Annual report
Page 1
Nick Scali Limited Appendix 4E Preliminary final report 1. Company details Name of entity ABN Current reporting period Nick Scali Limited 82 000 403 896 Year ended 30 June 2026 Prior corresponding period Year ended 30 June 2025 nickscali LIMITED 2. Results for announcement to the market Statutory results compared to the prior corresponding period Statutory results Reporting Previous Increase / % period period decrease $ ' 000 $ ' 000 Revenue from ordinary activities Increase 4.3 516,704 495,283 Profit from ordinary activities after tax attributable to the owners of Nick Scali Limited Increase 31.2 75,678 57,676 Profit for the year attributable to the owners of Nick Scali Limited Increase 31.2 75,678 57,676 In the prior year there were adjustments to exclude the impact in FY25 of the restructuring costs incurred since the acquisition of Anglia Home Furnishings Ltd ( $ 2,390,000 , no tax impact ) and additional costs incurred from the failure of a freight forwarder in ANZ ( $ 2,760,000 , net of tax underlying profit impact $ 1,932,000 ) . Reporting Previous Increase / % period period decrease Revenue from ordinary activities Increase 4.3 $ ' 000 516,704 $ ' 000 495,283 Underlying profit from ordinary activities after tax attributable to the owners of Nick Scali Limited Increase 22.1 75,678 61,998 Underlying profit for the year attributable to the owners of Nick Scali Limited Increase 22.1 75,678 61,998 Refer to the Operating and Financial review in the Directors ' Report for discussion of the results . Reporting Previous Earnings per share Basic earnings per share Increase / decrease % period cents period cents Increase 31.1 88.5 67.5 Diluted earnings per share Increase 31.1 88.5 67.5 Amount per Franked amount per Dividends security ( Cents ) Final dividend for the year ended 30 June 2025 paid on 28 October 2025 33.0 security ( % ) 100.0 Interim dividend for the year ended 30 June 2026 paid on 24 March 2026 On 7 August 2026 the directors declared a fully franked final dividend of 39 cents per ordinary share with a record date of 1 October 2026 to be paid on 22 October 2026 . 39.0 100.0
Page 2
Nick Scali Limited Appendix 4E Preliminary final report 3.-7. Accompanying financial statements Statements of comprehensive income, financial position, cash flows and changes in equity, together with notes to the statements and details of individual and total dividends are included in the Annual Report which accompanies this report. 8. Dividend reinvestment plans Nick Scali Limited has not implemented a dividend reinvestment plan. 9. Net tangible assets Reporting period Previous period Total net assets ($’000) 279,771 266,678 Intangibles ($’000) (163,558) (166,378) Net tangible assets ($’000) 116,213 100,300 Ordinary shares on issue 85,530,699 85,530,699 Net tangible assets per ordinary share (cents) 135.87 117.27 The net tangible assets include right-of-use assets as defined by AASB16 for the reporting and previous period. 10. Entities over which control has been gained or lost during the period Nick Scali Limited did not gain or lose control over any entities during the year ended 30 June 2026. 11. Details of associates and joint ventures Nick Scali Limited has no associates or joint ventures. 12. Other significant information For further information on the Company’s financial performance and financial position, please refer to the Company’s Investor Presentation and Results Announcement which accompany this report. 13. Foreign entities Nick Scali Limited is an Australian entity and has complied with International Financial Reporting Standards in compiling this report. 14. Commentary For commentary on the Company’s results, please refer to the Operating and Financial Review section of Directors’ Report, in the Annual Report accompanying this report and the Company’s Investor Presentation and Results Announcement which are available on the ASX announcements platform and the Company’s website. 15-17. Audit opinion This report is based on the Company’s Annual Report for the year ended 30 June 202 6 which has been audited and includes an unqualified audit opinion. Additional information For additional information required under ASX Listing Rule 4.3A, please refer to the attached Annual Report for the year ended 30 June 2026 of Nick Scali Limited and its controlled entities.
Page 3
1 Nick Scali Limited ABN 82 000 403 896 Annual Report Year ended 30 June 2026
Page 4
Nick Scali Limited Annual report for the year ended 30 June 2026 Contents 2 Contents Corporate Directory 3 Directors Report 4 Auditor’s Independence Declaration 20 Consolidated statement of comprehensive income 21 Consolidated statement of financial position 22 Consolidated statement of changes in equity 23 Consolidated statement of cashflows 24 Notes to the consolidated financial statements 25 Note 1. Basis of preparation 25 Note 2. Segment information 26 Note 3. Revenue and other income 27 Note 4. Expenses 27 Note 5. Current and deferred tax 27 Note 6. Earnings per share 29 Note 7. Dividends 29 Note 8. Reconciliation of profit after income tax to net cash from operating activities 30 Note 9. Cash and cash equivalents and Term Deposits 30 Note 10. Receivables 30 Note 11. Inventories 31 Note 12. Other financial assets and liabilities 31 Note 13. Property, plant and equipment 32 Note 14. Leases 33 Note 15. Intangibles 34 Note 16. Borrowings 36 Note 17. Payables 37 Note 18. Deferred revenue 38 Note 19. Provisions 38 Note 20. Issued capital 39 Note 21. Reserves 39 Note 22 Financing facilities 40 Note 23. Financial instruments 40 Note 24. Contingent liabilities 43 Note 25. Commitments 43 Note 26. Employees 43 Note 27. Key management personnel 44 Note 28. Related party transactions 44 Note 29. Share-based payments 44 Note 30. Parent entity information 45 Note 31. Controlled entities 46 Note 32. Significant events after the reporting period 49 Note 33. Remuneration of auditors 49 Note 34. Summary of other material accounting policies 49 Directors’ declaration 52 Independent auditor’s report to the members of Nick Scali Limited 53 Sustainability Report 60 Independent auditor’s report to the members of Nick Scali Limited 70 Shareholder information 73
Page 5
Nick Scali Limited Annual report for the year ended 30 June 2026 Corporate Directory 3 Corporate Directory Directors Anthony Scali William Koeck Carole Molyneux Kathy Parsons Niran Peiris (Executive Chair and Chief Executive Officer) (Lead Independent Non-Executive Director and Deputy Chair) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) Company Secretary Keith Toms Elizabeth Spooner Registered Office Level 7, Triniti II 39 Delhi Road North Ryde NSW 2113 Telephone: 02 9748 4000 Share Register MUFG Corporate Markets (AU) Limited Liberty Place Level 41 161 Castlereagh Street Sydney NSW 2000 Auditor KPMG Level 38, Tower Three International Towers 300 Barangaroo Avenue Sydney NSW 2000 Stock Exchange Listing Nick Scali Limited shares are listed on the Australian Securities Exchange (ASX code: NCK) Website www.nickscali.com.au
Page 6
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 4 Directors Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘Group’) consisting of Nick Scali Limited (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 2026. Directors The names and details of the Company's directors (referred to hereafter as the ‘Board’) in office at any time during the financial year or until the date of this report are as follows. Directors were in office for this entire year unless otherwise stated. John Ingram - retired 29 October 2025 Carole Molyneux William Koeck Kathy Parsons Niran Peiris – appointed 2 September 2025 Anthony Scali Principal activities The principal activities of the Group during the year were the sourcing and retailing of household furniture and related accessories. No change in the nature of these activities occurred during the year. Dividends Dividends paid during the year were as follows: 2026 $’000 2025 $’000 Final franked dividend for 30 June 2025 33.0 cents (2024: 33.0 cents) 28,225 28,126 Interim franked dividend for 30 June 2026: 39.0 cents (2025: 30.0 cents) 33,357 25,659 61,582 53,785 In addition to the above dividend, since the end of the financial year directors have declared a fully franked final dividend of 39 cents per fully paid ordinary share to be paid on 22 October 2026 out of retained profits at 30 June 2026. Operating and financial review Nick Scali Limited is a furniture retailer operating in Australia, New Zealand and the United Kingdom. Group operating results 2026 $’000 2025 $’000 % change Revenue 516,704 495,283 4.3% Gross Margin % 65.6 63.5 2.1% Net profit after tax (NPAT) 75,678 57,676 31.2% Underlying NPAT 75,678 61,998 22.1% Earnings per share (EPS) (cents) 88.5 67.5 31.1% The net profit after tax result for the group increased against the prior year net profit after tax by 31. 2% at $75 .7m. When comparing the current year to the prior year underlying net profit after tax it was up 22.1%. During the previous year the underlying net profit was adjusted for one-off expenses for restructuring costs incurred since the acquisition of Anglia Home Furnishings Ltd ($2 .4m) and additional costs incurred from the failure of a freight forwarder in ANZ of ($2.8m), net of tax underlying profit impact $1.9m.
Page 7
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 5 Group operating results (continued) Revenue Revenue for the Group for the financial year was $516.7m up 4.3% on prior year. Australian and New Zealand (“ANZ”) FY26 revenue of $476.7m is higher than FY25 revenue of $453.5m by 5.1%. UK Revenue was $40.0m 4.3% lower than the previous year of $41.8m. UK Revenue was impacted by the continued refurbishment of the showroom network in the first half with FY25 revenue benefiting from the delivery of the acquired order bank. Gross margin Group gross margin of 65.6 % for FY2 6 increased 2.1% compared to FY25 . The ANZ gross margin was 6 6.0% up 1.0% compared to FY25. In the UK significant margin improvement continues with FY26 margin of 60.3% compared to 47.1% reported in FY25. This margin improvement reflects the roll out of Nick Scali products in the refurbished showrooms. Operating expenses On an underlying basis Group operating costs increased $ 5.0m up 3.0% compared to FY25. The increase in ANZ underlying operating costs was $5.0m which was predominately an increase in employee and marketing costs. The UK operating costs were flat year on year with some increases in marketing and logistics costs offset by savings in employment. Cashflow and capital management The Group maintained a strong working capital position throughout the year with closing cash and bank deposits at 30 June 2026 of $106.6m and net cash and bank deposits of $34.9m. Operating cashflows of $154.4m increased by 33.7% from the prior year ($115.5m) primarily driven by higher profitability and favourable working capital movements. During the year the group invested $21.9m in the purchase of property plant and equipment which includes the acquisition of the Nick Scali Campbelltown Store for $7.9m, the purchase of land in SA for $3.8m to construct a DC, $4.2m being used to refurbish the AU store network and $4.0m being used to refurbish the UK store network. In the current year $61.6m was returned to shareholders in dividend payments. Showroom network ANZ UK Group Nick Scali Furniture (No.) 64 16 80 Plush (No.) 48 - 48 Fabb Furniture (No.) - 2 2 Total (No.) 112 18 130 During the year, the Group opened a Nick Scali showroom in Ballarat, Victoria and Plush-Think Sofas showrooms in Bendigo, Victoria, Tuggerah, NSW and Cannington, WA. Two Nick Scali showrooms were closed in Brisbane Airport, Qld and Toowoomba, Qld. In the UK, 16 showrooms have now been refurbished and converted into Nick Scali Furniture stores and two showrooms that were shared concessionary stores were closed. A UK warehouse commenced operations in June 2026. People The Group has a strong focus on attracting, engaging, developing, and retaining top talent to ensure it remains a desirable employer and maximises its potential to deliver growth. Investment in training and leadership development ensures employees are equipped to deliver in their varied roles, and best practice short and long-term incentives are in place to reward exceptional performance. To deliver maximum shareholder value, and to maintain investor and consumer confidence, the Group is committed to achieving high levels of integrity and ethical standards across all areas of the business . The Group has a Code of Conduct which sets out the requirement for honesty, care, fair dealing, and integrity in the conduct of all business activities.
Page 8
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 6 The Group promotes workplace diversity and has zero tolerance for discrimination and harassment and ensures that Workplace Health and Safety is a priority for all employees, along with that of customers and suppliers. Business Risk The business, assets and operations of the group are subject to certain risk factors that have the potential to influence future operating and financial performance. The Group maintains a Risk Management Framework to support the identification, assessment, management, monitoring and reporting of such risks. Set out below are the key risks to future operating and financial performance the Group has identified together with the Group’s risk management approach for these risks. This is not an exhaustive list of all actual or potential risks which may affect the Group. Risk Description Risk Management Approach External economic conditions A downturn in economic conditions may affect consumer demand for our products as our products are frequently discretionary purchase items for consumers. The group proactively monitors key macroeconomic indicators and market sentiment to anticipate changes in consumer demand. A strong balance sheet and significant available liquidity provide financial flexibility to withstand cyclical pressures. Marketing activity and management of retail team performance can partially mitigate. Where possible the cost base to support reduced volumes is adjusted. Additionally, economic slowdowns may present strategic opportunities, including the ability to secure prime store locations on acceptable lease terms. Acquisitions and integration Acquisitions may not deliver projected benefits or value, and integrations may not be successful, resulting in interruptions to the achievement of business strategy. The Group identifies and actively manages integration risks, including where appropriate appointing additional leadership resources to assist with the management and delivery of the acquisition business case and delivery of integration programmes. The Group regularly reports specific acquisition risks and the performance of the new business compared to the acquisition strategy to the Board. Cyber Security External cyber security threats to the group’s IT systems and data, including personal information, could lead to system failures, loss of control or data breaches. These incidents may result in significant reputational, financial, and regulatory implications for the Group. The group seeks to reduce cyber security risks through initiatives such as ongoing awareness training, phishing simulation, continuous software and hardware upgrades and active monitoring of threats. Periodic cyber security audits are undertaken which include penetration testing. The approach focuses on both traditional threats and evolving threats driven by the growth and utilisation of Artificial Intelligence (AI) both internally and externally. These initiatives and outcomes are regularly reported to the Audit and Risk Committee of the Board. Technology, data availability, and integrity A failure or disruption of information technology services (including infrastructure, hardware, software, digital platforms) and/or in the availability and integrity of data, could have a material adverse impact on the Group’s reputation, operations, and financial performance. The Group has experienced IT executive leadership. Where possible additional technical resources are engaged to mitigate key person risk. Key operating systems have business continuity restoration plans. The Group uses effective change control habits by evaluating, approving, and documenting modifications to minimise risks and maintain system and organisational stability. The Audit and Risk Committee of the Board has ongoing oversight of technology risk.
Page 9
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 7 Management Succession The group has executives considered key to the success of the Group by its stakeholders. A failure to adequately plan for their succession may adversely impact the groups financial and operational performance. Competitive remuneration strategies have been implemented and succession plans and retention activities and outcomes are regularly reviewed by the Remuneration and Human Resources Committee of the Board and the Board. Workplace Health and Safety Work, health, and safety risks could result in physical injury to employees or others, damage to property, damage to reputation and involve regulatory breach. The group has an ongoing programme to embed a safety culture across the business, including policies, procedures, reporting training and education. The Board receives regular reports of any incident resulting in first aid or lost time to injury. Climate change During the year, the Company adopted the Australian Sustainability Reporting Standards (AASB S2) and has prepared its inaugural Sustainability Report in accordance with these requirements. Outlook Australia and New Zealand For the first 5 weeks of trading in FY27, written sales orders were flat when compared to the same period the previous year cycling off high single digit growth. The four new stores opened during FY26 and the further two in July, are expected to contribute positively to FY27 earnings. A further 4 stores are expected to be opened during FY27, supporting the Group’s continued growth strategy. United Kingdom The positive momentum in the UK continued into FY27, with written sales orders for the first 5 weeks increasing 35% on the prior corresponding period. The Group expects to open one new store in the UK in October and is in negotiations on a number of other locations as we continue to expand our presence in this important growth market. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Company during the year. Matters subsequent to the end of the financial year The company will complete the acquisition of a retail property in Richmond, Victoria in August 2026 for $22m which we expect to be debt funded. The Company declared a dividend on 7 August 2026. No other matter or circumstance has arisen since 30 June 2026 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Likely developments and expected results of operations Refer to the Operating and financial review on page 4.
Page 10
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 8 Environmental regulation The Company is not subject to any significant environmental regulation under Australian Commonwealth or State law. The Directors are not aware of any particular or significant environmental issues which have been raised in relation to the Group’s operations during the financial year. Information on directors Name John Ingram (retired 29 October 2025) Title Independent Non-Executive Chair Qualifications AM, FAICD Experience and expertise John was appointed to the Board as non -executive Chair in April 2004 and retired 29 October 2025. He was formerly Managing Director of Crane Group Limited. Other current directorships Nil Former directorships Non-executive Chair of Peter Warren Automotive Holdings Limited (ASX: PWR) Special responsibilities Member of the Audit and Risk Committee Member of the Remuneration and Human Resources Committee. Interests in shares 206,387 (at retirement 29 October 2025) Name Carole Molyneux Title Independent Non-Executive Director Qualifications BA (Hons) Experience and expertise Carole was appointed to the Board in June 2014. Carole has extensive experience in retail and was the Chief Executive Officer of Suzanne Grae, (part of the Sussan Retail Group), for eighteen years until 2013. Other current directorships Nil Former directorships Nil Special responsibilities Chair of the Remuneration and Human Resources Committee Member of the Audit and Risk Committee Interests in shares 25,000 Name William (Bill) Koeck Title Lead Independent Non-Executive Director and Deputy Chair Qualifications LLB, LLM(Hons), Post Graduate Applied Corporate Finance; admitted UK and Australia Experience and expertise Bill was appointed to the Board in August 2020. Bill is an experienced legal adviser with over 40 years of experience in mergers and acquisitions, equity capital markets, private equity, restructuring and corporate governance. For over 20 years, Bill has been a part time lecturer in corporate and securities law in the Masters of Law course at the University of Sydney. Bill was a Member of the Federal Governments Takeovers Panel for 9 years until April 2024. Other current directorships Non-Executive Director of Poulos Bros.Group Former directorships Non-Executive Deputy Chair and lead Independent Director, Member of Audit Risk and Governance Committee and Chair of Compensation and Nomination Committee for Coronado Global Resources Inc (ASX: CRN) Special responsibilities Member of the Remuneration and Human Resources Committee Member of the Audit and Risk Committee Interests in shares 17,511
Page 11
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 9 Name Kathy Parsons Title Independent Non-Executive Director Qualifications BCom, CA Experience and expertise Kathy was appointed to the Board on 1 January 2024 and brings a wealth of experience in accounting, finance, governance and risk management. Formerly she was an assurance partner at Ernst & Young with deep international experience working in Australia, the USA and the UK in a broad range of industries including retail and real estate. She was also part of the Oceania assurance leadership team responsible for quality assurance and risk management. Kathy was the signing partner on the audit of Nick Scali Limited from 2012 to 2018. Other current directorships Non-Executive Director and Chair of the Audit Risk and Compliance Committee for McMillan Shakespeare Ltd (ASX: MMS) Non-Executive Director and Chair of the Audit and Risk Committee for Shape Australia Corp Ltd (ASX: SHA) Former directorships Non-Executive Director and Chair of the Audit Committee for Tassal Group Limited (ASX: TGR) Special responsibilities Chair of the Audit and Risk Committee Member of the Remuneration and Human Resources Committee Interests in shares 15,854 Name Niran Peiris (appointed 2 September 2025) Title Independent Non-Executive Director Qualifications BEconomics and BLaw Experience and expertise Niran was appointed to the Board in September 2025. He has an extensive background in financial services and insurance having been a Member of the Board of Management of Allianz SE, CEO of Allianz Australia and also having held a number of other executive roles (including CFO) at Allianz and other Australian insurance companies. Prior to that he worked in accounting services firms as a tax specialist Other current directorships Deputy Chair and Lead Independent Non -executive Director for Peter Warren Automotive Holdings Limited (ASX:PWR) Former directorships Nil Special responsibilities Member of the Remuneration and Human Resources Committee Member of the Audit and Risk Committee Interests in shares 10,629 Name Anthony Scali Title Executive Chair and Chief Executive Officer Qualifications BCom Experience and expertise Anthony is Executive Chair and Chief Executive Officer of Nick Scali Limited. Anthony joined the Company in 1982 after completing a Bachelor of Commerce degree at the University of New South Wales and has almost 40 years' experience in furniture retailing. Other current directorships Nil Former directorships Nil Special responsibilities Nil Interests in shares 6,739,473
Page 12
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 10 Other current directorships included above are current directorships for listed entities only and exclude directorships of al l other types of entities, unless otherwise stated. Former directorships included 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. At the date of this report, no Directors held options over ordinary shares in the Company. Company Secretary The Joint Company Secretaries are Elizabeth Spooner and Keith Toms. On 12 March 2026 Keith Toms replaced Kylie Archer as a Joint Company Secretary. Meetings of directors The numbers of meetings of the Board and of each Board sub-committee held during the year ended 30 June 202 6, and the numbers of meetings attended by each director or sub-committee member, were: Directors’ Meetings Remuneration and Human Resources Committee Meetings Audit and Risk Committee Meetings Held Attended Held Attended Held Attended John Ingram 4 4 1 1 1 1 William Koeck 13 13 2 2 4 4 Carole Molyneux 13 12 2 2 4 4 Kathy Parsons 13 13 2 2 4 4 Niran Peiris 9 9 1 1 3 3 Anthony Scali1 13 13 - - - - 1Anthony Scali is not a member of the sub-committees but was invited to attend the meetings of the sub-committees and his attendance was recorded in the minutes.
Page 13
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 11 Remuneration Report (Audited) The remuneration report details the remuneration arrangements for the key management personnel of the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of the report, key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the business. 1. Details of key management personnel For the year ended 30 June 2026 the key management personnel (KMPs) of the Group consisted of the following: Non-executive Directors • John Ingram - Non-Executive Chair (retired 29 October 2025) • William Koeck - Lead Non-Executive Director and Deputy Chair • Carole Molyneux - Non-Executive Director • Kathy Parsons - Non-Executive Director • Niran Peiris - Non-Executive Director (appointed 2 September 2025) Executive Director • Anthony Scali - Executive Chair & Chief Executive Officer Other Key Management Personnel • Keith Toms - Chief Financial Officer & Company Secretary (appointed 12 March 2026) • Kylie Archer - Chief Financial Officer & Company Secretary (ceased 12 March 2026) • Angus McDonald - Chief Operating Officer (resigned 24 April 2026) 2. Remuneration strategy The quality of Nick Scali Limited’s directors and executives is a major factor in the overall performance of the Group. To th is end, the Company believes that an appropriately structured remuneration strategy underpins a performance-based culture which in turn drives shareholder returns. The Group’s remuneration strategy is therefore designed to attract and retain high quality and committed non-executive directors and employees. The executive remuneration and reward framework has two components: • fixed remuneration comprising of salary and superannuation. • variable incentives comprising short-term incentives (STIs) in the form of a cash-based reward and long-term incentives (LTIs) in the form of an equity reward. The variable incentives are designed to deliver value to executives for performance against a combination of Company profitability metrics and strategic goals. Short-term incentives motivate employees to achieve outstanding performance and are based on current year predetermined key performance indicators (KPIs) such as profit after tax, and non-financial activities that achieve short to medium term objectives, while long-term incentives align employees with shareholder interests and are based on maintaining long-term shareholder value using performance measures such as earnings per share (EPS). 3. Remuneration and Human Resources Committee The Remuneration and Human Resources Committee currently consists of the non -executive Board members and is responsible for: • reviewing and approving remuneration arrangements and succession planning of senior executives reporting to the Executive Chair and Chief Executive Officer. • recommending the remuneration arrangements for the Executive Chair & Chief Executive Officer to the Board and engaging external compensation consultants if necessary.
Page 14
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 12 3. Remuneration and Human Resources Committee (continued) • reviewing and approving any discretionary component of short and long-term incentives for senior executives reporting to the Executive Chair & Chief Executive Officer. The Committee has met twice in the last twelve months. In addition, matters for consideration by the Committee have been dealt with during various Board meetings, where all Remuneration and Human Resources Committee members were in attendance. 4. Remuneration structure 4.1 Non-executive directors’ remuneration Non-executive directors are paid a fixed annual fee, which is periodically reviewed. Non-executive directors do not receive any variable remuneration and they are not entitled to participate in the Executive Performance Rights Plan. Non-executive Chair and directors’ fees in place at 30 June 2026 and 30 June 2025 were as follows: 2026 $ 2025 $ Base fee for Non-Executive Chair 250,000 250,000 Base fee for Non-Executive Director 120,000 120,000 Additional fee for Audit and Risk Committee Chair 25,000 25,000 Additional fee for Audit and Risk Committee Member 10,000 10,000 Additional fee for Remuneration and Human Resources Committee Chair 15,000 15,000 Additional fee for Remuneration and Human Resources Committee Member 5,000 5,000 The pool for non -executive directors’ fees is capped at $1, 500,000 per year as approved by shareholders at the Company’s Annual General Meeting in October 2025. 4.2 Executive remuneration The Group provides appropriate rewards to attract and retain key personnel. Base salaries, STIs and LTIs are approved by the Remuneration and Human Resources Committee for each executive reporting to the Executive Chair and Chief Executive Officer having regard to the nature of each role, the experience of the individual employee and the performance of the individual. Remuneration for the Executive Chair and Chief Executive Officer is approved by the Board. External consultants are engaged as appropriate and market information is used to benchmark executive remuneration. During the year ended 30 June 2026 no remuneration recommendations (as defined in the Corporations Act 2001) (Cth) were received. 4.2.1 Service agreements Details of the service agreements between the Company and executives considered KMPs, are as follows: Name Title Commencement date Annual base salary including superannuation Notice of termination by Company Notice of termination by Employee Anthony Scali Executive Chair & Chief Executive Officer 7 April 2004 $1,000,000 12 months 6 months Keith Toms Chief Financial Officer & Company Secretary 12 March 2026 $550,000 6 months 6 months Kylie Archer Chief Financial Officer & Company Secretary 1 July 2025 $480,000 6 months 6 months Angus McDonald Chief Operating Officer 15 December 2024 $625,000 3 months 3 months
Page 15
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 13 4. Remuneration structure (continued) 4.2 Executive remuneration (continued) 4.2.2 Remuneration mix The proportions of the total remuneration opportunity (at target) for the executives considered to be key management personnel (KMPs) are: Fixed Remuneration Variable Remuneration Base Salary Short-term Incentive Long-term Incentive Executive Chair Director & Chief Executive Officer 50% 50% - Chief Financial Officer1 50% 25% 25% Chief Operating Officer1 66% 17% 17% 1 Remuneration targets are pro-rated for the period of service where the KMP has not completed a 12 month service period. 4.2.3 Fixed remuneration – Base Salary Fixed compensation is set to provide a base level of compensation which is appropriate to the position and responsibility and is competitive in the market. Fixed compensation is reviewed annually with reference to the performance of both the business and the individual, the individual’s skills and experience, comparative market compensation and where appropriate, external advice. The Board approves changes to the fixed remuneration of the Executive Chair and Chief Executive Officer. The Group provides superannuation contributions in line with statutory obligations with benefits being contributed to the employee’s chosen superannuation fund. 4.2.4 Variable remuneration – Short-term incentive (STI) The Company operates a short-term incentive program that rewards KMPs and other senior executives on the achievement of predetermined KPIs established each financial year, according to the accountabilities of their role and its impact on the Group's performance. KPIs include profit targets and personal performance criteria which are set to incentivise superior performance. The maximum available STI for executives for the financial year is determined by financial targets established by the Board at the beginning of each financial year. The financial target was set in August 2025 for the year ended 30 June 202 6. The financial target was set based on the profit before tax (after excluding the impact of the application to AASB16 and excluding the expense of the STI progra mme) of the largest segment in the group, Australia and New Zealand of $110.6 million. The Board will consider inclusion of the UK segment in future financial years . UK segment metrics are included in individual STI performance criteria where applicable to an individual’s role. Th e financial target is chosen to link executive remuneration to the achievement of financial returns for shareholders. A sliding scale is applied pro rata from 20% of maximum available STI at 95% of financial target to 100% of maximum available STI at 110% of financial target. Individual KPI’s operate as modifiers to the maximum available STI which is based on the group’s financial performance. Below 95% of financial target set by the Board no STI is awarded for the financial year. The Executive Chair and Chief Executive Officer may also recommend to the Remuneration and Human Resources Committee discretionary bonuses in exceptional circumstances to reward contributions from high performing employees. The Board at its discretion determines the weighting of non-financial KPIs for each financial year for the Executive Chair and Chief Executive Officer. STIs awarded are paid in the form of cash bonuses and the Remuneration and Human Resources Committee is responsible for assessing whether the STIs are payable.
Page 16
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 14 4. Remuneration structure (continued) 4.2 Executive remuneration (continued) The following table shows the STI cash bonus target and the amount achieved for each KMP in the years ended 30 June 2026 and 30 June 2025: Year Ended 30 June 2026 Year ended 30 June 2025 Target Achieved % Achieved $ Target Achieved % Achieved $ Anthony Scali 1,000,000 91.2% 911,792 1,000,000 80% 800,000 Keith Toms1 84,384 91.2% 76,940 - - - Kylie Archer 240,000 91.2% 218,830 - - - Angus McDonald2 127,568 0% - 84,332 80% 67,466 1 STI for FY2026 is prorated from commencement date of 12 March 2026 2 STI for FY2025 is prorated from commencement date of 10 December 2024 4.2.5 Variable remuneration – Long-term incentive (LTI) Long-term incentives, in the form of the share rights offered under the Executive Performance Rights Plan (EPRP), are provided to employees to align remuneration with the creation of shareholder value over the long-term. The EPRP is only made available to executives and other employees who have been employed for more than 12 months who are able to influence the generation of shareholder value and who have a direct impact on the Group performance against relevant long -term performance targets. The Board has determined earnings per share (EPS) growth to be the most appropriate measure of long -term performance. Under the EPRP, employees are granted rights to ordinary shares that will vest after a period of three years subject to the achievement of specific levels of EPS growth. EPS is based on the Group’s underlying profit after tax and before non-recurring items, as determined by the Board. The Board has the discretion to adjust the EPS base year to reflect specific trading conditions which are not expected to re-occur in the measurement period. For performance rights issued in FY26 and FY25 the EPS base year was not adjusted. For performance rights issued in FY24, in recognition of the significant favourable impact on FY23 EPS due to the normalisation of delivery lead times following global supply chains disruptions in late FY22 that is not expected to recur in the LTI measurement period, the Board adjusted the EPS base year to 82 cents per share reflecting both the long-term target EPS growth from a pre COVID base and the Plush acquisition in FY22. Under the EPRP the number of rights exercisable at the end of the vesting period is dependent on the level of EPS growth achieved by the Company, as follows: EPS Growth (3 year CAGR) Less than 5% 5% 5% to 10% More than 10% Percentage of rights exercisable Nil 50% Pro-rata between 50% and 100% 100% The number of rights granted is calculated by taking the relevant executive’s fixed annual remuneration and multiplying it by the relevant predetermined LTI entitlement percentage of fixed remuneration and then dividing this by the Group’s volume weighted average share price for the five-day period post the release of the Group’s full year results. The FY24/26 LTI grant vests August 2026. The vesting condition was a CAGR Earnings per share (EPS) growth for the 3-year period 1 July 2024 to 30 June 2026. The EPS is based on the statutory profit after tax of the Group. The FY24/26 LTI grant vested at 65.7% in this triennium. Rights to ordinary shares may also be granted in accordance with the EPRP as a retention award where the only performance condition is continued employment with the Group at the vesting date.
Page 17
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 15 4. Remuneration structure (continued) 4.2 Executive remuneration (continued) If the minimum level of EPS growth is not met or if the participant ceases to be employed by the Group, any unvested rights will immediately lapse unless otherwise determined by the Board. There is no exercise price for shares granted under the EPRP and the employees are able to exercise their rights up to two years following the vesting date, after which time the rights will lapse. In the event of a takeover offer for the Company, t he rights may, at the discretion of the Board, vest in accordance with an assessment of performance with the performance period pro-rated to the date of the takeover offer. The performance rights entitlement of executives considered KMPs is calculated as a percentage of fixed annual remuneration for the years ended 30 June 2026 and 30 June 2025 as follows: Year ended 30 June 2026 Years of Service Targeted LTI Entitlement LTI Issued LTI Vested Anthony Scali1 44 0% 0% 0% 1 Anthony Scali is aligned to creation of shareholder value over the long term as the beneficial holder of 7.88% of the issued share capital in the Company. Anthony Scali is not invited by the Board to participate in the EPRP. Keith Toms had not completed a year of service and so was not eligible to participate in the EPRP in FY26. Year ended 30 June 2025 Years of Service Targeted LTI Entitlement LTI Issued LTI Vested Anthony Scali 43 0% 0% 0% Sheila Lines2 3 50% 50% 0% 2 Sheila Lines resigned as CFO on 30 June 2025. Employees who have been granted rights are prohibited from entering transactions to limit the economic risk of such rights whether through a derivative, hedge, or similar arrangement. In addition, employees are prohibited from entering margin lending arrangements in respect of shares in the Company where those shares are offered as security for the lending arrangement. 4.2.6 Terms of performance and retention rights granted The terms and conditions of each grant of rights to ordinary shares affecting the remuneration of employees in this financial year or future reporting years are as follows: Grant reference Grant date1 Vesting and exercisable date Expiry date Exercise price ($) Fair value per right at grant date ($) FY26/28 12 March 20263 March 2029 12 March 2031 0.00 14.52 FY26/28 31 Aug 2025 Aug 20282 30 June 2029 0.00 19.44 FY25/27 31 Aug 2024 Aug 20272 30 June 2029 0.00 14.11 FY24/26 31 Aug 2023 Aug 20262 30 June 2028 0.00 9.87 1The grant date is the date at which the performance rights are communicated to the employees. The effective date of the gran t, from which the performance hurdles are measured, is the first day of the financial year in which the grant is made. 2The exact vesting and exercisable date for performance rights that have not yet vested is currently indeterminate and depends on the date of meeting at which the Board can confirm the achievement of the long-term performance hurdles. This is typically four to eight weeks following the end of the financial year. 3The vesting and exercisable date for retention rights issued to Keith Toms are subject to a continuous service condition from 12 March 2026 to 11 March 2029.
Page 18
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 16 4. Remuneration structure (continued) 4.2 Executive remuneration (continued) 4.2.7 Performance rights holding The table below sets out the balance of performance rights held by executives considered KMPs. The vesting of these rights are subject to the achievement of the 3 year EPS target. If the target is achieved the maximum value is determined by the share price at the time of vesting and the minimum value is nil. Balance at 1 July 2025 Granted Vested and exercised Lapsed Balance at 30 June 2026 Anthony Scali - - - - - Balance at 1 July 2024 Granted Vested and exercised Forfeited Balance at 30 June 2025 Anthony Scali - - - - - Sheila Lines 22,314 20,283 - - 42,597 4.2.8 Retention rights holding The table below sets out the balance of retention rights held by executives considered KMPs. The vesting of these rights are subject to the completion of a service condition only. Balance at 1 July 2025 Granted Vested and exercised Lapsed Balance at 30 June 2026 Anthony Scali - - - - - Keith Toms1 - 2,500 - - 2,500 Balance at 1 July 2024 Granted Vested and exercised Lapsed Balance at 30 June 2025 Anthony Scali - - - - - Sheila Lines2 12,000 - - 12,000 - 1 Retention rights were issued to Keith Toms on his commencement date of 12 March 2026 2 The vesting and exercisable date for retention rights issued to Sheila Lines have lapsed as the continuous service condition from 6 October 2022 to 31 August 2025 was not met. 4.3 Group performance The table below sets out the financial performance of the Group over the past five years: 2022 2023 2024 2025 2026 CAGR (%) Revenue ($m) 441.0 507.7 468.2 495.3 516.7 4.0 Net profit after tax ($m) 74.9 101.1 80.6 57.7 75.7 0.3 Earnings per share (Cents) 92.5 124.8 98.7 67.5 88.5 -1.1 Ordinary dividends paid per share (Cents) 60.0 75.0 70.0 63.0 72.0 4.7 Share price at 30 June ($) 8.26 9.11 13.81 18.21 16.32 18.6
Page 19
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 17 4. Remuneration structure (continued) 4.4 Remuneration outcomes 4.4.1 Remuneration outcomes for non-executive directors The tables below set out the remuneration outcomes for the non- executive directors for the years ended 30 June 202 6 and 30 June 2025 respectively: Short-term benefit Post-employment benefits Total Fees Superannuation Year ended 30 June 2026 John Ingram1 74,405 8,928 83,333 William Koeck 120,536 14,464 135,000 Carole Molyneux 129,464 15,536 145,000 Kathy Parsons 145,982 4,018 150,000 Niran Peiris2 100,446 12,054 112,500 570,833 55,000 625,833 Year ended 30 June 2025 John Ingram 224,215 25,785 250,000 William Koeck 121,076 13,924 135,000 Carole Molyneux 130,045 14,955 145,000 Kathy Parsons 134,529 15,471 150,000 609,865 70,135 680,000 1John Ingram retired as a Non-executive Director on 29 October 2025 1Niran Peiris was appointed as a Non-executive Director on 2 September 2025 4.4.2 Remuneration outcomes for executive KMPs The tables below set out the remuneration outcomes for the executive KMPs for the years ended 30 June 2026 and 30 June 2025 respectively: Short-term benefits Post- employ ment benefits Long-term benefits Share-based payments Total Base salary Cash bonus1 (STI) Super- annuatio n Employee entitlements Shares rights (LTI) $ $ $ $ $ $ Year ended 30 June 2026 Anthony Scali 970,000 911,792 30,000 16,140 - 1,927,932 Keith Toms2 138,000 131,940 8,077 - - 278,017 Kylie Archer3 341,507 431,707 30,000 - - 803,214 Angus McDonald4 515,132 - 25,962 - - 541,094 1,964,639 1,475,439 94,039 16,140 - 3,550,257 Year ended 30 June 2025 Anthony Scali 960,453 800,000 31,083 88,030 - 1,879,566 Sheila Lines 554,730 96,000 29,932 - 113,386 794,048
Page 20
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 18 Angus McDonald4 304,400 67,466 15,427 387,293 1,819,583 963,466 76,442 88,030 113,386 3,060,907 1Cash Bonus includes Short Term Incentives and other payments 2 Keith Toms commenced as CFO on 12 March 2026 3Kylie Archer ceased as CFO and a KMP on 12 March 2026. She resigned effective 2 April 2026. 4Angus McDonald commenced as COO on 10 December 2024 and resigned on 24 April 2026 4. Remuneration structure (continued) 4.5 Additional disclosures relating to key management personnel 4.5.1 Interest in the Shares of the Company The beneficial interest of each director on 30 June 2026 in the contributed equity of the Company are as follows: Balance at 1 July 2025 Received as part of remunerations Purchases Disposals Balance at 30 June 2026 Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares William Koeck 17,511 - - - 17,511 Carole Molyneux 25,000 - - - 25,000 Kathy Parsons 14,504 - 1,350 - 15,854 Niran Peiris - - 10,629 - 10,629 Anthony Scali 6,739,473 - - - 6,739,473 6,796,488 - 11,979 - 6,808,467 This concludes the remuneration report, which has been audited. Indemnity and insurance of officers The Company indemnifies all the directors and executive officers against certain liabilities incurred as such by a director or officer, while acting in t heir respective capacity, and enters contracts insuring the directors and officers against liabilities of this nature. The premiums paid under the terms of these contracts have not been determined on an individual director or officer basis, and the directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability insurance contracts, as such disclosure is prohibited under the terms of the contract. No other agreement s to indemnify directors or officers have been entered into, nor have any payments in relation to indemnification been made, during or since the end of the financial year, by the Company. Indemnity and insurance of auditor To the extent permitted by law, the Company has agreed to indemnify its auditors KPMG, as part of the terms of audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount) – except for any loss in respect of any matters which are finally determined to have resulted from KPMG’s negligent, wrongful, or wilful acts or omissions. No payment has been made to indemnify KPMG during or since the financial year. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Corporate Governance Statement Nick Scali Limited’s Corporate Governance Statement discloses how the Company complies with the recommendations of the ASX Corporate Governance Council (4th Edition) and sets out the Group’s main corporate governance practices. This statement has been approved by the Board and is current as of 30 June 2026. The Corporate Governance Statement of Nick Scali Limited can be found on the Company’s website: www.nickscali.com.au/corporate-governance.
Page 21
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors Report 19 Rounding of amounts The Company is of a kind referred to in Class Order 20 26/183, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. Non-audit services The Company may decide to employ the Company’s auditor, or its network firms, for non-audit services where their skills and expertise are considered relevant. During the year ended 30 June 2026, KPMG Australia performed tax advisory services and provided tax compliance services. Details of the amount paid to the auditor for non-audit services are set out below. 2026 $ Tax compliance services 91,866 Tax review services 8,914 100,780 The directors are satisfied that the provisions of non-audit services are compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of all non-audit services provided was approved by the Audit and Risk Committee, and the directors are satisfied that the services provided do not compromise the integrity and objectivity of the Company’s auditor for the following reasons: • none of the services required the auditor to review or audit the auditor’s own work • none of the services required the auditor to act in a management or decision-making capacity for the Company • none of the services required the auditor to act as an advocate for the Company • none of the services involved the auditor jointly sharing in the economic risks and rewards of the Company • a declaration required by section 307C of the Corporations Act 2001 confirming their independence has been included on page 21 of this financial report Auditor's independence declaration The directors received the declaration from the auditor of Nick Scali Limited and is included on page 20 of the Financial Statements. Auditor KPMG continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors William Koeck Anthony Scali Deputy Chairman and Lead Independent Director Executive Chair and Chief Executive Officer 7 August 2026 Sydney
Page 22
20 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Nick Scali Limited I declare that, to the best of my knowledge and belief, in relation to the audit of the Financial Report and the review of the Sustainability Report of Nick Scali Limited for the financial year ended 30 June 2026 ther e have been: i. no c ontraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit and review; and ii. no contraventions of any applicable code of professional conduct in relation to the audit and review. KPMG Julie Cleary Partner Sydney 7 August 2026 KPM_INI_01
Page 23
Nick Scali Limited Annual report for the year ended 30 June 2026 Consolidated statement of comprehensive income 21 Consolidated statement of comprehensive income Note 2026 2025 $’000 $’000 Revenue from contracts with customers 3 516,704 495,283 Cost of goods sold (177,759) (180,663) Gross profit 338,945 314,620 Other income 3 7,020 5,119 Expenses Marketing expenses (28,508) (26,047) Employment expenses (88,851) (86,911) General and administration expenses (22,450) (23,006) Property expenses (18,430) (17,724) Logistics expenses (3,628) (6,170) Restructuring and Integration costs - (2,390) Depreciation and amortisation (56,028) (53,256) Finance costs (17,862) (16,984) Profit before income tax expenses 110,208 87,251 Income tax expense 5 (34,530) (29,575) Profit after income tax expense for the year attributable to the owners of Nick Scali Limited 75,678 57,676 Other comprehensive income Items that may be reclassified subsequently to profit or loss Net change in the fair value of cash flow hedges taken to equity, net of tax 3,261 (1,496) Exchange differences on translation of foreign operations (4,572) 3,302 Other comprehensive income for the year, net of tax (1,311) 1,806 Total comprehensive income for the year attributable to the owners of Nick Scali Limited 74,367 59,482 Note 2026 2025 Cents Cents Basic earnings per share 6 88.5 67.5 Diluted earnings per share 6 88.5 67.5 The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes
Page 24
Nick Scali Limited Annual report for the year ended 30 June 2026 Consolidated statement of financial position 22 Consolidated statement of financial position Note 2026 2025 $’000 $’000 Assets Current assets Cash and cash equivalents 9 106,594 100,993 Receivables 10 1,631 1,799 Inventories 11 52,466 58,103 Current tax receivable - 2,901 Other financial assets 12 1,795 - Prepayments 6,101 5,720 Total current assets 168,587 169,516 Non-current assets Land and buildings 13 131,017 120,112 Plant and equipment 13 30,071 27,620 Right-of-use assets 14 250,512 216,033 Deferred tax 5 5,331 6,148 Intangibles 15 163,558 166,378 Total non-current assets 580,489 536,291 Total assets 749,076 705,807 Liabilities Current liabilities Borrowings 16 41,300 11,000 Payables 17 30,325 34,785 Lease liabilities 14 44,915 46,373 Deferred revenue 18 64,598 66,304 Current tax liabilities 5,419 - Other financial liabilities 12 - 2,428 Provisions 19 7,483 7,464 Total current liabilities 194,040 168,354 Non-current liabilities Borrowings 16 30,387 60,687 Lease liabilities 14 233,464 198,080 Deferred revenue 18 908 864 Deferred tax 5 8,886 9,467 Provisions 19 1,620 1,677 Total non-current liabilities 275,265 270,775 Total liabilities 469,305 439,129 Net assets 279,771 266,678 Equity Issued capital 20 61,997 61,997 Reserves 21 (483) 520 Retained profits 218,257 204,161 Total equity 279,771 266,678 The above consolidated statement of financial position should be read in conjunction with the accompanying notes
Page 25
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 23 Consolidated statement of changes in equity Issued capital Equity benefits reserve Capital profits reserve Cashflow hedge reserve Foreign exchange reserve Retained profits reserve Total equity $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2024 58,211 (608) 78 80 (252) 200,270 257,779 Profit after income tax for the year - - - - - 57,676 57,676 Other comprehensive income for the year, net of tax - - - (1,496) 3,302 - 1,806 Total comprehensive income for the year - - - (1,496) 3,302 57,676 59,482 Employee share rights recognised under EPRP (Note 21) - (584) - - - - (584) Dividends paid during the year (Note 7) - - - - - (53,785) (53,785) Contributions of equity, net of transaction costs 3,786 - - - - - 3,786 Balance at 30 June 2025 61,997 (1,192) 78 (1,416) 3,050 204,161 266,678 Issued capital Equity benefits reserve Capital profits reserve Cashflow hedge reserve Foreign exchange reserve Retained profits reserve Total equity $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2025 61,997 (1,192) 78 (1,416) 3,050 204,161 266,678 Profit after income tax for the year - - - - - 75,678 75,678 Other comprehensive income for the year, net of tax - - - 3,261 (4,572) - (1,311) Total comprehensive income for the year - - - 3,261 (4,572) 75,678 74,367 Employee share rights recognised under EPRP (Note 21) - 308 - - - - 308 Dividends paid during the year (Note 7) - - - - - (61,582) (61,582) Balance at 30 June 2026 61,997 (884) 78 1,845 (1,522) 218,257 279,771 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Page 26
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 24 Consolidated statement of cashflows Note 2026 2025 $’000 $’000 Cash flows from operating activities Receipts from customers 571,302 558,902 Payments to suppliers and employees (394,092) (412,336) 177,210 146,566 Interest received 3,435 3,821 Income tax payments (26,208) (34,895) Net cash from operating activities 8 154,437 115,492 Cash flows from investing activities Maturity of Term Deposits - 30,000 Purchase of property, plant and equipment (21,991) (13,582) Purchase of intangible assets (995) (990) Net cash (used in)/from investing activities (22,986) 15,428 Cash flows from financing activities Payment of dividends on ordinary shares 7 (61,582) (53,785) Proceeds from issued capital - 3,785 Repayment of lease liabilities (45,176) (46,005) Interest payments - lease liabilities (14,146) (12,786) Interest payments - borrowings (3,716) (4,231) Net cash used in financing activities (124,620) (113,022) Net increase in cash and cash equivalents 6,831 17,898 Cash and cash equivalents at the beginning of the financial year 100,993 81,331 Foreign currency translation (1,230) 1,764 Cash and cash equivalents at the end of the financial year 9 106,594 100,993 The above consolidated statement of cashflows should be read in conjunction with the accompanying notes
Page 27
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 25 Notes to the consolidated financial statements Note 1. Basis of preparation Corporate information Nick Scali Limited (the Company or the parent) is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. Basis of preparation These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). The financial statements have been prepared under the historical cost convention, except for financial instruments, which have been prepared at fair val ue. The financial report was authorised for issue in accordance with a resolution of the directors on 7 August 2026. The consolidated financial statements have been prepared on a going concern basis , which contemplates the continuity of normal business activities and realisation of asset and settlement of liabilities in the ordinary course of business. At the end of the reporting period the group had a net current liability position. Underlying this position is a deferred revenue component that is expected to be recognised as revenue with the next 12 months . The financial statements are prepared on a going concern basis. Where necessary because of a change in the presentation of certain expenses during the current year, comparative amounts in the statement of comprehensive income have been reclassified for consistency with presentation in the current year. Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of and for the year ended 30 June 2026. A subsidiary is an entity that is controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity. The financial statements of the subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intercompany transactions, balances, and unrealised gains on transactions between the Company and its subsidiaries are eliminated. Accounting policies of the subsidiaries are consistent with the policies adopted by the Company. Changes in accounting policies, accounting standards and interpretations The accounting policies adopted in the preparation of the annual financial statements are consistent with those followed in the preparation of the annual financial statements for the year ended 30 June 2025. Material accounting judgements, estimates and assumptions In the process of applying the Company’s accounting policies, management has made judgements, estimates and assumptions. All judgements, estimates and assumptions made are believed to be reasonable, based on the most current information available to manage ment. Actual results may differ from these judgements, estimates and assumptions. Judgements, estimates and assumptions which have the most significant effect on the amounts recognised in the financial statements: Impairment of goodwill and brands The Company determines whether goodwill and brands are impaired on an annual basis. This requires determination of CGU’s and estimation of the recoverable amount of the cash -generating unit to which the goodwill and brand is allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and brands are discussed at Note 15 in the financial report. Fair value of acquired assets and liabilities The assets acquired and liabilities assumed have been measured using the acquisition method with the cost of acquisition allocated to the fair value of the assets acquired and liabilities assumed at acquisition date. This is further discussed at Note 32.
Page 28
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 26 Note 1. Basis of preparation (continued) Lease term of contracts with renewable options The Company determines the lease term to be the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised. In assessing the likelihood of a l ease option being exercised, the Company considers the costs of termination, the extent of any leasehold improvements, the strategic importance of the lease location and the current market rent for the site. Net realisable value of inventory Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Note 2. Segment information The Company has identified the Executive Chair & Chief Executive Officer and the Board of Directors as the chief operating decision makers (CODM). The Company has two reportable segments being the retailing of furniture in Australia and New Zealand as well as the United Kingdom. Operating segments are identified based upon internal reports to the CODM. Year ended 30 June 2026 Australia and New Zealand United Kingdom Consolidated $’000 $’000 $’000 Revenue from contracts with customers 476,719 39,985 516,704 Gross profit Other Income Operating expenses 314,830 5,414 (141,431) 24,115 1,606 (20,436) 338,945 7,020 (161,867) Depreciation and amortisation (47,880) (8,148) (56,028) Finance costs (15,903) (1,959) (17,862) Profit (Loss) before income tax expense 115,031 (4,823) 110,208 Income tax expense (34,530) - (34,530) Profit (Loss) after tax expense 80,501 (4,823) 75,678 As at 30 June 2026 Total assets 652,425 96,651 749,076 Total liabilities 413,880 55,425 469,305 During the year the Company had additions to non-current assets of $18,923,000 (2025: $9,592,000) to the Australia and New Zealand operating segment and $4,063,000 (2025: $4,980,000) to the United Kingdom operating segment. Year ended 30 June 2025 Australia and New Zealand United Kingdom Consolidated $’000 $’000 $’000 Revenue from contracts with customers 453,469 41,814 495,283 Gross profit Other Income Operating expenses 294,927 4,818 (139,383) 19,693 301 (20,475) 314,620 5,119 (159,858) Restructuring and Integration Costs - (2,390) (2,390) Depreciation and amortisation (44,276) (8,980) (53,256) Finance costs (15,183) (1,801) (16,984) Profit (Loss) before income tax expense 100,903 (13,652) 87,251 Income tax expense (29,575) - (29,575) Profit (Loss) after tax expense 71,328 (13,652) 57,676 As at 30 June 2025 Total assets 622,361 83,446 705,807 Total liabilities 400,601 38,528 439,129
Page 29
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 27 Note 3. Revenue and other income 2026 2025 $’000 $’000 Revenue Revenue from contracts with customers 516,704 495,283 Other income Rental income 309 460 Interest income 3,435 3,821 Net gain on disposal of right-of-use asset and remeasurement of lease liability 2,065 - Sundry income 1,211 838 7,020 5,119 Recognition and measurement – Revenue Revenue from contracts with customers is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. Contracts with customers provide for both the sale of goods and the provision of accidental damage warranties, and the timing of the recognition of revenue of these separate components is as follows: Sale of goods When recognising revenue in relation to the sale of goods to customers, the key performance obligation of the Group is the delivery of the goods to the customer, and revenue is recognised at the time of delivery of the goods to the customer. Accidental damage warranties When recognising revenue in relation to accidental damage warranties, the key performance obligation of the Group extends over the term of the warranty, and consequently revenue is recognised over the term of warranty, weighted according to the expected occurrence of the performance obligations. Note 4. Expenses Profit before income tax includes the following specific expenses: 2026 2025 $’000 $’000 Included within employee expenses Salaries, wages and fees 59,898 60,802 Superannuation contributions 7,937 6,862 Share-based payments 306 114 Included within property expenses Short-term and low value lease payments 2,841 5,722 Included within finance expenses Interest expense related to lease liabilities Interest expense related to bank loans 14,146 3,716 12,688 4,231 Note 5. Current and deferred tax 2026 2025 Amounts recognised in statement of comprehensive income $’000 $’000 Income tax expense Current income tax charge 35,598 29,738 Adjustments in respect of current income tax of previous years 40 (556) Relating to origination and reversal of temporary differences (1,108) 393 Income tax expense 34,530 29,575
Page 30
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 28 Note 5. Current and deferred tax (continued) Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense 110,208 87,251 Income tax at the statutory tax rate of 30% 33,062 26,175 Current year losses for which no deferred tax asset is recognised 1,206 3,413 Adjustments in respect of current income tax of previous years (44) (556) Adjustment for difference in overseas tax rates 241 704 Adjustment for non-deductible (non-assessable) items 65 (161) Income tax expense 34,530 29,575 2026 2025 Amounts recognised in equity $’000 $’000 Share Based Payments Before tax 440 (425) Income tax (132) 127 Net amount recognised in equity 308 (298) 2026 2025 $’000 $’000 Deferred tax recognised comprises temporary differences attributable to: Right-of-use assets (62,392) (57,088) Lease liabilities 69,982 64,113 Brands (11,400) (11,400) Deferred capital gains (1,612) (1,612) Property, plant and equipment (1,031) (1,542) Employee entitlements 2,193 2,112 Cashflow hedge (Note 23) (539) 728 Inventory provision 462 501 Other 782 869 (3,555) (3,319) Reflected in the statement of financial position as follows: Deferred tax assets 5,331 6,148 Deferred tax liabilities (8,886) (9,467) Deferred tax liabilities, net (3,555) (3,319) Recognition and measurement - Income tax Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Recognition and measurement - Deferred tax Deferred income tax is provided on all temporary differences at the reporting date , reflecting the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax, assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Deferred tax assets of $1,205,769 have not been recognised in respect of current year tax losses in the UK. The UK entity also has approx $10,965,000 of unrecognised deferred tax assets at the time of lodgement of the last tax return for the year ended 31 March 2025 from carried forward losses.
Page 31
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 29 Note 6. Earnings per share 2026 2025 $’000 $’000 Profit after income tax attributable to the owners of Nick Scali Limited 75,678 57,676 Weighted average number of ordinary shares used in basic earnings per share 85,530,699 85,434,535 Weighted average number of ordinary shares used in diluted earnings per share 85,530,699 85,434,535 2026 2025 Cents Cents Basic earnings per share 88.5 67.5 Diluted earnings per share 88.5 67.5 Recognition and measurement - Earnings per share Basic earnings per share Basic earnings per share (EPS) is calculated as net profit attributable to members, divided by the weighted average number of ordinary shares. Diluted earnings per share Diluted EPS adjusts the basic EPS to take account of the after -tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration. Note 7. Dividends Dividends Dividends paid during the financial year were as follows: 2026 2025 $’000 $’000 Final fully franked dividend for 30 June 2025: 30.0 cents (2024: 33.0 cents) 28,225 28,126 Interim fully franked dividend for 30 June 2026: 39.0 cents (2025: 35.0 cents) 33,357 25,659 61,582 53,785 In addition to the above dividend, since the end of the financial year directors have declared a final fully franked dividend of 39 cents per fully paid ordinary share to be paid on 22 October 2026 out of retained profits at 30 June 2026. Franking credit Franking credits are available to the Company as follows: 2026 2025 $’000 $’000 Franking credits available at the reporting date based on a tax rate of 30% 73,249 80,935 Franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date based on a tax rate of 30% 2,956 (3,661) Franking credits available for subsequent financial years based on a tax rate of 30% 76,205 77,274 Impact on franking account of dividends proposed after the reporting date but not recognised as a liability (14,295) (12,096) Franking credits available for future reporting periods based on a tax rate of 30% 61,909 65,178
Page 32
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 30 Note 7. Dividends (continued) 2026 2025 % % Tax rate at which paid dividends have been franked 30.0 30.0 Tax rate at which dividends declared and unpaid will be franked 30.0 30.0 Note 8. Reconciliation of profit after income tax to net cash from operating activities 2026 2025 $’000 $’000 Profit after income tax expense for the year 75,678 57,676 Investing and financing items included in profit after income tax expense: - Interest expense 17,862 16,984 - Net gain on disposal of right use asset (2,065) - Non-cash items included in profit after income tax expense: - Depreciation and amortisation expense 56,028 53,256 - Share-based payments expense 308 114 Cash items not included in profit after income tax expense: - Purchase of shares under EPRP - (539) Changes in operating assets and liabilities: - Trade and other receivables 168 396 - Inventories 5,637 540 - Deferred tax (236) 807 - Prepayments (381) (918) - Other financial assets and financial liabilities (4,223) 2,329 - Net fair value change on derivatives 3,261 (1,496) - Trade and other payables (4,460) (9,571) - Deferred revenue (1,662) 4,773 - Provision for income tax 8,320 (5,320) - Other provisions 38 (3,158) Net foreign currency differences 164 (381) Net cash from operating activities 154,437 115,492 Note 9. Cash and cash equivalents and Term Deposits 2026 2025 $’000 $’000 Cash at bank and on hand 43,315 80,993 Short-term deposits 63,279 20,000 Cash and cash equivalents 106,594 100,993 Recognition and measurement - Cash and cash equivalents and Term deposits Cash and cash equivalents comprise cash at bank and on hand and short -term deposits with a maturity of three months or less. Deposits are made for varying periods, depending on the immediate cash requirements of the Group. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above. Note 10. Receivables 2026 2025 $’000 $’000 Trade debtors 465 517 Other debtors 1,166 1,282 1,631 1,799 During the year ended 30 June 2026 $29,000 (2025: $69,000) was recognised as an expense for expected credit losses.
Page 33
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 31 Note 10. Receivables (continued) Recognition and measurement – Trade and other receivables Trade and other debtors are initially recognised at fair value, less any allowance for expected credit losses. Trade debtors are generally due for settlement within 30 days. Other debtors include receivables from suppliers and GST paid in advance. These are non-interest bearing and are due for settlement between 30 and 90 days. Note 11. Inventories 2026 2025 $’000 $’000 Finished goods – at lower of cost or net realisable value 41,551 44,513 Stock in transit - at cost 10,915 13,590 52,466 58,103 During the year ended 30 June 2026, $88,000 was recorded as a decrease to the cost of goods sold due to changes in the net realisable value of finished goods inventories (2025: $750,000 decrease in cost of goods sold). Recognition and measurement - Inventories Inventories are valued at the lower of cost and net realisable value. Weighted average cost is used to value inventories. Costs incurred in bringing each product to its present location and condition includes purchase price plus freight, cartage and import duties. Note 12. Other financial assets and liabilities 2026 2025 $’000 $’000 Derivative hedge receivable 1,797 - Derivative hedge payable - 2,428 1,797 2,428 Foreign exchange forward contracts Foreign exchange forward contracts are held as hedging instruments against forecast purchases in USD. The notional amount of foreign exchange forward contracts held on 30 June 2026 totalled $USD66,892,000 which covers between 75% and 100% of highly probably purchases for the eight months to 28 February 2027 (30 June 2025: $USD60,762,000). The average rate of foreign exchange forward contracts held on 30 June 202 6 was $USD0.70 for purchases in AUD and $US1.3 3 for purchases in GBP (30 June 2025: $USD0.64 for purchases in AUD and $1.32 for purchases in GBP). Recognition and measurement – Other financial assets and liabilities Derivative hedge payable The Group uses derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive an d as financial liabilities when the fair value is negative. Where derivative financial instruments are deemed to be effective hedges against foreign currency, interest rate, or commodity price risks, the net gain or loss on the fair value of the instrument is recognised as other comprehensive income. Where derivative financial instruments are deemed to be ineffective hedges, the net gain or loss on the fair value of the instrument is recognised in profit or loss.
Page 34
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 32 Note 13. Property, plant and equipment Land and Buildings Leasehold Improvements Fixtures and Fittings Motor Vehicles Office Equipment Total $’000 $’000 $’000 $’000 $’000 $’000 Year ended 30 June 2026 At cost 145,162 45,438 3,128 758 23,150 217,636 Less, accumulated depreciation (14,145) (24,527) (2,393) (622) (14,861) (56,548) 131,017 20,911 735 136 8,289 161,088 Year ended 30 June 2025 At cost 132,338 35,736 6,474 956 22,307 197,811 Less, accumulated depreciation (12,226) (21,108) (2,812) (758) (13,175) (50,079) 120,112 14,628 3,662 198 9,132 147,732 Reconciliations Reconciliation of the carrying amounts of property, plant and equipment at the beginning and end of the financial year: Land and Buildings Leasehold Improvements Fixtures and Fittings Motor Vehicles Office Equipment Total $’000 $’000 $’000 $’000 $’000 $’000 Balance at 30 June 2024 119,578 13,205 1,203 142 7,595 141,723 Additions 2,373 4,500 3,440 150 3,119 13,582 Disposals - (25) (476) - (106) (607) Foreign currency translation - 6 73 - 3 82 Depreciation expense (1,839) (3,058) (578) (94) (1,479) (7,048) Balance at 30 June 2025 120,112 14,628 3,662 198 9,132 147,732 Additions 12,824 7,812 433 - 922 21,991 Transfers 2,879 (2,892) - 13 - Disposals - (289) (3) - (21) (313) Foreign currency translation - (176) (364) - (4) (544) Depreciation expense (1,919) (3,943) (101) (62) (1,753) (7,778) Balance at 30 June 2026 131,017 20,911 735 136 8,289 161,088 Land and buildings totalling $81.2m (2025: $81.3m) are used to secure bank loans relating to their purchase. Recognition and measurement - Property, plant and equipment All classes of property, plant and equipment are measured at cost, less accumulated depreciation and any impairment in value. Depreciation is provided on a straight-line basis based on management’s estimate of both the residual value and the useful economic life of the asset. The depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Management’s current estimates of useful economic lives are as follows: - Buildings: 20 to 40 years - Leasehold improvements: 5 to 15 years - Furniture and fitting: 3 to 15 years - Motor vehicles: 6 years - Office equipment (including IT equipment): 3 to 12 years
Page 35
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 33 Note 13. Property, plant and equipment (continued) An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which it belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. Note 14. Leases 2026 2025 $’000 $’000 Lease liabilities Current lease liabilities 44,915 46,373 Non-current lease liabilities 233,464 198,081 278,379 244,454 Reconciliation of lease liabilities Opening lease liabilities 244,454 248,685 Lease modifications agreed during the year 34,514 16,357 Additional leases entered during the year 58,419 24,041 Interest accrued 14,146 12,786 Lease repayments (59,321) (58,791) Disposal (10,067) (2,121) Foreign currency translation (3,766) 3,497 278,379 244,454 Right-of-use assets 250,512 216,033 Reconciliation of right-of-use assets Opening right-of-use asset 216,033 223,526 Lease modifications agreed during the year 34,803 12,872 Additional right-of-use assets relating to leases entered during the year 57,849 23,716 Disposal of right-of-use assets relating to leases terminated during the year (7,923) (1,226) Make good asset movement during the year 24 (33) Depreciation (47,565) (45,699) Foreign currency translation (2,709) 2,877 250,512 216,033 Recognition and measurement – Leases Lease liabilities The Group enters non-cancellable leases for retail showrooms and warehouse facilities in Australia, New Zealand, and the UK. Leases are entered into for varying terms and rent reviews are based on CPI increases or fixed increases. A lease liability is recognised at the commencement date of a lease at the present value of the lease payments to be made over the term of the lease. Lease liabilities include known future payments for which the Group is contractually obliged under the terms of its non - cancellable leases. Estimated future payments in respect of make-good clauses within non-cancellable leases are accounted for as provis ions (Note 19). A number of the leases contain options to renew in favour of the Group. These options are negotiated by management to provide flexibility in managing the leased -asset portfolio and align with the Group’s business needs. Management exercises judgement in determining whether these extension options are reasonably certain to be exercised.
Page 36
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 34 Note 14. Leases (continued) The present value of the lease payments to be made under options considered reasonably certain to be exercised have been included in the lease liability balance at 30 June 202 6. The undiscounted potential future payments under options that are not considered reasonably certain to be exercised is $87,125,000 which includes those that have an exercise date within the next five years of $57,720,000. Right-of-use assets Right-of-use assets are measured at cost at commencement of the lease and depreciated on a straight-line basis over the effective life of the asset. The right -of-use assets have an effective life of between two - and fifteen-years dependent on the term of the lease and the likelihood of the Company exercising any lease extension options in its favour. Note 15. Intangibles Goodwill Brands Website costs Total $’000 $’000 $’000 $’000 Year ended 30 June 2026 At cost 123,405 38,000 4,833 166,238 Less, accumulated amortisation and foreign exchange differences - - (2,680) (2,680) 123,405 38,000 2,153 163,558 Year ended 30 June 2025 At cost 126,510 38,000 3,871 168,381 Less, accumulated amortisation and foreign exchange differences - - (2,003) (2,003) 126,510 38,000 1,868 166,378 Reconciliations Reconciliation of the carrying amounts of intangibles at the beginning and end of the financial year: Goodwill Brands Website costs Total $’000 $’000 $’000 $’000 Balance at 30 June 2024 118,172 38,000 1,388 157,560 Additions - - 990 990 Acquisitions (Note 32) 4,831 - - 4,831 Foreign exchange 3,507 - - 3,507 Amortisation expense - - (510) (510) Balance at 30 June 2025 126,510 38,000 1,868 166,378 Additions - - 995 995 Foreign exchange (3,105) - (25) (3,130) Amortisation expense - - (685) (685) Balance at 30 June 2026 123,405 38,000 2,153 163,558 No impairment losses have been recognised in the year ended 30 June 2026 (2025: $Nil)
Page 37
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 35 Note 15. Intangibles (continued) Goodwill is allocated to CGUs as shown below: Australia and New Zealand United Kingdom Total $’000 $’000 $’000 Goodwill 90,589 32,816 123,405 Recognition and measurement - Intangibles Goodwill and brands Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities, and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Brand names acquired in a business combination are initially measured at fair value using the relief from royalty method. Following initial recognition, brands are measured at cost less any accumulated impairment losses. Goodwill and brands are reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that their carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the cash generating unit (“CGU”), or group of CGUs, to which the asset relates. Goodwill arising from a business combination is allocated to the group of individual showrooms that are expected to benefit from the synergies of the combination (CGU). This is the lowest level at which goodwill is monitored for internal management purposes. The recoverable amount of the CGU is based on the value in use, determined by discounting the future cash flows expected to be generated by their continued use. The key assumptions, to which this determination is most sensitive, for each CGU are; Australia and New Zealand – Goodwill & Brand Sales revenue: Revenue for the next five years has been estimated with reference to the Group’s budget for the year ending 30 June 202 7 and four-year forward -looking plans. Consideration was given to expected retail trading conditions when estimating future revenue. Gross margin: Gross margins have been estimated with reference to the Group’s budget for the year ending 30 June 2027. Terminal growth rate: Growth beyond the next five years has been estimated with reference to the expected long-term average growth rate and was determined to be 2.0% (2025: 2.0%). Discount rate: The discount rate is based on the specific circumstances of the Group and its CGUs and was derived from its weighted average cost of capital. Consideration was given to the cost of both debt and equity, and the Group’s weighted average cost of capital was determined to be 11.9% (2025: 11.6%). At 30 June 2026, the recoverable amount of the CGU exceeded its carrying amount, and there are considered to be no reasonably possible changes to any of the key assumptions that would cause the recoverable amount of the CGU to be less than its carrying values. United Kingdom - Goodwill Sales Revenue: Revenue for the next five years has been estimated with reference to the Group’s budget for the year ending 30 June 2027, forecasted business revenue growth model for years 2 and 3, a rate of 5% growth for year 4 and a 2.5% growth for year 5. This resulted in a 5-year CAGR of 6.4% (2025: 7.0%).
Page 38
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 36 Note 15. Intangibles (continued) Recognition and measurement – Intangibles (continued) Gross margin: Gross margins have been estimated with reference to the Group’s budget for the year ending 30 June 2027. Terminal growth rate: Growth beyond the next five years has been estimated with reference to the expected long-term average growth rate was determined to be 2.0% (2025: 2.0%). Discount rate: The discount rate is based on the specific circumstances of the Group and its CGUs and was derived from its weighted average cost of capital. Consideration was given to the cost of both debt and equity, and the Group’s weighted average cost of capital was determined to be 9.8% (2025: 9.8%). At 30 June 2026, the recoverable amount of the CGU exceeded its carrying amount and no impairment has been recognised. Sensitivity analysis undertaken on the UK goodwill assumptions modelled and would result in impairment if there were a change in the assumptions by the magnitudes indicated: - 5-year revenue CAGR decreased to below 4.9% and all other assumptions held constant - If the gross margin decreased to below 57 .0% with revenue assumptions being constant at a 5-year revenue CAGR of 6.4% - If the discount rate increases by more than 2.7% and all other assumptions held constant. Website costs The direct costs of developing the Group’s websites are measured at cost, less accumulated amortisation and any impairment in value. The Group determines that the website will generate probable future economic benefits and recognises both internal expenditure and external expenditure on website content as an intangible. The website costs are determined to have a finite life of between 3 and 5 years and amortisation is provided on a straight-line basis over the useful life. Note 16. Borrowings 2026 2025 $’000 $’000 Current bank loans 41,300 11,000 Non-current bank loans 30,387 60,687 71,687 71,687 Reconciliation of borrowings Opening borrowings 71,687 71,687 71,687 71,687
Page 39
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 37 Note 16. Borrowings (continued) Recognition and measurement - Interest-bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings. Borrowing costs are recognised as an expense when incurred, unless they are directly attributable to the acquisition, construction, or production of a qualifying asset whereby they are capitalised. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Note 17. Payables 2026 2025 $’000 $’000 Trade creditors 15,586 19,621 Other creditors 14,739 15,164 30,325 34,785 Trade creditors Trade creditors are non-interest-bearing financial instruments and are normally settled within 30 days. Other creditors Other creditors are non-interest-bearing financial instruments and are normally settled on 30- to 60-day terms. Recognition and measurement - Payables Trade and other payables are carried at amortised cost and due to their short -term nature, they are not discounted. They represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of goods and services received. Currency Interest rate including commitment fee Year of maturity Carrying amount $000 - 30 June 2026 Carrying amount $000 - 30 June 2025 Secured corporate bank loan AUD 5.91% 2027 28,000 28,000 Secured property bank loans AUD 5.69% 2027 13,300 13,300 Secured property bank loans AUD 5.79% 2028 14,262 14,262 Secured property bank loan AUD 5.49% 2029 16,125 16,125 Total 71,687 71,687
Page 40
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 38 Note 18. Deferred revenue 2026 2025 $’000 $’000 Customer deposits 64,184 65,586 Current accidental damage warranties 414 718 Current deferred revenue 64,598 66,304 Non-current accidental damage warranties 908 864 Non-current deferred revenue 908 864 65,506 67,168 Recognition and measurement – Deferred revenue Customer deposits Customer deposits represent amounts received from customers for orders not yet completed. Deposits received from customers are recognised as revenue at the point of delivery of the goods to the customer. Orders are typically completed within three months and deposits are therefore considered short-term in nature and are not discounted. Accidental damage warranties Accidental damage warranties are purchased by customers in conjunction with the purchase of goods and are initially measured based on an allocation of the purchase price between the fair value of the goods and the warranty. Amounts deferred are recognised as revenue over the term of the warranty. Accidental damage warranties classified as current will be recognised as revenue within 12 months of the reporting date. Note 19. Provisions 2026 2025 $’000 $’000 Current employee entitlements 6722 6,503 Current lease make good 761 961 Current provisions 7,483 7,464 Non-current employee entitlements 598 551 Non-current lease make good 1,022 1,126 Non-current provisions 1,620 1,677 9,103 9,141 Recognition and measurement - Provisions Employee entitlements Liabilities for annual leave and long service leave expected to be settled within 12 months of the reporting date are measured as the amounts to be paid when the liabilities are settled and are discounted to net present value. Liabilities for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Lease make good A provision has been made for the present value of anticipated costs of future restoration of leased properties. The provision includes future cost estimates associated with restoring the premises to its condition at the time the Company initially leased the premises, subject to fair wear and tear.
Page 41
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 39 Note 20. Issued capital 2026 2025 No. of Shares No. of Shares Authorised and fully paid ordinary shares 85,530,699 85,530,699 2026 2025 $’000 $’000 Authorised and fully paid ordinary shares 61,997 61,997 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. All ordinary shares carry one vote per share without restriction. There are no other classes of equity securities. Recognition and measurement – Issued share capital Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received, net of tax. Note 21. Reserves 2026 2025 $’000 $’000 Capital profits reserve 78 78 Cash flow hedge reserve 1,845 (1,416) Foreign exchange reserve (1,522) 3,050 Equity benefits reserve (884) (1,192) (483) 520 Movements in reserves Equity benefits reserve Capital profits reserve Cashflow hedge reserve Foreign exchange reserve Total $’000 $’000 $’000 $’000 $’000 Balance at 30 June 2024 (608) 78 80 (252) (702) Amounts recognised for cash flow hedges - - (1,496) - (1,496) Income tax on items taken directly to or transferred from equity (159) - - - (159) Purchase of shares under EPRP (539) - - - (539) Share based payments expense 114 - - - 114 Foreign currency translation - - - 3,302 3,302 Balance at 30 June 2025 (1,192) 78 (1,416) 3,050 520 Amounts recognised for cash flow hedges - - 3,261 - 3,261 Share based payments expense 308 - - - 308 Foreign currency translation - - - (4,572) (4,572) Balance at 30 June 2026 (884) 78 1,845 1,522 (483)
Page 42
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 40 Note 21. Reserves (continued) Equity benefits reserve This reserve is used to record the value of share-based payments provided to employees as part of their remuneration. Refer to Note 29 for further details of these plans. Capital profits reserve This reserve is comprised wholly of the surplus on the disposal of assets that were acquired prior to the introduction of Capital Gains Tax provisions. Cash flow hedge reserve This reserve is used to recognise the effective portion of the gain or loss on cash flow hedge instruments that are determined to be effective hedges. Foreign exchange reserve This reserve is used to recognise differences arising where assets and liabilities denominated in foreign currencies are translated at the functional currency exchange rate prevailing at the reporting date. Note 22 Financing facilities Unrestricted access was available to the following credit facilities at the reporting date: 2026 2025 $’000 $’000 Total facilities Bank loans expiring within 12 months 41,300 11,000 Bank loans expiring in greater than 12 months 30,387 60,687 Revolving Loan Facility - 20,000 Bank guarantee facilities 3,000 3,000 74,687 94,687 Facilities used at reporting date Bank loans expiring within 12 months 41,300 11,000 Bank loans expiring in greater than 12 months 30,387 60,687 Bank guarantee facilities 235 295 71,922 71,982 Facilities unused at reporting date Revolving Loan Facility - 20,000 Bank guarantee facilities 2,765 2,705 2,765 22,705 Note 23. Financial instruments Financial risk management objectives The Company has exposure to foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Company’s financial risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors has established an Audit and Risk Committee, which is responsible for developing and monitoring the Company’s risk management policies. The Committee provides regular reports to the Board of Directors on its activities. The Company’s principal financial instruments comprise bank loans, and cash and short-term deposits. The main purpose of these financial Instruments is to raise finance for and fund the Company’s operations. The Company has various other
Page 43
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 41 Note 23. Financial instruments (continued) financial instruments such as trade debtors and trade creditors, which arise directly from its operations. It is, and has bee n throughout the year, the Company’s policy that no trading in financial instruments is undertaken. Market risk Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control exposure within acceptable parameters while maximising return. Foreign currency risk All the Company’s sales are denominated in either Australian dollars, New Zealand dollars or Great British Pounds, whilst the majority of inventory purchases are denominated in primarily US dollars. Where appropriate the Company uses forward currency contracts and options to manage its currency exposures; and where the qualifying criteria are met, these are designated as hedging instruments for the purposes of hedge accounting. As of 30 June 2026, the Company had trade payables of $8,420,000 (2025: $4,372,000) denominated in US dollars and stock in transit of $ 10,915,000 (2025: $ 13,590,000), all of which are covered by designated cash flow hedges. As a result, the sensitivity to a reasonably possible change in the US dollar exchange rate is minimal. The cash flows relating to cash flow hedge positions held at year end are expected to occur in July 2026 through to February 2027, and the profit and loss is expected to be affected through cost of sales as the hedged items (inventory) are sold to customers. All forecast transactions subject to hedge accounting have occurred or are highly likely to occur. The terms of the foreign currency forward contracts have been negotiated to match the terms of the forecasted transactions. Both parties of the contract have fully cash collateralised the foreign currency forward contracts, and therefore, effectivel y eliminated any credit risk associated with the contracts (both the counterparty’s and the Company's own credit risk). Consequently, the hedges were assessed to be highly effective. As of 30 June 2026, an unrealised gain of $3,261,000 (30 June 2025: an unrealised loss of $1,496,000) is recorded in other comprehensive income. Interest rate risk Financial instruments utilised that are subject to interest, and therefore interest rate risk, are cash and commercial bills. Management continually monitor the exposure to interest rate risk, and t he following table sets out the carrying amount by maturity of the financial instruments exposed to interest rate risk at reporting date. All financial instruments exposed to interest rate risk are exposed to a variable interest rate. The fair value of the cash, deposits and bank loans shown below are based on the face value of those financial instruments. 2026 2025 Weighted average interest rate Balance Weighted average interest rate Balance % $’000 % $’000 Assets less than three months - Cash 4.64 106,594 3.84 100,993 Liabilities less than one year – Bank loans 5.73 (41,300) 4.91 (11,000) Liabilities between one and five years – Bank loans 5.58 (30,387) 5.02 (60,687) 34,907 29,306 A reasonably possible decrease (or increase) in the interest rate of 50 basis points would result in a decrease (or increase) of profit of $175,000 (2025: $146,000 on 50 basis points movement). Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. In most cases, the Company requires full and final payment either prior to, or upon delivery of the goods to the customer. In limited cases where credit is provided, the Company trades on credit terms with recognised, creditworthy third parties. Customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant. There are no significant concentrations of credit risk within the Company.
Page 44
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 42 Note 23. Financial instruments (continued) With respect to credit risk arising from financial assets of the Company, which comprise of cash and cash equivalents and receivables, the Company’s maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised financial assets is in the carrying amount, net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements. Cash and cash equivalents are only invested with credit worthy counterparties that are large Australian banks. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. The Company manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. The following tables detail the Company's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both known interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Lease liabilities only include remaining contractual terms and exclude lease options not yet exercised. Less than 3 months 3 to 12 months 1 to 5 years Over 5 years Remaining maturities $’000 $’000 $’000 $’000 $’000 Year ended 30 June 2026 Interest bearing Bank loans - 41,300 30,659 - 71,959 Lease liabilities 13,520 37,900 132,285 14,116 197,821 Non-interest bearing Trade creditors 15,586 - - - 15,586 Other creditors 14,739 - - - 14,739 Current tax liabilities - 5,419 - - 5,419 43,845 84,619 162,944 14,116 305,524 Year ended 30 June 2025 Interest bearing Bank loans - 11,044 61,189 - 72,233 Lease liabilities 13,091 34,692 97,355 10,173 155,311 Non-interest bearing Trade creditors 19,621 - - - 19,621 Other creditors 15,164 - - - 15,164 Current tax liabilities - - - - - 47,876 45,736 158,544 10,173 262,329 Fair value hierarchy All financial instruments for which fair value is recognised or disclosed are categorised with the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1: Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities
Page 45
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 43 Note 23. Financial instruments (continued) Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable At the reporting date the fair value of derivative financial instruments represented a derivative hedge receivable of $1,796,000 (2025: payable of $2,427,000). All foreign currency forward contracts were measured at fair value using the Level 2 method. Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Recognition and measurement - Financial instruments Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. Recognition of the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and the nature of the item being hedged. As appropriate, the Company designates derivatives as either hedges of the fair value of recognised assets or liabilities of firm commitments (fair value hedges) or hedges of highly probable forecast transactions (cash flow hedges). Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects t he significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one year to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Note 24. Contingent liabilities In the ordinary course of business , the Group is subject to various legal actions, inquiries and investigations from regulators and government bodies. Consideration has been given to all such matters at 30 June 2026, and no contingent liabilities were identified at that date (30 June 2025: Nil). Note 25. Commitments 2026 2025 $’000 $’000 Land and buildings 28,835 11,379 Leasehold improvements 172 168 Plant and equipment 577 67 IT 21 147 29,605 11,761 Note 26. Employees The total number of employees at the reporting date was as follows: 2026 2025 No. No. Number of full-time and part-time employees at balance date 811 850
Page 46
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 44 Note 27. Key management personnel The aggregate compensation made to directors and other key management personnel of the Company is set out below: 2026 2025 Short-term employee benefits 4,010,911 3,392,914 Long-term employee benefits 16,140 88,030 Post-employment benefits 149,039 146,577 Share-based payments - 113,386 4,176,090 3,740,907 Note 28. Related party transactions Related party transactions between the Company and the directors and personally related entities were made during the year in the ordinary course of business on normal commercial terms and conditions. The nature of these dealings was primarily the reimbursement of personal expenses incurred on Company paid with credit cards, the employment of immediate family members and the purchase of products for their own use. Receivables from and payables to related parties There were no trade receivables from or trade payables to related parties on 30 June 2026 (2025: Nil). Loans or from related parties There were no loans to or from related parties on 30 June 2026 (2025: Nil). Note 29. Share-based payments The Company has an Executive Performance Rights Plan (EPRP) which is provided for executives and other employees. In accordance with the provisions of the plan, executives and employees are awarded rights to ordinary shares that will vest after a period of three years subject to the achievement of specific performance hurdles in relation to earnings per share (EPS) growth. There is no exercise price for the shares and the employees can exercise the right for up to two years following vesting, after which time the rights lapse. The following table reconciles the outstanding employee share rights under the EPRP at the beginning and end of the financial year: 2026 2025 Outstanding share rights at the start of the year 151,856 149,558 Share rights granted 23,917 50,543 Share rights vested and exercised - (36,245) Share rights lapsed (49,516) (12,000) Outstanding share rights at the end of the year 126,257 151,856 The expense recognised in relation to employee share rights during the year was $306,873 (2025: $113,958). Recognition and measurement - Share-based payments Share-based payments are measured at the fair value of the rights at grant date and are expensed on a straight-line basis over the vesting period, with a corresponding increase in equity, based on the Company’s estimate of the number of shares that will eventually vest, considering the likelihood of employee turnover and the likelihood of non-market performance conditions being met. The fair value of rights at grant date is valued under risk neutral conditions. Under these conditions the value of the right is equivalent to the share price reduced by the present value of dividends payable on the shares until vesting. The present value of the dividends is deducted from the share price because the right holder is not entitled to dividends until the rights are exercised. The valuation assumes that the rights are exercised as they vest.
Page 47
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 45 Note 29. Share-based payments (cont) The key assumptions used for determining fair value at grant date are as follows: 2026 2025 Share price at grant date ($) 22.40 16.72 Share price at grant date of retention rights ($) 17.40 - Dividend yield (%) 3.38 4.07 Franking rate (%) 30.0 30.0 Implied pre-tax effective dividend yield (%) 4.8 5.8 Note 30. Parent entity information Set out below is the supplementary information about the parent entity. Statement of financial position 2026 2025 $’000 $’000 Current assets 313,696 299,098 Non-current assets 300,217 271,043 Total assets 613,913 570,141 Current liabilities 138,402 112,261 Non-current liabilities 171,683 182,385 Total liabilities 310,085 294,646 Net assets 303,828 275,495 Equity Issued capital 61,997 61,997 Capital profits reserve 78 78 Cash flow hedge reserve 1,725 (1,537) Equity benefits reserve (885) (1,191) Retained profits 240,913 216,148 Total equity 303,828 275,495 Statement of comprehensive income 2026 2025 $’000 $’000 Profit after income tax expense 56,988 52,432 Other comprehensive Income 3,262 (1,496) Total comprehensive income for the year 60,250 50,936 Recognition and measurement - Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Nick Scali Limited ('Company' or 'parent entity') as of 30 June 202 6 and the results of all subsidiaries for the year then ended. Nick Scali Limited and its subsidiaries together are referred to in these financial statements as the Group. Subsidiaries are all those entities over which the Company has control. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power to direct
Page 48
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 46 the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances, and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Note 31. Controlled entities Subsidiaries The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in accordance with the accounting policy described in this financial report Name of Entity Country of incorporation Class of shares 2026 2025 % % Nick Scali (New Zealand) Limited New Zealand Ordinary 100.0 100.0 Nick Scali Employee Share Scheme Pty Limited Australia Ordinary 100.0 100.0 Plush-Think Sofas Pty Limited Australia Ordinary 100.0 100.0 Nick Scali Furniture Limited United Kingdom Ordinary 100.0 100.0 Nick Scali Holdings (UK) Limited NSL Operations Limited Nora Debtco UK Limited Anglia Home Furnishings Limited AHF Internet Limited United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Ordinary Ordinary Ordinary Ordinary Ordinary 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Closed Group Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, Nick Scali Limited, Plush -Think Sofas Pty Limited and Nick Scali Employee Share Scheme Pty Ltd (the “Closed Group”) entered into a deed of cross guarantee on 30 June 2022. The effect of the deed is that Nick Scali Limited has guaranteed to pay any deficiency in the event of winding up of any controlled entity or if they do not meet their obligations under the terms of overdrafts, loans, leases or other liabi lities subject to the guarantee. The controlled entities within the Closed Group have also given a similar guarantee in the event that Nick Scali Limited is wound up or if it does not meet its obligations under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The consolidated statement of profit or loss, consolidated statement of comprehensive income, summary of movements in consolidated retained earnings and consolidated statement of financial position of the entities that are members of the Closed Group are as follows:
Page 49
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 47 Note 31. Controlled entities (continued) Closed Group 2026 Closed Group 2025 $’000 $’000 Statement of profit or loss Revenue from contracts with customers 458,030 435,101 Cost of goods sold (154,869) (152,110) Other income 2,160 4,796 Operating expenses (134,828) (132,569) Depreciation and amortisation (43,910) (40,427) Finance costs (12,418) (14,857) Profit before income tax expenses 114,165 99,934 Income tax expense (34,202) (29,295) Profit for the year 79,963 70,639 Other comprehensive income Net change in the fair value of cash flow hedges taken to equity, net of tax 3,262 (1,496) Other comprehensive income for the year, net of tax 3,262 (1,496) Total comprehensive income for the year, net of tax 83,225 69,143 Summary of movements in consolidated retained earnings Retained earnings at the beginning of the year 213,621 196,767 Profit for the year 79,963 70,639 Dividends paid during the year (61,582) (53,785) Retained earnings at the end of the year 232,002 213,621
Page 50
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 48 Note 31. Controlled entities (continued) Closed Group 2026 Closed Group 2025 $’000 $’000 Statement of financial position Assets Current assets Cash and cash equivalents 94,327 86,765 Receivables 823 807 Current tax receivable - 2,843 Inventories 43,107 47,873 Other financial assets 63,682 56,888 Prepayments 5,668 4,823 Total current assets 207,607 199,999 Non-current assets Land and buildings 131,017 120,112 Plant and equipment 22,248 22,046 Right-of-use assets 200,139 181,936 Intangibles 130,432 130,148 Total non-current assets 483,836 454,242 Total assets 691,443 654,241 Liabilities Current liabilities Borrowings 41,300 11,000 Payables 24,150 28,984 Lease liabilities 34,463 34,620 Deferred revenue 57,562 60,023 Current tax liabilities 5,298 - Other financial liabilities - 2,428 Provisions 6,642 6,449 Total current liabilities 169,415 143,504 Non-current liabilities Borrowings 30,387 60,687 Lease liabilities 190,354 170,504 Deferred revenue 876 822 Deferred tax 3,903 3,693 Provisions 1,546 1,543 Total non-current liabilities 227,066 237,249 Total liabilities 396,481 380,753 Net assets 294,962 273,488 Equity Issued capital 61,997 61,997 Reserves 963 (2,130) Retained profits 232,002 213,621 Total equity 294,962 273,488
Page 51
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 49 Note 32. Significant events after the reporting period The company will complete the acquisition of a retail property in Richmond, Victoria in August 2026 for $22m which we expect to be debt funded. The Company declared a dividend on 7 August 2026 (see Note 7). No other matter or circumstance has arisen since 30 June 202 6 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Note 33. Remuneration of auditors During the financial year, the following fees were paid or payable for services provided by KPMG (KPMG in 20 25), the auditor of the Company, and its network firms. In addition, Azets, an audit firm based in the United Kingdom, was engaged as component auditor for the UK operations. 2026 2025 Audit services Auditors of the financial Report 347,930 331,850 Review of the Sustainability Report 55,660 - Total for Auditors of the Group - KPMG 403,590 331,850 Other Auditors 11,249 13,000 Other services Tax review 8,914 8,406 Tax compliance 91,866 45,398 5 15,619 398,654 Note 34. Summary of other material accounting policies Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting year; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting year. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting year; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting year. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Other taxes Revenues, expenses, and assets are recognised net of the amount of Goods and Services Tax (‘GST’) except: - when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and - receivables and payables, which are stated with the amount of GST included. Th e net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Foreign currency translation The financial statements are presented in Australian dollars, which is Nick Scali Limited's functional and presentation currency.
Page 52
Nick Scali Limited Annual report for the year ended 30 June 2026 Notes to the consolidated financial statements 50 Note 34. Summary of other material accounting policies (continued) Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions or at the hedged rate if qualifying financial instruments have been used to reduce exposure. Monetary assets and liabilities denominated in foreign currencies are retranslated at the financial year-end exchange rates and recognised in profit or loss. All exchange differences are recognised in the statement of comprehensive income, except when deferred in equity as qualifying cash flow hedges. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. Derecognition of financial assets and financial liabilities Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when either: - the rights to receive cash flows from the asset have expired; or - the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or - the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset. When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Company could be required to repay. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged, cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) because of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre -tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised a s a borrowing cost. Dividends Dividends are recognised when declared during the financial year and no longer at the discretion of the Company. Rounding of amounts The Company is of a kind referred to in Class Order 20 26/183, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
Page 53
Nick Scali Limited Annual report for the year ended 30 June 2026 Consolidated entity disclosure statement 51 Consolidated entity disclosure statement Set out below is relevant information relating to entities that are consolidated in the consolidated financial statements at the end of the financial year as required by the Corporations Act 2001 (s.295(3A)(a)). For the year ended 30 June 2026 Entity Name Body corporate, partnership or trust Place incorporated /formed % of share capital held directly or indirectly by the company in the body corporate Australian or foreign tax resident Jurisdiction for foreign tax resident Nick Scali Limited (the Company) Body Corporate N/A N/A Australian N/A Nick Scali (New Zealand) Limited Body corporate New Zealand 100% Foreign New Zealand Nick Scali Employee Share Scheme Pty Limited Body Corporate Australia 100% Australian N/A Plush-Think Sofas Pty Limited Body Corporate Australia 100% Australian N/A Nick Scali Holdings (UK) Limited Body Corporate UK 100% Foreign UK NSL Operations Limited Body Corporate UK 100% Foreign UK Nora Debtco UK Limited Body Corporate UK 100% Foreign UK Nick Scali Furniture Limited Body Corporate UK 100% Foreign UK Anglia Home Furnishings Limited Body Corporate UK 100% Foreign UK AHF Internet Limited Body Corporate UK 100% Foreign UK Key assumptions and judgements Section 295 (3A) of the Corporation Act 2001 requires that the tax residency of each entity which is included in the Consolidated Entity Disclosure Statement (CEDS) be disclosed. In the context of an entity which was an Australian resident, “Australian resident” has the meaning provided in the Income Tax Assessment Act 1997 . The determination of tax residency involves judgement as the determination of tax residency is highly fact dependent and there are currently several different interpretations that could be adopted, and which could give rise to a different conclusion on residency. In determining tax residency, the consolidated entity has applied the following interpretations: Australian tax residency The consolidated entity has applied current legislation and judicial precedent, including having regard to the Commission of Taxation’s public guidance in Tax Ruling TR 2018/5. Foreign Tax residency The consolidated entity has applied current legislation and where available judicial precedent in the determination of foreign tax residency.
Page 54
Nick Scali Limited Annual report for the year ended 30 June 2026 Directors’ declaration 52 Directors’ declaration In the Directors; opinion: • the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; • the consolidated entity disclosure statement as at 30 June 2026 set out on page 51 is true and correct; and • the attached financial statements and notes comply with the International Financial Reporting Standards as issued by the International Accounting Standards Board as described in Note 1 to the financial statements; • the attached financial statements and notes g ive a true and fair view of the Company’s financial position as at 30 June 2026 and of its performance for the financial year ended on that date; and • there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. • as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in Note 31 will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee. The Directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Anthony Scali William Koeck Executive Chair and Chief Executive Officer Deputy Chair and Lead Independent Non-Executive Director 7 August 2026 Sydney
Page 55
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the members of Nick Scali Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Nick Scali Limited (the Company). In our opinion, the accompanying Financial Report of the Company gives a true and fair view, including of the Group’s financial position as at 30 June 2026 and of its financial performance for the year then ended, in accordance with the Corporations Act 2001, in compliance with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • C onsolidated statement of financial position as at 30 J une 2026; • C onsolidated statement of profit or loss and other comprehensive income, Consolidated statement of c hanges in equity, and Consolidated statement of cash flows for the year then ended; • C onsolidated entity disclosure statement and acco mpanying basis of preparation as at 30 June 2026; • Notes, including material accounting policies; and • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to audits of the financial report of public interest entities in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. 53
Page 56
54 Key Audit Matters Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. UK Goodwill amount ($33m) Refer to Note 15 to the financial report The key audit matter How the matter was addressed in our audit A key audit matter was the Group’s annual testing of goodwill allocated to the UK group of Cash Generating Units (CGU) for impairment. Certain conditions impacting the Group increased the judgement applied by us when evaluating the evidence available. We focussed on the significant forward-looking assumptions the Group applied in their value in use model, including: • forecast operating cash flows – the s egment has incurred a loss during the year due to business disruptions arising from showroom refurbishments undertaken as part of the rebranding to Nick Scali. This increases the possibility of goodwill bei ng i mpaired, plus the risk of inaccurate f orecasts or a wider range of possible out comes, for us to consider. • forecast growth rates– in addition to the unc ertainties described above, the model is sensitive to changes in this assumption, indicating possible impairment. This drives additional audit effort specific to their feasibility and consistency of application to the Group’s strategy. • discount rate - these are complicated in na ture and vary according to the conditions and environment the specific Cash G enerating Unit (CGU) is subject to, and the m odel’s approach to incorporating risks into t he cash flows. We involve our valuations sp ecialist with the assessment. The Group uses a manually developed model to perform their annual testing of goodwill for impairment. The model uses adjusted historical Our procedures included: • We considered the appropriateness of the value in use method applied by the Group to perform the annual test of goodwill for impairment against the requirements of the accounting standards. • We assessed the integrity of the value in use m odel used, including the accuracy of the under lying calculation formulas. • We compared the forecast cash flows contained i n the value in use model to Board approved f orecasts. • We assessed the accuracy of previous Group f orecasts to inform our evaluation of forecasts incorporated in the model. • We assessed the Group’s determination of CGU assets for consistency with the assumption s us ed in the forecast cash flows and the r equirements of the accounting standards. • We challenged the Group’s significant forecast cash flow and growth assumptions. We compared key events, including showroom closures and rebranding activities undertak en t hroughout the period to the Board approved plan a nd strategy. We applied increased scepticism to f orecasts in the areas where previous forecasts w ere not achieved. We assessed the objectivity of sources used for assumptions, including c omparing forecast growth rates to published s tudies of industry trends and expectations, and c onsidered differences for the Group’s operations. We used our knowledge of the
Page 57
55 performance, and a range of internal and external sources as inputs to the assumptions. Using forward-looking assumptions tend to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny, in particular to address the objectivity of sources used for assumptions, and their consistent application. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. Group, their past performance, business and customers, and our industry experience. • We checked the consistency of the growth rates and gross margin to the Group’s stated plan and s trategy, past performance of the Group, and our experience regarding the feasibility of these in t he economic environment in which they operate. We assessed these assumptions for indicators of bi as and inconsistent application, using our industry knowledge. • Working with our valuation specialists, we i ndependently developed a discount rate range us ing publicly available market data for comparable entities, adjusted by risk factors s pecific to the Group and the industry it operates in. • We considered the sensitivity of the model by varying key assumptions, such as forecast growth rates and discount rates, within a reasonably possible range. We did this to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures. • We assessed the disclosures in the financial r eport using our understanding obtained from our testing and against the requirements of the a ccounting standards. Other Information Other Information is financial and non-financial information in Nick Scali Limited’s annual report which is provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and specified sustainability disclosures within the Sustainability Report and our respective assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Page 58
56 We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report in accordance with the Corporations Act 2001, including giving a t rue and fair view of the financial position and performance of the Group, and in compliance with Australian Accounting Standards and the Corporations Regulations 2001 • implementing necessary internal control to enable the preparation of a Financial Report in a ccordance with the Corporations Act 2001, including giving a true and fair view of the financial position and performance of the Group, and that is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the us e of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • t o issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/media/bwvjcgre/ar1_2024.pdf. This description forms part of our Auditor’s Report.
Page 59
57 Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Nick Scali Limited for the year ended 30 June 2026, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 11 to 18 of the Directors’ report for the year ended 30 June 2026. Our responsibility is to express an opinion as to whether the Remuneration Report complies in all material respects with Section 300A of the Corporations Act 2001, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Julie Cleary Partner Sydney 7 August 2026
Page 60
6 0 Contents Basis of Preparation 61 Governance 61 Strategy 63 Climate-related risks and opportunities 63 Risk Management 67 Metrics and Targets 67 Directors Declaration 69 Independent auditor’s report to the member of Nick Scali Limited 70 Sustainability Report 30 June 2026
Page 61
Nick Scali Limited Sustainability report for the year ended 30 June 2026 61 Basis of Preparation Reporting Entity This Sustainability Report has been prepared for Nick Scali Limited and its controlled entities (the Group) and contains the climate -related financial information for the Group for the financial year ended 30 June 2026, which aligns with, and should be read in conjunction with, the Group’s consolidated financial statements. The reporting entities for climate-related disclosures align with those included in the Group’s consolidated financial statements. The Group’s Sustainability Report has been prepared in accordance with AASB S2 Climate-related Disclosures (AASB S2), issued by the Australian Accounting Standards Board, and the Corporations Act 2001. The Group has applied the following transition relief as this is the first reporting period: - No comparative climate disclosures have been presented. - No Scope 3 greenhouse gas emissions have been disclosed. Assumptions, judgements, estimates and forward looking statements In the preparation and presentation of this Sustainability Report, the Group has exercised judgement to determine the climate-related information that is relevant, reliable and useful to disclose. This Sustainability Report includes forward-looking information regarding the anticipated financial effects of climate- related risks and opportunities (CRROs). Such information reflects the Group's assessment of climate -related risks and opportunities at the reporting date. The preparation of climate related disclosures requires the application of judgement and the use of estimates and assumptions. The disclosures include forward looking information, which is based on management's current expectations, assumptions and estimates. Due to the forward looking nature of certain climate related disclosures actual outcomes may vary from those expressed in the statements contained in the Sustainability Report. The most significant judgements and measurement and estimation uncertainty that could affect the information disclosure are described below. Significant judgements that were applied in the Sustainability Report include: - Identifying and assessing CRROs across the Group’s value chain that could reasonably be expected to affect the Group’s prospects - Selection of climate scenarios and the underlying key assumptions applied in modelling the impact on the Group. Scenario analysis has inherent limitations and is based on a wide range of assumptions, which may result in different outcomes (refer to page 7 for further details on these assumptions). - Defining and evaluating short, medium and long-term time horizons and associated impacts. - Determining which sources of data and guidance to apply in modelling the impact of the CRROs on the Group. Sources of measurement and estimation uncertainty Measurement and estimation uncertainty in the Sustainability Report arises in respect of measurement of the GHG emissions in accordance with the GHG protocol and in respect of the qualitative disclosures relating to CRROs. The disclosed GHG emissions metrics are unavoidably subject to inherent uncertainties arising from activity data and emissions factors. In respect of CRROs uncertainties exist with forward -looking assumptions and resilience assessments including, but without limitation, uncertainty regarding regulatory developments, policy timing, carbon pricing mechanisms, market trends, demand conditions, future energy market changes, consumer preferences, and time horizons over which and severity of climate outcomes which could emerge. These present inherent limitations in climate modelling, scenario analysis and climate resilience assessments. Governance Board oversight of climate-related risks and opportunities The Board retains ultimate responsibility for oversight of climate matters, including climate -related risks and opportunities (CRROs), and monitors these through the Audit and Risk Committee (ARC). As part of the broader risk
Page 62
Nick Scali Limited Sustainability report for the year ended 30 June 2026 62 Board oversight of climate-related risks and opportunities (continued) management and governance frameworks, the ARC assesses the adequacy of the Group’s plans and activities in relation to sustainability, including management of climate risks and opportunities and maintains oversight of sustainability and climate reporting. In overseeing climate-related risks and opportunities, the Group does not have a transition plan. The assessment of climate risks and opportunities does not currently consider the implications of trade-offs between climate risks and opportunities and futur e financial performance. The Board considers the potential implications of CRROs for the Group’s strategy including capital allocation decisions, lease portfolio management, and supplier arrangements. The Board and the Audit and Risk Committee (ARC) consider climate-related matters at least every six months as part of the Group's broader Enterprise Risk Management (ERM) framework review, including the review and approval of the Group's key CRROs. The ARC assists the Board in fulfilling its risk management responsibilities including overseeing the effectiveness of the Group’s process of risk management, internal controls and compliance. Climate-related matters are incorporated into existing governance processes, supporting Board -level oversight of climate-related risks and opportunities as part of the Group’s broader risk management and strategic oversight framework. The Board is responsible to oversee management’s assessment of climate -related targets. The Group has not established formal emissions reduction or other climate-related targets as at 30 June 2026. Board Skills and Competency Details of the Board’s composition, skills and competencies are provided in the Group’s Corporate Governance Statement published separately from this Annual Report and available on the ASX and the Group’s website. The Board’s Skills Matrix incorporates climate -related risk, strategy and reporting capabilities and is reviewed at least annually to ensure an appropriate mix of skills and experience is maintained. The outcomes of this review inform Board composition an d ongoing director development. Where additional climate -related expertise is required, the Board may obtain external advice or training to support its oversight responsibilities. Management’s role and accountability for climate-related risks and opportunities Overall accountability for identifying, assessing, managing, and monitoring the CRROs rests with the Chief Executive Officer. The Chief Financial Officer, supported by the finance and reporting team, assists the Chief Executive Officer in fulfilling those obligations and are responsible for designing and implementing processes, systems and controls to support the identification, assessment and management of climate-related risks and opportunities. The Chief Executive Office and Chief Financial Officer are responsible for overseeing the implementation of the Group's climate-related governance, strategy and reporting processes. Their responsibilities include oversight of the Group's climate risk assessment, governance processes, climate-related reporting under AASB S2 and integration of climate-related risks and opportunities into the Group's enterprise risk management framework. The Chief Financial Officer has undertaken sustainability training and has prior experience in asses sing climate -related risks and opportunities. Combined with ongoing professional development, this supports management's capability to identify, assess and oversee climate-related risks and opportunities relevant to the Group. CRROs are integrated within the Group’s Enterprise Risk Management (ERM) framework with defined risk ownership, and periodic monitoring and review of key climate -related risk matters, exposures and mitigation actions. Climate - related reporting processes are integrated with the Group’s existing financial reporting and risk management controls. Management is accountable for developing appropriate data governance processes to support reliable measurement and reporting including scenario analysis, data management, and establishing relevant metrics. Emissions data and other climate-related metrics are subject to internal review procedures, including reconciliation to underlying utility invoices, application of published emissions factors and review by finance personnel. The CEO is responsible for establishing reporting to the ARC to support board level oversight and strategic alignment. Key internal stakeholders across property, human resources, finance, retail operations and supply chain management support and are responsible for embedding key climate-related considerations in operational decision- making across the Group’s retail and supply chain activities.
Page 63
Nick Scali Limited Sustainability report for the year ended 30 June 2026 63 Strategy The Group’s climate strategy focuses on identifying, assessing and managing climate-related risks and opportunities that may reasonably be expected to affect the Group’s financial performance, resilience and long-term value. Given the Group’s predominantly leased retail footprint and offshore manufactured product supply chain, the Group focuses on areas where it has operational control, including energy consumption in stores and supplier engagement, supported by governance and transparent climate-related disclosures. Group initiatives for reduction of GHG emissions in any leased premises may require the consent of landlords and may involve additional costs to the business which are offset by energy efficiencies. In stores owned by the Group the consent of landlords for any initiatives to reduce GHG is not required. The Group has undertaken an assessment of current and emerging climate-related risks and opportunities, focusing on their potential financial and operational impacts and related strategic implications. For the purposes of assessing climate-related risks and opportunities, the Group applies the following time horizons: - Short term: 0-2 years - Medium term: 2-5 years - Long term: Beyond 5 years These time horizons are aligned with the Group’s strategic planning cycles, lease portfolio duration, supplier contract structures and capital allocation planning. Climate-related risks and opportunities are assessed across each of these time horizons when performing scenario analysis and risk assessments. Performance evaluations for the Chief Executive Officer are conducted by the Group as part of the Group’s governance processes. The Chief Executive Officer’s performance evaluation includes a risk management component; however, climate -related key performance indicators are not currently directly incorporated into remuneration for executives or directors of the Group. The Group does not apply an internal carbo n price in its assessment of climate-related risks and opportunities or in decision-making processes. Climate-related risks and opportunities The Group’s analysis identified key climate -related risks and opportunities (CRROs) that could potentially influence future cash flows, access to finance, and the cost of capital, across the short, medium and long term. A qualitative description of the CRRO anticipated impacts is provided below. Quantitative information has not been provided due to the high level of measurement and estimation uncertainty of the resulting quantitative information and would not be useful. Transition Risks Risk Anticipated Impacts Strategic Responses Carbon pricing and regulatory change Long term (5+ years): Introduction of carbon pricing mechanisms or stricter climate regulations which may increase operating costs across energy, logistics and supplier networks. The Group will continue to monitor and respond to regulatory and policy developments. Continue to invest in improving energy efficiency in retail operations and assess opportunities to increase renewable energy procurement where possible and commercially viable. Supply chain compliance requirement Medium to long term (2–5+ years): Suppliers may face increased compliance requirements relating to emissions, sustainability standards or materials sourcing. Potential increase in product sourcing and compliance costs, changes to supplier availability, and added operational oversight requirements may increase inventory costs. The Group will continue to engage with suppliers on relevant sustainability matters and monitor emerging supply chain risks.
Page 64
Nick Scali Limited Sustainability report for the year ended 30 June 2026 64 Physical Risks Physical Risks Anticipated Impacts Strategic Responses Extreme weather events (flooding, storms, bushfires) Medium to long term (2–5+ years): Severe weather events may disrupt store operations, logistics networks, suppliers may delay product availability or damage physical assets. The Group will continue to maintain a geographically diverse showroom and distribution network and will identify opportunities to improve operational resilience and adaptive planning for extreme weather events. The Group will endeavor to maintain insurance coverage for extreme weather events where available on commercially acceptable terms. Opportunities Opportunity Anticipated Impacts Strategic Responses Renewable energy sourcing Medium to long term (2–5+ years): Increased use of renewable electricity may reduce emissions and exposure to energy price volatility. The Group may benefit from expanding renewable electricity procurement where possible and commercially viable, potentially reducing emissions and exposure to energy price volatility. Business model and Value chain The identified climate-related risks and opportunities may affect the Group’s business model primarily through its retail operations, supplier network and logistics activities. These impacts are distributed across the Group’s supplier and distribution netw orks rather than concentrated in any single geographic region or asset base. The risks and opportunities set out above describe the areas of potential exposure, the time horizons over which they may arise, and the key mitigation actions applied to manage these effects. Physical risk analysis, based on scenario modelling, considers potential impacts from asset damage (affecting inventories, right-of-use assets and property, plant and equipment) and business interruption (affecting revenues). These potential financial impacts are mitigated by the Group’s geographically dispersed showroom network, which helps diversify exposure to acute weather events, and are further mitigated by existing insurance coverage. Transition risk analysis considers potential increases in operating costs arising from regulatory developments, including carbon pricing mechanisms and enhanced compliance requirements. Based on its current emissions profile, the Group currently considers that it has lower exposure to these regulatory changes. Process for prioritising Climate-related risks and financial impacts CRROs have been assessed using the Group’s risk matrix that evaluates both likelihood and impact across short, medium, and long-term horizons as described above. This assessment draws on scenario analysis, input from senior leadership, and cross-functional review processes. Management’s consideration of these factors has informed current period budgeting assumptions and risk assessments. As at the reporting date, based on management’s current assessment, no material impacts have been identified on the Group’s financial position, financial performance or cash flows. The Group has considered the potential current and anticipated financial effects of these risks across asset values, revenues, operating costs and cash flows over the short, medium and long term , as described above. While no material financial impacts have been identified in the current reporting period, climate -related risks may potentially have material financial effects in future periods. Quantification of these impacts remains subject to estimation uncertainty due to the long-term nature of climate projections, evolving regulatory frameworks and market responses. Accordingly, the Group’s current assessment is primarily qualitative, with the potential for financial impact estimates to improve over time as data availability and methodologies improve. Strategy and decision-making Climate-related risks and opportunities have not resulted in material changes to the Group’s core retail business model during the reporting period. The Group has identified potential impacts and mitigation strategies to reduce
Page 65
Nick Scali Limited Sustainability report for the year ended 30 June 2026 65 Strategy and decision-making (continued) climate-related risks and support climate -related opportunities. Refer to the table under Climate -related risks and opportunities. Given the concentration of emissions in non -controlled activities, the Group’s strategic approach emphasises influence through commercial relationships rather than operational restructuring. Climate-related activities are resourced through the existing functional management team and funded through normal operational budgets. The Group does not currently maintain a dedicated climate or sustainability team, reflecting its business scale and emis sions profile. Any enhancements to systems, data processes or external advisory support are considered as part of normal strategic and operational planning processes. As at the reporting date, the Group has not adopted a climate -related transition plan or science based emissions reduction target, given the Group’s business operating model and emissions profile. Climate Resilience Assessment The Group has undertaken a climate resilience assessment by evaluating the potential effects of transition and physical climate risks on its business model, including operating cost structure, supply chain reliability, energy consumption and regulatory compliance obligations. Based on this assessment, management has not identified any immediate material changes to the Group’s strategy, business model or asset base. This reflects the Group’s asset- light operating model, supplier base and geographically distr ibuted retail footprint, which provide flexibility and reduce exposure to concentrated climate-related risks. Climate-related scenario analysis was conducted using global reference scenarios to evaluate potential impacts on the Group’s operations and value chain. These global reference scenarios were applied to the Group's operations in Australia, New Zealand and the United Kingdom. In assessing potential impacts, consideration was given to region- specific regulatory developments, energy market conditions, physical climate exposures and supply chain characteristics relevant to the Group's operating environment and the retail furniture sector. The scenario analysis was performed in financial year 2026 using the Group’s defined assessment horizons of short term (1–2 years), medium term (2–5 years) and long term (5+ years). These time horizons were used to assess how transition and physical climate-related risks and opportunities may evolve over time and their potential impacts on the Group’s operations, strategy and financial position under each reference scenario. The Group identified strategic responses to respond to the potential climate scenarios are pare part of the Groups usual business operations and the Group has adequate financial resources to respond to the effects identified from the CRROs scenario analysis. The Group selected reference scenarios that represent a range of plausible climate futures, including a scenario aligned with the temperature goals of the Paris Agreement and a higher warming scenario reflecting more limited global decarbonisation. These s cenarios were selected to assess the potential impacts of both transition and physical climate-related risks under different policy, market and climate conditions relevant to the Group’s operations in Australia, New Zealand and the United Kingdom. Scenario Description SSP1‑1.9 A temperature increase of approximately 1.5°C above pre -industrial levels (aligned with the Paris Agreement). This scenario assumes rapid decarbonisation, increased climate regulation, accelerated renewable energy adoption and stronger market expectations regarding sustainability performance. SSP2‑4.5 A higher warming scenario reflecting a temperature increase of approximately 2.5°C and slower global decarbonisation and less coordinated policy responses. Under this scenario, transition pressures are more gradual, but physical climate impacts such as ext reme weather events and temperature increases are more pronounced over time.
Page 66
Nick Scali Limited Sustainability report for the year ended 30 June 2026 66 Climate Resilience Assessment (continued) Scenario Key Drivers / Assumptions Implications for strategy Strategic response SSP1-1.9 (1.5 °C scenario) • Accelerated decarbonisation policies across all operating jurisdictions, including carbon pricing mechanisms • Increasing regulatory disclosure requirements • Heightened stakeholder expectations regarding sustainability performance • Increased energy efficiency requirements, with technological advancements declining reliance on fossil fuels • Potential increases in input costs due to transition measures • Increased policy and regulatory pressure and compliance costs could require accelerated emissions reduction efforts and pose risks to regulatory compliance • Failure of suppliers to meet sustainability performance obligations may result in disruptions to supply continuity, increased compliance and remediation costs, and potential reputational impacts for the Group. • Market demand for lower-carbon energy sources may increase energy cost exposure • Potential negative reputational impact if the Group or its suppliers are seen as not meeting evolving sustainability expectations, potentially affecting brand value, customer demand and investor confidence. • Ongoing monitoring and response to evolving regulatory and disclosure requirements • Continuing focus on improving energy efficiency across retail operations, including maintaining renewable electricity procurement at owned locations and evaluating further procurement opportunities where economically feasible. SSP2-4.5 (2.5°C+ scenario) • Increased frequency and severity of extreme weather events • Potential supply chain disruptions and Impacts on logistics networks • Changes in energy demand, with fossil fuels remaining significant but gradually declining as renewables and low-carbon technologies expand • Moderate technological development, supporting efficiency gains and partial decarbonisation • Incremental improvements in infrastructure with ongoing pressure on natural resources due to uneven adaptation • In creased operational disruption and downtime risk • Increased physical climate risks, including extreme weather events, may disrupt operations and logistics networks, resulting in downtime, increased operating costs and reduced supply chain reliability • Damage to infrastructure or third- party facilities may require additional maintenance, contingency planning and investment in resilience measures • Supply chain disruptions and resource constraints may lead to increased input costs and reduced availability of key products • Energy cost and demand variability in both upstream and downstream value chain components • Reputational impact of negative stakeholder perception if the Group is seen as inadequately prepared for or responsive to physical climate risks, potentially affecting brand value, customer trust and investor confidence • Identify opportunities to improve operational resilience, through store-level risk assessments and adaptive planning for extreme weather events • Integrate climate risk considerations into business continuity planning, including contingency arrangements for supply chain and distribution disruption
Page 67
Nick Scali Limited Sustainability report for the year ended 30 June 2026 67 Business Model and Capital Allocation Climate-related risks and opportunities may influence the Group’s medium -term financial planning processes, including operational budgeting, energy procurement decisions and supplier engagement strategies. Management considers potential impacts such as energy price volatility, logistics disruptions and regulatory developments when assessing future operating cost assumptions and capital allocation priorities. Risk Management Overview and Integration with Enterprise Risk Management The Group integrates climate -related risks and opportunities into its existing Enterprise Risk Management (ERM) framework, assessing them alongside other strategic, operational and financial risks to support more consistent identification, evaluation and oversight. Climate-related risks are considered relative to other principal risks using the Group’s established risk matrix, which evaluates likelihood and impact across financial, operational, regulatory and reputational dimensions, with the risk register reviewed bi-annually by management and tabled to the Audit and Risk Committee and the Board as part of regular risk reporting cycles. Processes to Identify, Assess, Prioritise and Monitor Climate-Related Risks and Opportunities Climate-related risks are primarily identified through the Group’s Enterprise Risk Management (ERM) process, which incorporates: - Internal operational data (including emissions data and engagement with internal stakeholders); - Regulatory developments in Australia, New Zealand and the United Kingdom; - Industry guidance and government issued emissions factors; - Supplier and logistics exposure assessments; and - Climate scenario references and market developments. The assessment covers all controlled operations, including retail stores, distribution centres and relevant value chain exposures while noting that much of the value chain exposure is offshore and not directly controlled. Identified climate -related risks are assessed using the Group’s risk matrix, which considers both qualitative and quantitative factors. Likelihood and impact are evaluated with reference to financial thresholds, operational disruption potential, regulatory exposure and reputational considerations to determine the CRROs that could reasonably be expected to affect the Group’s financial performance, cash flows and cost of capital. Risks and opportunities are assessed across short, medium and long term time horizons, as described above. Scenario analysis supports the identification and assessment of climate-related risks and opportunities, drawing on IPCC-aligned climate pathways, regulatory responses, supply chain exposures, and projected energy and carbon cost impacts to assess potential transition and physical climate-related risks. Further details of the scenarios considered are provided in the Climate Resilience and Scenario Analysis section of this Sustainability Report. Climate-related opportunities are identified through the Group’s Enterprise Risk Management process and are assessed by considering their potential to improve operational efficiency, reduce energy consumption and operating costs, strengthen business resilience, and support the Group’s long-term strategic objectives. Climate-related risks and opportunities are monitored through the Group’s existing risk management and governance processes and are reported through established management and Board reporting channels. Metrics and Targets FY26 represents the first full year of greenhouse gas (GHG) emission measurement for the Group. Scope 1 and Scope 2 emissions were quantified across its global footprint from the Group’s offices, stores and distribution centres, applying the GHG Protocol’s Operational Control approach to support whereby entities Sustainability Report emissions from facilities where they have the authority to implement operational policies to identify and measure material emissions sources. GHG emissions quantification is unavoidably subject to inherent limitations. Key estimates within the reported metrics include: • Extrapolation of electricity and gas data where data sourced from utility invoices and related records are not available for the entire reporting period.
Page 68
Nick Scali Limited Sustainability report for the year ended 30 June 2026 68 Metrics and Targets (continued) • Refrigerant leakage estimates based on landlord data or average leakage rates by coolant capacity, where required. • Spend-based or activity-based proxies where supplier-specific data is unavailable. • Emissions factors sourced from recognised government publications in Australia, New Zealand and the United Kingdom. Scope 1 GHG emissions refer to the direct GHG emissions that occur from sources owned or controlled by the Group. Emissions are calculated by applying relevant emissions factors to the underlying data, based on fuel consumption, gas usage and refrigerant leakage estimates using emissions factors for each operating jurisdiction. Key inputs include fuel card records, supplier inv oices, meter data and maintenance records. Where complete information is unavailable, reasonable estimates are applied using prior period usage or comparable site data. Scope 2 GHG emissions refer to the indirect GHG emissions from the electricity purchased from the grid by the Group. Emissions are calculated using the location-based method in accordance with the Greenhouse Gas Protocol. Key inputs include electricity invoices, landlord recoveries, utility statements and tenancy data. Where consumption data is not directly available, estimates have been based on prior usage, floor area, trading profile or landlord allocation methodologies. The Group does not currently hold renewable energy certificates, power purchase agreements or other contractual instruments that would result in a difference between location -based and market- based Scope 2 emissions. Renewable electricity procurement at certain owned locations is achieved through retail electricity products incorporating renewable supply attributes, rather than standalone renewable energy certificates or power purchase agreements. Metric FY26 (t CO₂-e) Emissions Source Scope 1 – Direct Emissions 568 Fuel use from company vehicles, onsite combustion and refrigeration fugitive emissions. Scope 2 – Indirect Emissions (Location- based) 7,167 Purchased electricity across owned and leased sites. Total Scope 1 and 2 emissions (Baseline) 7,735 Global Operations (Australia, New Zealand and United Kingdom) * Note: As FY26 represents the Group’s first baseline year for GHG reporting, prior periods are not presented because emissions were not quantified in previous years. Greenhouse gas emissions are measured in accordance with the Greenhouse Gas Protocol (2004) using an operational control approach as this methodology aligns with the Group’s financial reporting boundary and provides consistency with the consolidated financial statements. Emissions factors are sourced from relevant government publications in each operating jurisdiction, including the latest available factors from National Greenhouse Accounts Factors (Australia), Ministry for the Environment emissions factors (New Zealand), and UK Government greenhouse gas reporting conversion factors. The Group has commenced data requests and collection and supplier engagement to enable future Scope 3 emissions measurement and disclosure as this data becomes available to the Group.
Page 69
69 Directors Declaration The directors of Nick Scali Limited declare that, in their opinion, the Company and its controlled entities (the Group) have taken reasonable steps to ensure the substantive provisions of the Nick Scali Limited Sustainability Report for the year ended 30 J une 2026 set out on pages 60 to 68 are in accordance with Australian Sustainability Reporting Standards (AASB S2) and the Corporations Act 2001, including (a) Complying with the Australian Sustainability Reporting Standard AASB S2 Climate-related Disclosures and any further requirements determined under section 296C(2) of the Corporations Act 2001; and (b) Containing the climate statement disclosures required by section 296D of the Corporations Act 2001. This declaration is made on 7 August 2026 in accordance with a resolution of the board of directors of Nick Scali. On behalf of the board of directors Anthony Scali William Koeck Executive Chair and Chief Executive Officer Deputy Chair and Lead Independent Non-Executive Director 7 August 2026 Sydney
Page 70
Independent Auditor’s Review Report To the members of Nick Scali Limited Report on specified Sustainability Disclosures of Nick Scali Limited presented in the Sustainability Report titled “Sustainability Report 30 June 2026” prepared in accordance with the Corporations Act 2001 Review Conclusion on specified Sustainability Disclosures as required under the Corporations Act 2001 We have conducted a review of the following specified Sustainability Disclosures presented in the Sustainability Report of Nick Scali Limited titled “Sustainability Report 30 June 2026” in accordance with Australian Standards on Sustainability Assurance (ASSA) 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001 issued by the Auditing and Assurance Standards Board (AUASB). Specified Sustainability Disclosures Reporting requirement of Australian Sustainability Reporting Standard AASB S2 Climate-related Disclosures (AASB S2) (including related general disclosures required by Appendix D) (the Criteria) Locations in Sustainability Report Governance disclosures Paragraph 6 Section “Governance”, on pages 61-62 Strategy (risk and opportunities) disclosures Subparagraphs 9(a), 10(a) and 10(b) Section “Strategy”, subsection “Climate-related risks and opportunities”, on pages 63-64 Scope 1 greenhouse gas emissions Subparagraphs 29(a)(i)(1) to (2) and 29 (a)(ii) to (v) Section “Metrics and Targets”, table on page 68 including the emissions c alculation methodology described in t he accompanying notes to th e table. Scope 2 greenhouse gas emissions Section “Metrics and Targets”, table on page 68 including the emissions c alculation methodology des cri bed in the accompanying note s t o th e table. The requirements of AASB S2 identified in the table above form the Criteria relevant to the specified Sustainability Disclosures and apply under Division 1 of Part 2M.3 of the Corporations Act 2001 (the Act). We have not become aware of any matter in the course of our review that makes us believe that the specified Sustainability Disclosures specified in the table above do not comply with Division 1 of Part 2M.3 of the Corporations Act 2001. 70
Page 71
Basis for Conclusion Our review has been conducted in accordance with ASSA 5000 General Requirements for Sustainability Assurance Engagements issued by the AUASB. Our review includes obtaining limited assurance about whether the specified Sustainability Disclosures are free from material misstatement. In applying the relevant Criteria, we note that subsection 296C(1) of the Act includes a requirement to comply with AASB S2. Our conclusion is based on the procedures we have performed and the evidence we have obtained in accordance with ASSA 5000. The procedures in a review vary in nature and timing from, and are less in extent than for, an audit. Consequently, the level of assurance obtained in a review is substantially lower than the assurance that would have been obtained had an audit been performed. See the “Summary of the Work Performed“ section of our report. Our responsibilities under ASSA 5000 are further described in the “Our responsibilities” section of our report. We comply with the independence and other ethical requirements of APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited. Our firm applies Auditing Standard ASQM1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements, issued by the AUASB. This standard requires the firm to design, implement and operate a system of quality management, including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Other Information The Directors of Nick Scali Limited are responsible for the other information. The other information comprises the financial and non-financial information included in the Nick Scali Limited Annual Report, but does not include the specified Sustainability Disclosures and our review report thereon. Our conclusion on the specified Sustainability Disclosures does not cover the other information and we do not express any form of conclusion thereon, with the exception of the Financial Report and Remuneration Report and our respective audit reports. In connection with our review of the specified Sustainability Disclosures, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the specified Sustainability Disclosures, or our knowledge obtained when conducting the review, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 71
Page 72
Responsibilities for the specified Sustainability Disclosures The Directors of Nick Scali Limited are responsible for: • The preparation of the specified Sustainability Disclosures in accordance with the Act; and • Designing, implementing and maintaining a system of internal control that it determines is necessary to ena ble the preparation of specified Sustainability Disclosures in accordance with the Act that are free from material misstatement, whether due to fraud or error. Inherent Limitations I nherent limitations exist in all assurance engagements due to the selective testing of the information being examined. It is therefore possible that fraud, error or material misstatement in the specified Sustainability Disclosures may occur and not be detected. Non-financial data may be subject to more inherent limitations than financial data, given both its nature and the methods used for determining, calculating, and estimating such data. The precision of different measurement techniques may also vary. The absence of a significant body of established practice on which to draw to evaluate and measure non-financial information allows for different, but acceptable, evaluation and measurement techniques that can affect comparability between entities and over time. For climate risks and opportunities, there is inherent uncertainty as a result of using assumptions about future events and management’s actions that may not occur. Greenhouse gas quantification is subject to inherent uncertainty due to the nature of the information and the uncertainties inherent in: (i) the methods used for determining or estimating the appropriate amounts, (ii) information used to determine emission factors and (iii) the values needed to combine emissions of different gases. Auditor’s Responsibilities Our objectives are to plan and perform the review to obtain limited assurance about whether the specified Sustainability Disclosures are free from material misstatement, whether due to fraud or error, and to issue a review report that includes our conclusion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence decisions of users taken on the basis of the specified Sustainability Disclosures. As part of a review in accordance with ASSA 5000, we exercise professional judgment and maintain professional scepticism throughout the engagement. We also: • Perform risk assessment procedures, including obtaining an understanding of internal controls relevant to the enga gement to identify and assess the risks of material misstatement, whether due to fraud or error, at the di sclosure level but not for the purpose of providing a conclusion on the effectiveness of the entity’s internal control. • Design and perform procedures responsive to the assessed risks of material misstatement at the disclosure le vel. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 72
Page 73
Summary of the Work Performed A review is a limited assurance engagement and involves performing procedures to obtain evidence about the specified Sustainability Disclosures. The nature, timing and extent of procedures selected depend on professional judgement, including the assessed risks of material misstatement at the disclosure level, whether due to fraud or error. In conducting our review, we: • Enquired with management to understand the governance structures and reporting process; • Enquired with management to understand the process for developing the climate governance, strategy and m etrics disclosures; • Obtained an understanding of relevant processes, information flow and data sources; • Reviewed internal documentation including policies, charters, minutes of meetings, risk management frameworks, and basis of preparation documents; • Reviewed Nick Scali Limitd’s process undertaken to identify climate-related risks and opportunities that could r easonably be expected to affect the entity’s prospects; • Assessed the suitability and application of the Criteria in respect of the Specified Sustainability Disclosures; • For Scope 1 and 2 greenhouse gas emissions, tested underlying data to source documentation on a sample b asis; and • Reconciled the Specified Sustainability Disclosures to underlying information. KPM G Julie Cleary Partner Sydney 7 August 2026 73
Page 74
Shareholder information Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The information is current as at the 21st July 2026. Voting rights of equity securities The only class of equity securities on issue in the Company which carry voting rights are ordinary shares. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. A poll may be demanded at a general meeting of the members of the Company in the manner permitted by the Corporations Act 2001 (Cth). Number of holdings of equity securities As at the 21st July 2026, the number of holders in each class of equity securities on issue in Nick Scali is as follows: Security Type Number of Securities Number of Shareholders Fully Paid Ordinary Shares 85,530,699 7,987 Unquoted Share Rights 126,257 10 Distribution of equitable securities Analysis of number of equitable security holders by size of holding: Holders of ordinary shares % of ordinary shares No. No. Shareholders Category 1 to 1,000 4,928 61.70 1,001 to 5,000 2,256 28.25 5,001 to 10,000 441 5.52 10,001 to 100,000 335 4.19 100,001 and over 27 0.34 Total 7,9 87 100 There were 292 shareholders (representing 4,587 fully paid ordinary shares) holding less than a marketable parcel. 74
Page 75
75 Equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Ordinary shares No. % of total shares issued J P Morgan Nominees Australia Pty Limited 17,400,145 20.34 HSBC Custody Nominees (Australia) Limited 15,796,581 18.47 Citicorp Nominees Pty Limited 15,180,120 17.75 Scali Consolidated Pty Limited 6,739,473 7.88 BNP Paribas Noms Pty Ltd 2,594,581 3.03 BNP Paribas Nominees Pty Ltd 2,206,794 2.58 UBS Nominees Pty Ltd 1,105,208 1.29 Molvest Pty Ltd 1,000,000 1.17 Grahger Investments Pty Ltd 700,000 0.82 BNP Paribas Nominees Pty Ltd 651,628 0.76 Netwealth Investments Limited 610,337 0.71 HSBC Custody Nominees (Australia) Limited 587,766 0.69 Code Nominees Pty Ltd 330,000 0.39 3rd Wave Investors Pty Ltd 300,000 0.35 Anacacia Pty Ltd 287,605 0.34 BNP Paribas Nominees Pty Ltd 255,828 0.30 BNP Paribas Nominees Pty Ltd 234,231 0.27 NCH Pty Ltd 218,907 0.26 BNP Paribas Noms Pty Ltd 212,684 0.25 Averone Pty Limited 189,264 0.22 66 ,601,152 77.87 Su bstantial holders Substantial holders in the Company are set out below: Ordinary shares No. % of total shares issued Magellan Financial Group Limited 7,764,061 9.07 Scali Consolidated Pty Limited 6,739,473 7.88 Perpetual Investments 6,560,119 7.67 Vanguard Group 5,170,968 6.05 State Street Corporation 4,529,443 5.30 Pinnacle Investment Management Group Limited 4,436,010 5.19 On-Market Buy-Back The Company does not have a current on-market buy back.