Announcement PDF Appendix 4E hipages Group Holdings Ltd ABN 67 644 430 839 Reporting period The year ended 30 June 2024 Previous reporting period The year ended 30 June 2023 Results for announcement to market 30 June 2024 A$’000 Change A$’000 Change % 30 June 2023 A$’000 Revenue Revenue from ordinary activities up 75,312 9,419 14% 65,893 Revenue from other activities down 501 (613) (55%) 1,114 Total revenue up 75,813 8,806 13% 67,007 Net profit/(loss) for the period attributable to members1 up 3,563 8,707 >100% (5,144) $ per share $ per share % $ per share 0.001 0.049 102% (0.048) Net tangible assets Net tangible asset backing per ordinary security 2 up Dividends No dividend will be paid for the year ended 30 June 2024 1. Net profit for the period attributable to members includes a non-recurring gain of $3.079 million, related to the disposal of equity-accounted investment for the year ended 30 June 2024. (30 June 2023: Net loss for the period attributable to members includes an impairment of $3.100 million, which is non-cash in nature and is related to the investment in the New Zealand Cash Generating Unit (CGU), Builderscrack). 2. Net tangible assets represents net assets less right-of-use assets, intangible assets and deferred tax assets. The calculation is based upon the weighted average number of shares on issue during the period. Review of operations A review of the Group’s operations during the year ended 30 June 2024 and the results of those operations are included in the 30 June 2024 Directors’ Report. Change in ownership of controlled entities and associated entities Controlled entities: There have been no changes in ownership of controlled entities during the current year ended 30 June 2024. Associated entity: PropTech Labs, an equity-accounted investment in which the Group held a 19.53% stake was disposed in full during November 2023 for a cash consideration of $8.400 million. Dividend reinvestment plans There are no dividend reinvestment plans in place. hipages Group Appendix 4E 2024 I Appendix 4E continued Additional Appendix 4E disclosures pursuant to ASX Listing Rule 4.3A Additional Appendix 4E disclosures can be found in the attached audited Consolidated Financial Report and the Directors’ Report for the year ended 30 June 2024. This report is based on the Consolidated Financial Report for the year ended 30 June 2024 which has been audited by PwC with the Independent Auditor’s Review Report included in the Annual Financial Report. II hipages Group Appendix 4E 2024 hipages Group Holdings Ltd ABN 67 644 430 839 Financial Report 2024 ii hipages Group Annual Financial Report 2024 Contents 2 Directors’ Report 53 Notes to the Consolidated Financial Statements 14 Remuneration Report 53 Section 1: Basis of preparation 46 Auditor’s Independence Declaration 54 Section 2: Business performance 47 Consolidated Financial Statements 63 Section 3: Working capital and operating assets 48 Consolidated Statement of Profit or Loss 76 Section 4: People 49 Consolidated Statement of Comprehensive Income 82 Section 5: Capital and financial risk management 50 Consolidated Statement of Financial Position 90 Section 6: Group structure 51 Consolidated Statement of Changes in Equity 96 Section 7: Other disclosures 52 Consolidated Statement of Cash Flows 100 Consolidated Entity Disclosure Statement 101 Directors’ Declaration 102 Independent Auditor’s Report iii Corporate Directory hipages Group Annual Financial Report 2024 1 Directors’ Report Board of Directors (from left to right): Kate Hill, Nicholas Gray, Inese Kingsmill, Roby Sharon-Zipser, Adir Shiffman and Kate Mills Directors The names of the Directors of hipages Group Holdings Ltd in office during the reporting period are set out on the following pages. Directors were in office for this entire period unless otherwise stated. 2 hipages Group Annual Financial Report 2024 The Directors of hipages Group Holdings Ltd present their report together with the Consolidated Financial Statements of hipages Group Holdings Ltd (referred to hereafter as hipages Group, the Company, the consolidated entity or the Group) consisting of hipages Group Holdings Ltd and the entities it controlled at the end of, or during, the year ended 30 June 2024 (FY24) and the Independent Auditor’s Report on the Group. Inese Kingsmill Robert (Roby) Sharon-Zipser B Bus MAICD B Comm GAICD Chair and Independent Non-Executive Director Co-founder, Chief Executive Officer and Executive Director Member of the Audit and Risk Committee and Remuneration and Nominations Committee Roby co-founded hipages in 2004 and has been a Director of the hipages Board since 2005. Date of appointment: 1 October 2020 Date of appointment: 18 September 2020 Experience and other directorships Experience and other directorships Over the course of a career spanning 25 years, Inese has earned a reputation as a growth-focused and customer orientated business leader, with leadership experience across a broad spectrum of accountabilities at Microsoft, Telstra and Virgin Australia. Roby commenced his career as a Senior Accountant, working with PwC and Allco Finance Group on clients from a broad range of industries. He subsequently founded his own boutique accounting firm Advanced Audit Solutions, offering audit, accounts payable and recovery services for large Australian corporate clients. Roby also provided a small business advisory service. Inese has been involved with and led major transformations across a range of scenarios including enterprisewide business restructuring, culture change, digital transformations, customer experience and design, brand re-launches and re-positioning as well as developing fit-for-purpose operating models. Roby holds a Bachelor of Commerce, and is a graduate member of the Australian Institute of Company Directors and a member of Chartered Accountants of Australia and New Zealand. Inese currently serves as a Non-Executive Director on the boards of Noble Oak Life Limited and Bigtincan Holdings Limited and is the Chair of the Board of Sonder Australia Pty Ltd. She is also Independent Chair of Sonder Holdings. hipages Group Annual Financial Report 2024 3 Directors’ Report continued Adir Shiffman Kate Hill Kate Mills MBBS, Medicine BSc (Hons) GAICD CA BA/LLB (ANU) Independent Non-Executive Director Independent Non-Executive Director Master of Laws (UNSW) Member of the Remuneration and Nominations Committee Chair of the Audit and Risk Committee Independent Non-Executive Director Chair of the Remuneration and Nominations Committee Member of the Audit and Risk Committee Date of appointment: 7 July 2023 Date of appointment: 25 August 2023 Date of appointment: 1 December 2022 Experience and other directorships Experience and other directorships Experience and other directorships Adir is an accomplished technology sector founder, investor, and the Executive Chairman of ASX-listed global athlete analytics business Catapult Sports (ASX: CAT). A registered medical practitioner with a particular interest in subscription software, e-commerce and health technology. He has advised many of Australia’s largest companies, startups and early-stage companies on their online strategy and execution. Kate is an accountant and public company director with over 30 years’ experience working with listed and private companies, including over 20 years as an audit partner with Deloitte in Australia. Kate has extensive audit and capital markets experience, including Initial Public Offerings, capital raising, governance and compliance. Kate held a variety of leadership roles within Deloitte including serving for a period on the Board of Partners of the Australian firm. Kate is a commercial lawyer with 30 years’ experience in practice and corporate roles, specialising in financial services and capital markets, public and private mergers and acquisitions, and corporate governance. She is a Partner at Gadens law firm, having previously been a Partner at King and Wood Mallesons. Adir holds a Bachelor of Medicine, Bachelor of Surgery from Monash University. Prior to becoming involved in the technology sector, he practised as a doctor. Kate is an Independent Non-Executive Director of ASX listed Count Limited, Artrya Limited and MedAdviser Limited, as well as Chair of UK-listed Seeing Machines Limited. Kate holds a Bachelor of Science (Hons) from Bristol University, is a member of the Institute of Chartered Accountants in Australia and New Zealand, and a graduate of the Australian Institute of Company Directors. 4 hipages Group Annual Financial Report 2024 She has also been general counsel at iSelect Ltd, government body FASEA, senior in-house counsel to ASX (market and listing rules enforcement) and was a senior policy adviser to the Federal Treasury, including as Head of the ASIC Enforcement Review Taskforce, and development of a new corporate collective investment vehicle. Kate is currently the Chair of the Board of Biennale of Sydney Ltd. Kate holds a Master of International Law from the University of New South Wales and a Bachelor of Arts from the Australian National University. Nicholas Gray Directors’ resignation Principal activities LLB B Comm (UNSW) Chris Knoblanche and Stacey Brown both retired as Directors on 25 August 2023 after making a significant contribution to the Group during their tenure. hipages Group is Australia and New Zealand’s (ANZ’s) #1 platform to connect homeowners and tradies. Through its platforms hipages (Australia) and hipages New Zealand (Builderscrack) more than 4.8 million Australians and New Zealanders have used hipages Group to change the way they find, hire and manage trusted tradies, providing more work to over 36,700 subscribed trade businesses. Non-Independent Non-Executive Director Member of the Remuneration and Nominations Committee Nicholas is a Nominee Director for substantial shareholder News Corp Australia. Date of appointment: 2 October 2020 Company Secretaries Experience and other directorships Kylie Quinlivan Nicholas currently serves as Managing Director and Publisher of The Australian and Prestige and Managing Director of Tech Platform Partnerships at News Corp Australia (NCA). Past roles at NCA include CEO of The Australian, MD of Vogue, MD of Subscriptions and Director of Transformation. Bachelor of Commerce-Law (Hons) Master of Laws He is a Director (and former Chair) of ThinkNewsBrands and a Non-Executive Director of the UNSW Foundation. Nicholas has prior experience in senior finance, sales and strategy roles at nine digital (then known as ninemsn) and Lion Co, as well as in investment banking at Citi and Macquarie Bank. Nicholas has a Bachelor of Laws and a Bachelor of Commerce (Accounting) from the University of New South Wales. Kylie joined hipages as General Counsel and Company Secretary on 11 October 2021. Kylie is a top tier trained corporate lawyer with over 17 years’ experience in public and private M&A, fundraising and corporate governance. This is her second role as General Counsel and Company Secretary of an ASX-listed Company. Kylie holds a Bachelor of Commerce/Law (Hons) and a Master of Laws from the University of Sydney. The Group has continued its strategic evolution from marketplace to platform with the integration of the job management solution ‘tradiecore’ in April 2024. Lucy Thompson Bachelor of Science in Medical Science and Juris Doctor Lucy joined hipages as Legal Counsel on 31 January 2022 and was appointed as Assistant Company Secretary on 22 December 2022. Lucy holds a Bachelor of Science in Medical Science and a Juris Doctor from the University of Technology Sydney. She has a certificate in Governance Practice from the Governance Institute of Australia. hipages Group Annual Financial Report 2024 5 Directors’ Report continued Operating and financial review For the 12 months ended 30 June 2024, hipages Group delivered continued growth in its key financial and operating metrics. A reconciliation of reported results in the Financial Statements to non-IFRS (International Financial Reporting Standards) numbers in the Directors’ Report is provided below.1 Result overview 30 June 2024 $’000 30 June 2023 $’000 Change % Revenue from ordinary activities 75,312 65,893 14% Revenue from other activities 501 1,114 (55%) Total revenue 75,813 67,007 13% Statutory EBITDA2 16,756 9,424 78% – 3,100 (100%) (369) (369) – Non-recurring remuneration – 130 (100%) EBITDA before significant items 16,387 12,285 33% EBITDA margin 22% 18% 4 ppt Statutory net profit/(loss) after tax 3,563 (5,144) 169% Goodwill impairment of New Zealand subsidiary (Builderscrack) – 3,100 (100%) Non-recurring gain on disposal of equity-accounted investment, net of tax (3,079) – 100% (369) (369) – – 130 (100%) 115 (2,283) 105% Net cash inflows from operating activities 19,310 15,697 23% Cash and cash equivalents 20,116 8,540 136% Cash and cash equivalents and funds on deposit 21,266 10,727 98% Summary of Group performance Revenue Add back items which are one-off in nature: Goodwill impairment of New Zealand subsidiary (Builderscrack) Write back of deferred consideration related to historical acquisition of New Zealand subsidiary (Builderscrack) Add back items which are one-off in nature: Write back of deferred consideration related to historical acquisition of New Zealand subsidiary (Builderscrack) Non-recurring remuneration Net profit/(loss) after tax, excluding items one-off in nature 1. The hipages financial report complies with Australian Accounting Standards and International Financial Reporting Standards. The statutory results have been adjusted for one-off items on the basis that management believes this reflects a more meaningful measure of the Group’s underlying performance. The underlying (non-IFRS) EBITDA before significant items is unaudited but is derived from the audited financial statements by removing the impact of certain one-off items. 2. EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation. 6 hipages Group Annual Financial Report 2024 Operating and financial review continued Key Operational Metrics 30 June 2024 30 June 2023 Change (%) MRR ($m) 6.44 5.72 13% Subscription tradies (000’s) 36.70 35.70 3% ARPU ($) 2,079 1,872 11% Key operational highlights Key highlights3 include: • Record tradie activity and proactive marketplace management delivering double digit revenue growth, positive NPAT and free cash flow in FY24; • Revenue from ordinary activities up 14% to $75.312 million; • Recurring revenue up 15% to $72.089 million, comprising 95% of total revenue; • MRR4 up 13% to $6.438 million at June 2024, fuelled by yield uplift in the context of strong tradie demand; • EBITDA before significant items up 33% to $16.387 million, reflecting an EBITDA margin of 22%, up four percentage points; • Subscription tradies up 3% to 36.7k5; • ARPU6 up 11% to $2,079, with hipages Australia up 11% to $2,199; • Successful launch of hipages tradiecore platform during April 2024 combining lead generation and job management into a single application for tradies; and • Free cash flow inflection point achieved with the Group generating $2.144 million free cash flow for the full year bolstering its financial position with $21.266 million cash and funds on deposit with no debt at period end. FY24 performance hipages Group ended a very successful FY24 while it continues to benefit from the current macroeconomic environment, driving increased demand from tradies using the hipages platform to connect to jobs posted by homeowners. Homeowners, in turn, are benefitting from the increased engagement and competition for those jobs. The Group’s strong key metrics and other lead indicators clearly show how the Group benefits from softer economic activity. The financial year reflected continued pressure on homeowners as fewer jobs increased the demand for the platform amongst tradies as they looked to connect to quality jobs. The marketplace continued to deliver high value for tradies and homeowners which translated into healthy revenue growth over both halves as the Group increased yields through pricing initiatives across both new and existing tradie cohorts, whilst maintaining the marketplace momentum. Revenue growth was strong over the financial year as MRR continued its growth trajectory and closed the year at $6.438 million, up 13% on the pcp. The total revenue for FY24 was up 13% to $75.813 million, with operating revenue up 14% to $75.312 million, while recurring revenue was up 15% to $72.089 million, comprising a very pleasing 95% of total revenue. Demand for the Group’s services from new and returning tradies remained robust, with subscription tradies growing by 3% to 36,700, as tradies continue to join at record yields and ascend to higher-priced packages. FY24 saw continued strong ARPU growth of 11% to $2,079, or up 11% to $2,199 for the core hipages business in Australia, supported by new business yields expanding 4% yoy, including increased subscription prices and dynamic lead pricing driving increased credit usage and ascensions to higher tiers. 3. A comparison refers to the prior corresponding period (pcp) unless otherwise stated. 4. MRR: Monthly Recurring Revenue at 30 June 2024 (exclusive of GST). 5. Subscription tradies includes 3,644 New Zealand paying tradies of hipages New Zealand (Builderscrack). 6. Average Annual Revenue Per Unit (Tradie ARPU) is the annual operating revenue (total revenue from ordinary activities) divided by the average of the opening and closing number of total hipages tradies and paying Builderscrack tradies for the period. hipages Group ARPU of $2,079 is the blended result of hipages’ ARPU of $2,199 and Builderscrack’s ARPU of $964. hipages Group Annual Financial Report 2024 7 Directors’ Report continued FY24 performance continued Subdued homeowner demand in the current economic environment resulted in 1.3 million jobs, down 6% vs. the pcp. However, pleasingly the number of tradie-homeowner connections grew 3% vs. the pcp to a record 2.711 million connections. This is a direct reflection of tradies’ increased activity in the marketplace, and resulting in an exceptional homeowner experience, with 86% of jobs being connected with a tradie in H2. EBITDA before significant items increased by 33% to $16.387 million, with marketing efficiencies, disciplined expense management and enhanced operating leverage driving the EBITDA margin up 4 percentage points to a very healthy 22%. The Group’s efficient marketing strategy delivered a two-percentage point improvement in marketing expense as a percentage of revenue, with 78% of jobs coming from unpaid channels and 73% of jobs from repeat homeowners. The Group reported a full year net profit after tax of $3.563 million as it benefitted from the sale of its equity-accounted investment in PropTech Labs, realising an overall gain of $3.079 million in the financial year. Adjusting for items of a one-off nature, the Group generated a net profit after tax of $0.115 million compared to a net loss after tax of $2.283 million in the previous year. Importantly, the Group was cash flow positive for the full year, generating free cash flow of $2.144 million, compared to a negative free cash flow of $2.790 million in the previous year. FY24 was an inflection point for the Group in cash generation and a very important milestone as it bolstered its cash and funds on deposit to $21.266 million, setting a solid foundation to execute on its long-term strategy. Executing the strategy While the current macroeconomic environment is favourable for the hipages Group business model in the near term, the Group has evolved its strategy to a single tradie platform to reduce its exposure to the economic cycle and open up new opportunities for growth. The Group reached another important milestone in its evolution from a pure marketplace business to a full-service tradie platform by launching the all-in-one hipages tradiecore application during April 2024 to help tradies run better businesses. This brings together lead generation and job management features into one easy-to-use application for tradies and represents an Australian first. From April 2024, all new tradie businesses that register with hipages Australia are enrolled into the single tradie platform where they will have access to all lead and job management tools in one single application. The new single tradie platform combines all the features of job lead claiming, quoting, scheduling, invoicing, messaging, payment acceptance and accounting integration. This enables tradies to complete an entire job, from lead claim to completion and payment in one simple-to-use interface. During H2 FY25, the Group will start migrating existing tradie businesses into the new platform as they reach their contract renewal dates, a process the Company expects to complete during FY26. This represents a significant opportunity to provide existing tradies with value-added services, as well as attracting new tradies who don’t currently use hipages for lead generation. hipages tradiecore is expected to deliver significantly enhanced tradie retention and tradie lifetime value by offering a range of valueadded services to drive future revenue growth opportunities. Over time, the rich data received from hipages tradiecore will provide powerful insights to further enhance the user experience for tradies, as well as identifying opportunities for new products and services for homeowners to support further future growth. hipages New Zealand (trading as Builderscrack) experienced a marked improvement in trading performance compared to the previous year despite the continued weak economic environment. A key contributing factor of the improved performance resulted from the move to a hybrid subscription model comprising a combination of a small monthly fee and success fees. This evolution is in line with the strategy to move towards a full subscription model similar to hipages Australia. hipages New Zealand is progressing well with this transition and has introduced its first subscription only contracts during June 2024 for all new tradies, and will start migrating existing tradies onto the full subscription model during FY25. 8 hipages Group Annual Financial Report 2024 Net debt/Net cash The Group reached a milestone by achieving positive free cash flow for the year and as a result reported strong positive statutory operating cash flow of $19.310 million (30 June 2023: $15.697 million). Cash outflow from investing activities reduced to $5.290 million (30 June 2023: $15.503 million) driven mainly by the proceeds of $8.400 million following the sale of PropTech Labs as well as the release of a $1.037 million bank guarantee related to a property lease. hipages closed 30 June 2024 with cash and funds on deposit of $21.266 million (30 June 2023: $10.727 million) and no debt. FY25 outlook The Group’s outlook for FY25 is positive, with the core marketplace business carrying strong trading momentum and the recently launched single tradie platform presenting incremental growth opportunities. The Group has historically benefitted from its countercyclical model during periods of softer homeowner demand and stronger competition among tradies, which we anticipate will continue into FY25. With the launch of the single tradie platform, the Company is widening its value proposition to servicing tradies beyond just job lead generation, with the aim of reducing the Company’s exposure to market cycles. Having delivered positive net cash flow for the full year, hipages Group has reached an inflexion point and is well positioned for continued profitable growth. Our FY25 outlook should be read together with the material business risks in the following table. Material business risks Risk categories Key business risks and impact Mitigation and monitoring strategies Platform performance Failure to attract new tradies and/or failure to attract new tradies at expected yields • Investment in hipages brand and marketing initiatives to keep hipages top-of-mind for tradies • Development and optimisation of hipages’ sales teams to convert tradies’ interest • hipages has undertaken significant investment to increase value for our tradies through job management features and partnerships • Data driven initiatives focus our feature enhancements on what our tradies really want • Invest in brand and marketing activities like SEO to drive homeowner jobs • Tactically reallocate performance marketing spend to drive more job volumes when, and where, required If hipages is unable to attract new tradies to the platform and/or is unable to attract new tradies at the yields hipages currently expects, this may adversely impact hipages’ financial performance and growth. Failure to retain tradies If tradies are not retained on the hipages platform, this may adversely impact hipages’ financial performance and growth. Material reduction in jobs If hipages has a material reduction in the number of jobs posted by homeowners on the platform, including as a result of macroeconomic conditions, then the hipages marketplace may become imbalanced affecting tradies’ experience. Whilst indirect, this may have an adverse impact on hipages’ financial performance and growth. hipages Group Annual Financial Report 2024 9 Directors’ Report continued Material business risks continued Risk categories Key business risks and impact Mitigation and monitoring strategies Failure of the single tradie platform to drive yield and retention benefits • hipages continues to invest in job management features to provide a seamless end-to-end experience for tradies • Continued investment in technology to enhance the platform for long-term growth • Teams experiment with and incorporate new technology, such as AI, to optimise existing processes • The Company’s security program applies a risk-based approach to tackling current and emerging cyber security threats and vulnerabilities • Regular assessment of cyber security controls, monitoring of third-party providers, targeted internal and external penetration testing and externally facilitated tabletop exercises • Subscription model provides recurring revenue which helps smooth volatility • Countercyclicality of model means softer homeowner demand may balance the marketplace and increases the importance of the platform for tradies to source jobs • Reminding tradies that hipages provides a high ROI channel for tradies to find work in a lower demand environment, making it more attractive If tradies are not willing to migrate to, and actively engage with, the new single tradie platform – hipages tradiecore: lead generation and job management in one app; this may adversely impact the Company’s growth. Technology and data Technology hipages technology risks are threefold: outages, technology debt, and third party technology threats. If hipages technology experiences downtime or systems failures for a prolonged period, the Company may not be able to provide its services and this may have an adverse impact on financial performance. If hipages does not invest appropriately in its technology, its ability to be agile, innovative and competitive can be hindered by technology debt. Third party technology threats, such as artificial intelligence, may disrupt or cause hipages product obsolescence. Cybersecurity and data protection Whilst hipages has systems in place to secure its data, cyberattacks could compromise or breach these safeguards. Macroeconomic deterioration Significant deterioration in macroeconomic conditions A significant deterioration in macroeconomic conditions may cause: • softer homeowner demand resulting in a reduction of jobs on the platform; and/or • tradies to reduce marketing spend, resulting in the platform attracting fewer new tradies and retaining less of its existing tradie base. 10 hipages Group Annual Financial Report 2024 Changes in the state of affairs There were no significant changes in the state of affairs during the year ended 30 June 2024. Environmental regulations and climate change The Group’s operations are not subject to any significant Commonwealth or State environmental regulations or laws. The Group is aware of the general risks associated with climate change and continues to be committed to operating sustainably. hipages Group will provide an Environmental Social Governance (ESG) snapshot in the 2024 Annual Report. Corporate governance statement The Board is committed to effective corporate governance. The Board has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th edition) published by the ASX Corporate Governance Council. A description of current corporate governance practices is set out in the Group’s Corporate Governance Statement which can be viewed at https://hipagesgroup.com.au/investor-centre/corporate-governance/. Dividends No dividend has been proposed or paid during the year ended 30 June 2024 (30 June 2023: nil). Directors’ meetings Remuneration and Nominations Committee meetings Audit and Risk Committee meetings Board meetings Eligible Attended Eligible Attended Eligible Attended Inese Kingsmill 10 10 4 4 4 4 Roby Sharon-Zipser 10 10 4 4 3 3 Adir Shiffman 10 8 – – 4 4 Kate Hill 8 8 3 3 – – Kate Mills 10 8 4 4 4 4 Nicholas Gray 10 9 – 2 4 4 Stacey Brown 2 2 1 1 – – Chris Knoblanche 2 2 1 1 – – Director hipages Group Annual Financial Report 2024 11 Directors’ Report continued Directors’ interest in shares and share rights Shares held at reporting date Rights held at reporting date Shares held at r