Annual Report 2024 Acknowledgement of Country Temple & Webster Group acknowledges the Traditional Owners and Custodians of Country throughout Australia. We recognise their enduring connection to the lands, the waterways, and the skies. We acknowledge the Gadigal and Wangal people, on whose lands our corporate head office is located, as well as all other First Nation Countries we operate across. We pay our respects to Elders past, present and to all Aboriginal and Torres Strait Islander peoples. Temple & Webster Group Ltd ACN 608 595 660 Contents Summary 2 Chair’s report 4 CEO’s report 6 Operational review 10 Environmental, social and governance statement 18 Directors’ report 40 Remuneration report 48 Auditor’s independence declaration 70 Consolidated statement of profit or loss and other comprehensive income 71 Consolidated statement of financial position 72 Consolidated statement of changes in equity 73 Consolidated statement of cash flows 74 Notes to the consolidated financial statements 75 Consolidated entity disclosure statement 108 Directors’ declaration 109 Independent auditor’s report 110 Shareholder information 115 Corporate directory 119 1 Annual Report 2024 Summary Overview • Australia’s leading pure-play online retailer for furniture and homewares1 • Temple & Webster’s market share of the total furniture and homewares market is now 2.3%2, up 31% year on year • Profitable, cash flow generative and funded for growth • Generative artificial intelligence delivering material conversion and cost-of-doing-business gains Strong revenue growth in FY24 • FY24 revenue up 26% year on year to $498m • Strong growth despite cyclical headwinds EBITDA (pre-one-off costs)3 at the top end of guidance • Profitable, asset light model driving +$25m in free cash flow4 • EBITDA margin result of 2.6%, within our target 1-3% range (excludes one-off costs) • All margins within or above target ranges On track to reach $1b+ sales • On track to reach mid-term goal of $1b+ in revenue • Closing cash of $116m, no debt, fully funded to execute on growth plans 1. Source: IBISWorld Industry Reports: OD4176 Online Household Furniture Sales in Australia, OD4174 Online Home Furnishing Sales in Australia. 2. Source: ABS 8501.0 Retail Trade, Australia (2024). 3. EBITDA is a non-IFRS measure and is calculated by adding depreciation and amortisation, finance costs and interest income to profit before tax. The above result excludes one-off costs pertaining to a write-down of our investment in Renovai. 4. Free cash flow is calculated as net cash flow pre-financing and investing activities (i.e. excluding share buy-back outflows and investment in Renovai). 2 Temple & Webster Group Ltd FY24 Revenue $498m FY24 EBITDA (pre-one-off costs) $13.1m Cash Balance at 30 June 2024 $116m 3 Annual Report 2024 Dear shareholders, On behalf of the Board of Directors, I am delighted to present Temple & Webster’s 2024 Annual Report. Financial performance As Australia’s leading pure-play online retailer of furniture and homewares1, Temple & Webster’s ability to provide quality products at affordable prices continues to resonate with customers, especially in the current economic environment, as reflected in our strong financial performance for FY24. We reported record revenue of $498 million, up 26% on last year, which was an impressive achievement in a market that was down approximately 4%2. Before one-off costs3, our earnings before interest, taxes, depreciation and amortisation (‘EBITDA’) was $13.1 million, with an EBITDA margin of 2.6%, within our target 1-3% range for the financial year. Our asset light, negative working capital business model drove free cash flows of over $25 million4 during the financial year. This performance reflects the strong customer-focused culture we adopt everyday at Temple & Webster, and I would like to thank all our staff members, along with our Executive Leadership Team, for their continued hard work and diligence. 1. Source: IBISWorld Industry Reports: OD4176 Online Household Furniture Sales in Australia, OD4174 Online Home Furnishing Sales in Australia. 2. Source: ABS 8501.0 Retail Trade, Australia (year ended 30 June 24 against prior corresponding period). 3. Excludes one-off costs pertaining to a write-down of our investment in Renovai. 4. Free cash flow is calculated as net cash flow pre-financing and investing activities (i.e. excluding share buy-back outflows and investment in Renovai). Executing on our strategy In August 2023, we outlined our mid-term strategy of reaching over $1 billion in annual sales within 3-5 years, and I am pleased to report that we are on track. Within this strategy were five key strategic goals focused on becoming a top-of-mind brand, increasing revenue from our exclusive products, developing leading capabilities around data, artificial intelligence (‘AI’) and technology, lowering our fixed cost base as a percentage of revenue and building scale through adjacent growth plays. Pleasingly, we are tracking well against all of these goals with tangible benefits being realised. Among these priorities, we are particularly pleased with the results from our strengthened AI capabilities. Our generative AI efforts delivered significant customer conversion rate improvements and cost benefits, with the potential for AI to materially disrupt our cost base in the future and as we scale. Chair’s report 4 Temple & Webster Group Ltd Capital management We finished the year with a cash balance of $116 million and remain debt-free. We are well funded to continue investing in growth and building out our strategic moats. The strength of our balance sheet enabled us to continue with our on-market share buy-back program which commenced in April 2023, and subsequently implement our second on-market share buy-back program in June 2024 for up to $30 million in Temple & Webster shares. During FY24, the business bought back a total of 1.7 million shares for $12.5 million. The Board views our share buy-back program as an effective capital management strategy, while providing us with the flexibility to pursue future organic and inorganic opportunities. Governance changes Temple & Webster continues to develop its policies to align with best practice corporate governance. As we outlined in August 2024, we amended our Securities Dealing Policy to broaden the trading window for Non-Executive Directors and Key Management Personnel and established a Minimum Shareholding Policy for Non-Executive Directors and the Executive Leadership Team to ensure better alignment with shareholder interests. Thank you to the team On behalf of the Board, I would like to thank Mark, the Executive Leadership Team and all Temple & Webster staff for your hard work and dedication in FY24. I would also like to thank my fellow board members for their expertise, commitment and stewardship throughout the year. And last but certainly not least, I would like to thank our shareholders for your ongoing support. Stephen Heath Chair 5 Annual Report 2024 CEO’s report Dear fellow shareholders, I am pleased to report Temple & Webster delivered another set of outstanding results this financial year as we progress towards our goal of becoming Australia’s largest furniture and homewares retailer. In the midst of cost-of-living pressures placing stress on household budgets, Temple & Webster supported over 1 million Australians during FY24 in delivering beautiful products at great prices, a proposition which is clearly resonating with our customers. Strong Results and Taking Share In FY24, we generated close to half a billion dollars in revenue, which was an increase of 26% year on year. To put this in perspective, the overall furniture and homewares industry was down around 4%1 for the year, which means we gained significant share, up 31% vs last year to 2.3% of the total market. While this is a pleasing result, at only 2.3% of the market, it shows the huge opportunity ahead of us to continue expanding our market share position in the years ahead. A question we often get asked is why are we taking so much share? We believe it is due to the following factors: 1) We have one of the best and largest ranges of quality furniture and homewares items; 2) As an online-only retailer we can offer better prices and great value to our customers; 1. Source: ABS 8501.0 Retail Trade, Australia (year ended 30 June 24 against prior corresponding period). 2. Excludes one-off costs pertaining to a write-down of our investment in Renovai. 3. Free cash flow is calculated as net cash flow pre-financing and investing activities (excluding share buyback outflows and investment in Renovai). 3) Our flexible supply chain lets us rapidly switch to growth categories such as home office; 4) We have a brand that is loved, with high product review ratings and customer satisfaction scores; and 5) Our core competitive strengths around sourcing, data, technology, AI, logistics, content and marketing are setting us apart from our competition. Our strong top line momentum translated into a bottom line EBITDA result which was at the top end of our guidance with $13.1 million in EBITDA (pre-one-off items)2 at a 2.6% margin. Our asset light and negative working capital model generated over $25 million3 of free cash flow, ending the year with $116 million in cash and no debt, meaning we are fully funded to execute on our organic and potential inorganic growth strategies. Taking advantage of a “Once in a generation” structural change To take a step back from our FY24 results, it’s important to reiterate our mid-term goals and our longer term targets. In August 2023, we outlined our goal to achieve over $1 billion in annual sales within 3-5 years, through growth in both our core B2C furniture and homewares business and our adjacent growth plays in Trade & Commercial (‘B2B’) and Home Improvement. I’m pleased to report we are tracking well and growing in line with our stated target compound annual growth rate (‘CAGR’) of 20-36%. 6 Temple & Webster Group Ltd While this milestone is important, our ultimate goal is becoming the largest retailer of furniture and homewares in Australia, and we think now is the time to double down and accelerate our growth to take advantage of this “once in a generation” structural change in our market. The overall furniture and homewares industry is large at approximately $19 billion4 and has been incredibly stable over the past 40 years, affirming that many of our products are less discretionary than what people think. Importantly, for us as a pure-play online retailer, online penetration of approximately 20%5 in Australia lags other geographies such as the US and UK and other higher penetrated categories. This is a key reason as to why we believe now is the time to focus on growth and building our strategic moats as we take advantage of the structural change occuring in our category, driven by different purchasing preferences of millennials and Generation Z. However, there are other factors that support this strategy: 1) At almost half a billion dollars in revenue, we have overtaken the majority of our competitors6 and have the resources and scale to increase our market share; 2) As we get bigger, our core customer proposition improves around the breadth and depth of our range, pricing, data, personalisation, content, service and delivery experience; 4. Excludes Trade & Commercial and Home Improvement Source: ABS 8501.0 Retail Trade, Australia (2024). 5. Source: Euromonitor 2024 Home and Garden for CY23. 6. Source: IBISWorld Industry Reports: OD4176 Online Household Furniture Sales in Australia, OD4174 Online Home Furnishing Sales in Australia. 7. Source: Lucid (Hub Consulting) Temple & Webster Brand Tracker, June 2024. 3) We are profitable and have over $100 million of cash with no debt, and an asset light model which will support our unit economics improving as we scale; and 4) We can leverage capabilities we have built for our core Australian B2C furniture and homewares business, including sourcing, logistics, AI, data, digital marketing and content creation, to expand into adjacent markets and categories (such as B2B and Home Improvement). While this strategy means prioritising growth over profitability in the short term, we believe this will lead to us solidifying our strategic moats and achieving our longer term targets sooner. Investing for growth In August 2023, we outlined five key strategic goals that we wanted to focus on. 1) Becoming the top-of-mind brand in the category FY24 was a year of experimentation, at scale, to get a statistically significant read on the benefit of adding incremental marketing channels (TV, online video, out‑of- home, audio, print, cinema and paid social). We saw good growth in direct and branded search traffic, however unprompted brand awareness still remained below 10%7, highlighting the significant opportunity ahead of us. We are currently rolling out media mix modelling which will advise us on which channels to prioritise, with these learnings to be incorporated into more optimised campaigns in FY25. 7 Annual Report 2024 CEO’s report continued 2) Generating the majority of revenue from exclusive products In FY24, revenue from exclusive products grew to 43% of total revenue, driven by growth in both private label and exclusive drop-ship products. Pleasingly, approximately 70% of our top 500 selling products are now exclusive to Temple & Webster. Growing our exclusive product range differentiates us from our competition, provides longer term defensibility and helps to drive improvements in margins over time. 3) Lowering fixed cost % to obtain a price and margin advantage We made good progress in FY24 towards our goal of reducing fixed costs as a percentage of revenue to below 6% by FY28. In FY24, we reduced our fixed cost percentage to 11%, which compares against 12% in FY23. As we know, a key driver of this leverage will be our ability to grow and spread these costs across a larger revenue base. 8. Revenue is based on net revenue (excluding deferred revenue accounting adjustments). 4) Building scale through adjacent growth plays B2B achieved $45 million8 revenue in FY24, representing 27% growth year on year. FY24 was a year of investing in future capabilities, people, marketing and B2B product ranges which will set up FY25 well. Home Improvement achieved $29 million8 revenue in FY24, representing 26% growth year on year. In FY24, we pivoted to a single brand strategy through the Temple & Webster site vs two websites previously (T&W and The Build) in FY23. This single brand strategy improved the focus and profitability of the Home Improvement division. 5) Developing leading capabilities around data, AI and technology While we are clearly making good progress against our strategic goals, the area I am most pleased and excited about is our goal of developing leading capabilities around data, AI and technology. 8 Temple & Webster Group Ltd During FY24, we added new hires into our internal AI team, combining machine learning and generative AI knowledge. We also created an AI research & development function, focused on experimenting with new large language models and building new disruptive solutions. Some examples of these solutions are: • Product content generation, product recommendations and live chat, which delivered in excess of 10%9 in conversion benefits; • AI and technology powered customer pre- and post- sales support interactions which handled around 40% of interactions in FY24 resulting in an estimated $4 million in annusalised cost-of-doing-business savings; and • Our internal AI assistant (‘Pearl’) was deployed and is available for all employees. 9. Statistically significant results from A/B testing using Sitespect Leadership team changes As announced in August 2024, Cameron Barnsley has joined us as Chief Financial Officer as of 2 September 2024. We have known Cam professionally for years in his previous capacity as Executive Director and Head of Technology for Morgan Stanley in its Investment Banking division, and we look forward to utilising his experience in capital markets and advising companies on their growth strategies, both locally and internationally. Importantly, Cam will be supported by current Deputy CFO, Chris Berner, who has led the Temple & Webster finance function for many years, and outgoing CFO, Mark Tayler, who will be staying to take up a role focused on investor relations and growth. Mark has been a great business partner to me over the past eight and a half years and has been an instrumental part of why Temple & Webster is where we are today – and we’re grateful to have him on board for our next stage of growth. Where to from here? Looking forward, we will continue to be focused on our customer experience and adapting our pricing, product ranges, marketing investment and promotional strategy based on market conditions. This inherent flexibility in our model is what sets us apart from our peers. We will continue to focus on revenue growth and market share gains, while ensuring we maintain our stated profitability goals of between 1-3% EBITDA margin for the financial year. We will also be executing on our five key strategic goals to continue building out our competitive moats. Our strong balance sheet position with over $100 million in cash and no debt ensures all of our growth activities are fully funded, and also means we can continue to investigate inorganic and capital management options going forward. Thank you to the Tempster team Lastly, I’d like to say a massive thank you to the Tempster team. Your tenacity, passion and resilience inspires me every day and is the driving force behind us realising our vision of making the world more beautiful, one room at a time. Mark Coulter Chief Executive Officer 9 Annual Report 2024 Operational review 10 Temple & Webster Group Ltd Overview of FY24 performance In line with Temple & Webster’s mid-term strategy of delivering over $1 billion in annual sales, FY24 was a year focused on high revenue growth, taking market share and building on our competitive moats to set the business up for long-term sustainable growth. $498m FY24 Revenue $13.1m FY24 EBITDA (pre-one-off costs)1 $116m Cash Balance at 30 June 2024 Temple & Webster delivered revenue of $498 million which was up 26% vs last year. EBITDA (pre-one-off items) was $13.1 million1 at a 2.6% margin which was at the top end of our margin guidance for FY24. We generated over $25 million in free cash flow as a result of the above mentioned profit result, plus benefits from our negative working capital and asset light business model. Impressively, these results were against a furniture and homewares market that was down approximately 4% in FY24, equating to a +31% market share gain to end with 2.3% share of the total market. Temple & Webster share of the total Australian furniture and homewares market 0.0 0.5 1.0 1.5 2.0 2.5 FY24 FY23 FY22 FY21 FY20 FY19 TPW market share % COVID peak Reset year post COVID TPW market share surpasses COVID peak (up 31% yoy) 1. EBITDA is a non-IFRS measure and is calculated by adding depreciation and amortisation, finance costs and interest income to profit before tax. The above result excludes one-off costs pertaining to a writedown of our investment in Renovai. 11 Annual Report 2024 Operational review continued RECORD ACTIVE CUSTOMER GROWTH Temple & Webster supported over 1 million customers throughout FY24, up 31% vs last year, reflecting the strength of our customer proposition centred around price, range and convenience. Active customers2 271k 480k 778k 941k 832k 1,094k FY24 FY23 FY22 FY21 FY20 FY19 2. Active customers refers to the number of unique customers who have transacted in the last twelve months (‘LTM’). ORDERS FROM REPEAT AND NEW CUSTOMERS GROWING STRONGLY Repeat orders made 57% of FY24 orders, resulting in year on year growth in repeat orders of 36%. Growing our repeat order base is a key driver of reducing our marketing spend as a percentage of revenue towards our longer term target of less than 11%. First time and repeat customer orders 361k 245k 203k 140k 620k 745k 491k 642k 654k 874k 565k 463k ■ First-time customer orders ■ Repeat customer orders FY24 FY23 FY22 FY21 FY20 FY19 12 Temple & Webster Group Ltd REVENUE PER ACTIVE CUSTOMER WAS DOWN YEAR ON YEAR AS CUSTOMERS SEARCHED FOR VALUE As a result of cost-of-living pressures throughout FY24, customers traded down as they searched for value to fit adjusted household budgets. Pleasingly, we were able to meet the needs of our customers with our value orientated range, strong pricing points and promotions that resonated strongly with customers. This resulted in higher customer repeat rates, however this was offset by lower average order values, translating into a lower revenue per active customer. Revenue per active customer3 $379 $380 $426 $451 $477 $461 FY24 FY23 FY22 FY21 FY20 FY19 3. Revenue per active customer = Last 12 months net revenue (excluding deferred revenue accounting adjustments) divided by active customers. 4. Statistically significant results from A/B testing using Sitespect. 5. Average conversion rate is the total number of purchases divided by the total number of monthly users. Sourced from Google Analytics. WE ARE MAINTAINING OUR STRONG CONVERSION RATE Despite operating in a more challenging market and driving record levels of traffic to our site, we have been able to maintain our industry leading conversion rate during FY24. This was in part driven by our AI powered product content, product recommendations and live chat which resulted in an aggregate +10%4 increase in conversion. Despite this, over 97% of traffic still did not convert, meaning there remains significant scope to increase conversion rates going forward. Conversion rate5 3.0% 2.9% 3.0% 3.2% 2.8% 2.8% FY24 FY23 FY22 FY21 FY20 FY19 13 Annual Report 2024 Operational review continued 12-MONTH MARKETING RETURN ON INVESTMENT IN LINE WITH EXPECTATIONS An important part of our mid-term plan is to grow our brand awareness, currently less than 10%, through reinvesting 2-3% of revenue into new brand channels opposed to our more traditional digital channels. We initiated this journey with an out-of-home test in Sydney, which laid the groundwork for the subsequent launch of our brand platform, “Imagine”. This platform was the cornerstone of three multi-channel, large-scale brand campaigns throughout the year. In October 2023, we initiated our first multi-channel, multi‑million dollar brand campaign, strategically timed ahead of the peak retail season. This was followed by our second brand campaign in January 2024 and another in May 2024. These efforts have yielded good results, with Temple & Webster’s share of brand searches in the furniture and homewares category growing 20% vs the previous year. Given FY24 was a year of experimentation to get a statistically significant read on which channels were most successful, it was anticipated that the 12-month marketing ROI would decline. Pleasingly, our ROI remained well placed at 1.7x, and was in line with prior financial years at 2.0x when excluding the new brand investment. 12 month marketing ROI6 2.7x 2.6x 2.3x 2.0x 2.0x 1.7x $43 $46 $58 $69 $72 $88 Customer acquisition cost (‘CAC’) FY24 FY23 FY22 FY21 FY20 FY19 Non-brand marketing ROI remains -2x With the introduction of media mix modelling, we will continue to optimise our mix of brand and performance channels in order to maximise our return on investment going forward. 6. Marketing ROI = Margin $ / CAC. Margin = Revenue per active customer as at 30 June 2024 x delivered margin % for FY24. CAC = Total marketing spend for FY24 x 74% (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 the period. REVENUE FROM EXCLUSIVE PRODUCTS CONTRIBUTING 43% OF TOTAL REVENUE A key mid-term strategic goal is to generate the majority of revenue from our exclusive products. This strategy ensures we differentiate our range from our competitors, adds defendability to our model and helps to drive improved delivered margins in the longer term. During FY24, revenue from exclusive products grew to 43% of total revenue, which was driven by both growth in private label and exclusive drop-ship products. Approximately 70% of our top 500 selling products are now exclusive to Temple & Webster. Our local drop-ship suppliers are an important element in growing our contribution from exclusive products. Exclusive drop-ship products are an ideal outcome given the improved margin profile, negative working capital benefits and zero inventory risk. Private label (product imported directly by Temple & Webster) remained steady at 29% of total revenue in FY24 with sourcing focused largely on furniture, outdoor and lighting. An in-house industrial design team was established to further differentiate our product range and secure proprietary ranges. The team is now registering its first designs, with plans to continue expanding our portfolio. By leveraging AI technologies, the design team accelerated product development, enhancing concept generation and visualisation capabilities. Current explorations include the use of 2D to 3D image generation and virtual reality tools for collaborative design, positioning us at the forefront of innovative product creation. The team is also integrating internal and external data sources to identify trends and product opportunities, increasing the success rate of new developments. Moving forward, we aim to train AI models to enhance research capabilities and fully integrate 2D to 3D design tools. Our partnership with the University of New South Wales’ Honours Industrial Design program further supports this innovation drive, focusing on research into wellness and health in the home, and fostering young talent through our internship program. 14 Temple & Webster Group Ltd With an expanded Inventory planning and buying team, we introduced new factories that helped us grow our private label range and enter into Home Improvement and B2B commercial grade products, improving delivered margins and inventory productivity. Merchandising, promotional strategies and management tools increased the success rate of new products as expanded teams focused on the growth of private label, securing exclusive ranges and delivering on trend products at exceptional value. INCREASING CONVERSION AND REDUCING costs THROUGH DATA, AI AND TECHNOLOGY Our data, AI and technology strategy is focused on two key areas; creating a seamless customer experience and driving cost efficiencies. We continued to grow our dedicated internal team focused on AI and data by adding both machine learning and generative AI knowledge. Our AI team developed a generative AI ‘Solutions in a box’, which is now powering a suite of tools from product content and product recommendations to live chat interactions with customers. Our efforts to date yielded statistically significant conversion rate improvements of greater than 10%. Additionally, 40% of all customer pre- and post-sales support interactions were handled by AI and technology resulting in approximately $4 million in annualised cost-of- doing-business savings. FY24 saw the establishment of a new AI research and development function, focused on experimenting with novel techniques to build new solutions to disrupt existing ways of operating. This function is closely aligned to our AI, data, customer experience, product and technology teams. Temple & Webster’s AI roadmap aims to disrupt key retail value chain elements such as product ranging (e.g. competitor reviews/gap analysis), pricing (e.g. product pricing, shipping pricing, sale pricing), merchandising (e.g. content), promotion and personalisation (e.g. recommendations) and pre and post sales support (e.g. live chat and email). PRODUCING BEAUTIFUL CONTENT MORE EFFICIENTLY In FY24, our creative team and partners produced thousands of bespoke studio images, video assets, 3D photorealistic images and 3D models. These assets are all exclusive to Temple & Webster and are used across our digital shopping experience and in marketing channels including social media, display advertising and email helping to create a uniquely differentiated customer experience. We entered FY24 with the objective of creating Temple & Webster style imagery at scale. We tested various methods of image production including grey and green screen 3D compositing techniques, and have created a hybrid approach combining our unique skills in studio produced images to collaborate alongside our offshore photography partners which increased production capacity, reduced cost per image and delivered faster turnaround times. We will continue to experiment with our own and vendor supplied emergent generative AI technologies for content creation and augmentation. ENHANCING SUPPLY CHAIN CAPABILITIES Although we experienced growth in FY24, strong customer net promoter score (‘NPS’) levels were able to be maintained by leveraging previous investments in people, processes, and technology as operational demands increased. Net promoter score 54% Score from -100% to 100% 60% 62% 57% 62% 61% FY24 FY23 FY22 FY21 FY20 FY19 Temple & Webster’s asset light, dedicated delivery service (servicing only private label products) continued to expand into new regions, providing more customers with a fast and reliable delivery experience. By operating at a lower cost and minimising product damages, Temple & Webster delivery consistently ensures faster delivery times by streamlining the process and reducing touch points. 15 Annual Report 2024 Operational review continued We continued to invest in capabilities that would improve the effectiveness of managing owned inventory. Efforts included a redesign of the supply chain network to introduce new capabilities, allowing us to position bulky products closer to customers, as well as significant enhancements to forecasting, planning, and inventory management systems. We also invested in enhanced technologies to empower drop-ship partners to operate efficiently, achieve success, and scale in tandem with Temple & Webster. Ongoing collaboration with partners throughout the entire supply chain is delivering significant results, consistently exceeding customer expectations. Better conversion and experience through the App By the end of FY24, Temple & Webster had approximately 900k lifetime downloads of iOS and Android apps. Both apps continued to show higher conversion rates, greater customer lifetime values and higher rates of customer satisfaction than desktop or mobile. Additionally, apps were consistently rated highly by customers, achieving a 4.8 star rating from over 27,000 reviews across iOS and Android app stores. CONTINUALLY IMPROVING OUR B2B RANGE AND TARGETTED MARKETING EFFORTS FOR TRADE AND COMMERCIAL CUSTOMERS The B2B division generated $45 million7 revenue in FY24, up 27% vs the prior year. During the financial year, the focus was on refining sales strategies for key sectors, improving digital tools and customer experience, and onboarding new suppliers to broaden B2B offerings. Additionally, new marketing initiatives and supply chain partnerships were implemented to drive acquisition and operational efficiency. These efforts positioned us for sustained growth and improved customer satisfaction, creating a stronger platform to capture share of the B2B market. The market dynamics in B2B remain very attractive; it is a very fragmented, multi billion dollar market with high margins and a lack of digital-focused online players, which presents both organic and inorganic opportunities going forward. 7. Revenue is based on net revenue (excluding deferred revenue accounting adjustments). INCREASING MARKETING EFFICIENCY FOR HOME IMPROVEMENT TO SUPPORT GROWTH Similar to B2B, the Home Improvement market dynamics are attractive. It is an approximately $20 billion market that is high margin and lends itself to substantially higher online penetration levels, which currently sit at less than 10%. In FY24, the Home Improvement division delivered $29 million7 in revenue, achieving a 26% growth rate. This was a strong result given we focused on one website (Temple & Webster) versus two (Temple & Webster and The Build) in the previous financial year. This focus on a single platform reduced marketing costs as a percentage of revenue and improved the division’s profitability. Bathroom and kitchen fixtures were the fastest-growing categories, with a 44% increase vs last year. This growth was driven by expanding product offerings through existing and new suppliers. Private label collections of tapware, sinks, bathroom cabinets, vanities, and ceiling fans were launched throughout FY24. These new ranges resonated well with customers, offering stylish and affordable options that complement the broader range of branded and drop-ship products. The user experience on Temple & Webster was enhanced by improving the site browsing experience, creating new content, and implementing targeted product recommendations. These efforts led to higher conversion rates and increased basket sizes. Additionally, delivery capabilities for fragile and bulky goods and product packaging were improved which helped drive a strong NPS for the year. Looking ahead, Temple & Webster remains focused on growing the product catalogue and developing capabilities across supply chain, technology, and user experience to better support the needs of the Home Improvement customer and to grow our market share in the category. 16 Temple & Webster Group Ltd AWARD WINNING WAYS Temple & Webster was recognised with a variety of awards throughout 2024. Temple & Webster scooped the pool in the WeMoney “People’s Choice Awards” for 2024, winning three awards; Overall Satisfaction, Best for Value and Best for Quality in the furniture category. The WeMoney People’s Choice Awards recognise everyday products and services that are rated ‘best-in-class’ by everyday Australians. At the 9th Annual Power Retail All Star Bash Awards, Temple & Webster was acknowledged with two awards - the Top Online Only Retailer Award and the Top Home & Decor Retailer Award. Temple & Webster was also recognised by Power Retail as one of the Top 100 online retailers in Australia, ranking at #15 in the Home & Decor category, the highest ranked pure-play online retailer. The Temple & Webster Sydney headquarters was also recognised with two awards for design excellence in the BETTER FUTURE Design Awards 2024, in the category of Interior Design – Commercial. We won Gold in the Sydney category and Silver in the Australian category. These awards celebrate innovative and creative building interiors, with consideration given to space creation and planning, furnishings, finishes, aesthetic presentation and functionality. 17 Annual Report 2024 Environmental, social and governance statement 18 Temple & Webster Group Ltd Our approach Our vision is to make the world more beautiful, one room at a time. Driving meaningful change for all of our stakeholders is key to delivering this. We continue to focus on areas that will deliver positive change for the planet, our people, our communities, and our value chain. In FY24, we made good progress towards our environmental, social, and governance (‘ESG’) goals. In line with our sustainability strategy, we continued to show progress across four key areas: 1. carbon and energy management 2. responsible sourcing (lower impact products) 3. responsible packaging 4. diversity, equity, and inclusion (‘DEI’). These material topics were defined by our FY22 materiality assessment as areas of high importance to our stakeholders and which have a material impact on our business. The process and methodology undertaken for our materiality assessment included surveying key internal and external stakeholders to identify which ESG topics they believe are important to our business. Internal stakeholders surveyed consisted of our employees, while external stakeholders consisted of a random sample of over 100 customers. All stakeholders were provided with a list of ESG topics and asked to select a maximum of three topics which they believed were most important. These material topics were defined under high-level categories in collaboration with an external consultant to inform the development of a materiality matrix. To ensure that key material topics for our industry were included in the final assessment, compliance and product safety & quality were added to the list by the external consultant. The final material topic categories, and a qualitative description for each, are outlined in figure 1. 19 Annual Report 2024 Environmental, social and governance statement continued Figure 1: List of ESG topics from our FY22 materiality assessment Material Topics Description Animal Welfare Ethical sourcing and management of animals and their quality of life Australian Made Products A product whose ingredients or production mostly originate from Australia Carbon Emissions Carbon emissions reduction, offsetting and insetting of scope 1 and scope 2 emissions attributed by fossil fuels, transport, energy use and efficiency, and other carbon intensive processes. This may also include scope 3 emissions in the long term Charity & Workplace Giving (Corporate Social Responsibility) Engage and empower the local communities in which we operate through partnerships with social enterprises, customer giving and workplace giving Circular economy Incorporating product stewardship to reduce use of virgin material in products and processes through efficient use, reuse and recycle of waste to design new products Compliance1 Research, understand, implement, and communicate the requirements of evolving laws, regulations and standards designed to manage environmental and social risks Employee Wellbeing and Diversity, Equity & Inclusion (DEI) Health, safety, and well-being of our people. Actively building a workplace that mirrors the diverse communities we work in and for. Ensuring everyone can confidently bring their skills, values, backgrounds, and experiences to work Environmental Protection Conserve, protect, and where possible, restore the natural environment in which we operate in Product Safety & Quality1 Ensuring the consistent and durable design, development, production, assembly, delivery, and disposal of products that are safe for their intended purpose Responsible Packaging Source, develop and use packaging solutions that have minimal environmental impact and footprint, maximise reuse and recoverability, and do not contribute to the further depletion of natural resources Responsible Sourcing Ensure our business practice does not have a negative impact on the people living in communities which we operate in. This includes managing supply chain materials, labour, risks and building long-term supplier relationships to improve environmental and social performance in end-to-end supply chains Sustainability communication Communication of operational and product sustainability through ESG ratings and certifications that is genuine, transparent and timely. Ensure positive, enduring relationships are maintained with stakeholders Waste Reduction & Landfill Diversion Management of waste in line with the waste hierarchy, with the primary focus to avoid and reduce the generation of waste, followed by reusing materials and maximising resource recovery Water & Energy Consumption Management of water and energy consumption in line with energy and water management hierarchy, including resource use, quality, and associated infrastructure and efficiencies 1. Stakeholder importance values for these material topics were substituted with business impact values as it was not included in the stakeholder surveys. 20 Temple & Webster Group Ltd To define and align business impact across our materiality matrix, we assigned a business impact rating for each of the listed material topics. The final materiality matrix can be seen below. Figure 2: Our FY22 materiality matrix 1 0 1 2 3 4 5 6 7 8 9 10 11 2 3 4 5 6 7 8 9 10 11 Amalgamated Stakeholder Importance Impact on Business ■ Environmental sustainability ■ Social sustainability ■ Governance sustainability Bubble size reflects ease of implementation (larger bubbles are easier to implement) Employee wellbeing and diversity and inclusion HIGH MEDIUM LOW Responsible sourcing Responsible packaging Product safety and quality Environmental protection Compliance Waste reduction and landfill diversion Sustainability communication Carbon emissions Animal welfare Circular economy Water and energy consumption Charity and workplace giving Australian made products With a clearer understanding of our carbon footprint and targeted focus areas, we are committed to reducing our carbon emissions by 45% by 2030, in alignment with the United Nations Sustainable Development Goal on climate action. We will continually review and update our carbon reduction strategy to prioritise action that yields the greatest impact. For areas where carbon reduction mechanisms are not yet feasible within our controlled operations, we will continue to invest in carbon credits to offset our environmental impact. As a retailer of furniture, homewares and home improvement products, the most effective way in which we can reduce our impact on the environment is through the responsible sourcing and development of our products. Our procurement teams continue to work with suppliers to curate, source, and verify responsibly made products. In FY24, we established an in-house product design team, responsible for designing and developing new products for our private label range. Product design plays a key role in shaping a product’s life cycle and environmental performance, including critical determinants such as materials selection, manufacturing processes, transportation requirements, energy efficiency during use, and end-of- life considerations. Having our procurement and product design teams collaborating closely and considering product performance, environmental and health considerations from the outset allows us to consider lower impact choices at every stage of the product development process. When implementing changes to reduce the impact of our products, a key consideration is reducing the environmental impact of our packaging. We remain committed to meeting Australia’s 2025 National Packaging Targets and have made good progress with our drop-ship and private label supply partners to prioritise the use of recyclable and recycled packaging materials. Our long-term goal, beyond 2025, is for all packaging in our range to be recyclable through kerbside collection systems. Due to our complex supply chains and large number of suppliers, we will continue to prioritise the packaging of our Temple & Webster and Milan Direct branded range throughout FY25. Supporting individuals within our organisation and the broader community is a core element of our business and is embedded in our values. We are delivering and continuously improving programs to create a fairer and more inclusive workplace, develop our employees, advance reconciliation with First Nations peoples, and to expand our corporate partnerships in support of organisations that offer essential social and health services to the community. We are dedicated to implementing necessary changes in our operations to become a more responsible business as we continue to scale and grow. This commitment ensures that we can continue to deliver sustainable value for all our stakeholders. We have begun incorporating select principles from the Global Reporting Initiative (‘GRI’) into our ESG reporting processes and plan to further align with the GRI framework in FY25. This ESG statement outlines our progress toward ESG targets and details our actions throughout FY24. For further information contact: sustainability@templeandwebster.com.au 21 Annual Report 2024 Environmental, social and governance statement continued Our ESG goals Number Goal Calendar year target Progress to date Status 1 Carbon neutral in our controlled operations (Scope 1 and 2 gross emissions) 2030 Successfully attained carbon neutrality for FY22 and FY23 Scope 1 and 2 emissions 2 45% reduction in our total carbon footprint2 2030 • Commenced the installation of solar panels at our corporate head office • Switched energy provider for enhanced energy efficiency leveraged through a virtual energy network 3 Audit all private label suppliers for ethical and social compliance 2023 • 100% of our private label suppliers have been audited for ethical and social compliance • Where applicable, suppliers requiring corrective action received plans based on audit findings • 100% of corrective action plans have been reviewed internally 4 100% responsibly sourced solid wood in our private label range 2030 Range baseline captured. Verification ongoing 5 100% reusable, recyclable or compostable private label packaging3,4 2025 191 out of 1,940 (10%) private label product has fully recyclable packaging5 6 70% of plastic private label packaging being recycled or composted3,4 2025 On hold until we have a viable national recycling scheme for our customers 7 50% of average recycled content included in private label packaging3,4 2025 Independent third-party verification of recycled content in packaging to be undertaken in FY25 8 Phase out of expanded polystyrene (‘EPS’) and expanded polyethylene (‘EPE’) packaging3 2025 • Requirements and timeline communicated to private label suppliers • Commenced capturing baseline of FY24 private label range using EPS and EPE packaging Just started On hold In progress Completed 2. Carbon intensity compared to our FY23 baseline 3. These goals are aligned with the Australian Packaging Covenant Organisation’s (‘APCO’) National Packaging Targets 4. The scope of this target has been updated in FY24 to reflect alignment with our Temple & Webster and Milan Direct branded range only (ie. not including products supplied through drop-ship supply arrangements) 5. Figures are based on packaging metrics from our FY23 APCO annual report 22 Temple & Webster Group Ltd Number Goal Calendar year target Progress to date Status 9 Nurture and grow our diverse, equitable and inclusive workplace culture Ongoing • Created a DEI charter and action plan • Completed our first DEI survey with 79% participation rate • Published an updated DEI policy • Significantly improved our parental leave scheme • Created and published our Gender Equality Strategy for FY24-26 10 Continue to invest in the growth and development of our people and to create a resilient and adaptable team for the future Ongoing • Delivered change leadership training for all people leaders • Launched LinkedIn Learning for our employees • Expanded onboarding program with new content and activities 11 Build authentic and respectful relationships with First Nations communities through a Reconciliation Action Plan (‘RAP’) Ongoing • Reflect RAP endorsed in FY24 • Educational resources provided to all employees during National Reconciliation Week • Developed internal directory for First Nations stakeholders 12 Achieve ISO 27001:2022 Information security management systems certification 2025 • Established an internal Data and Privacy Committee • Passed 50% implementation of ISO 27001:2022 • Adopted a full scope and full Statement of Applicability of the 93 Annex A controls • Improved our vulnerability identification and mean time to remediation Our ESG goals Just started On hold In progress Completed 23 Annual Report 2024 Environmental, social and governance statement continued Caring for the planet 6. Based on internal estimates established with Cyanergy Carbon and energy Climate change remains a critical focus of global ESG efforts to protect our planet for future generations. As we pursue our growth targets over the next five years, we acknowledge that without operational change and innovation, this will likely increase our total greenhouse gas (‘GHG’) emissions. We are committed to working with key partners to identify solutions for this issue and reducing our annual carbon intensity footprint. Our carbon reduction action plan for Scope 1 and 2 emissions commenced implementation in FY24, and we are making great progress towards reducing and eliminating carbon emissions within our controlled operations by the end of FY25. In FY24, our primary focus was on reducing carbon emissions associated with our Scope 1 and 2 footprint, as these are within our direct control. In FY23, we committed to installing solar panels at our head office to offset our grid energy requirements and eliminate the associated carbon emissions. Partnering with energy efficiency and renewable energy specialists Cyanergy, this installation began in Q4 of FY24 and is on track for completion by early Q1 in FY25. This milestone is a significant achievement for our carbon reduction action plan, as it will reduce our Scope 2 emissions by 65%, based on current energy consumption. To further support our carbon reduction initiative, we switched to an energy provider that facilitates a ‘virtual energy network.’ This enables us to use excess solar energy generated during the day in areas of our head office with higher electricity consumption. By implementing this change, we anticipate reducing our grid energy requirements by approximately 90%6. We are currently exploring further investments in renewable energy and have set a target to achieve net zero in our Scope 1 and 2 emissions in 2026. This goal will be accomplished through investments in solar energy storage solutions or by procuring renewable grid energy to cover the remainder of our energy needs. We are committed to achieving net zero status in our controlled operations by 2026 As part of our ongoing commitment to being carbon neutral in our controlled operations, we continued to purchase carbon credits to offset 100% our scope 1 and 2 emissions from our FY23 carbon footprint. In FY24, we purchased 256 tonnes of Australian Carbon Credit Units (‘ACCUs’) from Sunnyside Permanent Planting Forest initiative, a project which sequesters carbon through the protection of forests and the avoidance of logging. Through this project, our investment also supports important environmental and social benefits, including: • Conservation and restoration of Australian biodiversity, and • Investment in First Nations-focused land management practices and connection to Country. Considering that Scope 3 emissions constitute 99% of our total carbon footprint, we recognise that leadership and action in this area will significantly impact our entire value chain. As these are indirect emissions beyond our direct control, we will work closely with key stakeholders and deepen our collaboration with partners who are already advanced in reducing their carbon footprints. In FY25, to assist with future measurement and reporting of our initiatives to reduce scope 3 emissions, we will work with an external consultant to understand reporting boundaries and develop a comprehensive plan to support our reduction target by 2030. In FY24, in collaboration with a key transport and logistics partner, we explored the potential to transition a portion of our Temple & Webster delivery service fleet, currently operating entirely on diesel, to electric vehicles (‘EVs’). Based on our FY24 carbon footprint, this segment represents 1.36% of our total carbon footprint and 4.48% of our outbound freight emissions. To reinforce our commitment to renewable energy, we aim to transition 75% of our Temple & Webster delivery service fleet to EV trucks in FY25. We will transition 75% of our Temple & Webster delivery service fleet to electric vehicles by FY26 24 Temple & Webster Group Ltd Figure 3: Gross emissions7 Temple & Webster GHG Emissions (tonnes carbon dioxide equivalent [t CO2e]) FY22 FY23 FY24 YoY % Change Scope 1 0.02 0.05 0.06 ▲ 20.00% Scope 2 112.33 255.79 210.49 ▼ 17.71% Scope 3 26,810.50 27,759.05 31,492.52 ▲ 13.45% Total GHG Emissions 26,922.85 28,014.89 31,703.07 ▲ 13.17% Figure 4: Emissions intensity7 Carbon Intensity FY22 FY23 FY24 YoY % Change Tonnes carbon dioxide equivalent (t CO2e) 26,922.85 28,014.89 31,703.07 ▲ 13.17% Revenue (‘000) $426,335 $395,513 $497,841 ▲ 25.87% Carbon intensity (t CO2e / revenue) 0.00006315 0.00007083 0.00006368 ▼ 10.10% 7. Scope 1 and 2 emissions have been calculated using the methodology and emission factors presented by the Australian Government’s Australian National Greenhouse Accounts (NGA) Factors. Scope 3 emissions have been calculated using a variety of sources, with methodologies following the guidance of the GHG Protocol Corporate Value Chain (Scope 3) Standard. No external assurance was provided for our FY24 GHG emissions data United Nations Sustainable Development Goals that align with this area of focus Sunnyside Permanent Planting Forest initiative 25 Annual Report 2024 Environmental, social and governance statement continued Reducing the impact of our products As one of our core strategic pillars, we aim to offer the best range in our categories. We are committed to providing products made from lower-impact materials and backed by third-party certifications. Our new in-house product design team will also allow us to have greater control over the quality and durability of our private label products, helping to drive sustainable outcomes by extending the useful life of the product. Established a product design team to manage the entire product development process In FY23, we increased our focus on the validation of product sustainability claims, ensuring they are accurate and verifiable. Throughout FY24, we assessed over 150 product claims against various sustainability certifications and standards, successfully validating more than 70% of these claims. We recognise that this represents a small portion of our range and further collaboration with our suppliers is needed to ensure alignment with our compliance requirements. Where we were unable to validate certain sustainability claims, we provided suppliers with detailed explanations and recommendations to meet the specific requirements of each certification. We remain committed to sourcing 100% responsibly sourced solid wood for our private label range by 2030. To guide us toward this target, we plan to develop and implement a Timber Procurement Policy for our private label division in FY25. This policy will establish rules, requirements, and guidelines for developing new solid timber products and replenishing existing lines. It will provide a roadmap for transitioning our entire private label range to certified solid wood from responsibly managed sources by 2030. Provided all suppliers with sustainable packaging guidelines In FY23, our internal leadership group explored opportunities to prevent end-of-life products from making their way to landfill. In FY24, building on the findings from this project, we have launched phase one of a mattress recycling service in collaboration with the social enterprise Softlanding. This initial phase is limited to NSW metropolitan areas, with a focus on gathering data to understand customer uptake, serviceability, collection lead times, and system integration requirements. This data will be crucial for shaping our strategy and investment in future end-of-life product solutions. We recognise that mattresses represent only a portion of our product range. We will also explore opportunities to divert more of our products into the circular economy throughout FY25, providing customers with alternatives to landfill for products they no longer need. We believe that finding new homes for old products is key to improving sustainability in our industry and will give our customers even more choices to make their homes and offices more beautiful. Launched a mattress recycling service for NSW metro customers We believe a holistic approach is essential to supporting the circular economy. We are committed to collaborating with key stakeholders across our value chain to increase the volume of materials and products diverted into the circular economy. We’ve held preliminary discussions with some of our key suppliers, industry bodies, and social enterprises to explore opportunities to implement various end of life solutions for our products and their packaging. Additionally, we will work closely with our direct private label suppliers to ensure our products meet stringent internal quality and durability standards, thereby minimising future waste. United Nations Sustainable Development Goals that align with this area of focus 26 Temple & Webster Group Ltd Responsible packaging We support the upcoming sustainable packaging design legislation in Australia and the initiatives being implemented as part of the Western Australia (‘WA’) Plastics Ban. Well- designed packaging is crucial to ensure our products are adequately protected, can be handled safely during transportation and storage, and arrive at the customer’s location in perfect condition. Our packaging should meet these objectives while reducing its own associated environmental impact. We are continuously innovating, learning and embracing alternative packaging solutions to reduce our environmental impact and support a more sustainable future. Progressed to ‘Good Progress’ under APCO performance reporting In FY23, we submitted our first annual APCO report. This process provided critical baseline information about the current state of our private label branded packaging, which has allowed us to prioritise actions in areas which will have the greatest impact to our range. As a result of our efforts to transition towards responsible packaging, our overall performance under APCO reporting has improved in FY24 from ‘Getting started’ to ‘Good progress’. While we believe this is a step in the right direction, we know there is still plenty more to do over the next 18 months to meet the National Packaging Targets. Furthermore, our APCO performance summary highlighted areas for improvement in our responsible packaging journey which will become key areas of focus for us in FY25. These focus areas include: • On-site waste – enhancing our efforts to minimise waste generated from head office operations while increasing landfill diversion for remaining waste materials • Disposal labelling – revising the labels, instructions, and guidance on our consumer product packaging to simplify proper disposal of packaging materials for our customers • Recoverability – transitioning away from non-recyclable packaging materials for materials which can be recovered through kerbside collection systems. In FY24, we engaged with our private label and drop-ship suppliers to begin phasing out EPS and EPE foam packaging. The feedback from our suppliers has been encouraging, with many key partners prepared and willing to support this initiative. We provided all drop-ship suppliers with our internal Sustainable Packaging Guide, which outlines our goals for adopting more responsible packaging practices. This guide includes visual representations of best practices for educational purposes and guidance. Additionally, all private label suppliers received an updated version of our internal Packaging Guideline. This document details the technical requirements for packaging, suitable materials for various applications, and the performance testing methodology used to ensure that the final packaging is fit for purpose. Over the next 12 months, we will continue to collaborate with our suppliers to source alternative materials and test revised packaging to ensure it meets our technical performance and sustainability requirements without compromising product quality. Temple & Webster and UNSW partnered to create bedroom products to improve sleep and wellness 27 Annual Report 2024 Environmental, social and governance statement continued Commenced the phase out of EPS and EPE foam packaging To empower our customers to participate in the circular economy, we aim to replace EPS and EPE foam with recyclable materials wherever possible. In some instances, due to the size, weight and/or material of our products, EPS and EPE foam will be essential to ensure that the goods remain undamaged throughout transit and can be delivered to our customers in acceptable condition. Whilst this will impact the overall recoverability of our packaging, it will help to avoid products becoming waste and ending up in landfill. While we strive to avoid plastic packaging, we recognise that in some cases, plastic may outperform recyclable alternatives. In such instances, we will work with our suppliers to optimise the proportion of recycled content in the plastic packaging. This approach allows us to support the recycled material market whilst maintaining our high standards for product quality. We recognise that transitioning our private label packaging from plastics to recyclable alternatives such as paper and cardboard will impact our carbon footprint related to transportation and distribution. Given that paper and cardboard packaging materials are generally heavier than plastic packaging, this shift is expected to increase associated carbon emissions. Our goal remains to achieve 100% kerbside recyclable packaging for our private label products. To mitigate the environmental impact and associated transit costs, we will optimise the performance of our packaging over time. For example, by ‘lightweighting’ our packaging, which is the practice of optimising packaging and materials to reduce the carbon emissions linked to the transport of goods. United Nations Sustainable Development Goals that align with this area of focus 28 Temple & Webster Group Ltd 29 Annual Report 2024 Environmental, social and governance statement continued Supporting our people and communities Diversity, equity and inclusion DEI creates a thriving, successful and more innovative world. Our vision is to create a culturally rich space for team members and stakeholders to be their authentic selves and feel a sense of belonging, thus attracting, retaining and motivating the very best people. Our employee turnover rate has decreased by 30% in FY24 For transparency of how we govern our approach to DEI, we have established a set of related policies which are available from our investor relations website, these include: • Code of Conduct • Leave Policy • Parental Leave Policy • EEO, Harassment & Bullying Policy • Whistleblower Policy • Grievance Policy • Work, Health & Safety Policy. • Diversity, Equity & Inclusion Policy • Gender Equality Strategy Over the years, our commitment to DEI has been a key driver of our success. We strive to ensure that all employees, regardless of their background, have equal opportunities to grow and succeed within our organisation. Our DEI initiatives in FY24 include targeted recruitment efforts, employee engagement surveys, improved leave policies, comprehensive education sessions and training programs, acknowledgement and celebration of days of significance, and the establishment of a DEI Charter and action plan with a mission to continue on our path of promoting diversity, equity and inclusion for team members and stakeholders. Additionally, our DEI Policy was reviewed in collaboration with our Board of Directors (‘the Board’) and updated to reflect our evolving commitments and to better address the needs of our diverse workforce. The updated policy has been published on our investor relations website and communicated to all employees. In FY24, we developed a comprehensive three-year Gender Equality Strategy designed to serve as a roadmap for closing our gender pay gap. This strategic plan outlines actionable steps and benchmarks to help us achieve this outcome. By implementing targeted initiatives and continuous monitoring, we are committed to fostering an equitable workplace where all employees can thrive and progress. Launched our three-year Gender Equality Strategy In FY24, we established a DEI Charter and action plan, which is managed and implemented by our ‘We Are Inclusive Committee’. The committee is Co-Chaired by two employees from our Product and People and Culture teams and includes representatives from the Data and Analytics, Service Delivery, People and Culture, Marketing and Trade and Commercial teams. Our Chief of Staff, who is the executive sponsor for the committee, drives our DEI strategy and ensures accountability across the organisation. We conducted our first DEI Survey, which was made available to all Australian-based employees. We achieved a 79% participation rate. The insights gathered from this survey have been instrumental in shaping our DEI strategy and identifying areas for action that are likely to have the most positive impact. 30 Temple & Webster Group Ltd To further instil diversity, equity and inclusion within our business, we held a range of events to promote education and provide opportunity to celebrate a broad range of days of significance, including: • International Women’s Day – where a panel of emerging and established female Temple & Webster leaders shared their personal and business experiences with our employees • Wear it Purple Day – we celebrated and raised awareness for young people in the LGBTIQA+ community and hosted drag trivia for our employees • The International Day Against Homophobia, Biphobia and Transphobia (IDAHOBIT) – a special day that aims to raise awareness about the discrimination and challenges faced by the LGBTIQA+ community and promote equal rights and opportunities. We held a fundraising raffle with our employees, with proceeds raised being donated to Minus18 • Eid celebration – to celebrate the end of the month of Ramadan, we catered lunches of Middle Eastern cuisine for our employees to enjoy and share. Personal stories and insights were also shared across our company-wide communications channels. To empower our leaders to effectively manage change initiatives, we delivered change leadership training for our people leaders. This training equips our leaders with the skills needed to navigate and implement changes smoothly, ensuring continuity and stability. We also launched LinkedIn Learning, in addition to our existing internal Learning Management System (‘LMS’). Employees now have access to over 21,000 courses across business, leadership & management, technology and creativity which has significantly expanded our course offerings to cover emerging industry trends and skills. This platform ensures all employees have access to high-quality educational resources, fostering continuous learning and development. We invested over $450,000 in employee training and development in FY24 In FY24, recognising the importance of family, we improved our parental leave scheme to provide all new parents with 12 weeks of paid leave, regardless of gender and caregiving responsibilities. This improvement supports our employees in balancing their professional and personal lives, promoting a family-friendly workplace. We also introduced a new policy allowing employees to swap selected public holidays, giving them the flexibility to celebrate days that are meaningful to them. This policy supports cultural diversity and personal choice within our workforce. Over 5,000 hours of paid parental leave taken in FY24 These initiatives underscore our ongoing dedication to fostering a diverse and inclusive workspace where every individual feels valued, supported, and empowered to thrive. By prioritising DEI and investing in the growth and development of our people, we are building a more resilient and dynamic organisation, fully equipped to meet future challenges and drive continuous improvement. United Nations Sustainable Development Goals that align with this area of focus 31 Annual Report 2024 Environmental, social and governance statement continued Advancing reconciliation In FY24, we continued to embark on a journey of reflection, discovery and learning to ensure that we understand how and where we can have the most impact on closing the gap and advancing reconciliation with Aboriginal and Torres Strait Islander peoples in Australia. Our Reflect RAP received endorsement from Reconciliation Australia in December 2023, marking the start of a transformative journey. This endorsement provides us with a robust framework and clear, measurable targets to guide our efforts in advancing reconciliation and building stronger relationships with Indigenous Australia. The purpose of our Reflect RAP is to establish strong foundations and engage our employees and leaders in the significance of reconciliation. By scoping our sphere of influence, we aim to cultivate meaningful relationships with Aboriginal and Torres Strait Islander stakeholders. Guided by actions aligned with the three core pillars of relationships, respect, and opportunities, we are well- positioned to drive meaningful change and support the national reconciliation movement. Our efforts are driven by an internal cross-functional working group comprising employees and leaders from our Executive, Sustainability, Category Management, People and Culture, and Marketing teams. Our Chief Experience Officer (‘CXO’) and Co-Founder is the executive sponsor for this working group. For governance and reporting purposes, this working group will meet quarterly to review our progress and ensure our actions align with our Reflect RAP commitments and targets. Received formal endorsement for our Reflect RAP Building on our previous year’s efforts, we celebrated NAIDOC Week 2023 by prominently featuring First Nations artists on our website. We engaged with six artists, discussing their practices and the stories behind their vibrant works showcased on our website. Using our platform to promote storytelling authentically and meaningfully is crucial, as it respects both the cultural significance of the artwork and the artists themselves. This initiative allowed us to refine our media content to ensure we communicate respectful and inclusive messages to the wider community. Our campaign extended beyond our own digital platforms, featuring on our Instagram stories, Pinterest pins, and broadcast via dedicated customer messaging that highlighted our beautiful First Nations artworks and the artists’ stories. Since FY23, the number of First Nations artists featured on our website has increased by 8%, and we aim to continue this growth. To further highlight their work and make it easier for customers to find, we created a destination category on our website specifically for First Nations artists and their work. We also developed a spotlight page where customers can learn more about each artist and their history. We are committed to building on this initiative, using our platform to celebrate, educate, and promote the remarkable talent of First Nations artists. National Reconciliation Week is a time for all Australians to learn about our shared histories, cultures, and achievements, and to explore how each of us can contribute to achieving reconciliation in Australia. In FY24, our employees actively engaged in a variety of events and activities, showcasing our commitment to reconciliation and deepening our understanding of the challenges and achievements of Indigenous communities. We also made educational resources available to all employees through our LMS. These initiatives are key in advancing our collective efforts toward a more inclusive and equitable workplace. Moving forward, we are committed to engaging further with First Nations stakeholders as part of our Reflect RAP and aim to progress to our Innovate RAP in FY26. 32 Temple & Webster Group Ltd United Nations Sustainable Development Goals that align with this area of focus Efforts in Action In FY24, we engaged Alysha Menzel, a First Nations creative and a proud descendant of the Samsep people from Erub Island in the Torres Strait to craft an original artwork. The resultant work, entitled ‘Journey Home’, celebrates the diverse ways that Aboriginal and Torres Strait Islander peoples, along with all other Australians, live. The artwork encapsulates the themes of home, sanctuary and safe places. It highlights the importance of space where First Nations communities feel supported, protected and empowered. We were incredibly grateful to partner with Alysha in the creation of this artwork, which is now proudly displayed in our corporate head office. Alysha also visited our head office during NAIDOC week to talk at a company-wide standup and share what ‘home’ means to her, her artistic process, and the personal significance of NAIDOC Week. 33 Annual Report 2024 Environmental, social and governance statement continued Community relations Giving back and supporting our community has been an integral part of our company culture since we were founded in 2011. We believe that everyone deserves to live more beautifully, and we partner with selected organisations to bring this philosophy to life. In 2018, we began our partnership with Women’s Community Shelters (‘WCS’), contributing to the styling and installation of furniture and homewares in a single shelter. Since then, our continued partnership has seen us collaborate with WCS on the delivery of 11 shelters and “meanwhile use” facilities across NSW. Supported the fit out and install of 11 units and one office for Women’s Community Shelters One of the larger projects we did for WCS in FY24 was the styling, furnishing and installation of 11 individual apartments and an office space, one of the new “core and cluster” initiatives WCS have launched in partnership with the NSW Government. A dedicated team of 30 Temple & Webster employees were involved in volunteering for this project which involved providing styling services, donating furniture, homewares, and delivery and assembly services to bring these safe havens to life. Along with this, we have donated furniture and homewares to various other shelters in the WCS community as required. In recognition of our successful partnership, WCS entered us into the Fundraising Institute Australia Awards and the Australian Philanthropy Awards in FY24. In Q4, Danielle Miller, OAM, Director of Education and Special Projects at WCS, conducted an informative session titled "Walk the Talk" for our employees. The session provided insights into domestic and family violence, empowered employees to recognise warning signs, respond to disclosures, refer individuals to specialised support, and inspire action to effect positive change in the workplace and broader community. We are incredibly grateful for Danielle’s commitment to educate and raise awareness among our employees on such an important and relevant topic. Earlier in the year, we also offered employees the opportunity to participate in a pilot domestic violence education program called “Allies in Action”, in partnership with WCS and Team Building With Purpose. In FY23, we expanded our community partnerships program to include the Black Dog Institute (‘BDI’), providing similar styling and installation support as we do for WCS for some of BDI’s treatment rooms and offices. We’re looking forward to rolling out more upgraded facilities for BDI as opportunities arise. Furnished reception area and ketamine treatment rooms for Black Dog Institute Our primary project has been styling and furnishing their reception area and ketamine treatment rooms, donating styling services, furniture, homewares, and installation services, to create a relaxing sanctuary conducive to positive treatment outcomes. New South Wales Women’s Shelter 34 Temple & Webster Group Ltd Through our partnership with BDI, we had a lived experience presenter from the organisation share their experience and tips on navigating mental health with all employees on RUOK day. This day aims to inspire and empower people to meaningfully connect with those around them and support anyone struggling with mental health issues. The session provided valuable perspectives on personal struggles, the impact of undiagnosed depression, and emphasised the significance of early detection and treatment, contributing to greater awareness and understanding among our team members. To help our employees manage personal wellness, we also provide daily mindfulness sessions in our beautiful wellness room, an annual subscription to a free mindfulness app, free cereal and fruit for breakfast and free catered lunch 3 days a week in our communal cafe area to encourage social interaction. Donated $10,000 cash to Women’s Community Shelters Outreach Program As part of our ongoing efforts to support and give back to the community, we also participated in or donated to: • RSPCA Cupcake Day – a fundraising event where participants bake and sell cupcakes to raise funds for the Royal Society for the Prevention of Cruelty to Animals (RSPCA) • Minus18 – an organisation that works to lead change, building social inclusion and advocating for an Australia where young LGBTIQA+ people are safe, empowered, and surrounded by people that support them • Australia’s Biggest Morning Tea – a fundraising event that brings people together to enjoy a morning tea while raising funds for cancer research and support services • ReLove – donation of furniture and homewares to an organisation that provides furniture to help people restart their lives with the agency to choose how they want to live • Byron Bay Wildlife Sanctuary – a charity designed to increase awareness and preservation of threatened and endangered species, with the primary objective to rescue, rehabilitate and release. United Nations Sustainable Development Goals that align with this area of focus Reception area and treatment rooms for Black Dog Institute 35 Annual Report 2024 Environmental, social and governance statement continued Being a good corporate citizen Data privacy and cybersecurity We are committed to safeguarding customer data and preserving privacy in adherence to legislative requirements, specifically the Privacy Act 1988 (Cth) and associated amendments, such as the Notifiable Data Breaches scheme. With the increase in online consumer adoption of our services, we see cybersecurity as an inherent corporate initiative and necessary response to the protection of our customer and employee data alike. We are very aware of the risks presented to all Australian organisations due to recent public data breaches. We see this as a call to further enhance security practices across all aspects of our business, both technically and operationally. The prevalence of these attacks in recent times calls for technical investment, employee vigilance and a focused approach to corporate governance to ensure we respond effectively. We continue to respond at all levels of the organisation, commensurate to the present threats facing Australian organisations. Zero data privacy breaches in FY24 Our focus and commitment to the protection of our data stores has led to the formation of an internal Data and Privacy Committee which is responsible for identifying, assessing and ultimately protecting our data from compromise. Our Data and Privacy Committee meets monthly and is chaired by our Head of Legal, with sponsorship from the Chief Information Officer (‘CIO’). Key stakeholders include our CXO/Co-Founder and Chief Marketing Officer (‘CMO’). We have diligently identified all sensitive data stores and have responded accordingly by applying security controls commensurate with the criticality and need. This is an ongoing process and has resulted in regular committee meetings to respond to the ever- changing landscape of threats. We continue with the implementation of ISO 27001:2022. ISO 27001:2022 is the most comprehensive and relevant security best practice for our business. By adhering to this standard, we aim to protect our digital assets, effectively manage our supply chain, foster crucial technical relationships and establish an ongoing framework for enhancing security measures. In FY24, we passed the 50% implementation completion milestone. We adopted a full scope and full Statement of Applicability of the 93 Annex A controls which has allowed us to identify and remediate shortcomings during implementation. We consider this initiative as validation of our ongoing commitment to our cybersecurity duties and trust model, in the protection of our corporate and customer data. In FY24, we increased our detection and prevention security controls within our environment in line with the continual improvement of our security practices. This led to an improvement of our vulnerability identification and “mean time to remediation”, improving the overall security posture of our environment. Sensitive to the fact new vulnerabilities appear each day, we continue to monitor our detection and protection capabilities and time to remediate. We have adopted and continue to govern a risk-based model which has resulted in a number of focused initiatives, which include: 1. Regular mapping of cyber risk against security controls and practices 2. Increased training and awareness across the workforce 3. Regular testing of environments to continually detect any vulnerabilities 4. Increased security-focused resources 36 Temple & Webster Group Ltd Human rights and ethical procurement As part of our commitment to delivering beautiful solutions for all our stakeholders, we have worked diligently with our suppliers to ensure they provide a safe and equitable work environment for everyone involved in making our products and facilitating our business operations. Recognising the vital role these individuals play in our success, we have continued our efforts since 2019 to enhance supply chain transparency and identify key areas of risk that could lead to modern slavery if left unchecked. For risk management and supplier screening purposes, all private label suppliers are required to provide or undergo a third-party factory audit for social and ethical compliance. These audit reports are reviewed by our Quality and Compliance department to identify potential modern slavery risks within the factory, prior to purchase orders being raised with a supplier. Where necessary, corrective action plans (‘CAP’) are developed by our Quality and Compliance team and provided to suppliers to assist them in addressing key risks. More detail on our actions to assess and address modern slavery risk within our operations and supply chains is available in our annual Modern Slavery Statements, and can be accessed from https://modernslaveryregister.gov.au/ (search “Temple & Webster”). We have been auditing our private label suppliers for ethical and social compliance since 2020. Since FY23, we have developed corrective action plans based on audit findings to educate and assist our suppliers in addressing modern slavery risks and improving overall labour and working conditions. In FY24, we reviewed the results of these corrective action plans to assess progress, capture outcomes, and set short- and long-term targets for our private label supplier base. The evidence captured in FY24 will be part of an internal desktop audit. To ensure continued assurance, we will require all private label suppliers to undergo regular audits (frequency determined by risk) to verify that corrective actions have been implemented and controls are in place to prevent recurrence. In FY24 and continuing into FY25, our core focus has been on assessing and addressing risks within our private label supply chains. To assist with the expansion of our scope, we partnered with iPRO software to manage the annual modern slavery risk assessment of our drop-ship suppliers and operational vendors. The iPRO Modern Slavery Assessment Framework, based on the global framework developed by the Social Responsibility Alliance, leverages research and reports from credible sources such as the International Labour Organisation, International Organisation for Migration, United Nations Children’s Fund, and Bureau of International Labor Affairs. This software provides us with a standardised reporting and scoring system, enabling us to establish clear metrics and key performance indicators (‘KPIs’) for all suppliers, facilitating ongoing performance management and continuous improvement. We have used the results from supplier self-assessments to develop general insights and action plans, helping suppliers improve their overall scores and address modern slavery risks. These insights will continue to guide us in identifying key risk areas within our direct supply chains and prioritising mitigative actions. In FY25, we plan to integrate all suppliers into the iPRO platform (including all private label suppliers), ensuring a standardised measure for ongoing human rights risk management and reporting across all of our operations and supply chains. In FY24, we initiated training and education programs for our local drop-ship suppliers to support them in the early stages of modern slavery risk management. These programs aim to foster a deeper understanding of human rights risks, identify potential areas of concern, and develop strategies to address these risks proactively. By equipping our suppliers with the knowledge and tools needed to recognise and mitigate human rights issues, we aim to prevent the development of modern slavery within our supply chain. This initiative underscores our commitment to ethical practices and the protection of human rights throughout our operations. Private label supply chain modern slavery risk management approach 37 Annual Report 2024 Environmental, social and governance statement continued Business ethics and integrity We are committed to the highest ethical standards as outlined in our Code of Conduct. We expect our employees to act honestly and with personal integrity in all their dealings on behalf of the Company, including in their interactions with colleagues, business partners, customers and the community. Our Code of Conduct is available on our investor relations website. Our Whistleblower Policy is designed to promote transparency, accountability, and integrity within the company. It encourages employees, contractors, suppliers, and stakeholders to report any suspected misconduct, unethical behaviour, or illegal activities. Disclosures can be made internally to company officers, or to external bodies such as ASIC and APRA. It ensures confidentiality and protects whistleblowers from retaliation, such as dismissal, discrimination or damage. Our People and Culture department assesses all disclosures and provides a written report to the Audit and Risk Committee each quarter, outlining any material incidents that are reported under the Whistleblower Policy. Our Anti-Bribery and Corruption Policy details how we manage, mitigate and deal with conflicts of interest arising from relationships between employees, contractors, consultants and third parties. It provides clear parameters for acceptable gifts and benefits, outlines an internal approval and record keeping process via the Gifts and Entertainment Register, and highlights facilitation payments as a form of bribery. Any employee that breaches the Anti-Bribery and Corruption Policy will face disciplinary action, up to and including termination of employment or engagement. Corporate governance Our Sustainability team, which is responsible for the day- to-day management of ESG initiatives, plays a key role in defining and implementing our sustainability strategy. This team operates under the oversight of the Audit and Risk Committee, ensuring that our ESG strategies align with our broader corporate goals and regulatory requirements. The Audit and Risk Committee provides governance and accountability, reviewing our ESG performance, identifying potential risks, and guiding strategic improvements. This governance structure ensures that our ESG efforts are not only effectively implemented but also continuously monitored and improved. The Board is committed to the highest standards of governance, legislative compliance and financial and ethical behaviour. It is responsible for the overall operation, stewardship and governance of the Company. The Board has adopted a framework of corporate governance principles, policies and practices that are in line with the ASX Principles and Recommendations to promote responsible governance. Our Corporate Governance Statement reports the Company’s compliance with the fourth edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations and has been approved by the Board. The Corporate Governance Statement and further details about corporate governance policies adopted by the Company and the Board are available on our investor relations website. 38 Temple & Webster Group Ltd 39 Annual Report 2024 Financial Report 2024 40 Temple & Webster Group Ltd Directors’ report 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 2024. 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 Conrad Yiu Mark Coulter Belinda Rowe Melinda Snowden Principal activities Temple & Webster is Australia’s largest 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 whereby products are sent directly to customers by suppliers, enabling faster delivery times and reducing the need to hold inventory, allowing for 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’s Trade & Commercial division services the B2B market, offering exclusive product ranges, procurement, styling, specialised delivery and installation services by a dedicated support team. The Group also offers a huge range of home improvement products that customers need to renovate and redecorate their homes. Temple & Webster Group’s registered office and principal place of business is Building 2, 1-7 Unwins Bridge Road, St Peters, 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. 41 Annual Report 2024 Operating and financial review Key operating and financial metrics for the year ended 30 June 2024 include: • Record FY24 revenue of $497.8 million was up 26% vs last year, driven by active customer growth which was up 31% to an all-time high of 1.1 million; • This was a particularly strong result given the overall market for furniture and homewares was down ~4%1 for the year, resulting in Temple & Webster (‘TPW’) increasing its market share by 31% vs last year; • Gross margin % for FY24 improved to 33.4% vs 32.6% in FY23, despite inflationary and high interest rate pressures on household budgets. Gross margin gains were led by improved shipping recovery, decreased refunds and replacement costs, and product mix gains as customers shift spend into lower discretionary, higher margin categories (i.e. bedroom, dining, living room furniture); • All other operating expenses reduced as a % of revenue in FY24 as a result of measured cost-base investments being outpaced by revenue growth and efficiency gains as a result of Generative AI; • EBITDA (pre-one-off costs) of $13.1 million was within the Group’s communicated range of 1-3% at 2.6% (this result excludes one-off costs pertaining to a change in fair value of convertible notes and an impairment of investment in an associate, refer to note 5 for further details and a reconciliation of EBITDA (pre-one-off costs) to statutory profit before tax on the following page); • Profit before tax was $6.4 million, however if the above-mentioned one-off costs of $4.7 million were excluded, profit before tax was $11.1 million, down 7.6% vs last year, which is in line with expectations; • TPW’s asset light, negative working capital model drove positive free cash flows of $25.8 million (cash flow before share buy-back of $12.1 million and payment for other non-current financial assets of $2.4 million) with a closing cash balance of $116.4 million. The Group remains debt free. Strategic priority update In August 2023, TPW outlined a strategy to target annual sales of $1b+ within 3-5 years, with a focus on five key strategic priorities, being: • Becoming the top-of-mind brand in the furniture and homewares category; • Generating the majority of revenue from exclusive products; • Developing market-leading capabilities around data, AI and technology; • Lowering our fixed costs % to obtain a price and margin advantage; and • Building scale through adjacent growth plays, including Home Improvement and Trade & Commercial (B2B). The Group made good progress against each of its strategic priorities in FY24: • The Group commenced its first multi-channel brand marketing campaign; • Revenue from exclusive products grew to 43% of total revenue as at 30 June 2024. It included growth in both private label and exclusive drop-ship products; • The Group’s internal AI team developed a Generative AI ‘solutions in a box’ that powers a suite of tools, from product recommendations to live chat interactions with customers. As a result of these initiatives, the Group was able to materially reduce customer care costs and improve conversion rate; • Fixed costs as a % of revenue decreased since last year (pre-one-off costs) as a result of measured fixed cost investments being outpaced by revenue growth; and • Both of the Group’s longer-term growth plays of B2B and Home Improvement delivered revenue growth in line with the core business. The Group remains committed to achieving our mid-term goal of $1b+ in annual sales. 1. Source: ABS 8501.0 Retail Trade, Australia (year ended 30 June 24 against prior corresponding period) 42 Temple & Webster Group Ltd Directors’ report continued Reconciliation of EBITDA (pre-one-off costs) to statutory profit before tax Earnings before interest, tax, depreciation and amortisation (‘EBITDA’) is a non-IFRS measure and is the primary reporting measure used by the Chief Operating Decision-Making bodies, being the Chief Executive Officer, Management and the Board of Directors, for the purpose of assessing the performance of the Group. EBITDA (pre-one-off costs) excludes one‑off costs resulting from a fair value adjustment of the convertible notes and an impairment of the investment in an associate (refer to note 5 for further details). Consolidated 2024 $’000 2023 $’000 Profit before tax 6,358 11,963 Adjustments Add: Depreciation and amortisation 5,830 5,271 Add: Interest on lease liabilities 1,207 942 Less: Interest income (4,964) (3,367) EBITDA 8,431 14,809 One-off costs Add: Impairment of investment in an associate 1,665 – Add: Change in fair value of convertible notes 3,024 – EBITDA (pre-one-off costs) 13,120 14,809 Further commentary on operational and financial results can be found in the Group’s annual results presentation lodged with the ASX on 13 August 2024. 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 (not exhaustive nor in order of materiality). Key risk Description 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, homewares and home improvement have been growing there is no guarantee this will continue into the future. The Group is subject to factors outside of 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 The Australian furniture, homewares and home improvement segment is highly fragmented. Competition can arise from a number of sources including domestic and foreign 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 cost of customer acquisition, lower margins due to pricing pressure and reduce the Group’s market share in the furniture and homewares segment in Australia. 43 Annual Report 2024 Key risk Description Political, economic or social instability 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. 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. Supply chain might be disrupted There remains a risk that an unforeseen, rare and impactful event (including pandemic, military conflicts and terrorist attacks) may cause a significant disruption in 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. Performance, reliability and security of websites, databases, operating systems 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, directly influencing sales to customers. The Group’s databases and systems are hosted on platforms provided by third parties. 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 property or independent development of technology 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 materially adverse effect on the Group’s financial and operational performance in the future. Laws and regulations may change 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 (‘KMP’) 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. 44 Temple & Webster Group Ltd Directors’ report continued Significant changes in the state of affairs On 3 April 2023, the Group initiated an on-market share buy-back program up to a maximum value of $30 million for a period up to 12 months from initiation. The program concluded on 19 March 2024, following which the Group initiated a new on-market share buy-back program up to a maximum value of $30 million on 17 June 2024. The Group considers the acquisition of shares at prevailing prices to be effective capital management while retaining financial flexibility to fund accretive organic and inorganic opportunities as part of its growth strategy. During the year ended 30 June 2024, the Group purchased 1,735,838 ordinary shares (2023: 2,697,582) on issue at average price of $7.22 (2023: $4.56) under the on-market share buy-back programs. Of the total shares bought back, 1,683,292 ordinary shares (2023: 2,696,254) were cancelled as at 30 June 2024. One of the Group’s strategic objectives has been developing leading capabilities around AI, data & technology. During the current financial year the Group added new hires to its internal AI team, combining both machine learning and Generative AI knowledge and created an AI R&D function focused on experimenting with new large language models and building new disruptive solutions. Since FY21 the Group has held an investment in Renovai, Inc (‘Renovai’), a start-up developing AI interior design tools that is recognised as an investment in an associate (refer to note 5 for further information). In FY24, the Group invested US$2.0 million in convertible notes (‘Notes’) issued by Renovai. Given the uncertainty regarding Renovai’s ability to generate future economic benefits for the Group, it has determined the recoverable amount of its investment in Renovai and the fair value of the Notes to be nil as at 30 June 2024. Matters subsequent to the end of the financial year No matters or circumstances have arisen since 30 June 2024 that have 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 Other than the developments described in this report, the Directors are of the opinion that no other matters or circumstances will significantly affect the operations and expected results of the Group. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. Unissued Shares Share options As at the date of this report and at the reporting date, there were 8,962,052 unissued ordinary shares under options. Refer to the remuneration report for further details of the options outstanding for Key Management Personnel (‘KMP’). Performance rights As at the date of this report and at the reporting date, there were 165,840 unissued shares under performance rights. Refer to the remuneration report for further details of the performance rights outstanding for KMP. Restricted rights As at the date of this report and at the reporting date, there were 43,657 unissued shares under restricted rights. Refer to the remuneration report for further details of the restricted rights outstanding for KMP. 45 Annual Report 2024 Information on directors Name: Stephen Heath Title: Independent Non-Executive Director 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 include 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: Non-Executive Director of G8 Education Limited (ASX:GEM) (appointed on 3 June 2024). Former directorships (last 3 years): Non-Executive Director of Best & Less Group Holdings Ltd (ASX:BST) (appointed on 24 June 2021 and resigned on 10 July 2023). Chair of Shiro Holdings Limited (ASX:SHM) (appointed on 24 October 2019 and resigned on 2 November 2021). Chair of Redhill Education Limited (appointed to Board on 1 September 2019, elected as Chair on 1 December 2020 and resigned on 30 October 2021). Special responsibilities: Chair of the Board Interests in shares: Nil Interests in options over shares: 181,026 Interests in restricted rights: 14,150 Name: Melinda Snowden Title: Independent Non-Executive Director Qualifications: Bachelor of Economics and Laws from the University of Sydney, Graduate Diploma in Applied Finance and Investment (SIA), Graduate of the Australian Institute of Company Directors Experience and expertise: Melinda joined the Group in June 2023. Melinda has extensive experience in legal and professional corporate advisory roles, as well as on listed Boards in technology, retailing, property and funds management. Melinda has 28 years of experience in finance and has been a professional Non-Executive Director since 2010 in a broad range of industries. Melinda is Chair of the Board for Megaport Ltd (ASX:MP1) (appointed on 30 June 2024) and a Non-Executive Director of Brighte. Melinda has held previous Non-Executive Director roles at Best & Less Group Holdings Ltd, Newmark Property REIT, WAM Leaders, MLC, Vita Group, Mercer Investments (Australia), Sandon Capital Investments, Our Ark Mutual, Newington College, Sane Australia and Kennards Self Storage. Prior to her non-executive career, Melinda held investment banking roles with Grant Samuel, Merrill Lynch and Goldman Sachs and was a solicitor in the corporate division of Herbert Smith Freehills. Other current directorships: Chair of Board (appointed to Board on 1 June 2021, elected as Chair on 30 June 2024) and Non-Executive Director (appointed 1 June 2021) of Megaport Ltd. Former directorships (last 3 years): Non-Executive Director and Chair of the Audit and Risk Committee of Best & Less Group Holdings Ltd (ASX:BST) (appointed on 18 May 2021 and resigned 10 July 2023) and Newmark Property REIT (ASX:NPR) (appointed on 1 March 2021 and resigned 27 March 2024). WAM Leaders Limited (ASX:WLE) (appointed on 1 March 2016 and resigned 1 June 2023) and Sandon Capital Investments Limited (ASX:SNC) (appointed on 14 May 2018 and resigned 2 March 2022). Special responsibilities: Chair of the Audit and Risk Management Committee Interests in shares: Nil Interests in options over shares: Nil Interests in restricted rights: Nil 46 Temple & Webster Group Ltd Directors’ report continued Name: Conrad Yiu Title: Non-Executive Director Qualifications: Bachelor of Commerce from the University of New South Wales, Master of Business Administration from the University of Cambridge, Graduate of the Australian Institute of Company Directors Experience and expertise: 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 30 years of 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 and technology investments in public and private markets. Other current directorships: Non-Executive Director of FiscalNote (NYSE: NOTE) (Appointed 25 October 2020). Former directorships (last 3 years): None Special responsibilities: Deputy Chair of the Board from 1 November 2022 Interests in shares: 2,077,933 ordinary shares* Interests in options over shares: 181,026 Interests in restricted rights: 23,125 Name: Belinda Rowe Title: Independent Non-Executive Director Qualifications: Bachelor of Arts Monash University, Graduate of Australia Institute of Company Directors Experience and expertise: Belinda is an 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 ARN Media Ltd (appointed on 5 February 2019), 3P Learning Limited (appointed on 20 September 2021) and Sky NZ (appointed on 1 March 2023). Former directorships (last 3 years): Nominated Director Soprano Design (appointed on 22 September 2020 and resigned in February 2023). Special responsibilities: Chair of the Nomination and Remuneration Committee Interests in shares: 12,100 Interests in options over shares: Nil Interests in restricted rights: 6,382 47 Annual Report 2024 Name: Mark Coulter Title: Executive Director Qualifications: Bachelor of Laws and Bachelor of Science (Biochemistry) from the University of Sydney and Graduate Diploma of Psychology from Monash University Experience and expertise: Mark is a co-founder of Temple & Webster, Australia’s largest online retailer for the home. Previously, Mark worked at News Limited where he was the Director of Strategy for the Digital Media properties and additionally managed a portfolio of digital businesses. Mark was also a solicitor at Gilbert + Tobin and management consultant at McKinsey & Company. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Chief Executive Officer Interests in shares: 1,008,537 ordinary shares* Interests in options over shares: 8,600,000 Interests in restricted rights: Nil * ArdenPoint Ecommerce Unit Trust (‘Trust’) is the registered holder of 1,927,828 Ordinary Shares of Temple & Webster Group Ltd. For the purpose of the above table, both Mr Coulter and Mr Yiu, the beneficiaries of the Trust, are considered to hold 50% of the shares held by the Trust. This is same as prior financial years. ‘Other current directorships’ quoted above are current directorships for listed entities only and exclude directorships of all other types of entities, unless otherwise stated. ‘Former directorships (last 3 years)’ quoted above are directorships held in the last three years for listed entities only and exclude directorships of all other types of entities, unless otherwise stated. Company secretary Lisa Jones is Company Secretary of Temple & Webster Group Ltd. Lisa is a corporate lawyer and corporate governance professional with more than 20 years’ experience in commercial law and corporate affairs, working with both public listed and private companies in Australia and in Europe after starting her career in the corporate practice of Allens. Meetings of directors The number of meetings of the Group’s Board of Directors (‘the Board’) held during the year ended 30 June 2024, and the number of meetings attended by each director were: Full Board Nomination and Remuneration Committee Audit and Risk Management Committee Attended Held Attended Held Attended Held Stephen Heath 5 6 6 6 4 4 Conrad Yiu 6 6 6 6 4 4 Melinda Snowden 6 6 6 6 4 4 Belinda Rowe 6 6 6 6 4 4 Mark Coulter 6 6 – – – – Held: represents the number of meetings held during the time the director held office. 48 Temple & Webster Group Ltd Remuneration report Dear shareholders, On behalf of the Board, it gives me immense pleasure to present the FY24 remuneration report. FY24 was a record year for Temple & Webster with revenue of $497.8 million, up 26% year on year, and active customers surpassing 1 million. This was achieved in a market that was down ~4%1 year on year, resulting in significant market share gains. EBITDA (pre-one-off costs) of 2.6% was at the top end of the guidance and free cash flow of +$25 million (cash flow before share buy-back and payment for other non-current financial assets) was strong with an ending cash position of $116 million and no debt. It was also a year of execution against our mid-term strategy to achieve $1b+ in annual sales which was outlined in August 2023. Pleasingly, TPW is making good progress against all five strategic goals, most notably against our AI/Data/ Technology goals where we are already seeing material customer care costs reduction and customer conversion gains. The Group’s results, coupled with a strong financial position, mean it is fully funded to execute on both organic and inorganic growth plans. Based on the business’ results and strategy, the Board has established a remuneration framework that clearly links the Group’s performance with remuneration outcomes. This framework also ensures that the interests of directors, employees and shareholders are closely aligned. The Board is confident that the outcomes described below are fair and reasonable. We believe that the outcomes strike the right balance, as they reward and motivate our key executives whilst meeting the expectations of our shareholders. FY24 Remuneration Outcomes The key remuneration outcomes for FY24 were: • Despite the strong performance of the Company, there was no change to the remuneration package for the CEO in FY24. This is in accordance with the terms of the CEO’s remuneration approved by shareholders at the 2022 AGM (see further section 5.2). • Mr Adam McWhinney, Chief Experience Officer (‘CXO’), and Mr Mark Tayler, Chief Financial Officer (‘CFO’), received a 3% increase in fixed remuneration. Their target and stretch short-term incentive increased to 30% and 50% respectively (from 25% at target and 43.75% stretch). Long-term incentive quantum remained at 25% of fixed remuneration at target and 50% at stretch for FY24. • The FY24 short-term variable remuneration (‘STVR’) outcomes for the CFO and CXO were 105.3% and 112.0% of target, respectively. Further details regarding the STVR outcomes are set out in section 4.2 of this report. It is noted that for FY24 the Revenue metric, worth 30% of the Group STVR targets, has been amended so that it measures revenue growth from a FY23 base as compared to a relative online sales growth metric used in the prior financial year. • Performance rights were granted in FY21 to the CFO and selected non-KMP executives under the FY21 long-term variable remuneration (‘LTVR’) awards. These awards lapsed in August 2023 as Temple & Webster’s TSR was less than the TSR of the ASX 300 Industrials Total Return Index at the end of the three-year performance period ended 30 June 2023. 1. Source: ABS 8501.0 Retail Trade, Australia (June-24 against prior corresponding period). 49 Annual Report 2024 • The CXO and CFO received LTVR awards in FY24 which have the same performance hurdles as those awarded in FY23. The awards have 50% of the award measured against an indexed relative total shareholder return (‘iTSR‘) target, measuring the Group’s TSR over the Measurement Period with the TSR of the ASX 300 Industrials Total Return Index. The remaining 50% of the award have an earnings per share growth (‘EPSG’) hurdle. As in FY23, the structure of the LTVR awards prioritises and rewards indexed relative total shareholder return (‘iTSR‘) growth, to give the executive team and the Board flexibility to adapt the Group’s strategy as the market evolves. The maximum reward will only be permitted under the awards where Temple & Webster has materially outperformed the market. Further details of these awards are set out in section 5.1 of this report. • Board and Committee fees increased by 5% in FY24. This is the first increase in Board fees since FY21. There were no awards made under the Temple & Webster Group Ltd NED Equity Plan (‘NED Equity Plan’) in FY24. FY24 Executive KMP and Board changes There were no changes to Executive KMP or the Board in FY24. Looking forward to FY25 • There will be no changes to the CEO’s remuneration in FY25. • After eight-and-a-half years in the CFO role, Mark Tayler has decided to move to a new, non-KMP executive role within Temple & Webster. Effective from 2 September 2024, Cameron Barnsley will join Temple & Webster in the CFO role. He is appointed on the same fixed remuneration package as Mr Tayler, but his target and stretch short- and long-term incentive opportunity will be 50% and 80% respectively. • The CXO will receive a 4.5% increase in fixed remuneration in FY25. Furthermore, the Board has also decided that the STVR target opportunity should be aligned between the CFO and CXO, so in FY25 the CXO’s target and stretch short- and long-term incentive opportunity will also be 50% and 80% respectively. • The Board has determined that the structure of the STVR and LTVR programs will be broadly similar to those programs run in FY24. The only change to the FY25 LTVR program will be to the calculation methodology for the TSR hurdled awards. For the FY25 awards, relative TSR vs the ASX 300 Industrials Index will be retained as a measure applying to 50% of the award. However, the Company’s TSR will be measured against the individual TSRs of the constituent companies in the Index (ranked on a percentile basis), rather than against the TSR of the Index itself. The Board has decided that the amended approach is more in line with market practice and allows the Group to more effectively measure its TSR against the individual companies in the comparator group (rather than the Index whose TSR is impacted by weighting towards the larger companies). • The FY25 Board fees will be tested by reference to appropriate comparable benchmark data in the next financial year. • As the Temple & Webster share price at the end of the FY22-24 performance period (ended 30 June 2024) was below the share price at the start of the period, the positive TSR gateway was not met and no portion of the FY22 LTVR award will vest. I hope the information in this year’s Remuneration report helps shareholders to understand how the Group manages remuneration. Belinda Rowe Chair, Nomination and Remuneration Committee 50 Temple & Webster Group Ltd Remuneration report (audited) 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 2024. 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 AASB 124 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 KMP, including roles and changes in roles. 2. Remuneration overview This section provides an overview of performance and reward for FY24. 3. Remuneration framework, strategy and governance This section provides details of the elements of the remuneration framework, including market positioning, changes to fixed remuneration, variable remuneration principles, and the terms of variable remuneration. 4. FY24 Executive Short-Term Variable Remuneration (‘STVR’) plan and outcomes This section outlines the key terms of the FY24 STVR Plan, the key metrics that apply to Executive KMPs under the STVR Plan and their STVR outcomes. 5. Executive Long-Term Variable Remuneration (‘LTVR’) plans and outcomes This section outlines the key terms of the FY24 LTVR Plan awards and key prior year equity awards. 6. Non-Executive Director remuneration This section outlines the Non-Executive Director fee policy, aggregate Board fees, Board and Committee fees. It also sets out any prior years’ equity awards to Non-Executive Directors. 7. Statutory tables and supporting 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. 51 Annual Report 2024 1. Persons covered by this report This report covers 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: Committees1 Name Role Appointed/ (Retired) Nomination and Remuneration Audit and Risk Management Non-Executive Directors Stephen Heath Independent Board Chair 15 March 2016 M M Conrad Yiu2 Deputy Chair, Non-Executive Director 6 October 2015 M M Belinda Rowe Independent Non-Executive Director 26 February 2021 C M Melinda Snowden Independent Non-Executive Director 1 June 2023 M C Executive KMP Mark Coulter2 Managing Director and Chief Executive Officer (‘CEO’) 22 April 2016 n/a n/a Adam McWhinney2 Customer Experience Officer (‘CXO’) 1 July 20173 n/a n/a Mark Tayler Chief Financial Officer (‘CFO’) 18 April 2016 n/a n/a 1. M = Member, C = Chair. 2. These individuals are considered co-founders of the Group and referred as ‘founder executives’ in this report. 3. Mr. McWhinney has been employed by the Group since 1 January 2012 and became a KMP of the Group on 1 July 2017. 52 Temple & Webster Group Ltd Remuneration report (audited) continued 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 FY24: Executive Remuneration Components The timeline below outlines how remuneration is delivered. Component Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Fixed remuneration Salary and statutory superannuation STVR 1 year performance period ▲ 2024 • Y1 STVR performance period commences • STVR performance tested • STVR award delivered in Q1, Y2 – 100% cash unless Board determines otherwise LTVR ● ■ 2024-2026 • Y1 LTVR performance period commences • Performance rights for Y1 LTVR granted in Q1, Y1 • LTVR service tested in Y1 • Y1-Y3 LTVR performance tested Two-year additional disposal restriction Once rights vest, participants have until 15 years from grant to exercise Y1 Y2 Y3 Y4 Performance rights granted Shares released Performance tested, and cash award paid Performance tested The structure outlined above applies to the CXO, CFO and non-KMP executives in the current financial year. The CEO does not participate in the STVR plan and received a separate award of premium-priced options in FY23 which are intended to cover the period to and including FY26. The terms of the CEO’s Options are discussed in section 5.2 and the terms of STVR and LTVR performance rights for other KMPs are discussed in section 4.1 and 5.1 respectively. The FY24 STVR outcomes for participating Executive KMP are set out in section 4.2 and LTVR outcomes of performance rights due for vesting in FY24 for participating Executive KMP are set out in section 5.2. 53 Annual Report 2024 2.2 Executive remuneration mix at target CEO and other executive KMPs total remuneration packages (including stretch target) are broken down into the following four elements. Executive KMP Remuneration Mix ■ Fixed remuneration – Cash ■ LTVR – Options ■ STVR – Cash ■ LTVR – Rights Other Executive KMP CEO 14% 0% 86% 65% 19% 16% The CEO, Mark Coulter, does not receive an annual LTVR award as he received a single award of options in FY23 designed to be his equity awards over a four-year term (FY23 to FY26). Accordingly, in calculating his FY24 remuneration mix, Mark Coulter’s LTVR component value was determined by pro-rating the value of his FY23 option award (as determined by an independent valuer), so that one-quarter of the value was attributed to FY24 (refer to section 5.2 for more details). 2.3 Group’s performance at-a-glance The following outlines the Group’s performance in FY24 in the context of the prior four years, which is intended to assist in demonstrating the link between performance, value creation for shareholders, and executive reward: FY end date Revenue $000s NPAT $000s Share price1 $ Change in share price $ Dividends2 $ Change in shareholder wealth3 Rolling 3-year annualised TSR4 % 30/06/2024 497,841 1,786 9.39 3.51 – 60% (5%) 30/06/2023 395,513 8,305 5.88 2.56 – 77% (2%) 30/06/2022 426,335 11,968 3.32 (7.47) – (69%) 35% 30/06/2021 326,344 13,954 10.79 4.48 – 71% 142% 30/06/2020 176,342 13,909 6.31 4.96 – 367% 227% 1. Share price at the end of the financial year. 2. Dividends paid during the financial year. 3. Share price change plus dividends on prior financial year. 4. Total shareholder return (‘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 a rolling three-year annualised share price growth. 54 Temple & Webster Group Ltd Remuneration report (audited) continued 3. Remuneration framework, strategy and governance 3.1 Executive remuneration – fixed remuneration, 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 remuneration, short-term variable remuneration and long-term variable remuneration. This structure applies to all Executive KMP and senior management, other than the CEO. Fixed remuneration Short-term variable remuneration Long-term variable remuneration Fixed remuneration comprises base salary, plus any other fixed elements such as superannuation, allowances, benefits, fixed equity and fringe benefits. Fixed remuneration 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 FY24 STVR will be paid in cash (unless determined otherwise by the Board). Performance is measured over the financial year with a combination of financial and non-financial goals for Executive KMP, both at a Group and Individual scorecard level with threshold, target and stretch levels. FY24 STVR goals were: Group Targets (80%) • Group revenue growth (30%) • EBITDA margin (30%) • Customer satisfaction (20%) • Employee engagement (20%) Individual targets tied to CEO’s assessment of performance against the Company’s leadership values and achievement of any special projects. (20%) Refer to section 4.1 for more details. Performance rights vesting after three years. The LTVR program aligns executives to shareholder interests through 50% of the award being tested against iTSR targets (indexed relative Total Shareholder Return) measured over a three-year Measurement period from FY24. This ensures executives are only rewarded by shareholder returns which must at least match the iTSR of the ASX 300 Industrials Index for any portion to vest (and beat this Index by 10% p.a. for all awards to vest). 50% of the award is aligned against Earnings Per Share Growth (‘EPSG’), a key internal financial metric of the Group. iTSR remains the primary measure in the LTVR scheme, with exceptional iTSR performance permitting full vesting of the award in certain instances. Any shares allocated after vesting are subject to an additional disposal restriction of two years after the Measurement period. Refer to section 5.1 for more details. 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%. 3.2 Benchmarking approach Executive KMP remuneration has been tested regularly by reference to appropriate independently sourced comparable benchmark data, and specific advice as may be appropriate from time to time. Two peer groups are used to benchmark Executive KMP and senior executives at Temple & Webster. A primary peer group consisting of Consumer Discretionary and Information Technology focused companies, with 15 above and 15 below the Company’s market capitalisation. A secondary peer group based on market capitalisation (using ASX-listed companies within 50-200% of Temple & Webster’s 12-month market capitalisation) is also used to provide further background and validation of remuneration packages. Benchmarks may be adjusted upwards or downwards for variations in role design compared to market benchmark roles, and individual remuneration may vary to reflect individual factors such as experience, qualifications and performance. The Board will continue to monitor market positioning to ensure that appropriate talent can be attracted, retained and aligned to the strategic needs of the business. More detail on the TRP is set out in section 7.1. 55 Annual Report 2024 3.3 Remuneration governance framework The Board takes an active role in the governance and oversight of the Group’s remuneration policies and practices. Approval of certain key remuneration practices is reserved for the Board, including appointing the CEO, and monitoring their performance and other key senior executives. In addition, the Board has final approval of the Group’s remuneration framework, including approving remuneration of the CEO, the remuneration policy and succession plans for the CEO. However, the Nomination and Remuneration Committee assist the Board in fulfilling its corporate governance and oversight responsibilities in terms of the remuneration structures, processes and annual remuneration cycle of the Board and its senior executives, including all Executive KMPs, as well as Group culture and employee engagement. The Nomination and Remuneration Committee has a formal Charter which outlines the roles and responsibilities of the Committee. This is available on the Group website (templeandwebstergroup.com.au). The Committee’s responsibilities include: • providing advice and recommendations to the Board with respect to the appointment and removal of directors and senior executives; • providing the Board with advice and recommendations regarding executive and senior executive remuneration policy; • reviewing and providing recommendations to the Board with respect to the remuneration packages of senior executives and executive directors; • providing advice to the Board with respect to Non-Executive Directors’ remuneration; • reviewing and providing recommendations to the Board with respect to incentive schemes; and • reviewing and providing recommendations to the Board on the Group’s remuneration, recruitment, retention and termination policies. The Group has a Securities Dealing Policy which outlines under what circumstances and when trading in the Group’s securities by KMP and other nominated employees may be permitted or prohibited. This is available on the Group website. The Group also has a Diversity, Equity and Inclusion Policy, which supports the Board and management in making sustainable and appropriate decisions around hiring, career development and remuneration. This is available on the Group website as well. 3.4 External remuneration consultants (‘ERC’) The External Remuneration Consultant Engagement Policy is intended to ensure the independence of any recommendation received regarding KMP remuneration. In addition to the requirements outlined in the Corporations Act, it requires the external remuneration consultant notify the Board if management contacts the external remuneration consultant on remuneration matters outside of interactions approved or supervised by the Board, such as the provision of factual information for benchmarking purposes. During FY24, the Board did not engage remuneration consultants to provide remuneration recommendations for any KMP. The Board engaged independent external remuneration consultants, KPMG, to provide executive remuneration benchmarking data to assist it in reviewing the Group’s FY24 executive remuneration packages to ensure these remain competitive to market. 56 Temple & Webster Group Ltd Remuneration report (audited) continued 4. FY24 Executive STVR Plan and outcomes 4.1 FY24 STVR Plan A description of the STVR structure applicable for FY24 is set out below. Term Detail Purpose To provide at-risk remuneration and incentives that reward 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. Measurement period The financial year of the Group ending 30 June 2024. Opportunity The target value for Executive KMP participating in the STVR was 30% of fixed remuneration, with a maximum stretch target of 50% of fixed remuneration. Outcome metrics and weightings The STVR was dependent on meeting Group and individual performance objectives. For FY24, the metrics were as follows: Group Targets – weighted at 80% of target opportunity. These Group Targets include: • revenue growth exceeding FY23 revenue – 30% weighting; • EBITDA margin – 30% weighting; • customer satisfaction – 20% weighting; and • employee engagement – 20% weighting. Individual Targets – weighted at 20% of target opportunity. These metrics were selected because they are viewed by the Board as the primary drivers of value creation for the business in FY24. Settlement Awards are determined following release of the audited financial statements 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 FY24 STVR in cash. Malus and clawback Should the Board determine that any portion of STVR is deferred, the deferral would be in the form of share rights and therefore subject to the malus and clawback clauses under the Group’s Rights plan (see further section 5.1). Board discretions 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. 57 Annual Report 2024 4.2 Executive KMP STVR plan – objectives and outcomes All Executive KMP, aside from the CEO, participated in the STVR Plan in FY24. Metric/measure Performance/comment Group targets (80% of total opportunity) Revenue growth exceeding market growth (30% weighting of Group target) Revenue growth is a critical metric when assessing the performance of the business. This measure tracks TPW’s revenue growth relative to FY23, with target performance set at 25% growth, and stretch requiring 35% growth. This reflects a change from the revenue metric used in FY23, which focused on market share growth (using the NAB Online Sales Index). The Group delivered a very strong result with revenue of $497.8 million, an improvement of 26% on the prior year. Due to the challenging nature of the STVR targets this result was judged at just above target. EBITDA margin (30% weighting of Group target) This measure tracks EBITDA margin with target set at 2% and stretch at 3%. EBITDA (pre-one-off costs) of 2.6% of revenue was in line with the Group’s stated guidance range for the year and between the target and stretch from the STI point of view. This result excludes one-off costs. The Board decided that EBITDA without this adjustment was more appropriate to use for STI calculation since it represented the underlying profitability of the Group in the current financial year. Customer satisfaction (20% weighting of Group target) Customer experience and satisfaction are critical to the success of the Group. This measure tracks customer satisfaction using Net Promoter Score (‘NPS’) scoring, with target NPS set at 65% and stretch at 70%. The Group set a challenging NPS threshold metric, reflecting the high standards required when measuring customer satisfaction. The Group achieved NPS result between the threshold and target. Employee engagement (20% weighting of Group target) The Group’s employees are one of its key assets and primary drivers of success. It is vitally important they are engaged as measured by Industry Employee Engagement Benchmarks. The FY24 result was just below target for the comparative group (being top quartile performance). The Group measures itself against other technology companies who typically have high employee engagement scores. The achieved result demonstrated the high level of employee engagement across the employee base. 58 Temple & Webster Group Ltd Remuneration report (audited) continued Metric/measure Performance/comment Individual targets (20% of total opportunity) The individual targets are determined by the CEO based on performance against the Temple & Webster executive leader values and the execution of any special projects agreed between the CXO or CFO and the CEO during FY24. The CXO’s personal targets were assessed against the Group’s leadership values framework. In FY24, the CXO was given an overall rating of ‘sets a new standard’, the highest rating available. This was based on his achievements both functionally through improvements in conversion rate, customer experience, AI and content; and culturally through his consistent display and role modelling of Temple & Webster values such as being supportive, creative and inclusive. The CFO’s personal targets were assessed against the Group’s leadership values framework. In FY24, the CFO was given an overall rating of ‘Consistently Exceeds Expectations’. This was based on his execution of key projects, including the implementation of a new investor relations strategy, a capital management framework and execution of margin optimisation and cost management programs. These scores included a ‘sets a new standard’ for his work on creating an inclusive and diverse finance team, fostering the next generation of finance team leader and empowerment of his team to execute key projects. The table below sets out the actual STVR outcomes as a percentage of their maximum STVR opportunity for FY24 and FY23. Executive KMP1 FY24 FY23 Adam McWhinney 67.2% 43.5% Mark Tayler 63.2% 42.6% 1. The CEO did not participate in the STVR Plan in either FY23 or FY24. The Board views the outcomes of remuneration for FY24 performance as appropriately aligned, given the Group and individual performance against annual targets, and progress towards strategic growth objectives made by the executive team, despite challenging economic circumstances. 59 Annual Report 2024 5. Executive LTVR plans and outcomes 5.1 Executive LTVR plan – Performance rights A description of the LTVR awards granted in FY24 to Executive KMP, aside from the CEO, under the Temple & Webster Group Ltd Rights Plan (‘the Plan’), is set out below. Term Detail Purpose To provide at-risk remuneration and incentives that reward 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. Measurement period Three years from 1 July 2023 to 30 June 2026. Opportunity The target value is 25% of fixed remuneration, with a maximum stretch of 200% of target, or 50% of fixed remuneration. 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 (‘VWAP’) following the release of the financial results for FY23. Performance metrics and weightings Performance rights granted in FY24 have two performance hurdles, each with a 50% weighting. 1. Performance rights with an indexed Total Shareholder Return (‘iTSR’) vesting condition (50% 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 TSR of the Group vs TSR of the ASX 300 Industrials Total Return Index Vesting % Stretch Index TSR + 10% TSR p.a. 100% Target Index TSR + 5% TSR p.a. 50% Threshold Index TSR 0% Below threshold