash on a gross basis and the sales tax 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.
28. Other material accounting policy information (continued)
72
Articore Group • FY24 Annual Report
(h) Leases
Set out below are the accounting policies of the Group upon adoption of AASB 16, which have been applied from the date of initial application:
Group as a lessee
Right-of-use assets
The Group 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, initial direct costs incurred and lease payments made at or before the
commencement date of the lease less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the
end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease
term. Right-of-use assets are subject to impairment in accordance with AASB 136 Impairment of Assets.
Lease liabilities
The Group recognises lease liabilities at the commencement date of the lease (i.e., the date the underlying asset is available for use), 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. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition
that triggers the payment occurs.
Significant judgement in estimating the incremental borrowing rate
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. The rate is determined using a government bond (risk free) rate adjusted for a risk premium commensurate
with each lessee’s profile. The bond rates used are for a bond with a term and security similar to each lease and are country specific.
After the commencement date, the amount of the lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. The carrying amount of lease liabilities are adjusted if there is a modification, a change in the lease terms or a change in the in-substance fixed lease
payments.
Short-term leases and leases of low-value assets
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.
Significant judgement in determining the lease term of contracts with renewal options
The Group 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, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option under some of its leases to extend the term of the original lease. The Group 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 the Group to exercise the
renewal option. After the commencement date, the Group reassesses the lease term when 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.
The Group has determined that no lease extension options will be exercised as they are not reasonably certain that those options will be exercised and
therefore, the extended periods have not been included in calculations.
(i) Accounting standards issued but not yet effective
A number of new accounting standards, amendments to standards and interpretations, have also been issued and will be applicable in future periods. While
these remain subject to ongoing assessment, no significant impacts on the financial statements of the Group have been identified to date. These standards
have not been applied in the preparation of these Financial Statements.
28. Other material accounting policy information (continued)
73
Articore Group • FY24 Annual Report
For the year ended 30 June 2024
Name of entity
Type of entity
Trustee, partner
or participant in
joint ventures
% of share capital
Country of
incorporation
Australian
resident or
foreign resident
Foreign
jurisdiction(s) of
foreign residents
Articore Group Limited
Body corporate
-
N/A
Australia
Australian
N/A
Redbubble Incorporated
Body corporate
-
100
USA
Foreign
USA
Redbubble UK Limited
Body corporate
-
100
UK
Foreign
UK
Redbubble Europe GmbH
Body corporate
-
100
Germany
Foreign
Germany
Redbubble Canada Processing Ltd
Body corporate
-
100
Canada
Foreign
Canada
TP Apparel LLC
Body corporate
-
100
USA
Foreign
USA
Key assumptions and judgements
Determination of tax residency
Section 295 (3A) of the Corporations Act 2001 requires that the tax residency of each entity which is included in the Consolidated Entity Disclosure
Statement (CEDS) be disclosed. In the context of an entity which was an Australian resident, “Australian resident” has the meaning provided in the Income
Tax Assessment Act 1997. The determination of tax residency involves judgement as the determination of tax residency is highly fact dependent and there
are currently several different interpretations that could be adopted, and which could give rise to a different conclusion on residency.
In determining tax residency, the consolidated entity has applied the following interpretations:
• Australian tax residency: The consolidated entity has applied current legislation and judicial precedent, including having regard to the Commissioner of
Taxation’s public guidance in Tax Ruling TR 2018/5.
• Foreign tax residency: The consolidated entity has applied current legislation and where available judicial precedent in the determination of foreign tax
residency.
Consolidated Entity
Disclosure Statement
74
Articore Group • FY24 Annual Report
Directors’
Declaration
In accordance with a resolution of the Directors of Articore Group Limited, we state that in the Directors’ opinion:
(a) the financial statements and notes, as set out on pages 40 to 73 are in accordance with the Corporations Act 2001 including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance for the financial year ended on
that date; and
(b) there are reasonable grounds to believe that Articore Group Limited will be able to pay its debts as and when they become due and payable.
(c) the consolidated entity disclosure statement on page 74 is true and correct.
The financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Group Chief Executive Officer and Group Chief Financial Officer required by Section 295A of the
Corporations Act 2001.
Anne Ward
Board Chair
Melbourne
21 August 2024
Martin Hosking
Group Chief Executive Officer/Managing Director
Melbourne
21 August 2024
75
Articore Group • FY24 Annual 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 auditor’s report to the members of Articore Group
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Articore 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 comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including material accounting policy information, 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 year 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 judgment, 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.
Independent Auditor’s Report
76
Articore Group • FY24 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Revenue Recognition
Why significant
How our audit addressed the key audit matter
As disclosed in Note 3 to the consolidated financial
statements, revenue is recognised when control of
the goods are transferred to the customer, which is
considered to be when the product is delivered.
However the billing system recognises revenue upon
receipt of payment from customers which requires
management to estimate the sale transactions not
delivered at period end.
Due to the volume of online transactions processed
on a daily basis, and the arrangement in place with
fulfillers whereby fulfillers dispatch goods directly to
the Group’s customers, the judgement involved in the
timing of when revenue is recognised is considered
to be a Key Audit Matter.
Our audit procedures included the following:
a combined testing approach, including testing the
operating effectiveness of controls and performing
substantive procedures over the occurrence, timing of
revenue recognition and measurement of revenue
transactions;
using data analytic tools to test the full population of
revenue transactions, including performing:
•
correlation analysis between revenue, receivables and
cash;
•
targeted audit procedures over material items that did
not correlate as expected; and
•
testing to verify that the cash recorded represents real
cash from third party customer.
for a sample of revenue transactions, testing whether the
revenue was recorded in the appropriate period and
whether management’s estimate of sale transactions not
delivered to the customer at 30 June 2024 were
appropriately recorded as Unearned Revenue and Goods in
Transit for items shipped but not yet delivered, as at that
date;
testing the assumptions used in management’s estimate
based on the average delivery days between payment,
shipment and delivery;
using data analytic tools to identify revenue-related manual
journals posted to the general ledger and traced these back
to underlying source documentation, to evaluate the
validity, completeness and accuracy of the postings.
assessing whether the revenue recognition policy applied to
the terms and conditions of sale was in accordance with
Australian Accounting Standards; and
evaluating the adequacy of the revenue recognition policy
disclosure contained in Note 3.
77
Articore Group • FY24 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
;YhitYdike\ \evedoheent coktk
Why significant
How our audit addressed the key audit matter
As disclosed in Note 15 to the consolidated financial
statements, the Group capitalises costs related to
the development and engineering activities of
website and mobile applications as intangible assets.
The carrying value of capitalised development costs
as at 30 June 2024, after derecognition of $0.1m
during the year, totalled $10.7m.
The accounting for capitalised development costs
involves judgment, including: considering technical
and commercial feasibility, the Group’s intention and
ability to complete the intangible asset, future
economic benefits to be generated by the asset, the
ability of the Group to measure the costs reliably,
determining when the asset is ready for use, the
useful lives for capitalised development costs and
the amortisation recognised.
In addition, determining whether there is any
indication of impairment of the carrying value of
assets requires judgment in making assumptions
which are affected by future market or economic
developments.
This was considered a key audit matter given the
judgement required in accounting for internal
capitalised development costs, the value of
capitalised development cost assets relative to total
assets, the rapid technological and economic change
in the industry, and the specific Australian
Accounting Standards criteria that have to be met to
enable costs incurred to be capitalised.
Our audit procedures included the following:
assessing the eligibility of the development costs for
capitalisation as an intangible asset in accordance with
Australian Accounting Standards;
selecting a sample of capitalised development costs by
project and assessing whether the nature of projects and
costs incurred were supported by underlying evidence such
as employee time sheets, employee contracts and supplier
invoices, where relevant;
checking the clerical accuracy of the movements in the
capitalised development cost balances, including
amortisation and disposals;
assessing whether the amortisation rates used are
appropriate;
testing a sample of projects on the feasibility and benefits
expected from each based on the current status, forecast
performance and related assumptions. This included
discussions with project managers and developers and
reviewing project plan approvals and reporting;
considering whether there were any indicators of
impairment or derecognition;
evaluating the completeness of the listing of impacted
assets as well as calculation of amount derecognised; and
evaluating the adequacy of disclosures in Note 15 of the
consolidated financial statements.
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 Group’s 2024 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual
Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will 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.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, 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.
Independent Auditor’s Report (continued)
78
Articore Group • FY24 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of:
a)
the financial report 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
judgment 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.
79
Articore Group • FY24 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
►
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.
Independent Auditor’s Report (continued)
80
Articore Group • FY24 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 39 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Articore Group Limited for the year ended 30 June 2024,
complies with section 300A of the Corporations Act 2001.
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
Ashley Butler
Partner
Melbourne
21 August 2024
81
Articore Group • FY24 Annual Report
Shareholder Information
The shareholder information set out below was applicable as at 12 September 2024 (except as otherwise indicated).
A. Top 20 Shareholders
Rank Shareholder Name
Number of
Ordinary Shares
Issued
Capital %
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
40,550,021
14.42
2
CITICORP NOMINEES PTY LIMITED
32,432,924
11.53
3
BNP PARIBAS NOMINEES PTY LTD
52,920,944
18.82
4
JELLICOM PTY LTD
37,143,172
13.21
5
BLACKBIRD FOF PTY LTD
11,361,819
4.04
6
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
11,065,960
3.94
7
RADIATA INVESTMENTS PTY LTD
10,075,208
3.58
8
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
5,840,317
2.08
9
SOLIUM NOMINEES (AUSTRALIA) PTY LTD
5,611,072
2.00
10
PITON CAPITAL VENTURE FUND II LP
5,537,291
1.97
11
CAWSEY SUPERANNUATION FUND PTY LTD
4,033,980
1.43
12
OSBORNE TAS PTY LTD
2,016,542
0.72
13
DENALI VENTURE PARTNERS FUND 1 LP
1,840,240
0.65
14
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
1,740,486
0.62
15
GARRETT SMYTHE LTD
1,596,209
0.57
16
THREE SPRINGS FOUNDATION P/L
1,500,000
0.53
17
MR PAUL VANZELLA
1,340,042
0.48
18
TLFTC PTY LTD
1,308,640
0.47
19
JABBOUR HOLDINGS PTY LTD
1,300,000
0.46
20
NATIONAL NOMINEES LIMITED
1,229,108
0.44
Total
230,443,975
81.96
Balance of register
50,732,888
18.04
Grand total
281,176,863
100.00
B. Holding Distribution
Shares
Range
Shares
%
No. of holders
%
100,001 and Over
257,383,728
91.54
110
1.80
10,001 to 100,000
15,588,667
5.54
519
8.50
5,001 to 10,000
2,927,083
1.04
393
6.40
1,001 to 5,000
3,995,307
1.42
1,616
26.47
1 to 1,000
1,282,078
0.46
3,468
56.80
Total
281,176,863
100.00
6,106
100.00
Share Options
Range
Options
%
No. of holders
%
100,001 and Over
4,640,346
63.79
18
18.56
10,001 to 100,000
2,555,032
35.12
63
64.95
5,001 to 10,000
51,436
0.71
7
7.22
1,001 to 5,000
25,997
0.36
7
7.22
1 to 1,000
1,401
0.02
2
2.06
Total
7,274,212
100.00
97
100.00
82
Articore Group • FY24 Annual Report
Share Appreciation Rights
Range
Share Appreciation
Rights
%
No. of holders
%
100,001 and Over
16,693,974
98.63
16
80.00
10,001 to 100,000
232,577
1.37
4
20.00
5,001 to 10,000
0
0
0
0
1,001 to 5,000
0
0
0
0
1 to 1,000
0
0
0
0
Total
16,926,551
100.00
20
100.00
Restricted Stock Units
Range
Restricted
Stock Units
%
No. of holders
%
100,001 and Over
3,246,969
45.43
20
20.20
10,001 to 100,000
3,879,283
54.27
76
76.77
5,001 to 10,000
18,485
0.26
2
2.02
1,001 to 5,000
3,183
0.04
1
1.01
1 to 1,000
0
0
0
0
Total
7,147,920
100.00
99
100.00
C. Substantial Holders
The information displayed below has been obtained from each holder’s most recent notice of substantial holding as submitted to the Company (except as
indicated).
Name
Number of Shares Issued Capital % (1)
Martin Hosking
40,000,000
14.23
Osmium Partners, LLC
25,764,473
9.16
Spheria Asset Management Pty Ltd
22,377,700
7.96
Pinnacle Investment Management Group Limited
14,170,656
5.04
D. Unquoted Equity Securities
The information displayed below has been obtained from each holder’s most recent notice of substantial holding as submitted to the Company.
Type of Equity Security
Number of Holders
Number
Share Options
97
7,274,212
Share Appreciation Rights
20
16,926,551
Restricted Stock Units
99
7,147,920
Total
216
31,348,683
E. Securities subject to escrow arrangements
There are no shares on issue that are subject to voluntary escrow.
F. Voting Rights
Ordinary Shares
At a general meeting of shareholders, each shareholder is entitled to one vote on a show of hands and one vote per fully paid ordinary share on a poll.
Options, Share Appreciation Rights and Performance Rights
No voting rights.
G. On-market Buy-back
There is a current on-market buy-back of shares, which commenced on 5 June 2024. The proposed buy-back end date is 5 June 2025. The Company
will buy back shares up to a value of $5 million. The number of shares bought back will not exceed 10% of the smallest number of shares on issue in the
Company at any time during the preceding 12 months.
(1)
The issued capital percentages are based on the total issued capital as at 12 September 2024.
83
Articore Group • FY24 Annual Report
Directors
• Anne Ward (Chair, Independent Non-
Executive Director)
• Martin Hosking (Group Chief Executive
Officer/Managing Director)
• Greg Lockwood (Independent Non-
Executive Director)
• Robin Low (Independent Non-Executive
Director, appointed effective 18 March
2024)
• Ben Heap (Independent Non-Executive
Director)
• Bob Sherwin (Independent Non-Executive
Director)
• Robin Mendelson (Independent Non-
Executive Director, appointed effective
1 July 2024)
• Jennifer (Jenny) Macdonald (Independent
Non-Executive Director, resigned
24 October 2023)
Group Chief Executive Officer
Martin Hosking
Company Secretary
• Carlie Hodges
• Harry Pratt (appointed effective 15 February
2024)
Registered Office
Level 12, 697 Collins Street
Docklands VIC 3008
Australia
Share Register
Link Market Services
Tower 4, 727 Collins Street
Melbourne VIC 3008
Australia
1300 554 474
Corporate Information
Auditors
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
Bankers
Citibank, N.A.
Stock Exchange Listing
Articore shares are listed on the Australian
Securities Exchange (ASX listing code: ATG)
Investor Centre
articore.com/investor-centre
84
Articore Group • FY24 Annual Report