Redbubble Annual Report 2020

108 109 Redbubble Annual Report 2020 29. Other significant accounting policies (continued) Sublease classified as operating lease Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of comprehensive income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Short-term leases and leases of low-value assets Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. Significant judgement in determining the lease term of contracts with renewal options The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has the option under some of its leases to extend the term of the original lease. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for the Group to exercise the renewal option. After the commencement date, the Group reassesses the lease term when there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew. The Group has determined that no lease extension options will be exercised as they are not reasonably certain that those options will be exercised and therefore, the extended periods have not been included in calculations. Practical expedients applied In applying AASB 16 for the first time, the Group has used the practical expedients permitted by the standard. The Group has made use of the practical expedient on transition to AASB 16 not to reassess whether a contract is or contains a lease. Accordingly only leases in existence at 1 July 2019 have been assessed and transitioned into the new standard. The definition of a lease in accordance with AASB 117 Leases and Interpretation 4 Determining whether and Arrangement contains a Lease will continue to be applied for those leases entered or modified before 1 July 2019. (k) Accounting standards issued but not yet effective The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. There are other new accounting standards, interpretations or amendments issued but not yet effective, however they are not considered relevant to the activities of the Group and are not expected to have a material impact on the financial statements of the Group. Director’s Declaration In accordance with a resolution of the Directors of Redbubble Limited, we state that in the Directors’ opinion: (a) the financial statements and notes, as set out on pages 64 to 108 are in accordance with the Corporations Act 2001 including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that Redbubble Limited will be able to pay its debts as and when they become due and payable. The financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by Section 295A of the Corporations Act 2001. Anne Ward Chair Melbourne 21 August 2020 Martin Hosking Chief Executive Officer Melbourne 21 August 2020