TEMPLE & WEBSTER GROUP LTD
ABN 69 608 595 660
ASX ANNOUNCEMENT
30 August 2021
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS:
Unit 1, 1-7 Unwins Bridge Road
St Peters NSW 2044
Full Year 2021 4E and Annual Report
Temple & Webster Group Ltd attaches the 2021 ASX Appendix 4E and Annual Report.
This document has been authorised for release by the Board of Directors.
About Temple & Webster
Temple & Webster is Australia’s leading online retailer of furniture and homewares.
Temple & Webster has over 200,000 products on sale from hundreds of suppliers. The business runs an
innovative drop-shipping model, whereby products are sent directly to customers by suppliers thereby
enabling faster delivery times and reducing the need to hold inventory thereby allowing a larger product
range.
The drop ship range is complemented by a private label range which is sourced directly by Temple & Webster
from overseas suppliers.
Temple & Webster is listed on the Australian Securities Exchange under the code TPW.
Temple & Webster Group Ltd
Temple & Webster Group Ltd
Appendix 4E
Appendix 4E
Preliminary final report
Preliminary final report
Temple & Webster Group Ltd
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Temple & Webster Group Ltd
69 608 595 660
For the year ended 30 June 2021
For the year ended 30 June 2020
2. Results for announcement to the market
Revenues from ordinary activities
Up
85.1%
to
326,344
Profit from ordinary activities after tax attributable to the owners of
Temple & Webster Group Ltd1
Profit after tax for the year attributable to the owners of Temple &
Webster Group Ltd1
Up
Up
0.3%
to
13,953
0.3%
to
13,953
$'000
Dividends
There were no dividends paid, recommended or declared during the current financial period.
1Comments
Profit after tax for the year on a normalised basis (excluding deferred tax adjustments) was up 165% year on year. Normalised
profit after tax is calculated as profit after tax adjusted for any benefits received from the recognition and utilisation of historical
tax losses.
Further information on the 'Review of operations' is detailed in the Directors' report which forms part of the Annual Report.
3. Net tangible assets
Net tangible assets per ordinary security
Reporting
period
Cents(1)
Previous
period
Cents(1)
57.13
18.09
The net tangible assets per ordinary share amount is calculated based on 120,452,928 ordinary shares on issue as at 30 June
2021 and 113,422,884 on issue as at 30 June 2020.
(1) Consistent with the Australian Security & Investment Commission interpretation, the Right-of-use asset (AASB 16) and Right of return
assets (AASB 15) are intangible assets, and therefore have been excluded from Net tangible assets.
4. Control gained over entities
No changes to the group structure have occurred during the current financial year.
5. Loss of control over entities
Not applicable.
a
Appendix 4E 2021
Temple & Webster Group Ltd
Appendix 4E
Preliminary final report
Temple & Webster Group Ltd
Appendix 4E
Preliminary final report
6. Dividend reinvestment plans
Not applicable.
7. Details of associates and joint venture entities
Not applicable.
8. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
9. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unqualified opinion has been issued.
10. Attachments
Details of attachments (if any):
The Annual Report of Temple & Webster Group Ltd for the year ended 30 June 2021 is attached.
11. Signed
Signed ___________________________
Date: 30 August 2021
Stephen Heath
Chairperson
Sydney
b
Temple & Webster Group Ltd
Annual
Report 2021
2
Summary
4
Chairperson’s Report
6
CEO’s Letter and Operational Review
10
KPI Snapshot & Strategic Priorities Overview
12
Committed to making the world more beautiful
14
Financial Report 2021
15
Directors’ Report
37
Auditor’s Independence Declaration
38
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
39
Consolidated Statement of Financial Position
40
Consolidated Statement of Changes in Equity
Contents
41
Consolidated Statement of Cash Flows
42
Notes to the Consolidated Financial Statements
69
Directors’ Declaration
70
Independent Auditor’s Report
74
Shareholder Information
77
Corporate Directory
1
Annual Report 2021 Summary
FY21 Revenue
FY20 Revenue
$326.3m
85% growth vs pcp
$176.3m
FY21 EBITDA
$20.5m
141% growth vs pcp
FY20 EBITDA
$8.5m
June 21 Cash
$97.5m
June 20 Cash
$38.1m
Sources: Euromonitor International Limited; Home Furnishings and Homewares System
2020 edition. IBISWorld Online Home Furnishing Sales in Australia Industry Report and
Online Household Furniture Sales in Australia Industry Report Jun 20 cash balance excludes
proceeds from $40 million placement which took place in July 20.
2
Temple & Webster Group Ltd • Temple & Webster is the leading pure play
online retailer for furniture & homewares
in Australia
• Large addressable market with
accelerating online adoption
• Business is profitable with strong top-
line growth, capital light and a debt free
balance sheet
3
Annual Report 2021 Chairperson’s
Report
Time for reinvestment
Once again, the year showed the inherent operating leverage
in the online retail business model with our EBITDA increasing
by 141% to $20.5 million. This was primarily due to the leverage
in the fixed costs base which as percentage of sales fell from
10.0% to 7.9%.
During the second half, the Group reaffirmed its commitment
to a re-investment strategy to ensure we are building the go-
to brand in our category for the next generation of shopper.
This will require investment into marketing, technology, data,
logistics expertise, along with other key areas of the business.
We have guided the market to expect an EBITDA of 2-4%
in the short to mid-term to provide us with the flexibility to
make these investments. We believe that by making these
investments now, the Group will be well positioned to grow
its market leadership and the benefits from scale will naturally
flow.
New Director
During the year, Belinda Rowe was appointed as a Non-
executive Director of the Group. Our goal is to become the
first place Australians turn to when shopping for their homes
which will require becoming the top-of-mind brand in our
category. Belinda is an experienced marketing professional
and successful business executive and will help with our push
to national brand status.
Thank you to the team
On behalf of the Board, I would like to thank management
and the broader Temple & Webster team for a busy year,
made even harder by moving in and out of the office during
lockdown periods. While it’s great to see sales and customers
grow so fast, the cost of this growth has been a relentless year
for the team. We thank you for your passion and dedication.
stephen heath
Non-Executive Chairperson
Dear shareholders,
On behalf of the Board of Directors, it gives me great pleasure
to present the 2021 Annual Report.
Temple & Webster continues to outperform
While FY21 was a year that many Australians will remember
as one of great change and disruption, it was also a year
that reaffirmed the importance of our homes. Government-
enforced lockdowns meant that many Australians turned to
online shopping, and Temple & Webster was well placed to
service the needs of those customers.
While many Australians turned to the online channel initially
out of necessity, strong year on year growth suggested a
more permanent shift up the online shopping adoption curve
with full year revenue growing to $326.3 million, up 85% on
the prior year. This is off the back of previous years that have
also grown very strongly.
While industry growth was helped by the tailwinds of
consumer discretionary spend moving out of the travel
category, pleasingly Temple & Webster also grew its market
share by outperforming its peers. This is a testament to the
hard work the team has put into strengthening the customer
proposition.
As much as this growth is impressive, it is worth reiterating
that we are still at the start of the journey – a journey which
COVID has accelerated. We operate in the large market for
furniture and homewares (~$16 billion), where less than 10%
has moved online. This is well behind other markets such as
the US which is up to 25% online penetration and showing no
signs of slowing down. This shift in spend will be driven by
millennials as they enter their core furniture and homewares
buying years. In addition to our core market, we also operate
in the B2B and home improvement markets. These markets
significantly increase our total addressable market to more
than $30 billion. This market size and consumer trends are
the reason why Temple & Webster should be a high growth
business for many years to come.
Strong balance sheet & Capital Raise
During the financial year, we made the strategic decision to
strengthen the balance sheet with a $40 million capital raise.
As a result of this raise and our record profit, we finished the
year with a cash balance of $97.5 million and we remain debt-
free. This balance sheet provides us with the flexibility to take
advantage of inorganic opportunities which make strategic
sense for the Group. While we have no plans for a large
program of M&A, we remain open to the right opportunity
that aligns to our strategic pillars.
4
Temple & Webster Group Ltd 5
Annual Report 2021 CEO Letter &
Operational Review
Dear fellow shareholders,
As I write this letter to you from lockdown in Sydney, it is
somewhat bittersweet to take you through the year that has
been. I would like to acknowledge the difficult period that
many Australians have lived through over the last year. Temple
& Webster does not take for granted how fortunate we are to
be able to trade during these lockdowns. Our singular goal is
to keep delivering a great experience to our customers, and
hopefully have them enjoy their homes, even just a little bit
more, during these challenging times.
Record customers, revenue and profit
Once again, Temple & Webster has delivered a record set of
results, with full year revenue up 85% to $326.3 million and
EBITDA up 141% to $20.5 million. This growth was across all
major categories, geographies, channels and demographics.
Our market remains massive and subject to accelerating
tailwinds, and we are well positioned to capitalise on our
scale. Importantly, we were a high growth business before
COVID, growing 30-50%, and while the lockdowns have no
doubt accelerated the underlying trends of the shift to online
shopping, what was pleasing to see was that we maintained
growth when there were little to no restrictions on retail
trading. Our final quarter grew a healthy 26% up on the
final quarter in FY20, which in turn was up 130% on the final
quarter of FY19.
Operational Highlights
Active Customers up 62% year on year
Fig 1. Active Customers by quarter1
Fig 2. First time and repeat orders
160,000
First time
Repeat
120,000
80,000
40,000
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Active Customers were up 62% year on year, with growth
even on the COVID periods from last year. Our job was to
give first-time customers a great experience to get them to
continue shopping online and more relevantly, keep shopping
with us. The great news is that orders from repeat customers
are growing significantly and have now overtaken first-time
customers for the first time. This goes to our public position
that we feel COVID has resulted in a permanent shift up the
adoption curve for online shopping in our category.
Customer and marketing metrics remain strong
Fig 3. 12 month marketing return on Investment2
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
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3.0
2.5
2.0
1.5
1.0
0.5
0.0
As at 30 June 2020
As at 30 June 2021
$46
$58
Customer Acquisition Cost (CAC)
1. Active customers are the number of unique customers who have transacted in the last twelve months (LTM).
2. Marketing ROI = Margin $ / CAC
Margin = Revenue per active customer as at 30 June 2021 x delivered margin % for FY21
CAC = Total marketing spend for FY21 x 78% (being the estimated percentage of marketing spent on new customer acquisition, i.e., excludes estimated
spend on repeat customers) divided by the number of first-time customers during FY21.
6
Temple & Webster Group Ltd
Fig 4. Revenue per Active Customer3
500
400
300
200
100
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This year, we continued our investment in building our brand
moat with the goal of becoming the top-of-mind retailer for
Australians shopping for their homes. While we have a long
way to go on this journey, the return on Investment from our
experiments with TV advertising continues to be positive.
We have expanded our brand marketing team and are now
preparing plans for future campaigns. As predicted, the
customer acquisition cost has increased due to these longer
payback channels, however this has been somewhat offset by
a 12% increase in annual revenue per active customer which
is now over $425. This is due to a higher repeat rate and a
higher average order value for both new and repeat orders.
This indicates customers continue to get more comfortable
buying larger items online, plus we are doing a better job at
using our ever-increasing pool of data to drive cross-sells by
surfacing more relevant items from our catalogue on-site and
in our various marketing channels.
Customer satisfaction returns to target levels
Fig 5. Net Promoter Score (score range -100% to +100%)
70%
65%
60%
55%
50%
45%
40%
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Unfortunately, the consequence of a record peak period
towards the end of the first half meant that the third-party
logistics network and our internal customer service team
were stretched. This was further exacerbated by a crunch
in our capacity at our 3PL warehouses due to an incredible
spike in demand for warehouse space around the country.
Over the second half, we have increased our capacity to
five warehouse locations and worked hard at improving our
internal and logistic partner systems and processes to allow
for smoother scaling. The good news is that our NPS has
returned to our target levels. While we have no immediate
plans to have our own warehouses or trucks, we continue to
investigate how we can take more control of the fulfilment
journey to ensure that we are delivering a great customer
experience.
Private Label increases to 26% of sales
Fig 6. Private label (inventory) share of sales
26%
74%
drop-shipped (no inventory)
private label (inventory)
Our owned inventory program or ‘Private Label’ has been a
strategic focus for the business. We have publicly stated a
goal of increasing the share of revenue from these products to
~30%, and it’s great to see the share grew from 19% to 26% in
FY21. This was done by increasing our buying and merchandise
planning teams, diversifying our factories outside of China,
adding multiple warehouses (including Sydney), investing
in data and analytics to improve forecasting accuracy, and
expanding our quality and compliance team. We were able
to make a step up in inventory while maintaining our target
weeks of cover and a very low level of aged stock. Importantly,
we have no plans to change our negative working capital and
asset-lite model, however our conservative level of inventory
allows us to take strategic bets on stock to fill product and
price gaps that we have identified using our immense amount
of data.
3. Revenue per active customer = Last 12 months revenue divided by active customers.
7
Annual Report 2021
CEO Letter & Operational Review
continued
Android and iOS apps now live
Fig 7. iOS and Android apps now live
Augmented Reality pilot launched
Fig 8. Augmented Reality pilot launched
Another goal was to launch both iOS and Android apps and
target a native mobile customer with a content-rich and
seamless app-based shopping experience. We now have
apps in both app stores, with early feedback tremendously
positive. The iOS app, which was launched during the first
half, now has more than 5,000 reviews with an average rating
of 4.8 stars (out of 5). The app customer is a more engaged
customer with higher conversion and repeat rates. More than
50% of consumer orders are now placed on a mobile device,
which we expect will only increase.
Increased investment in AI interior design service
Fig 9. Artificial Intelligence powered design service live
One of the benefits of the mobile experience (both app
and mobile website) is the ability to use functionality such
as the phone’s camera to deliver augmented reality (‘AR’)
experiences. While there are many use cases for augmented
reality, one of the more straightforward ones is seeing a
product in your home, a feature which is now being piloted.
AR can help customers judge the look of the item and its size
relative to their room or other pieces of furniture. We believe
features such as AR will continue reducing the barriers to
buying online.
8
Temple & Webster Group Ltd During the year, we launched an artificial intelligence (‘AI’)
interior design service. The AI-powered service is another
feature unique to Temple & Webster, again designed to make
shopping online easier. It is in partnership with an Israeli
startup, in which we have made a second round of investment
after a successful pilot of the service. The first version of the
product is a 2D version with flat images, and the next version
will use our 3D models to generate photo realistic rooms. We
love this service as it exposes our huge range of beautiful
products across our many categories in an inspirational way
that helps customers visualize products, giving them even
more confidence to shop with us.
Trade & Commercial bounces back
Fig 10. Trade & Commercial (B2B) revenue by quarter4
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
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Fig 11. Trade & Commercial orders by type
8,000
First time orders
Repeat orders
After a difficult end to the previous financial year, it was great
to see our business customers come back in full force during
FY21 with our Trade & Commercial division growing 110% year
on year. Again, it’s worth noting that these are great customers
– with high repeat activity and large order sizes. This year, we
continued to focus on the rebounding residential property
development sector and the regional hospitality industry.
Our range and flexible go-to-market model has allowed us to
quickly pivot and chase these growth sectors.
Where to from here
We have a simple and consistent strategy. We want to have
the biggest and best range – having everything you need
for the home. Importantly, the “best” bit of this means we
won’t list everything. We want to be seen as a place for
quality, at an affordable price; we want to be a source of
inspiration and the place customers go to when they want
to make their home more beautiful; and we want to create a
seamless customer experience when shopping, including our
customer’s experience of the delivery to their home.
With scale comes benefits such as being able to forge closer
relationships with our suppliers; obtaining better terms and
exclusive product ranges; making bigger investments in
areas like technology and data; and expanding our logistics
capabilities. In effect, the bigger we become, the better and
stronger our customer proposition becomes, which is the
flywheel effect. This is in turn will lead us to increase our
market share.
We believe that now is the time to invest and scale our market
leadership. This is the period where customers are choosing
their trusted brands and we want to be that brand.
Thank you to the Tempster team
As always, a massive shout-out to the Tempster team – once
again, you have shown incredible resilience. While we have
bounced in and out of the office, and you have had to cope
with a rapidly scaling business, and you have done so with
humility, grace and a customer-first mindset.
6,000
4,000
2,000
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mark coulter
Chief Executive Officer
4. Revenue based on checkout revenue which is pre accounting adjustments (deferred revenue, refund provision).
9
Annual Report 2021 KPI Snapshot & Strategic
Priorities Overview
Key Performance Indicator Snapshot
Revenue $m
Active Customers5
326.3
Up
85%
778k
Up
62%
176.3
480k
FY20
FY21
30 June 20
30 June 21
EBITDA $m
$ per Active Customer6
20.5
Up
141%
380
426
Up
12%
8.5
FY20
FY21
FY20
FY21
Fixed Costs (% of Rev)
10.0%
Down
2.1pts
7.9%
Net Promoter Score
60.4%
62.0%
Up
1.6pts
FY20
FY21
FY20
FY21
5. Active customers are the number of unique customers who have transacted in the last twelve months (LTM).
6. Revenue per active customer = Last 12 months revenue divided by active customers.
10
Temple & Webster Group Ltd Strategic Priorities Overview
High Growth
Happy Customers
Engaged Team
Shareholder Value
Our goal is to deliver a
high growth business to
take advantage of a once
in a generation change in
shopping behaviours
We are building a
sustainable business that
puts the customer at the
heart of everything we do.
Our vision is to make the
world more beautiful, one
room at a time
We believe our team is the
most important stakeholder
group, as everything starts
with an engaged and
productive team
Our Target
Significantly outperform the
online category for furniture
& homewares
Our Target
Maintain and grow our high
Net Promoter Score as we
scale
Our Target
Top quartile of technology
companies in Australia
Our Results
Group Revenue
up 85%
B2B Division Revenue8
up 110%
Active Customers9
up 62%
Our Results
NPS of 62%
Our Results
84%
employee engagement
iOS App Store Rating
4.8/510
Customer product
review rating of
4.7 out of 5 stars11
95%
employees proud to work
for Temple & Webster
51%
manager level and
44%
executive team are female
Our goal is to deliver market
leading shareholder returns
Total
Shareholder
Returns (TSR)7
7,607%
5 year
1,320%
3 year
71%
1 year
7. TSR is the sum of share price appreciation and dividends (assumed to be reinvested in shares) expressed as a growth %. While the Group is not paying the
dividends, it’s equal to share price growth %.
8. Revenue based on checkout revenue which is pre accounting adjustments (deferred revenue, refund provision).
9. Active customers are the number of unique customers who have transacted in the last twelve months (LTM).
10. Rating as of August 2021.
11. Average of all customer reviews on https://www.templeandwebster.com.au/ as of August 2021.
11
Annual Report 2021 Committed to making
the world more beautiful
At Temple & Webster, we are proud of our vision to make the world more beautiful, one room at a time. This vision
extends to the broader community in which our customers, suppliers, shareholders and team members work and
live. Although we are a young company, we take our environmental, social and ethical responsibilities seriously. We
are a next generation company with a purpose to deliver sustainable value for all our stakeholders.
Climate Change and Sustainability
Given our business involves the manufacture and transport of
physical goods, climate change is a significant sustainability
issue relevant to us. We accept the Intergovernmental Panel
on Climate Change’s assessment of climate change science.
We understand our responsibility in mitigating the impact
of our business on the environment and are developing a
program of initiatives that align with relevant United Nations
Sustainable Development Goals (‘UN SDGs’). The UN
SDGs aim to end poverty, protect the planet, and promote
prosperity and peace.
Our key environmental areas of focus are:
• Reducing our carbon footprint
•
•
Improving our raw materials and component sourcing
Improving the sustainability of our packaging
Activities undertaken in FY21 included:
•
Identification of carbon reduction opportunities through
employee surveys, and engaging external sustainability
consultants
• Responsible sourcing initiatives (e.g., audits for ranges with
Forest Stewardship Council®, Better Cotton Initiative™,
and Greenguard Environmental Institute certifications)
•
Implementation of OEKO-TEX Standard 100® certification
for specific ranges of homewares
As part our commitment to the environment, we have engaged
an external consultant to assist us in developing a materiality
assessment, to identify, review and rank the material risks and
issues to our business, which will provide the foundations for
our sustainability roadmap. A full-time sustainability officer in
our Quality, Compliance and Sustainability team will be added
to the Group to support the development and execution of
our roadmap.
12
Temple & Webster Group Ltd Timber Sustainability and Illegal Logging
Our Role in the Community
As Australia’s leading pure-play online retailer for furniture and
homewares, we understand that our industry is dependent on
natural resource availability. We rigorously assess all timber
products which we import into Australia to ensure that the
timber is harvested, processed, and purchased from legally
verifiable sources.
We have a dedicated internal function that is responsible
for the maintenance and facilitation of our timber due
diligence system which also works to guide and educate key
stakeholders in understanding the requirements of the Illegal
Logging Prohibition Act and Regulations. Our illegal logging
governance framework requires us to audit each individual
timber species used in the construction of our imported
products, for all relevant manufacturers at least annually, to
ensure ongoing compliance and effective risk mitigation.
Modern Slavery and Ethical Sourcing
We believe that freedom from modern slavery is a human
right which should be afforded to everyone in the world. We
are committed to stamping out modern slavery in our supply
chains, both onshore and offshore.
Our offshore suppliers are governed by an ethical and
social audit framework, whereby regular factory audits are
undertaken by third parties, allowing us to measure supplier
ethical performance prior to starting a business relationship
and to show continuous improvement over time. We are
working with our suppliers through action plans which
address specific key risk areas.
Our FY20 Modern Slavery Statement is available at https://
modernslaveryregister.gov.au/
(search “temple & webster”).
Customer Data and Privacy
As an online retailer, cyber security is paramount. Our
platforms need to be secure, scalable and protect our
customers’ data. To that end, we have adopted the ISO 27001
standard as a framework for cyber security. We have also
added dedicated resources to manage the roll out of this
standard, including a Cyber Security Officer. As part of ISO
27001 we regularly engage independent industry experts to
perform audits across our platforms, policies and processes,
including regular penetration testing.
Temple & Webster acknowledges the traditional custodians
of the land, and we are committed to progressing the goals
of reconciliation. We have committed to the development
of a Reconciliation Action Plan which will include practical
actions that can drive our contribution to reconciliation both
internally and more broadly within the wider community. We
have commenced this work with a First Nations consultant.
Temple & Webster is proud of its long-term partnership with
Women’s Community Shelters (‘WCS’) – an organisation that
provides community-based emergency accommodation and
support for vulnerable women and children. WCS works in
direct partnership with communities to establish shelters
to provide support in a safe environment that enables
women and their children to rebuild self-esteem, control and
fulfilment in their lives.
Temple & Webster and our partners assist WCS in a range
of capacities from supplying furniture and homewares and
styling services to fit out shelters; donating food; providing
essential personal items for women; toys for children; to
sharing our technology knowledge; assisting with fundraising,
and, of course, volunteering in person.
13
Annual Report 2021 Financial
Report 2021
The Directors of the Temple & Webster Group
present the report, together with the consolidated
financial report for the year ended 30 June 2021.
14
Temple & Webster Group Ltd Directors’ Report
Temple & Webster Group Ltd
Directors' report
30 June 2021
The directors present their report, together with the consolidated financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Temple & Webster Group Ltd (referred to hereafter as the 'Company' or 'parent entity') and the entities it
controlled at the end of, or during, the year ended 30 June 2021.
Directors
The following persons were directors of Temple & Webster Group Ltd during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Stephen Heath
Susan Thomas
Conrad Yiu
Mark Coulter
Belinda Rowe (appointed 26 February 2021)
Principal activities
Temple & Webster is Australia’s leading pure play online retailer of furniture and homewares.
Temple & Webster has over 200,000 products on sale from hundreds of suppliers. The business runs an innovative drop-shipping model,
where products are sent directly to customers by suppliers, enabling a larger product range, faster delivery times and reducing the need
to hold inventory.
The drop-ship range is complemented by a private label range which is sourced directly by Temple & Webster from overseas suppliers.
The Temple & Webster Group is headquartered in Sydney, Australia and is listed on the Australian Securities Exchange under the code
TPW.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Financial and operational review
Revenue
Gross margin
%
EBITDA (1)
EBIT (2)
NPAT
Cash balance
30/06/2021
$m
30/06/2020
$m
326.3
148.0
45.3%
20.5
18.9
14.0
97.5
176.3
78.6
44.6%
8.5
7.9
13.9
38.1
(1) Earnings before interest, tax, depreciation and amortisation
(2) Earnings before interest and tax
Key financial and operational metrics for the year ended 30 June 2021 include:
• Record year for revenue, profit and customers
• Revenue up 85% for the year, driven primarily by growth in active customers and average order value
• Gross margin % in line with last year at 45%
• EBITDA increased by 141% as a result of operating leverage driven by revenue and margin growth and tight management of
fixed costs
• NPAT of $14.0m, which on a normalised basis3 (excluding deferred tax adjustments) was up 165% YoY
• Cash flow positive with an ending cash balance of $97.5m
• Active customer growth of 62%
(3)Normalised NPAT is calculated as NPAT adjusted for any benefits received from the recognition and utilisation of historical tax losses
Please refer to the CEO Letter & Operational review and the Group’s FY21 results presentation for further commentary on the Group’s
financial results.
2
15
Annual Report 2021
Directors’ Report
continued
Temple & Webster Group Ltd
Directors' report
30 June 2021
Key business risks
There are a number of market, financial and operational risks both specific to the Group and externally that could have an adverse effect
on the Group’s future performance. The Group has a risk management framework in place with internal control systems to identify key
business risks and mitigate them to an acceptable level. The material business risks are summarised below.
Key risk
COVID-19
Description
Events related to the coronavirus pandemic (‘COVID-19’) have resulted in continued uncertainty
as to ongoing and future response of governments and authorities globally as well as a likelihood
of an Australian economic recession of unknown duration or severity. As such, the full impact of
COVID-19 to consumer behaviour, suppliers, employees and the Group are not fully known. Given
this, the impact of COVID-19 could potentially be materially adverse to the Group’s financial and
operational performance. Further, any government or industry measures may adversely affect the
Group’s operations and are likely beyond the control of the Group.
Continued growth of retail
ecommerce in general and
growth in demand may be
affected by economic factors
While the B2C retail ecommerce market and the online market for furniture and homewares have
been growing there is no guarantee this will continue into the future. The Group is subject to factors
outside its current control including Australia’s outlook for economic growth, cash rate, taxation,
unemployment rate, consumer sentiment, global economic outlook, foreign economic shocks and
building activity. One or more of these factors could cause a slowing or contraction in the
forecasted growth in the market and industry.
New and existing competitors
could adversely affect prices and
demand and decrease the
Group’s market share
Supply chain might be disrupted
Reliance on third party product
suppliers
Political, economic or social
instability
The furniture and homewares segment is highly fragmented. Competition can arise from a number
of sources including traditional offline retailers, including multi-channel, mono-channel, multi-
branded retailers, and online-only ecommerce competitors. Existing online competitors may
strengthen through funding or industry consolidation, or through financial or operational
advantages which allow them to compete aggressively on pricing. Competition may also come
from third-party suppliers establishing their own online presence as opposed to utilising the
Group’s platform. As a result, this may increase the costs of customer acquisition, lower margins
due to pricing pressure and reduce the Group’s market share in the furniture and homewares
segment.
There remains a risk that the spread of COVID-19, or a similar event, has an adverse impact on
the Group’s supply chain. This could occur if the ability to transport products between countries is
disrupted, the Group’s key suppliers are negatively affected or the Group is otherwise unable to
efficiently distribute products to customers. In the event that the supply chain of the Group is
disrupted, this may have a material adverse effect on the Group’s operating performance and
earnings.
The Group has a large number of suppliers that provide a broad range of products. Its supply
agreements are on a case by case basis, with the majority of relationships informal and terminable
at will. The Group has some formal contracts but a number are short-term and with foreign
suppliers and have no guarantees associated with renewal on like terms. The deterioration of the
Group’s relationships with these suppliers and inability of these suppliers to renew informal or
contractual agreements may have a material adverse effect on the Group’s financial and
operational performance in the future.
The Group’s suppliers and service providers are also subject to various risks which could limit
their ability to provide the Group with sufficient, or any, products or services. Some of these risks
include raw material costs, inflation, labour disputes, union activities, boycotts, financial liquidity,
product merchantability, safety issues, natural disasters, disruption in exports, trade restrictions,
currency fluctuations and general economic and political instability (including as a result of
pandemics such as COVID-19). The Group is also exposed to risks related to labour practices,
environmental matters, disruptions to production and ability to supply, and other issues in the
foreign jurisdictions where suppliers and service providers operate. Any of these risks, individually
or collectively, could materially adversely affect the Group’s financial and operational
performance.
Temple & Webster Group Ltd
Directors' report
30 June 2021
Key business risks (continued)
Key risk
Description
Performance, reliability and
The Group’s financial and operational performance could be adversely affected by a system
security of websites, databases,
failure that causes disruption to its websites, or to third party suppliers of its systems and products.
operating systems
This could directly damage the reputation and brand of the relevant platform and could reduce
visitors to the Group’s website and directly influence sales to customers. The Group’s databases
and systems are hosted on platforms provided by third party providers. As a result, the Group is
subject to its own disaster planning contingencies and those of its third parties to deal with events
that are beyond the control of those parties such as natural disasters, infrastructure failures,
terrorist and cyber attacks. A material failure in the systems of a third party provider is likely to
have a material impact on the systems and operations of the Group’s platforms.
Unauthorised use of intellectual
Substantial parts of the Group’s online platforms, distribution software, applications, data analytics
property or independent
development of technology
and customer databases are seen as proprietary information. Unauthorised parties may obtain or
copy, or seek to imitate, all or portions of this intellectual property or independently develop
technology that is similar and may be in breach of proprietary rights. In this instance, the Group
may seek legal actions to remedy the breach of proprietary information. This may incur legal or
other fees and if unsuccessful may have a material adverse effect on the Group’s financial and
operational performance in the future
Laws and regulations may
The Group is subject to, and must comply with, a variety of laws and regulations in the ordinary
course of its business. These laws and regulations include those that relate to fair trading and
consumer protection, product safety, employment, property, taxation (including goods and
services taxes and stamp duty), accounting standards, customs and tariffs. Failure to comply with,
or changes to, laws and regulations may adversely affect the Group, including by increasing its
costs either directly or indirectly (including by increasing the cost to the business of complying
with legal requirements).
Key management personnel
The Group relies on the expertise, experience and strategic direction provided by its Key
Management Personnel. These individuals have extensive experience in, and knowledge of, the
Group’s business. Additionally, successful operation of the Group’s business depends on its ability
to attract and retain quality employees. Competition could increase the demand for, and cost of
hiring, quality employees. The Group’s ability to meet its labour needs while controlling costs
associated with hiring and training employees is subject to external factors such as unemployment
rates, prevailing wage legislation and changing demographics.
change
(‘KMP’)
.
16
3
4
Temple & Webster Group Ltd
Temple & Webster Group Ltd
Directors' report
30 June 2021
Key business risks (continued)
Key risk
Performance, reliability and
security of websites, databases,
operating systems
Unauthorised use of intellectual
property or independent
development of technology
Laws and regulations may
change
Key management personnel
(‘KMP’)
.
Description
The Group’s financial and operational performance could be adversely affected by a system
failure that causes disruption to its websites, or to third party suppliers of its systems and products.
This could directly damage the reputation and brand of the relevant platform and could reduce
visitors to the Group’s website and directly influence sales to customers. The Group’s databases
and systems are hosted on platforms provided by third party providers. As a result, the Group is
subject to its own disaster planning contingencies and those of its third parties to deal with events
that are beyond the control of those parties such as natural disasters, infrastructure failures,
terrorist and cyber attacks. A material failure in the systems of a third party provider is likely to
have a material impact on the systems and operations of the Group’s platforms.
Substantial parts of the Group’s online platforms, distribution software, applications, data analytics
and customer databases are seen as proprietary information. Unauthorised parties may obtain or
copy, or seek to imitate, all or portions of this intellectual property or independently develop
technology that is similar and may be in breach of proprietary rights. In this instance, the Group
may seek legal actions to remedy the breach of proprietary information. This may incur legal or
other fees and if unsuccessful may have a material adverse effect on the Group’s financial and
operational performance in the future
The Group is subject to, and must comply with, a variety of laws and regulations in the ordinary
course of its business. These laws and regulations include those that relate to fair trading and
consumer protection, product safety, employment, property, taxation (including goods and
services taxes and stamp duty), accounting standards, customs and tariffs. Failure to comply with,
or changes to, laws and regulations may adversely affect the Group, including by increasing its
costs either directly or indirectly (including by increasing the cost to the business of complying
with legal requirements).
The Group relies on the expertise, experience and strategic direction provided by its Key
Management Personnel. These individuals have extensive experience in, and knowledge of, the
Group’s business. Additionally, successful operation of the Group’s business depends on its ability
to attract and retain quality employees. Competition could increase the demand for, and cost of
hiring, quality employees. The Group’s ability to meet its labour needs while controlling costs
associated with hiring and training employees is subject to external factors such as unemployment
rates, prevailing wage legislation and changing demographics.
4
17
Annual Report 2021
Directors’ Report
continued
Temple & Webster Group Ltd
Directors' report
30 June 2021
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
On 22 July 2021, the Group increased its investment into a start-up developing artificial intelligence (“AI”) interior design tools to
accelerate the company’s growth after a successful pilot. The Group’s investment is in alignment with its strategy to innovate its digital
offering through 3D and AI generated tools to help customers navigate the vast range of furniture & homewares to aid engagement and
conversion.
The additional investment entailed a first tranche cash consideration of USD $1,000,000 in exchange for shares in the company, enabling
the Group to exercise significant influence over the investee from the investment date onwards. The second tranche of USD $500,000
will be paid on the completion of product deliverables.
On 12 August 2021, the Group signed a new 10-year lease for office space in St Peters Sydney. The lease will be recognised under
AASB 16 Leases and the liability of $17,839,000 will be recognised in the next financial year.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Group's
operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Likely developments in the operations of the consolidated entity and expected results of those operations are contained in the
Chairperson’s and the CEO’s reports.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Share Options
Unissued shares
As at the date of this report and at the reporting date, there were 5,543,078 unissued ordinary shares under options. Refer to the
remuneration report for further details of the options outstanding for Key Management Personnel (‘KMP’).
Information on directors
Name:
Title:
Stephen Heath
Independent Non-Executive Director and Chairperson
Qualifications:
Graduate of the Australian Institute of Company Directors.
Experience and expertise:
Stephen is a specialist in consumer goods brand management with over 25 years of
manufacturing/wholesale distribution and retail experience. Stephen spent 16 years as CEO
of some of Australia’s best-known consumer brands that includes Rebel Sport, Godfrey’s and
Fantastic Holdings with operations experience in Australia, New Zealand, and Asia.
His experience includes working for both ASX Listed and Private Equity owned companies.
Other current directorships:
Board Chairperson of Shiro Holdings Limited (appointed on 24 October 2019) and Director of
Redhill Education Limited (appointed on 1 September 2019).
Former directorships (last 3 years):
Non-Executive Director of Funtastic Limited (appointed on 18 October 2010 and resigned on 6
February 2019).
Special responsibilities:
Chair of the Board
Interests in shares:
Interest in options over shares:
34,000
181,026
18
5
Temple & Webster Group Ltd
Temple & Webster Group Ltd
Directors' report
30 June 2021
Information on directors (continued)
Name:
Title:
Susan Thomas
Independent Non-Executive Director
Qualifications:
Bachelor of Commerce and Bachelor of Law from the University of New South Wales.
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Susan is an experienced company director and audit and risk committee chair. Susan has
expertise in technology and law. Susan founded and was the Managing Director at FlexiPlan
Australia, an investment administration platform sold to MLC.
Director of Fitzroy River Holdings Limited (appointed on 26 November 2012) and Director of
Nuix Limited (appointed 18 November 2020).
Board Chairperson of Alexium International Group Limited (appointed to Board on 10 December
2017, Chairperson on 8 May 2018 and resigned on 31 March 2019). In February 2020, Fitzroy
River Holdings Limited acquired 100% of Royalco Resources Limited (‘Royalco’). Accordingly,
Royalco is no longer a listed entity, however, Susan Thomas is still a director of Royalco
(appointed on 22 February 2017).
Special responsibilities:
Chair of the Audit and Risk Management Committee
Interests in shares:
Nil
Interest in options over shares:
181,026
Name:
Title:
Qualifications:
Experience and expertise:
Conrad Yiu
Non-Executive Director
Bachelor of Commerce from the University of New South Wales and a Master of Business
Administration from the University of Cambridge.
Conrad is a co-founder of Temple & Webster and joined the Board on its formation in July 2011.
Conrad was Chairperson of the Company until immediately prior to the IPO. Conrad has over
25 years commercial and advisory experience with a focus on investing in, acquiring and
building high growth businesses in the consumer and technology sectors. Conrad was
previously Director of Corporate Development with the digital division of Newscorp Australia
(formerly News Digital Media), co-founder and Director of a London-based mobile technology
company, a manager at Arthur Andersen and is a principal of ArdenPoint, an investment firm
which he co-founded with Mark Coulter in 2011, the CEO of Temple & Webster Group Ltd.
Conrad is a co-founder and current partner of AS1 Growth Partners, a private investment firm
focused on growth & technology investments in public and private markets.
Other current directorships:
Former directorships (last 3 years):
None
None
Special responsibilities:
Interests in shares:
None
2,557,018 ordinary shares
Interest in options over shares:
181,026
Name:
Title:
Belinda Rowe
Independent Non-Executive Director
Qualifications:
Bachelor of Arts Monash University, AFA (Advertising Federation Australia) Graduate.
Experience and expertise:
Belinda is a very experienced business leader and successful marketing executive. Belinda’s
extensive professional experience lies in marketing communications, content, media and digital
marketing technologies. Belinda led media and marketing communications businesses for
Zenith and Publicis Media globally based in the UK, and held many senior roles in the marketing
industry, including as CEO of ZenithOptimedia for 10 years in Australia and as Director Brand
& Marcoms for O2 Telefonica in the UK.
Other current directorships:
Independent Non-Executive Director of HT&E Limited (appointed on 5 February 2019) and
Soprano Design Limited (appointed on 22 September 2020).
Former directorships (last 3 years):
None
Special responsibilities:
Chair of the Nomination and Remuneration Committee
Interests in shares:
Interest in options over shares:
Nil
Nil
19
6
Annual Report 2021
Directors’ Report
continued
Temple & Webster Group Ltd
Directors' report
30 June 2021
Information on directors (continued)
Name:
Title:
Mark Coulter
Executive Director
Qualifications:
Bachelor of Laws and Bachelor of Science (Biochemistry) from the University of Sydney.
Experience and expertise:
Mark is a co-founder of Temple & Webster and has been involved as an advisor to the Group
since its inception. Previously, Mark worked at News Limited where he was Director of Strategy
for the Digital Media properties and managed a portfolio of businesses including Moshtix, a
digital ticketing company. Mark was also a solicitor at Gilbert + Tobin and management
consultant at McKinsey & Company. Mark co-founded the National Online Retailers Association
and is a co-founder of ParcelPoint/Fluent Retail, a logistics and technology company servicing
many of Australia's largest online and omni-channel retailers.
Other current directorships:
Former directorships (last 3 years):
None
None
Special responsibilities:
Chief Executive Officer
Interests in shares:
Interests in options over shares:
2,253,484 ordinary shares
5,000,000
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of
entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Michael Egan is Company Secretary of Temple & Webster Group Ltd. He has a range of experience in the Chartered Accounting
profession, business and consulting. Michael has held Directorships and has been Company Secretary in ASX listed companies and in
Australian subsidiaries of multi-national companies including Anglo-Australian Group, Rio Tinto and Hoechst (Germany).
Meetings of directors
The number of meetings of the Group’s Board of Directors ('the Board') held during the year ended 30 June 2021, and the number of
meetings attended by each director were:
Stephen Heath
Susan Thomas
Conrad Yiu
Belinda Rowe
Mark Coulter
Full Board
Nomination and Remuneration
Committee
Audit and Risk Management
Committee
Attended
Held
Attended
Held
Attended
Held
5
6
6
2
6
6
6
6
2
6
3
3
2
2
-
3
3
2
2
-
4
4
4
1
-
4
4
4
1
-
Held: represents the number of meetings held during the time the director held office.
20
7
Temple & Webster Group Ltd
Remuneration report (audited)
Dear Shareholder,
On behalf of the Board, it gives me great pleasure to present the FY21 remuneration report, my first as the Chair of the Nomination
and Remuneration Committee.
FY21 was certainly a transformative year for Temple & Webster. During the year, the Group entered the ASX 300 due to a record year in
terms of revenue, profit and customers. As the business scales in complexity and sophistication, so too does our remuneration strategy. This
strategy is outlined in more detail in this year’s remuneration report.
In FY21, the Board put in place a remuneration framework that provides a clear line of sight between the Group’s performance and
remuneration outcomes, as well as driving deep alignment between the interests of directors, employees and shareholders. To achieve this,
the Board conducted an independent review of our remuneration design (see section 5.5), with the following notable outcomes:
Adopting best practice remuneration design which is “fit for purpose”
•
The Board adopted an executive remuneration package composed of an appropriate mix of remuneration elements including fixed
pay, short-term variable remuneration and long-term variable remuneration. Short-term variable remuneration was clearly linked to
the strategic priorities of the Group through a mix of financial and non-financial KPIs, while longer-term variable remuneration was
linked to longer term shareholder outcomes.
• At the same time, the Board has built a remuneration framework which is flexible and is “fit for purpose”, particularly when dealing
with a founder-led Company. For example, for the last five years the CEO has been on a lower fixed remuneration / higher equity
package versus benchmarked peers. As the Company evolves so too will our remuneration design, which the Board regularly
reviews.
Market benchmarking
● As a result of the rapid growth in scale, complexity, and market position of the Group, the Board has provided remuneration increases
as needed to meet the objectives of the Group’s strategy, and ensure the Group is attracting and retaining the best talent.
● Benchmarking of NED remuneration appropriate to the Group’s current market capitalisation, also indicated a need to increase the
Board Fees to ensure that individuals of the appropriate calibre and experience can be attracted and retained.
Updated rights plans
● The Non-executive Director (‘NED’) option plan has been reviewed and is proposed to be replaced with a new Temple & Webster
Group Ltd NED Equity Plan.
● An independent review of the executive equity plan has resulted in the development of a new Temple & Webster Group Ltd Rights
Plan adopted in FY21. The change includes a range of improvements in terms of instruments available, expected tax and termination
outcomes, and governance improvements aligned with current best practices such as the inclusion of malus and clawback clauses;
I hope the additional information and disclosures contained in this year’s remuneration report provide a deeper understanding of remuneration
governance and practices for our shareholders, and that you will agree we have struck the right balance for a Group that is scaling rapidly in
what has been another complex year.
Belinda Rowe
Chair – Nomination and Remuneration Committee
21
Annual Report 2021
Directors’ Report
continued
The Directors of Temple & Webster Group Ltd present the Remuneration Report (‘the Report’) for the Group and its controlled entities for the
year ended 30 June 2021. This Report forms part of the Directors’ Report and has been prepared in accordance with the Corporations Act
2001 (‘the Act’), Corporations Regulation 2M.3.03, in compliance with AASB124 Related Party Disclosures, and audited as required by
section 208(3C) of the Act.
The Report is divided into the following sections:
Section
Description
1. Persons covered by this Report
This section provides details of the directors and executives who are subject to the disclosure
requirements of this report, together with the Key Management Personnel, including roles and
changes in roles.
2. Remuneration overview
This section provides an overview of performance and reward for FY21, including “at-a-glance”
summaries.
3. Remuneration strategy, policy and
framework
This section provides details of the elements of the remuneration framework, including market
positioning, changes to fixed pay, variable remuneration principles, and the terms of variable
remuneration.
4. Link between performance and
reward
This section addresses FY21 short and long-term variable remuneration outcomes based on
performance Measurement Periods completed during FY21, as well as the “achieved”
remuneration outcomes for the executives.
5. Statutory tables and disclosures
This section provides the statutory disclosures not addressed by preceding sections of the
Report, including statutory remuneration tables, changes in equity, KMP service agreements,
related party loans/transactions, and the engagement of external remuneration consultants.
1. Persons covered by this report
This report covers Key Management Personnel (‘KMP’) which are defined as those who have the authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group.
The below table outlines the KMP of the Group:
Name
Role at Year End
Non-executive KMP
Stephen Heath
Susan Thomas
Conrad Yiu
Belinda Rowe
Executive KMP
Mark Coulter(2)
Adam McWhinney(2)
Mark Tayler
Independent Board Chair
Independent Non-executive Director
Non-executive Director
Independent Non-executive Director
Appointed
15 October 2016
23 February 2016
6 October 2015
26 February 2021
Executive Director and Chief Executive Officer (‘CEO’)
Customer Experience Officer (‘CXO’)
Chief Financial Officer (‘CFO’)
22 April 2016(3)
1 July 2017
18 April 2016(4)
Committee membership(1)
Audit &
Nomination &
Risk
Remuneration
M
M
M
C
n/a
n/a
n/a
M
C
M
M
n/a
n/a
n/a
(1) M = Member, C = Chair
(2) These individuals are considered co-founders of the Company and referred as “founder executives” in this report
(3) Mark Coulter was appointed as the interim CEO on 22 April 2016, the CEO on 24 October 2016 and an Executive Director on 23 October 2019
(4) Mark Tayler was appointed as the interim CFO on 18 April 2016 and the CFO on 24 October 2016
The following changes to KMP occurred during the year ending 30 June 2021 and between 30 June 2021 and the date of publication of this
report:
● Belinda Rowe was appointed an independent non-executive director, chair of the nomination and remuneration committee and a
member of the Board and the audit and risk committee on 26 February 2021;
● Stephen Heath was replaced by Belinda Rowe as chair of the nomination and remuneration committee on 26 February 2021,
however, still remains a member;
● Conrad Yiu was appointed a member of the nomination and remuneration committee on 1 September 2020.
22
Temple & Webster Group Ltd
2. Remuneration overview
2.1. Executive remuneration structure at-a-glance
The following diagram outlines the executive KMP remuneration cycle under the remuneration framework as applicable to FY21:
Component/Year
ending
Fixed
30-Jun-21
30-Jun-22
30-Jun-23
30-Jun-24
Fixed pay cash
Short term
< STVR(1) performance period >
< Metric assessment and
vesting confirmed by the
Board in Q1 FY24,
exercisable up to 15th year
(1) STVR is short term variable remuneration
(2) The Board has discretion to determine whether the STVR award is settled in cash or in equity interests such as rights (see point 3.2). The Board determined that FY21 STVR
would be settled in cash only.
(3) LTVR is long term variable remuneration
(4) LTVR service is tested during the first year only
The Board deemed the LTVRs granted to the CEO and CXO in FY19, subject to vesting conditions being met in August 2022, as sufficient
variable remuneration for the financial year, therefore the structure outlined above only applied to the CFO and non-KMP executives in FY21.
Outcomes from the FY21 STVR opportunity and FY19 LTVR that were eligible to be awarded/vest following the end of FY21 are outlined in
the section titled “The link between performance and reward in FY21”.
2.2 Group’s performance at-a-glance
The following outlines the Group’s performance in FY21 in the context of the prior 4 years, which is intended to assist in demonstrating the
link between performance, value creation for shareholders, and executive reward:
FY end
date
Normalised
NPAT(1)
$m
30/06/2021
30/06/2020
30/06/2019
30/06/2018
30/06/2017
12,088
4,560
637
(524)
(5,451)
NPAT(1)
$m
13,954
13,909
3,764
(21)
(7,754)
Share
price(2)
$
10.79
6.31
1.35
0.76
0.18
Change in
share price
$
4.48
4.96
0.59
0.58
0.04
Dividends(3)
$
-
-
-
-
-
Change in shareholder
wealth(4)
%
$
Rolling 3-year
annualised TSR(5)
%
4.48
4.96
0.59
0.58
0.04
71%
367%
78%
322%
29%
142%
227%
113%
n/a
n/a
(1) Normalised Net Profit After Tax (‘Normalised NPAT’) is calculated as NPAT adjusted for any benefits received from the recognition and utilisation of historical tax losses
(2) Share price at the end of the financial year
(3) Dividends paid during the financial year
(4) Share price change plus dividends on prior financial year
(5) TSR is the sum of share price appreciation and dividends (assumed to be reinvested in shares) during the Measurement Period expressed as a growth %. While the Group is not
paying the dividends, it’s equal to annualised share price growth
23
Annual Report 2021
Directors’ Report
continued
3. Remuneration strategy, policy and framework
3.1. Executive (other than the founder executives) remuneration - fixed pay, total remuneration package and variable remuneration
framework
Total remuneration package (‘TRP’) is intended to be composed of an appropriate mix of remuneration elements including fixed pay, short-
term variable remuneration (‘STVR’) and long-term variable remuneration (‘LTVR’).
Fixed Pay
Short-term variable remuneration (STVR)
Long-term variable remuneration
(LTVR)
Fixed pay comprises base salary, plus any
other fixed elements such as
superannuation, allowances, benefits, fixed
equity and fringe benefits tax for example.
Fixed pay is intended to be positioned
competitively in the market when assessed
against suitable benchmarks but may vary
with decisions around the mix of cash, equity
and performance linked remuneration as
negotiated between the Board and each
incumbent on a case-by-case and fit-for-
purpose basis.
100% of the FY21 STVR was paid in cash
Performance rights vesting after 3 years
Performance is measured on 12 month
financial and non-financial goals, both at a
Group and Individual scorecard level, with
threshold, target and stretch levels
The LTVR program aligns executives to
shareholder interests through iTSR targets
(indexed relative Total Shareholder
Returns)
See more detail in section 3.3.
FY21 STVR goals were:
• Group Revenue Growth
exceeding market growth (45%)
Various Group customer and
employee operational goals
(30%)
Individual Goals (25%)
•
•
See more detail in section 3.2.
Variable remuneration is not a “bonus”, but a blend of at-risk remuneration (below target) and incentives (above target and up to stretch).
Metrics selected are intended to be linked to the primary drivers of value creation for stakeholders, and successful implementation of the
long-term strategy over both the short and long term. Thresholds are intended to be a near-miss of expectations, while target is intended to
be a challenging but realistically achievable objective with a probability of around 50% to 60%. Stretch, on the other hand, is designed to be
exceptionally challenging with a probability of around 10% to 20%.
Variable remuneration outcomes and performance are linked as shown below:
Performance Assessment
Variable remuneration outcome
Approximate market position - TRP
Exceeds expectations
Target to stretch - incentive/upside
High in TRP market benchmark range
Meets expectations
Target - expected reward
Around midpoint to P62.5(1) of TRP market
range
Below expectations
Threshold to target - at risk/downside
Low in TRP market benchmark range
Below threshold
Fixed pay only
Very low within or below minimum of TRP
market range
(1) “P” refers to “Percentile” or the point in the sample data range below which the specified percentage of data points lie below.
Executive KMP remuneration is tested regularly by reference to appropriate independently sourced comparable benchmark data, and specific
advice as may be appropriate from time to time. Benchmark groups are generally designed to be based on 20 companies from the same
market sector, within a range of 50% to 200% of the market value of the Group at the time, and evenly balanced to ensure measures of
central tendency are highly relevant. Benchmarks may be adjusted upwards or downwards for variations in role design compared to market
benchmark roles, and individual remuneration may vary by +/- 20% compared to the policy midpoint, to reflect individual factors such as
experience, qualifications and performance.
During the current financial year, the CFO was the only executive KMP role to receive a fixed pay increase, which was appropriate to the
changes in the Group scale, complexity and operations. The Board will continue to monitor market positioning to ensure that appropriate
talent can be attracted, retained and aligned.
24
Temple & Webster Group Ltd
3. Remuneration strategy, policy and framework (continued)
3.2 Executive (other than the founder executives) STVR plan
A description of the STVR structure applicable for FY21 is set out below.
Purpose
Measurement
Period
To provide at-risk remuneration and incentives that rewards executives for performance against annual
objectives set by the Board at the beginning of the financial year. Objectives selected were designed to
support long-term value creation for shareholders, and link to the long-term strategy on an annual basis.
The financial year of the Group (ending 30 June 2021).
Opportunity
The target value was 25% of fixed pay, with a maximum stretch target of 28% of fixed pay.
Outcome metrics
and weightings
The STVR was dependent on meeting Group, individual and business unit (if applicable) performance
objectives. For FY21, the metrics were as follows:
1. Revenue growth – 45% weighting – must exceed market growth by specified percentage, with a
target of a materially higher growth rate
2. Operational metrics – 30% weighting – employee and customer metrics, must exceed prior year
3.
result, with a target of a specified improvement
Individual performance – 25% weighting – three to five individual metrics related to strategic
implementation directly relevant to the role.
Gate
Settlement
Malus and
clawback
Board
discretions
These metrics were selected because they are viewed by the Board as the primary drivers of value creation
for the business in FY21.
The Group metrics were subject to a Normalised Earnings Per Share(1) growth gate and a revenue growth
gate.
Awards are determined following auditing of accounts after the end of the financial year. The Board has
discretion to determine whether the STVR award is settled in cash or in equity interests such as rights. The
Board elected to settle the FY21 STVR in cash.
The STVR is currently not subject to any malus or clawback clauses or policies, however, this may be
reviewed in the next financial year.
The Board has discretion to modify the awards payable to participants regardless of any performance
outcome or gate, to ensure that outcomes are appropriate to the circumstances that prevailed over the
Measurement Period.
Corporate
actions
The Board has discretion to determine the treatment of unpaid STVR in the case of major corporate actions
such as a change in control, delisting, major return of capital or demerger.
(1) Normalised Earnings Per Share is a Normalised NPAT divided by weighted average number of ordinary shares
25
Annual Report 2021
Directors’ Report
continued
3. Remuneration strategy, policy and framework (continued)
3.3. Executive (other than the founder executives) long-term variable remuneration plan
A description of the LTVR structure granted in FY21 is set out below. The details of the LTVR grant that vested following FY21 completion or
in FY21 are provided in latter sections (see section 3.5 and 3.6 respectively).
Purpose
Measurement
Period
To provide at-risk remuneration and incentives that rewards executives for performance against long-term value
creation objectives set by the Board at the beginning of the financial year and to align the interests of executives
with the interests of shareholders.
3 years from 1 July 2020 to 30 June 2023.
Opportunity
The target value is 25% of fixed pay (‘FP’), with a maximum stretch of double the target, or 50% of fixed pay.
Instrument
The LTVR is granted under the rights plan which allows for performance rights, service rights or restricted rights,
each of which may be constructed as a share appreciation right (‘SAR’), which is equivalent to an Option, when
an exercise price is specified. For FY21, performance rights were used for the purposes of the LTVR. Rights are
not subject to dividend or voting entitlements.
Price
The price is nil because it forms part of the remuneration of the participant.
Exercise price
The exercise price is nil.
Allocation
method
The grant number is determined by dividing the stretch LTVR value by the 30-day Volume Weighted Average
Price following the release of unaudited financial results for FY20.
Performance
metrics and
weightings
FY21 granted performance rights have an Indexed Total Shareholder Return (‘iTSR’) vesting condition (100%
weighting). The vesting of such performance rights will be determined by comparing the Group’s TSR over the
Measurement Period with the TSR of the ASX 300 Industrials Total Return Index, according to the following
vesting scale:
Performance level
Stretch
Target
Threshold
Below threshold
TSR of the Group vs TSR of the ASX 300
Industrials Total Return Index
Index TSR + 10% TSR p.a.
Index TSR + 5% TSR p.a.
Index TSR