C a t a p u l t G r o u p I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 1 5 Annual Report 2015 Contents 2 Chairman’s and CEO’s Review 4 Operating and Financial Review 7 Corporate Governance Statement 17 Directors’ Report 27 Remuneration Report (audited) 33 Auditor’s Independence Declaration 34 Financial Statements 77 Directors’ Declaration 78 Independent Auditor’s Report 81 Information provided under ASX Listing Rule 4.10 83 Corporate Directory Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 1 1 Through strategic moves, Catapult Sports remains industry leader in wearable technology. + Who we are Catapult is a leading global sports analytics company that provides elite sporting organisations and athletes with detailed, real time data and analytics to monitor and measure athletes’: > fitness and skill levels; > response to specific training techniques; > tactical performance; and > risk of injury and safety and to assist with rehabilitation. Catapult has since become the global leader in athlete analytics, protecting thousands of elite athletes. Retaining its research-based approach to innovation, Catapult enables insight in to athlete risk, readiness and return to play. Catapult empowers coaches globally with scientifically-validated metrics for the advancement of athlete performance. 2 2 Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 Chairman’s and CEO’s Review We welcome you as a shareholder to Catapult in what has been a defining year for the Company. Since our successful equity raising and listing on the ASX in December 2014, where shares were issued at $0.55, demand for the stock has been strong producing a total shareholder return of 89 per cent to the year ended 30 June 2015. This trend of significant outperformance to the broader market has continued into the new financial year, in particular following the release of our 2015 full year results on 10 August 2015. Revenue increased by 26% per cent … delivering a total contract value of $16.9m for the year. The strength of our share price reflects the Company’s underlying performance over the past year, which was not only significantly higher than the prior year but also ahead of our Prospectus forecasts across metrics including: total unit ordered, Revenue, EBITDA and NPAT. Revenue increased by 26% per cent, driven largely by the 5,115 units ordered in the period and delivering a total contract value of $16.9m for the year. The Company’s global profile grew significantly, with Fast Company Magazine ranking Catapult as Number 12 on its list of the World’s Most Innovative Companies, as well as Number 1 across two other categories, Fitness and Big Data. As outlined in the Prospectus, Catapult has a clearly defined long terms global expansion strategy with four pillars: (i) Increasing market penetration in North America and Europe (ii) Continuing to build revenues from subscription sales (iii) Growing revenue per user through product upgrades and new analytical packages (iv) Exploring opportunities for the deployment of targeted consumer products. We continue to make significant progress in market penetration across North America and Europe with major wins across key target leagues including: (i) 18 NFL teams (of 32) (ii) 13 NBA teams (of 30) (iii) 6 MLS teams (of 20) (iv) 46 NCAA teams (US collegiate sports) (v) 30 English football teams across EPL, Championship and League one (vi) 10 English Premier Rugby teams (of 12) (vii) 5 Bundesliga teams (of 18) (viii) 6 Turkish Superlig teams (of 18). Catapult has become a truly global business with North America and Europe having accounted for 67% of our total revenue in the year. Revenue in the US was up 288% to $4.3m, and Europe was up 88% to $3.2m. Australia remains an important core to our global business and operations and we are proud of the stable, recurring revenue business we have established, where we continue to supply every AFL team, every NRL team, and every Australian Super Rugby team. A key focus underlying our market penetration strategy in North America and Europe has been a rapid expansion of our sales and marketing teams within these regions. As at 30 June 2015, Catapult increased its team in North America by more than 3 times and in Europe by more than 6 times. These new hires have also included the appointment of highly experienced local CEOs to ensure our growth agenda is well supported. We have a global management team united in its focus on delivering a strong localised sales and support offering. We have also witnessed early signs of emerging demand from other regions such as Asia, such as the signing of our first beachhead clients in the Chinese Super League and Thai Premier League. Revenue from the region increased from $0.07m in the 2014 financial year to $1.6m Catapult Group International Limited Annual Report 2015 3 Left: Dr Adir Shiffman. Right: Mr Shaun Holthouse. any solution and represents a “green fields” opportunity. Based on the current strategy as set out at IPO, Catapult is confident of delivering strong growth in the 2016 financial year in the range of 30-40% additional units ordered compared to 2015. Revenue growth is expected to be spurred by the compounding effect of our subscription business which provides a sold base upon which to execute our global growth strategy. We are confident that by maintaining our strategic focus we will continue to expand our client base globally, putting us in a strong position to capitalise on vertical opportunities within the industry and generate value for all our stakeholders. We would like to thank our shareholders, customers and all our Catapult staff for embracing our vision, sharing our confidence and supporting our efforts this year. We look forward to celebrating many more significant achievements with you in the future. Dr Adir Shiffman Executive Chairman Mr Shaun Holthouse Chief Executive Officer and as a result management has moved sooner than expected to deliver a more structured approach to Asia as a third key growth market. Importantly the growth Catapult has achieved across the globe has been underpinned by a strong rise in the total number of units under subscription across these regions. The result is that total annualized revenue under subscription contracts sits at $7.3m, as at 30 June 2015. We continue to focus significant energy on supporting our rapidly growing existing clients, as exemplified by our 100% retention of customers under subscription. This year also saw a major focus on integrating the GP Sports business into our global platform. Our priorities for this business were clear from the outset – to retain all clients, all desired staff and to manage the integration effectively ensuring minimal disruption to clients of the business. Not only were we successful in achieving these objectives, but our focus on targeting new leagues outside traditional territories has resulted in record sales for GP Sports, delivering 48% growth in the total value of contracts sold in the year. Another development of which we are proud is that Catapult has formed a new North American partnership with another of the world’s innovators in athlete analytics, XOS Digital Inc, which was announced during the year. The strategic tie-up delivers elite teams the next generation in analytics, commencing with American Football. Under the partnership, Catapult will integrate a variety of advanced analytical player performance data into the XOS Thunder Radar platform alongside game and practice video. Jacksonville Jaguars NFL team was revealed as the first team to benefit from the combined initiative which has now expanded to 4 other teams. Despite the significant progress Catapult has made this year, we believe more than 90% of the addressable market does not yet have 4 Catapult Group International Limited Annual Report 2015 Operating and Financial Review Catapult Group International Ltd ABN: 53 164 301 197 Catapult Group International Ltd and subsidiaries (the “Group” or “Catapult”) principal activities are the development and supply of wearable athlete tracking and analytics solutions. The Group has recorded an increased loss of $4.3m. This is mainly due to the continued transition to a subscription business model, expansions into the United States and European markets and continued investment in development of products. The Group’s net assets increased to $11.9m compared to the previous years’ position of $3.7m, largely attributable to the Group’s capital raising activities. Catapult continues to invest in its athlete tracking technology and products with a view to: > Increasing average revenue per unit for high end customers as we develop more analytics > Downward penetration into prosumer markets > Analytics sales to media and fan engagement applications > Leverage relationships with the world’s most powerful sports brands into consumer opportunities Highlights of FY15 are presented below. Key performance highlights Pro Forma Summary P&L Capital sales revenue Subscription sales revenue Other income Total Income Cost of materials Operating expenses Other expenses Loss before income tax Income tax credit Loss After Income Tax FY15 $m 6.1 5.1 0.5 11.8 (1.9) (12.4) (1.4) (3.9) 1.4 (2.5) FY14 $m Change % 5.4 1.9 0.6 7.9 (1.8) (4.0) (3.9) (1.8) 0.1 (1.8) +13% +168% –17% +49% –6% –210% +64% –117% +1300% –39% > Exceeded Revenue, EBITDA and NPAT Prospectus forecasts on both Statutory and Pro Forma bases > Pro Forma Revenue increased by 49% on FY14 to $11.8m > Revenue from subscription sales increased by 168% on FY14 to $5.1m > Strong unit sales resulting in a new full year record exceeding Prospectus forecasts by 24% > Total contract value (TCV) was up 55% on FY14 to $16.9m > Annualised Run Rate (ARR) from subscription orders to carry into FY16 was at $7.3m Catapult Group International Limited Annual Report 2015 5 FY15 results vs forecast Pro Forma Revenue EBITDA NPAT Statutory Revenue EBITDA NPAT FY15 (actual) FY15 (forecast) Variance $11.8m ($2.5m) ($2.5m) $9.4m ($3.8m) ($3.6m) +26% +34% +31% FY15 (actual) FY15 (forecast) Variance $11.8m ($4.6m) ($4.3m) $9.4m ($5.2m) ($4.9m) +26% +12% +12% To summarise Catapult delivered a strong financial result in FY15 mainly driven by 24% more unit orders than forecast due to stronger than expected performance in emerging markets (mainly in Asia and parts of Europe). This is likely the result of a faster than expected maturation of the global marketplace, and is encouraging for the overall business. EBITDA proforma adjustments Summary EBITDA adjustments Statutory EBITDA1 Acquisition of GPSports IPO costs2 STIP costs3 Litigation costs4 Pro-forma EBITDA1 FY15 ($m) ($4.6m) – $1.3m $0.3m $0.5m FY14 ($m) ($0.7m) $0.5m ($0.5m) – ($2.5m) ($0.9m) 1. Both FY15 Statutory EBITDA and FY15 Pro-forma EBITDA exceeded Prospectus forecast. 2. IPO costs include all tax, accounting, legal and advisory fees relating to IPO process, plus initial listing costs paid to ASX. 3. STIP has been normalised to show underlying operational performance, executive team were eligible for their full STIP ($0.3m). 4. Extraordinary litigation expense of $0.5m net of insurance recovery, associated with an employee non-compete captured in other expenses and actions against Statsports. 6 Catapult Group International Limited Annual Report 2015 Operating and Financial Review continued Review of Operations The Group is the global leader in wearable elite athlete tracking technology and corresponding sporting analytics, which sees a summary of the market as follows: > Every AFL, NRL and Australian Super Rugby team utilise Catapult devices > Rapidly expanding US and European client list across key leagues including 18 NFL, 13 NBA, 46 NCAA, 6 MLS and 30 English soccer teams > Management estimates more than 90% of the addressable market does not yet have any solution in this space Catapult has experienced rapid expansion to offshore markets and new verticals, which is key to supporting ongoing operations through: > Subscription model driving stable and recurring revenue base > Recent build out of sales and marketing presence in US and EU markets using IPO funds > Unrivalled trust, brand and reputation with significant PR uplift Financial Position At 30 June 2015, the Group has cash and cash equivalents of $5.6m. The net assets of the Group has increased by $8.2m from $3.7m to $11.9m in 2015. This increase has largely attributable to the Group’s capital raising activities and Catapult continues to utilise the cash and assets (in a form readily convertible to cash) that it had at the time of admission to the Australian Stock Exchange (ASX) in a manner way consistent with its stated business objectives. The Group has performed exceptionally well in 2015 achieving record unit orders and strong growth in subscriptions which delivered a substantially better financial result than we had forecast. This performance has resulted in Catapult reaching a total contract value of $16.9m for FY15 and an annualised run rate of $7.3m carrying into FY16, which puts the Group in a great position to continue aggressively pursuing further growth opportunities. Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 7 7 Corporate Governance Statement This corporate governance statement sets out Catapult Group International Ltd’s (Company) current compliance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles and Recommendations). The ASX Principles and Recommendations are not mandatory. However, corporate governance statement discloses the extent to which the Company has followed the ASX Principles and Recommendations. This corporate governance statement is current as at 30 June 2015 and has been approved by the board of the Company (Board). Investors should note that Company was admitted to the Official List of ASX Limited on 18 December 2014 (Listing Date) and, as such, this statement reports on the Company’s compliance with the ASX Principles and Recommendations from the Listing Date until the end of the reporting period, being 30 June 2015. ASX Principles and Recommendations Comply (Yes/No) Explanation 1. Lay Solid Foundations for Management and Oversight 1.1 A listed entity should disclose: Yes (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management. The Board is responsible for the corporate governance of the Company. The Board has adopted a Board Charter which outlines the manner in which its powers and responsibilities will be exercised and discharged having regard to principles of good corporate governance and applicable laws. Pursuant to the Board Charter, the Board assumes responsibilities including the following: (a) protecting and enhancing the value of the assets of the Company; (b) providing leadership and setting strategies, directions and monitoring and reviewing against these strategic objectives; (c) reviewing and ratifying internal controls, codes of conduct and legal compliance; (d) reviewing the Company’s financial statements and overseeing the integrity of the Company’s accounting and corporate reporting systems, including the external audit; (e) approval and review of the operating budget and the strategic plan for the Company; (f) evaluating performance and determining the remuneration of the Chief Executive Officer (CEO) and the Company’s senior management (Senior Management) and the Company’s remuneration framework generally; (g) ensuring the significant risks facing the Company have been identified and adequate control monitoring and reporting mechanisms are in place; (h) approval of transactions relating to acquisitions, divestments and capital expenditure above delegated authority limits; (i) approval of financial and dividend policy; (j) appointment of the CEO; (k) overseeing the Company’s process for making timely and balanced disclosure of all material information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities; 8 8 Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 Corporate Governance Statement continued ASX Principles and Recommendations Comply (Yes/No) Explanation 1. Lay Solid Foundations for Management and Oversight continued 1.1 1.2 A listed entity should: Yes (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. (l) ensuring that the Company has in place an appropriate risk management framework and setting the risk appetite within which the Board expects Senior Management to operate; and (m) monitoring the effectiveness of the Company’s governance practices. The responsibilities of the Chair of the Board, the CEO, Company Secretary and Senior Management are all outlined in the Company’s Board Charter. The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in Board discussions on a fully informed basis. The Company intends to regularly review the balance of responsibilities between the Board and management to ensure that the division of functions remains appropriate to the needs of the Company. The Remuneration and Nomination Committee will identify and recommend board member candidates to the Board. These recommendations will occur after considering the necessary and desirable competencies of new Board members, the range of and depth of skills and the diversity of the Board, and making appropriate checks regarding an individual being put forward. The Committee will also ensure that all material information in its possession relevant to a decision of whether to appoint or re-elect a director is made available to security holders. 1.3 A listed entity should have a written Yes agreement with each director and senior executive setting out the terms of their appointment. 1.4 The company secretary of a listed Yes entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Directors are given letters of appointment and/or service agreements, and senior executives are given employment contracts prior to their engagement with the Company. The Joint Company Secretaries are appointed by and responsible to the Board through the Chairman. The Chairman and the Joint Company Secretaries co-ordinate the Board agenda. Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 9 9 ASX Principles and Recommendations Comply (Yes/No) Explanation 1. Lay Solid Foundations for Management and Oversight continued The Company has adopted a Diversity Policy which identifies gender diversity as a key area of focus for the Company. Gender diversity is integral to the Company’s overall diversity strategy. Increasing the representation of women is one of the Company’s ongoing priorities. Diversity related measurable objectives for the Company and its controlled entities will be reviewed on an annual basis. The Remuneration and Nomination Committee is responsible, on an annual basis, for developing a long-term plan to address diversity initiatives and measures. A copy of the Diversity Policy is available on the Company’s website at the following URL: http://www.catapultsports.com/au/investors/corporate-governance For the reporting period (being the financial year ended 30 June 2015), the Remuneration and Nomination Committee set the following measurable objectives for achieving gender diversity: The Remuneration and Nomination Committee did not implement measurable objectives. Given the Company’s size it was not given highest priority, however employment sentiment reflects ongoing diversification It is noted that the current diversity policy states that the Company’s measurable objectives must have regard to the following key metrics: (a) representation by gender within each band within the Company, including key executives; and (b) salary comparison by gender and role level. As at the end of the reporting period, the respective proportions of men and women in the following roles were as follows. Board Senior executives Across the whole organisation Men 83% 100% 82% Women 17% 0% 18% The performance of the Board as a group and of individual Directors will be assessed each year for all future years. The Company has adopted a Process for Evaluation of Performance Policy which outlines the process of board evaluation and performance. The Company did not undertake a formal performance appraisal during the reporting period. 1.5 A listed entity should: Yes (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary Yes of it; and (c) disclose as at the end of each No Yes reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. 1.6 A listed entity should: (a) have and disclose a process for Yes periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. No 10 10 Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 Corporate Governance Statement continued ASX Principles and Recommendations Comply (Yes/No) Explanation 1. Lay Solid Foundations for Management and Oversight continued The Board and CEO intend to regularly review the performance of its senior executives and address any issues that may emerge. In December 2014, the Company adopted the ‘Process for Evaluation of Performance’ policy which outlines the process of evaluating the performance of its senior executives and management. Yes The Company undertook a formal performance appraisal during the reporting period. The Company has a Remuneration and Nomination Committee has three members being Dr Adir Shiffman (Executive Chairman), Mrs Rhonda O’Donnell (Independent Non-Executive Director) and Mr Brent Scrimshaw (Independent Non-Executive Director). A majority of the members of the committee are independent directors and Mrs O’Donnell and Mr Scrimshaw are considered independent. The chair of the committee is Mr Scrimshaw. A copy of the Remuneration and Nomination Committee Charter is available on the Company’s website at the following URL: http://www.catapultsports.com/au/investors/ corporate-governance The charter was adopted by the Company in December 2014. During the reporting period, the Remuneration and Nomination Committee met once. 1.7 A listed entity should: (a) have and disclose a process for Yes periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 2 Structure the Board to Add Value 2.1 The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and Yes (2) is chaired by an independent Yes Yes Yes Yes director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 11 11 ASX Principles and Recommendations Comply (Yes/No) Explanation 2 Structure the Board to Add Value continued 2.2 A listed entity should have and No disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. 2.3 A listed entity should disclose: Yes (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. 2.4 A majority of the board of a listed entity should be independent directors. No Yes 2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. 2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. The Board strives to ensure that it is comprised of directors with a blend of skills, experience and attributes appropriate for the Company and its business. The Remuneration and Nomination Committee is responsible for preparing a board skills matrix. To date, the Remuneration and Nomination Committee has not consider that a skills matrix is required given the stage of development of the business. However, the Remuneration and Nomination Committee will continue to consider whether it would be appropriate for the Company to adopt a board skills matrix as the Company continues to develop. The Board has reviewed the position and associations of each of the six directors in office and has determined that two are independent. In making this determination the Board has had regard to the independence criteria in the ASX Principles and Recommendations, and other facts, information and circumstances that the Board considers relevant. The Board assesses the independence of new directors upon appointment and reviews their independence, and the independence of the other directors, as appropriate. Information with respect to potential issues of independence may be disclosed to the market but no formal policy exists to ensure such disclosure. The Company has disclosed the details of each director (including their length of service) in the 2015 Annual Report. No The Board considers only Mrs O’Donnell and Mr Scrimshaw to be independent directors of the Company. Considering the Company’s current size and stage of development, the Board does not consider a majority independent board of directors to be a key priority. The Company’s current chairman, Dr Adir Shiffman is not an independent director. The Board considers Mr Shiffman’s role as Executive Chairman essential to the success of the Company in its current stage. Each new director of the Company will, upon appointment, participate in an induction program. This will include meeting with members of the existing Board, the Joint Company Secretaries, management and other relevant executives to familiarise themselves with the Company, its procedures and prudential requirements, and Board practices and procedures. 12 12 Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 Corporate Governance Statement continued ASX Principles and Recommendations Comply (Yes/No) Explanation The Board is committed to the establishment and maintenance of appropriate ethical standards in order to instil confidence in both clients and the community in the way the Company conducts its business. These standards are encapsulated in the Code of Conduct which outlines how the Company expects each person who represents it to behave and conduct business. A copy of the Code of Conduct is available on the Company’s website at the following URL: http://www.catapultsports.com/au/investors/ corporate-governance The code was adopted by the Company in December 2014. The Company has a separately constituted Audit and Risk Committee which consists of three members being Mr Igor van de Griendt (Executive Director), Mr Calvin Ng (Non-Executive Director) and Mrs Rhonda O’Donnell (Non-Executive Director). Only two members of the committee are non-executive directors and only Mrs O’Donnell is considered independent. The chair of the committee is Mrs O’Donnell. Yes A copy of the Audit and Risk Committee Charter is available on the Company’s website at the following URL: http://www.catapultsports.com/au/investors/ corporate-governance Yes Yes The Company has disclosed the relevant qualifications and experience of the members of the committee in the 2015 Annual Report. During the reporting period, the Audit and Risk Committee met a total of four times. Yes 3 Act Ethically and Responsibly 3.1 A listed entity should: Yes (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it. 4 Safeguard Integrity in Corporate Reporting 4.1 The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, Yes No all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 13 13 ASX Principles and Recommendations Comply (Yes/No) Explanation 4 Safeguard Integrity in Corporate Reporting continued Yes The Company has received a declaration from the CEO and CFO that, in their opinion, the financial records have been property maintained and comply with the proper standards. 4.2 The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. 4.3 A listed entity that has an AGM Yes should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. 5 Make Timely and Balanced Disclosure 5.1 A listed entity should: Yes (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it. 6 Respect the Rights of Security Holders 6.1 A listed entity should provide Yes information about itself and its governance to investors via its website. 6.2 A listed entity should design and Yes implement an investor relations program to facilitate effective two-way communication with investors. An external auditor will be present at the AGM and be available to answer questions from security holders relevant to the audit. The Company is committed to providing timely, complete and accurate disclosure of information to allow a fair, and well-informed market in its securities and compliance with the continuous disclosure requirements imposed by law including the Corporates Act and the ASX Listing Rules. A copy of the Company’s Continuous Disclosure Policy is available at the following URL: http://www.catapultsports.com/au/investors/ corporate-governance The Company provides information about itself and its governance to its investors via the website http://www.catapultsports.com/au/ investors which contains all relevant information about the Company. The Company will regularly update the website and contents therein as deemed necessary. The Company has an investor relations program in place to ensure effective two-way communication with investors. 14 14 Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 Corporate Governance Statement continued ASX Principles and Recommendations Comply (Yes/No) Explanation 6 Respect the Rights of Security Holders continued 6.3 A listed entity should disclose the Yes The Company has formal shareholders’ communications policy. A copy of the Company’s Shareholder Communications Policy is available at the following URL: http://www.catapultsports.com/au/investors/ corporate-governance Yes The Company encourages shareholders to register for receipt of announcements and updates electronically. (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and Yes No (2) is chaired by an independent Yes The Company has a separately constituted Audit and Risk Committee which consists of three members being Mr Igor van de Griendt (Executive Director), Mr Calvin Ng (Non-Executive Director) and Mrs Rhonda O’Donnell (Non-Executive Director). Only two members of the committee are non-executive directors and only Mrs O’Donnell is considered independent. A copy of the Audit and Risk Committee Charter is available on the Company’s website at the following URL: Yes Yes Yes http://www.catapultsports.com/au/investors/ corporate-governance The charter outlines the key areas of responsibility for the committee, outlining its responsibility for oversight over potential risks which affect the Company. The charter was adopted by the Company in December 2014. In the 2015 financial year, the Audit and Risk Committee met a total of four times. policies and processes it has in place to facilitate and encourage participation at meetings of security holders. 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. 7 Recognise and Manage Risk 7.1 The board of a listed entity should: director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. 7.2 The board or a committee of the board should: The Board annually reviews and approves the risk framework of the Company. (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and Yes The Company did not undertake a formal performance appraisal during the reporting period. (b) disclose, in relation to each No reporting period, whether such a review has taken place. Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 15 15 ASX Principles and Recommendations Comply (Yes/No) Explanation The Company does not have an internal audit function, and does not disclose the processes it uses to improve risk management. Nonetheless, it remains committed to effective management and the control of these factors. All material risks are announced to the market, in accordance with the requirements of the ASX listing rules and otherwise. The Company has a Remuneration and Nomination Committee has three members being Dr Adir Shiffman (Executive Chairman), Mrs Rhonda O’Donnell (Non-Executive Director) and Mr Brent Scrimshaw (Non-Executive Director). Both Mrs O’Donnell and Mr Scrimshaw are considered independent. The chair of the committee is Mr Brent Scrimshaw. A copy of the Remuneration and Nomination Committee Charter is available on the Company’s website at the following URL: http://www.catapultsports.com/au/investors/ corporate-governance During the reporting period, the Remuneration and Nomination Committee met once. 7 Recognise and Manage Risk continued 7.3 A listed entity should disclose: No (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. 7.4 A listed entity should disclose Yes whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. 8 Remunerate Fairly and Responsibly 8.1 The board of a listed entity should: (a) have a remuneration committee Yes which: (1) has at least three members, a majority of whom are independent directors; and Yes (2) is chaired by an independent Yes director, and disclose Yes Yes Yes (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. 16 16 Catapult Group International Limited Annual Report 2015 Catapult Group International Limited Annual Report 2015 Corporate Governance Statement continued ASX Principles and Recommendations Comply (Yes/No) Explanation 8 Remunerate Fairly and Responsibly continued 8.2 A listed entity should separately Yes disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. 8.3 A listed entity which has an equity- Yes based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. The Company discloses its remuneration policy in the 2015 Annual Report. The Company has a Securities Trading Policy that prohibits directors, offices and employees from entering into transactions or arrangements which limits the economic risk of participating in unvested entitlements under any equity based remuneration scheme. Catapult Group International Limited Annual Report 2015 17 Directors’ Report The Directors of Catapult Group International Ltd (‘Catapult’) present their Report together with the financial statements of the consolidated entity, being Catapult Group International Ltd (‘the Company’) and its controlled entities (‘the Group’) for the year ended 30 June 2015. Director details The following persons were Directors of Catapult Group International Ltd during or since the end of the financial year. Dr Adir Shiffman MBBS, Medicine Executive Chairman Appointed 4 September 2013 Member of Remuneration and Nomination Committee Mr Shaun Holthouse B.E. (Hon), Mechanical Engineering Chief Executive Officer Appointed 4 September 2013 Dr Adir Shiffman, Executive Chairman of Catapult, has extensive CEO and board experience across a number of technology companies. Adir’s expertise lies in providing assistance in relation to the development of strategic plans; providing strategic advisory services, including with respect to mergers and acquisitions and restructuring; and working with senior management of Catapult to execute those plans. Adir currently sits on a number of boards, including as the Non-Executive Chairman of ASX-listed Disruptive Investment Group Limited (ASX: DVI), the founder and Non-Executive Chairman of Global Reviews and the founder and Non-Executive Chairman of StartHere.com.au. Adir graduated from Monash University in 1999 with a Bachelor of Medicine and a Bachelor of Surgery. Prior to becoming involved in the technology sector, he practised as a doctor. Other current Directorships: Disruptive Investment Group Limited (Appointed February 2013) Previous Directorships (last 3 years): None Mr Shaun Holthouse is a co-founder, Chief Executive Officer and an Executive Director of Catapult. He has been responsible for creating and developing Catapult’s business plan, sourcing seed funding, negotiating the technology licence and the subsequent purchase of Catapult’s foundation technology from the Commonwealth Co-operative Research Centre (CRC). Shaun managed early stage sales, established Catapult’s early distribution network and has grown the Catapult team to more than 80 people across 4 offices worldwide. Shaun oversees Catapult’s senior management team and its Australian, US and European operations, as well as the integration of GPSports. Prior to co-founding Catapult, Shaun was a Technology Development Manager for the CRC for microtechnology from 2002-2006, which included providing technical direction to more than 20 projects and with a budget of more than $60 million. Shaun holds a Bachelor of Engineering (Hons) from the University of Melbourne. Other current Directorships: None Previous Directorships (last 3 years): None 18 Catapult Group International Limited Annual Report 2015 Directors’ Report continued Mr Igor van de Griendt B.E. Electrical Engineering Chief Operating Officer Appointed 4 September 2013 Member of Risk and Audit Committee Mr Calvin Ng BComm (Fins) LLB AMC DFP Non-Executive Director Appointed 29 November 2013 Member of Risk and Audit Committee Mr Igor van de Griendt is a co-founder, Chief Operating Officer and an Executive Director of Catapult. Mr Calvin Ng has significant investment banking, mergers & acquisitions and funds management experience. In his capacity as COO, he has been responsible for providing strategic direction and leadership in the development of Catapult’s products, both in the analytical space, as well as with respect to Catapult’s various hardware offerings. Igor also provides guidance and operational support to Catapult’s R&D and software development teams. Prior to co-founding Catapult, Igor was a Project Manager for the CRC for microtechnology which, in collaboration with the Australian Institute of Sport, developed a number of sensor platforms and technologies ultimately leading to the founding of Catapult. Prior to joining the CRC for microtechnology, Igor was a director of a consulting business that provided engineering services for more than 13 years to technology companies such as Redflex Communications Systems (now part of Exelis, NYSE:XLS), Ceramic Fuel Cells (ASX:CFU), Ericsson Australia, NEC Australia and Telstra. Igor holds a Bachelor of Electrical Engineering from Darling Downs Institute of Advanced Education (now University of Southern Queensland). Other current Directorships: None Previous Directorships (last 3 years): None Calvin is a co-founder and Managing Director of the Aura Group, an independent corporate advisory and funds management business. He is also a co-founder and Non-Executive Director of the Finsure Group. Calvin has significant board experience in a number of businesses, with particular expertise in providing management oversight and strategic guidance to small and medium sized enterprises. Calvin currently sits on a number of boards, including entities associated with the Aura Capital Group, Finsure Group and ASX-listed Disruptive Investment Group Limited (ASX:DVI). Calvin holds a Bachelor of Commerce and Bachelor of Laws from the University of New South Wales. Calvin has also completed a Graduate Diploma of Legal Practice and has been admitted to practice as a lawyer in the Supreme Court of New South Wales. Other current Directorships: Disruptive Investment Group Limited (Appointed February 2013) Previous Directorships (last 3 years): None Catapult Group International Limited Annual Report 2015 19 Mrs Rhonda O’Donnell M App Sc, MBA (Melbourne) Non-Executive Director Appointed 3 September 2014 Chair of Risk and Audit Committee Member of Remuneration and Nomination Committee Mr Brent Scrimshaw Non-Executive Director Appointed 24 November 2014 Chair of Remuneration and Nomination Committee Mrs Rhonda O’Donnell has extensive experience in international and local industries including telecommunications, information technology, education, government and utilities. Rhonda has been a successful executive and board member in both the private and public sectors. She has received several industry achievement awards, including the award for the Victorian Telstra Business Woman of the Year in 1999. Rhonda is also a Non-Executive Director of ASX-listed Slater & Gordon (ASX:SGH), and was formerly the Managing Director of Global Customer Solutions (which is now a subsidiary of TXU (now TRU)). Other current Directorships: Slater & Gordon (SGO.ASX) (Appointed March 2013) Previous Directorship (last 3 years): None Mr Brent Scrimshaw has over 25 years of experience in global consumer innovation, business leadership and brand management throughout a number of senior leadership roles for Nike inc in Asia, Europe and the United States focussed on the athletic and sports industry worldwide. Brent has held senior management roles at Nike Inc, including Vice President and Chief Executive of Western Europe; Chief Marketing Officer and Vice President of Category Businesses for Nike Europe, Middle East and Africa; and Regional General Manager of Nike’s Eastern Region USA business. As one of Nike Inc’s 30 most senior leaders worldwide, Brent has also served on Nike’s Global Corporate Leadership Team, where he helped lead the creation of Nike’s overall global operating strategy, as well as playing a senior role as a key member of the Global Commercial Operations Executive Team, which is responsible for Brand, sales and distribution strategies worldwide. Brent is also currently a Non-Executive Director at Rhinomed Ltd (ASX:RNO) a medical technology company focussed on enhancing human efficiency through innovative respiratory technologies and products. Other current Directorships: Rhinomed Ltd (ASX:RNO) (Appointed Feb, 2014) Previous Directorships (last 3 years): None 20 Catapult Group International Limited Annual Report 2015 Directors’ Report continued Mr Michael An BCom (Actuarial Studies/Finance) Non-Executive Director Appointed 13 January 2014 Resigned 14 November 2014 Mr Michael An has significant startup, venture capital and private equity experience. Michael is a co-founder and Investment Director at Perle Ventures, an early stage technology venture capital group. He is also a Venture Partner at the Aura Group, an independent corporate advisory and funds management business. Michael has been extensively involved in transactions encompassing private equity investments, corporate finance, public and private M&A canvassing financial services, telecommunications and technology sectors. Michael is currently involved with multiple early stage companies, both domestic and international, through direct investment, advisory and board representations. Companies include Waratek, Smart Business Telecom, Freestyle and Simple. Other current Directorships: None Previous Directorships (last 3 years): None Company Secretaries Andrew Whitten is a lawyer, specialising in corporate finance and securities law and has been involved in a comprehensive range of corporate and investment transactions including numerous initial public offerings on the ASX. Andrew was appointed Company Secretary of Catapult Group International on 18 August 2014 and resigned 22 July 2015. Anand Sundaraj is a lawyer, specialising in corporate finance and securities law and has been involved in a comprehensive range of corporate and investment transactions including numerous initial public offerings on the ASX. Anand was appointed Company Secretary of Catapult Group International on 22 July 2015. Brett Coventry is a Certified Practicing Accountant and the Group’s Chief Financial Officer. Brett has held the CFO role with a number of fast growing and technology businesses and has a degree in Accounting. Brett has been the Company Secretary of Catapult since 27 February 2013. Principal activities During the year, the principal activities of entities within the Group were: > ongoing development and sale of elite athlete wearable tracking solutions; and > ongoing development and sale of analytics for athlete tracking. There have been no significant changes in the nature of these activities during the year. Review of operations and financial results The Group is the global leader in wearable elite athlete tracking technology and corresponding sporting analytics. The Group has a diverse customer base across sports regions and leagues. The Group has recorded an increased loss of $4,309,230 (2014: $1,402,601 loss). This is mainly due to the continued transition to a subscription business model, expansions into the United States and European markets and continued investment in development of products. Catapult Group International Limited Annual Report 2015 21 Loss per share for the year was $0.04 (2014: $0.02) and no dividend will be paid or declared. Additional capital raising activities were undertaken during the year which raised $12m and allowed the Group to position itself with a sound cash position for 2015 and allow for continued growth. The Group defended legal actions over the employment and subsequent restraint of trade for a key US employee and $174,291 was expensed (net of insurance recovery) for legal costs. This matter was ultimately settled on favourable terms to the Group. The Group took action against Statsports, to enforce its intellectual property rights and to date $305,335 has been expensed, this matter is currently at a stay in proceedings. The Group’s net assets increased to $11.9m compared to the previous years’ position of $3.7m, largely attributable to the Group’s capital raising activities. – On 16 December 2014, the Group issued 6,201,600 ordinary shares on the conversion of the convertible notes previously on issue by the Group and held by One Managed Investment Funds Ltd. – On 16 December, the Group issued 21,818,182 ordinary shares as part of its capital raising program, being an Initial Public Offering (IPO) which resulted in gross cash proceeds of $12m. Dividends In respect of the current year, no dividend has been paid by Catapult Group International Limited. Events arising since the end of the reporting period There are no other matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either: Significant changes in the state of affairs > the entity’s operations in future financial years; During the year, the following changes occurred within the Group: > The company changed its name from Catapult Group International Pty Ltd to Catapult Group International Ltd and adopted a public company’s constitution; > C level executives in Brian Kopp and Barry McNeill, were appointed in the United States and European Markets respectively, with the customer facing teams in these markets also being increased; and > After a split of shares on the basis of 3,800 for 1, on 7 October 2014, significant share issues occurred as follows: – On 17 November 2014, the group issued 3,876,000 ordinary shares as part of an employee share plan, this share plan is subject to various performance, service and other vesting conditions. These shares are treasury shares and are held by the Employee Share Plan Trust for issue to employees in the future. As no shares have yet been issued by the Trust, no net increase in shares on issue is yet shown in the financial statements in relation to these. > the results of those operations in future financial years; or > the entity’s state of affairs in future financial years. Likely developments, business strategies and prospects Based on the expected demand in the wearables market globally as experienced by our inbound enquiries and recent sales history, we expect a significant increase in sales for next few years. The company completed an IPO in December 2014 to provide on-going working capital. The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group, and how the Group manages these risks include: Catapult Technology and Hosting Platforms Catapult relies upon its primary hosting provider, Amazon Web Services (AWS), to maintain continuous operation of its technology platforms, servers and hosting services and the cloud based environment in which it provides its products. There is a risk that these systems may be adversely affected by various factors such as damage, 22 Catapult Group International Limited Annual Report 2015 Directors’ Report continued faulty or ageing equipment, power surges or failures, computer viruses, or misuse by staff or contractors. Other factors such as hacking, denial of service attacks, or natural disasters may also adversely affect these systems and cause them to become unavailable. Hacking or exploitation of any vulnerability on those platforms could lead to loss, theft or corruption of data. Further, if AWS ceased to offer its services to Catapult and Catapult was unable to obtain a replacement provider quickly, this could also lead to disruption of service to the Catapult websites and cloud infrastructure. This could render Catapult’s services unavailable for a period of time while data is restored. It could also lead to unauthorised disclosure of users’ data with associated reputational damage, claims by users, regulatory scrutiny and fines. Although Catapult employs strategies and protections to try to minimise security breaches and to protect data, these strategies and protections might not be entirely successful. In that event, disruption to Catapult’s services could adversely impact on Catapult’s revenue and profitability. The loss of client data could have severe impacts to client service, reputation and the ability for clients to use the products. This could lead to a loss of revenue while Catapult is unable to provide its services, as well as adversely affecting its reputation. This could have a material adverse effect on Catapult’s financial position and performance. Development and commercialisation of intellectual property Catapult relies on its ability to develop and commercialise its intellectual property. A failure to develop and commercialise its intellectual property successfully would lead to a loss of opportunities and adversely impact on the operating results and financial position of Catapult. Furthermore, any third party developing superior technology or technology with greater commercial appeal in the fields in which Catapult operates may harm the future prospects of Catapult. Catapult’s success depends, in part, on its ability to obtain, maintain and protect its intellectual property, including its patents. Actions taken by Catapult to protect its intellectual property may not be adequate, complete or enforceable and may not prevent the misappropriation of its intellectual property and proprietary information or deter independent development of similar technologies by others. Catapult may also suffer damage if former employees infringe its intellectual property rights or assert their moral rights. The granting of a patent does not guarantee that Catapult’s intellectual property is protected and that others will not develop similar technologies that circumvents such patents. There can be no assurance that any patents Catapult owns, controls or licences, whether now or in the future, will give Catapult commercially significant protection of its intellectual property. Monitoring unauthorised use of Catapult’s intellectual property rights is difficult and can be costly. Catapult may not be able to detect unauthorised use of its intellectual property rights. Changes in laws in Australia and other jurisdictions in which Catapult operates may adversely affect Catapult’s intellectual property rights. Other parties may develop and patent substantially similar or substitute products, processes, or technologies to those used by Catapult, and other parties may allege that Catapult’s products incorporate intellectual property rights derived from third parties without their permission. Whilst Catapult is not the subject of any claim that its products infringe the intellectual property rights of a third party, allegations of this kind may be received in the future and, if successful, injunctions may be granted against Catapult which could materially affect the operation of Catapult and Catapult’s ability to earn revenue, and cause disruption to Catapult’s services. The defence and prosecution of intellectual property rights lawsuits, proceedings, and related legal and administrative proceedings are costly and time-consuming, and their outcome is uncertain. In addition to its patent and licensing activities, Catapult also relies on protecting its trade secrets. Actions taken by Catapult to protect its trade secrets may not be adequate and this could erode its competitive advantage in respect of such trade secrets. Further, others may independently develop similar technologies. Catapult Group International Limited Annual Report 2015 23 Industry and competition risk Foreign exchange rates Catapult operates in Australia and internationally. Currently, most of Catapult’s revenues are in US dollars, Euros and Australian dollars. However, most of Catapult’s costs are in Australian dollars. The mix of currencies in which Catapult earns its revenues and incurs its costs are likely to continue to change over time. Adverse movements in foreign currency markets could affect Catapult’s profitability and financial position. Catapult’s financial statements are prepared and presented in Australian dollars, and any appreciation in the Australian dollar against other currencies in which Catapult transacts may adversely impact its financial performance and position. You should refer to Note 32.2 (Market Risk Analysis) for more detail. Product liability Catapult’s business exposes it to potential product liability claims related to the manufacturing, marketing and sale of its products. Catapult maintains product liability insurance. However to the extent that a claim is brought against Catapult that is not covered or fully covered by insurance, such claim could have a material adverse effect on the business, financial position and results of Catapult. Claims, regardless of their merit or potential outcome, may adversely impact on Catapult’s business and its future growth and profitability. Litigation Catapult may in the ordinary course of business be involved in possible disputes. These disputes could give rise to litigation. While the extent of any disputes and litigation cannot be ascertained at this time, any dispute or litigation may be costly and may adversely affect the operational and financial results of Catapult. The industry in which Catapult operates is highly competitive. Catapult’s performance could be adversely affected if existing or new competitors reduce Catapult’s market share, or its ability to expand into new segments. Catapult’s existing or new competitors may have substantially greater resources and access to more markets than Catapult. Competitors may succeed in developing alternative products which are more innovative, easier to use or more cost effective than those that have been or may be developed by Catapult. This may place pricing pressure on Catapult’s product offering and may impact on Catapult’s ability to retain existing clients, as well as Catapult’s ability to attract new clients. If Catapult cannot compete successfully, Catapult’s business, operating results and financial position could be adversely impacted. Further product development risk Catapult has developed its athlete tracking technology and products, and continues to invest in further systems and product development. Catapult gives no guarantee that further development of its athlete tracking technology and products will be successful, that development milestones will be achieved, or that Catapult’s intellectual property will be developed into further products that are commercially exploitable. There are many risks inherent in the development of technologies and related products, particularly where the products are in the early stages of development. Projects can be delayed or fail to demonstrate any benefit, or may cease to be viable for a range of reasons, including scientific and commercial reasons. Brand and reputation damage The brand and reputation of Catapult and its individual products are important in retaining and increasing the number of clients that utilise Catapult’s technology and products and could prevent Catapult from successfully implementing its business strategy. Any reputational damage or negative publicity surrounding Catapult or its products could adversely impact on Catapult’s business and its future growth and profitability. 24 Catapult Group International Limited Annual Report 2015 Directors’ Report continued Directors’ Meetings The number of Directors Meetings (including meetings of Committees of Directors) held during the year, and the number of meetings attended by each Director is as follows: Director’s Name Board Meetings Audit and Risk Committee Remuneration and Nomination Committee Adir Shiffman Shaun Holthouse Igor van de Griendt Calvin Ng Rhonda O’Donnell Brent Scrimshaw Michael An Where: A 6 6 6 6 5 3 3 B 6 6 6 6 5 3 3 A – – 4 4 4 – – B – – 4 4 4 – – A 1 – – – 1 1 – B 1 – – – 1 1 – > column A is the number of meetings the Director was entitled to attend. > column B is the number of meetings the Director attended. Unissued shares under option Unissued ordinary shares of Catapult Group International Ltd under option at the date of this report are: Date Options Granted Expiry Date Exercise Price of Shares Number under Option 11 October 2013 31 October 2014 31 October 2014 31 October 2014 10 October 2016 31 October 2019 15 September 2018 30 November 2017 $0.3068 $0.55 $0.605 $0.00 1,664,400 927,000 1,920,000 510,000 The options issued on 11 October 2013, were under an agreement with Disruptive Asset Management Pty Ltd and have been allotted after fulfilment of any conditions required for allotment. All other options issued are part of the share based employee remuneration program. Shares issued during or since the end of the year as a result of exercise During or since the end of the financial year, the Company has not issued any ordinary shares as a result of the exercise of options. Catapult Group International Limited Annual Report 2015 25 Environmental legislation Catapult Group International Ltd operations are not subject to any particular or significant environmental regulation under a law of the Commonwealth or of a State or Territory in Australia. Indemnities given and insurance premiums paid to auditors and officers During the year, Catapult Group International Ltd paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all Directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor. Non-audit services During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the reason the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards. Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 26 to the Financial Statements. A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is included on page 33 of this financial report and forms part of this Directors’ Report. 26 Catapult Group International Limited Annual Report 2015 Directors’ Report continued Proceedings of 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. Signed in accordance with a resolution of the Directors. Dr Adir Shiffman Executive Chairman 10 August 2015 Catapult Group International Limited Annual Report 2015 27 Remuneration Report (audited) The Directors of Catapult Group International Ltd present the Remuneration Report for Non-Executive Directors, Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. The Remuneration Report is set out under the following main headings: 1 Principles used to determine the nature and amount of remuneration 2 Details of remuneration 3 Service agreements 4 Share-based remuneration; and 5 Other information. 1. Principles used to determine the nature and amount of remuneration The principles of the Group’s executive strategy and supporting incentive programs and frameworks are: > to align rewards to business outcomes that deliver value to shareholders > to drive a high performance culture by setting challenging objectives and rewarding high performing individuals; and > to ensure remuneration is competitive in the relevant employment market place to support the attraction, motivation and retention of executive talent. The Board has established a Nomination and Remuneration Committee which operates in accordance with its charter as approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team. The remuneration structure that has been adopted by the Group consists of the following components: > fixed remuneration being annual salary; and > short term incentives, being employee bonuses. The Nomination and Remuneration Committee assess the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive Team. The payment of bonuses, share options and other incentive payments are reviewed by the Nomination and Remuneration Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must be linked to pre-determined performance criteria. 28 Catapult Group International Limited Annual Report 2015 Remuneration Report (audited) continued Short Term Incentive (STI) The Group’s performance measures involve the use of annual performance objectives, metrics, performance appraisals and continuing emphasis on living the Company values. The performance measures are set annually after consultation with the Directors and executives and are specifically tailored to the areas where each executive has a level of control. The measures target areas the Board believes hold the greatest potential for expansion and profit and cover financial and non-financial measures. The Key Performance Indicators (‘KPI’s’) for the Executive Team are summarised as follows: Performance area: > financial – operating profit and earnings per share; and > non-financial – strategic goals set by each individual business unit based on job descriptions. The STI Program is currently a cash bonus for the Executive Team and other employees. Remuneration Approval Catapult Group International Ltd was admitted to the official list of the Australian Securities Exchange on 19 December 2014 and, as such, there was no requirement prior to this time that a resolution adopting the Company’s remuneration report be put to shareholders at an annual general meeting. The board notes that the remuneration recommendations made by the interim Remuneration and Nomination Committee (which were disclosed in the Company’s IPO prospectus) were adopted by the board. Consequences of performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and partial for the previous financial year: Item EPS (dollars) Dividends (cents per share) Net profit / loss ($’000) Share price ($) 2015 (0.04) – (4,309) 1.04 2014 (0.02) – (1,402) – Catapult Group International Limited Annual Report 2015 29 2. Details of remuneration Details of the nature and amount of each element of the remuneration of each Key Management Personnel (‘KMP’) of Catapult Group International Ltd shown in the table below: Director and other Key Management Personnel remuneration Short term employee benefits Post- employment benefits Long-term benefits Share-based payments Cash salary and fees $ Cash bonus $ Annual leave $ Super- annuation $ Shares $ Options $ – – – – – – – – – – – – – – Performance based percentage of remu- neration Total $ 304,000 114,000 448,002 146,617 354,789 149,195 55,000 – 39,488 – 32.9% 0.0% 34.7% 0.0% 24.7% 0.0% 0.0% – 0.0% – 65,411 46.5% – – – – – – 30.1% 0.0% 35.6% – Long service leave $ – – 16,818 3,942 13,206 3,583 – – – – – – – – – – 18,762 18,712 20,803 17,010 4,772 – 3,426 – 5,675 – – – – – – – – – – – – – – – – – – 14,737 – – – – – 18,800 13,906 2,248 834 – – – – – – – – 72,238 49,628 32,272 8,359 5,842 – 45,425 – 286,452 184,561 231,160 – 38,832 368,114 35.1% – – – 90,099 2,152,416 27.1% 14,737 – 594,373 – Employee Executive Directors Adir Shiffman Executive Chair Shaun Holthouse Director & CEO Igor van de Griendt Director & COO Non-Executive Directors Rhonda O’Donnell1 Brent Scrimshaw2 Calvin Ng Michael An3 Year 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Other Key Management Personnel Brett Coventry – CFO / Company Secretary Barry McNeill – CEO for Europe, Middle East, Africa4 Brian Kopp – President North America5 2015 Total 2014 Total 2015 2014 2015 2014 2015 2014 2015 2014 204,000 114,000 248,265 118,772 211,578 123,064 50,228 – 36,062 – 100,000 – 155,441 – 87,500 – – – – – 29,295 30,441 – – – 167,457 150,000 136,456 – – – – 80,441 – 36,958 – 229,545 90,405 – – 1,312,886 581,186 505,836 – – – 8,716 5,191 21,702 5,538 – – – – – – – – 11,664 5,084 12,321 – 9,332 – 63,735 15,813 1. Rhonda O’Donnell – Appointed 3 September 2014 2. Brent Scrimshaw – Appointed 24 November 2014 3. Michael An – Resigned 14 November 2014 4. Barry McNeill – Appointed 15 September 2014 5. Brian Kopp – Appointed 15 September 2014 30 Catapult Group International Limited Annual Report 2015 Remuneration Report (audited) continued The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Name Executive Directors Adir Shiffman Shaun Holthouse Igor van de Griendt Other Key Management Personnel Brett Coventry Barry McNeill Brian Kopp Fixed remuneration At risk – STI At risk – options 67% 65% 75% 70% 64% 65% 33% 35% 25% 28% 16% 25% – – – 2% 20% 10% As part of the STI Program, Adir Shiffman, Calvin Ng, Shaun Holthouse were paid once off listing bonus’s as follows, which have been included in the STI table above for the relevant parties. Name Adir Shiffman Shaun Holthouse Calvin Ng Brett Coventry Listing Bonus Exclusive of Superannuation $50,000 $30,441 $30,441 $30,441 Long term incentives are provided exclusively by way of options, the percentages disclosed reflect the valuation of remuneration consisting of options, based on the value of options expensed during the year. 3. Service agreements Remuneration and other terms of employment for the Executive Directors and other Key Management Personnel are formalised in a Service Agreement. The major provisions of the agreements relating to remuneration are set out below: Name Adir Shiffman Shaun Holthouse Igor van de Griendt Brett Coventry Barry McNeill Brian Kopp Base salary Term of agreement Notice period $204,000 $240,000 $200,000 $200,000 £130,000 US$260,000 Unspecified Unspecified Unspecified Unspecified Unspecified Unspecified One (1) month Three (3) months Three (3) months One (1) month Three (3) months At Will Catapult Group International Limited Annual Report 2015 31 4. Share-based remuneration All options refer to options over ordinary shares of the Company, which are exercisable on a one-for-one basis under the terms of the agreements. All options remain subject to other vesting criteria, there are no criteria specifically set, but remain subject review and approval by the Remuneration and Nomination Committee. Name Brett Coventry Barry McNeill Grant Date 31 October 2014 31 October 2014 31 October 2014 Options Granted 105,000 Vesting Schedule 105,000 10,000 10,000 960,000 320,000 320,000 320,000 Brian Kopp 31 October 2014 960,000 48,000 240,000 288,000 384,000 First Exercise Date Expiry Date 31 October 2017 31 October 2019 31 October 2017 30 November 2017 15 September 2015 31 October 2019 15 September 2016 31 October 2019 15 September 2017 31 October 2019 15 September 2015 31 October 2019 15 September 2016 31 October 2019 15 September 2017 31 October 2019 15 September 2018 31 October 2019 Value per option at grant date Total Value of Option Exercise price per option $0.198 $20,790 $0.55 $0.55 $5,500 $0.00 $0.078 $24,960 $0.605 $0.132 $42,240 $0.605 $0.172 $55,040 $0.605 $0.08 $3,840 $0.605 $0.134 $32,160 $0.605 $0.173 $49,824 $0.605 $0.206 $79,104 $0.605 32 Catapult Group International Limited Annual Report 2015 Remuneration Report (audited) continued Bonuses included in remuneration Details of the short-term incentive cash bonuses awarded as remuneration to each Key Management Personnel, the percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. Included in Remunera- tion ($) Percentage vested during the year Percentage forfeited during the year Performance criteria Executive Directors Adir Shiffman 100,000 100% 0% 50% on successful listing on the ASX Shaun Holthouse Igor van de Griendt 155,441 100% 0% 19.5% on successful listing on the ASX Exceed Prospectus Revenue x 1.1 / EBITDA x 0.9 (as it’s a loss) Up to 80.5% on criteria:– Tier 1 – Exceed Prospectus Revenue / EBITDA Tier 2 – Meet or beat Exceed Revenue x 1.05 / EBITDA x 1 Tier 3 – Exceed Prospectus Revenue x 1.1 / EBITDA x 0.9 (as it’s a loss) 87,500 100% 0% Up to 100% on criteria:– Tier 1 – Exceed Prospectus Revenue / EBITDA Tier 2 – Meet or beat Exceed Revenue x 1.05 / EBITDA x 1 Tier 3 – Exceed Prospectus Revenue x 1.1 / EBITDA x 0.9 (as it’s a loss) Non-Executive Directors Calvin Ng 30,441 100% 0% 100% on successful listing on the ASX Other Key Management Personnel Brett Coventry 80,441 100% 0% 38% on successful listing on the ASX Barry McNeill 36,958 100% 25% Brian Kopp 90,405 100% 25% Up to 62% on criteria:– Tier 1 – Exceed Prospectus Revenue / EBITDA Tier 2 – Meet or beat Exceed Revenue x 1.05 / EBITDA x 1 Tier 3 – Exceed Prospectus Revenue x 1.1 / EBITDA x 0.9 (as it’s a loss) Assessed against sales performance and regional goals for APAC and EMEA Assessed against sales performance and regional goals for North America Catapult Group International Limited Annual Report 2015 33 Auditor’s Independence Declaration 19 The Rialto, Level 30 525 Collins St Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Catapult Group International Ltd In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Catapult Group International Ltd for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants Adrian Nathanielsz Partner - Audit & Assurance Melbourne, 10 August 2015 Grant Thornton Audit Pty Ltd ABN 94 269 609 023 ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies. 34 Catapult Group International Limited Annual Report 2015 Financial Statements Catapult Group International Limited For the year ended 30 June 2015 Contents 35 Consolidated Statement of Profit or Loss and Other Comprehensive Income 36 Consolidated Statement of Financial Position 37 Consolidated Statement of Changes in Equity 38 Consolidated Statement of Cash Flows 39 Notes to the Consolidated Financial Statements Catapult Group International Limited Annual Report 2015 35 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2015 Revenue Other income Costs of materials Inventory Impairment Employee benefits expense Capital raising costs Travel, marketing and promotion Occupancy Legal Depreciation and amortisation Other expenses Finance costs Finance income Loss before income tax Income tax benefit/(expense) Profit for the year from continuing operations Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Notes 8 9 2015 $ 2014 $ 11,261,011 4,772,230 516,371 620,948 (1,884,256) (771,362) – (112,596) 20 (7,454,984) (2,854,634) (1,351,191) (305,002) (2,229,333) (1,076,213) (886,745) (157,723) (730,760) (59,835) (1,092,554) (426,744) (1,884,506) (767,948) (5,736,947) (1,138,879) (367,074) (203,801) 72,044 15,869 (6,031,977) (1,326,811) 1,722,747 (75,790) (4,309,230) (1,402,601) 23 23 25 Exchange differences on translating foreign operations (499,070) (27,944) Other comprehensive income for the period, net of tax that may be reclassified subsequently to profit or loss Total comprehensive income for the period Earnings per share (499,070) (27,944) (4,808,300) (1,430,545) Basic and diluted loss per share (cents per share) 27 4.2 cents 2.3 cents This statement should be read in conjunction with the notes to the financial statements. 36 Catapult Group International Limited Annual Report 2015 Consolidated Statement of Financial Position As at 30 June 2015 Assets Current Cash and cash equivalents Trade and other receivables Inventories Current tax assets Total Current Assets Non-Current Other long-term financial assets Property, plant and equipment Goodwill Other intangible assets Deferred tax assets Total Non-Current Assets Total Assets Liabilities Current Trade and other payables Other liabilities Borrowings Employee benefits Current Liabilities Non-Current Other liabilities Borrowings Employee benefits Deferred tax liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Share option reserve Foreign currency translation reserve Accumulated losses Total Equity Note 2015 $ 2014 $ 10 11 12 13 14 15 16 17 18 19 20 18 19 20 16 5,672,425 4,499,360 2,578,598 991,715 3,754,202 1,696,084 1,492,590 481,095 13,742,098 7,423,971 174,386 2,171,770 1,212,735 2,508,280 2,002,240 91,012 1,012,463 1,212,735 2,341,755 296,443 8,069,411 4,954,408 21,811,509 12,378,379 1,528,358 5,552,458 – 2,110,744 1,391,585 4,551,602 501,702 395,874 9,191,560 6,840,763 341,572 215,883 – 1,161,530 51,101 314,373 707,046 9,898,606 11,912,903 38,485 456,436 1,872,334 8,713,097 3,665,282 21 17,745,799 4,878,403 486,676 (506,906) 298,151 (7,836) (5,812,666) (1,503,436) 11,912,903 3,665,282 This statement should be read in conjunction with the notes to the financial statements. Catapult Group International Limited Annual Report 2015 37 Consolidated Statement of Changes in Equity For the year ended 30 June 2015 Total transactions with owners 4,878,308 298,151 Balance at 1 July 2013 Dividends Issue of share capital under share based payments Options issued Issue of share capital, net of transaction costs and tax Notes 28 21 20 Loss for the year Other comprehensive income Total comprehensive income Balance at 30 June 2014 Balance at 1 July 2014 Issue of share capital under share-based payments Options issued Treasury Shares Share Option Reserve $ Foreign Currency Translation Reserve $ Retained Profits/ (Accu- mulated Losses) $ Total Equity $ 20,108 49,165 69,368 – – – – – – (150,000) (150,000) – – – 120,527 298,151 4,757,781 (150,000) 5,026,459 (1,402,601) (1,402,601) (27,944) – (27,944) (27,944) (1,402,601) (1,430,545) Share Capital $ 95 – 120,527 – 298,151 4,757,781 – – – – – – – – – – – – 4,878,403 4,878,403 298,151 298,151 (7,836) (1,503,436) 3,665,282 (7,836) (1,503,436) 3,665,282 21 20 1,499,400 – – 188,525 (1,499,400) Issue of share capital, net of transaction costs and tax 21 12,867,396 Total transactions with owners 12,867,396 188,525 Loss for the year Other comprehensive income Total comprehensive income – – – – – – – – – – – – – – – – – 1,499,400 188,525 (1,499,400) 12,867,396 13,055,921 (4,309,230) (4,309,230) (499,070) – (499,070) (499,070) (4,309,230) (4,808,300) Balance at 30 June 2015 17,745,799 486,676 (506,906) (5,812,666) 11,912,903 This statement should be read in conjunction with the notes to the financial statements. 38 Catapult Group International Limited Annual Report 2015 Consolidated Statement of Cash Flows For the year ended 30 June 2015 Operating activities Receipts from customers Government grants Lease incentive Payments to suppliers and employees Income tax paid Notes 2015 $ 2014 $ 12,452,333 5,193,436 404,952 – 808,871 215,727 (16,905,853) (6,659,509) – (301,103) Net cash used in operating activities 29 (4,048,568) (742,578) Investing activities Purchase of property, plant and equipment Purchase of other intangible assets R&D tax offset received and offset against purchase of intangibles Acquisition of GPSports, net of cash acquired Interest received Net cash used in investing activities Financing activities Proceeds from borrowings Repayment of borrowings Transaction costs related to convertible notes issued Proceeds from issue of share capital Transaction costs related to share capital issued Proceeds from related party borrowings Interest paid Dividends paid Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of year Exchange differences on cash and cash equivalents 5 23 23 28 (1,750,494) (1,028,989) (1,207,105) (998,612) 543,197 61,160 (2,386,892) (258,299) 72,044 15,869 (4,729,250) (2,208,871) 1,500,000 1,500,000 (2,001,702) – – (221,825) 12,000,000 4,983,505 (694,806) (247,927) – 501,702 (177,009) (96,832) – (150,000) 10,626,483 6,268,623 1,848,665 3,317,174 3,754,202 504,456 69,558 (67,428) Cash and cash equivalents, end of year 10 5,672,425 3,754,202 This statement should be read in conjunction with the notes to the financial statements. Catapult Group International Limited Annual Report 2015 39 Notes to the Consolidated Financial Statements 1. Nature of operations Catapult Group International Ltd and subsidiaries (the “Group”) principal activities are the development and supply of wearable athlete tracking and analytics solutions. 2. General information and statement of compliance The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (IASB). Catapult Group International Ltd is a for-profit entity for the purpose of preparing the financial statements. Catapult Group International Ltd (formerly Catapult Group International Pty Ltd) is the Group’s Ultimate Parent Company. Catapult Group International Ltd is a Public Company incorporated and domiciled in Australia and listed on the Australian Stock Exchange. The address of its registered office and its principal place of business is The Clocktower, 1 Aurora Lane, Docklands, Victoria, Australia. The consolidated financial statements for the year ended 30 June 2015 were approved and authorised for issue by the Board of Directors on 10 August 2015. 3. Changes in accounting policies 3.1 New and revised standards that are effective for these financial statements A number of new and revised standards and an interpretation became effective for the first time to annual periods beginning on or after 1 July 2014. Information on these new standards is presented below. AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2014. The adoption of these amendments has not had any impact on the Group as the amendments merely clarify the existing requirements in AASB 132 and the Group doesn’t apply offsets. AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made in introducing those requirements resulted in the requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36 therefore clarify the IASB’s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal. AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to annual reporting periods beginning on or after 1 January 2014. The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. 40 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 3. Changes in accounting policies continued 3.1 New and revised standards that are effective for these financial statements continued > amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities The amendments in AASB 2013-5 provide an exception to consolidation to investment entities and require them to measure unconsolidated subsidiaries at fair value through profit or loss in accordance with AASB 9 Financial Instruments (or AASB 139 Financial Instruments: Recognition and Measurement where AASB 9 has not yet been adopted). The amendments also introduce new disclosure requirements for investment entities that have subsidiaries. These amendments apply to investment entities, whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. Examples of entities which might qualify as investment entities would include Australian superannuation entities, listed investment companies, pooled investment trusts and Federal, State and Territory fund management authorities. AASB 2013-5 is applicable to annual reporting periods beginning on or after 1 January 2014. This Standard has not had any impact on the Group as it does not meet the definition of an ‘investment entity’ in order to apply this consolidation exception. AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010-2012 and 2011-2013 Cycles) Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle. Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012 Cycle: > clarify that the definition of a ‘related party’ includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity) Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013 Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination. Part A of AASB 2014-1 is applicable to annual reporting periods beginning on or after 1 July 2014. The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. 3.2 Accounting Standards issued but not yet effective and have not been adopted early by the Group Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2015 reporting periods, and have not yet been adopted by the group. The group’s assessment of the impact of these new standards and interpretations is set out below: AASB 15 Revenue from Contracts with Customers AASB 15: > replaces AASB 15 Revenue and some revenue-related Interpretations > establishes a new control-based revenue recognition model > changes the basis for deciding whether revenue is to be recognised over time or at a point in time > provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights of return, warranties and licensing) > expands and improves disclosures about revenue Catapult Group International Limited Annual Report 2015 41 The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2018. AASB 9 Financial Instruments (December 2014) AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are: > Financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s business model for managing the financial assets; and (ii) the characteristics of the contractual cash flows. > Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. > Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments. > Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. > Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: – – – the change attributable to changes in credit risk are presented in Other Comprehensive Income (‘OCI’) the remaining change is presented in profit or loss If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9: – classification and measurement of financial liabilities; and – derecognition requirements for financial assets and liabilities. AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that enable entities to better reflect their risk management activities in the financial statements. Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model makes use of more forward- looking information and applies to all financial instruments that are subject to impairment accounting. The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2019. AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to AASB 116 prohibit the use of a revenue-based depreciation method for property, plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing balance method for property, plant and equipment. The amendments to AASB 116 present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. This rebuttable 42 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 3. Changes in accounting policies continued 3.2 Accounting Standards issued but not yet effective and have not been adopted early by the Group continued AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation continued presumption can be overcome (i.e. a revenue-based amortisation method might be appropriate) only in two limited circumstances: > the intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. > when it can be demonstrated that revenue and the 4.3 Business combination consumption of the economic benefits of the intangible asset are highly correlated. When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the transactions and balances recognised in the financial statements. 4. Summary of accounting policies 4.1 Overall considerations The consolidated financial statements have been prepared using the significant accounting policies and measurement bases summarised below. 4.2 Basis of consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2015. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquire, and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. Catapult Group International Limited Annual Report 2015 43 4.4 Foreign currency translation Functional and presentation currency The consolidated financial statements are presented in Australian dollars (‘AUD’), which is also the functional currency of the Parent Company. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange rates are recognised in profit or loss. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined. Foreign operations In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the AUD are translated into AUD upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into $AUD at the closing rate at the reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into $AUD at the closing rate. Income and expenses have been translated into AUD at the average rate over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal. 4.5 Revenue Revenue arises from the sale of goods and the rendering of services it is measured by reference to the fair value of consideration received or receivable, excluding sales taxes, rebates, and trade discounts. The Group enters into sales transactions involving either an outright sale to the client or on a subscription basis. The Group applies the revenue recognition criteria set out below to each separately identifiable component of the sales transaction in order to reflect the substance of the transaction. Outright Sale of goods Outright sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods. Subscription sale The Group generates revenues from subscription sales and once the customer has taken undisputed delivery of the goods, the revenue from the subscription agreement is recognised on a monthly basis, equal amounts for each month of the subscription agreement. In recognising subscription sales revenues, the Group considers the nature of the term of the agreement and the useful life of the goods being provided under the subscription agreement. Interest and dividend income Interest income and expenses are reported on an accrual basis using the effective interest method. Dividends, other than those from investments in associates, are recognised at the time the right to receive payment is established. 4.6 Operating expenses Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised. 44 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 4. Summary of accounting policies continued > the Group has the ability to use or sell the software; and 4.7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs (see Note 23). 4.8 Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. See Note 4.3 for information on how goodwill is initially determined. Goodwill is carried at cost less accumulated impairment losses. Refer to Note 14.1 for a description of impairment testing procedures. 4.9 Other intangible assets Recognition of other intangible assets Acquired intangible assets Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the specific software. Brand names and customer lists acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values (see Note 4.3). Internally developed software > the software will generate probable future economic benefits Development costs not meeting these criteria for capitalisation are expensed as incurred. Directly attributable costs include employee, costs, incurred on software development, along with an appropriate portion of relevant overheads. Internally developed hardware Expenditure on the research phase of projects to develop new hardware for athlete tracking and analytic analysis is recognised as an expense as incurred. Costs that are directly attributable to a project’s development phase are recognised as intangible assets, provided they meet the following recognition requirements: > the development costs can be measured reliably > the project is technically and commercially feasible > > > the Group intends to and has sufficient resources to complete the project the Group has the ability to use or sell the hardware; and the hardware will generate probable future economic benefits Development costs not meeting these criteria for capitalisation are expensed as incurred. Expenditure on the research phase of projects to develop new customised software for athlete tracking and analytic analysis is recognised as an expense as incurred. Directly attributable costs include employee, costs, incurred on software development, along with an appropriate portion of relevant overheads. Costs that are directly attributable to a project’s development phase are recognised as intangible assets, provided they meet the following recognition requirements: > the development costs can be measured reliably > the project is technically and commercially feasible > the Group intends to and has sufficient resources to complete the project Subsequent measurement All intangible assets, including capitalised internally developed software and hardware, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described in Note 4.12. Catapult Group International Limited Annual Report 2015 45 The following useful lives are applied: > Software (licenses and internally developed): 5 years, except with regard to identified projects with 2 years > brand names: annually assessed by management for impairment > customer lists: 10 years > hardware: 3 years > distributor relationships: 10 years > distributor contracts: 10 years > goodwill: annually assessed by management for impairment Amortisation has been included within depreciation, amortisation and impairment of non-financial assets. Subsequent expenditures on the maintenance of computer software and brand names are expensed as incurred. When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses. 4.10 Property, plant and equipment Plant, IT equipment and other equipment Plant, IT equipment and other equipment (comprising fittings and furniture) are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group’s management. Plant, IT equipment and other equipment are subsequently measured using the cost model, cost less subsequent precaution and impairment losses. Depreciation is recognised on a diminishing-value basis to write down the cost less estimated residual value of Plant buildings, IT equipment and other equipment. The following useful lives are applied: > plant: 3-10 years > office equipment: 3-20 years > fixture and fittings: 20 years > other equipment: 2-7 years > property improvements: 7 years In the case of leasehold property, expected useful lives are determined by reference to comparable owned assets or over the term of the lease, if shorter. Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses. 4.11 Leased assets Operating leases All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight- line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. 4.12 Impairment testing of goodwill, other intangible assets and property, plant and equipment For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. 46 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 4. Summary of accounting policies continued 4.12 Impairment testing of goodwill, other intangible assets and property, plant and equipment continued which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below. Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. 4.13 Financial instruments Recognition, Initial Measurement and De-recognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and Subsequent Measurement of Financial Assets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: > Loans and receivables > Financial assets at Fair Value Through Profit or Loss (‘FVTPL’) > Held-To-Maturity (‘HTM’) investments; or > Available-For-Sale (‘AFS’) financial assets All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Catapult Group International Limited Annual Report 2015 47 Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group. Classification and subsequent measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognised in profit or loss. All derivative financial instruments that are not designated and effective as hedging instruments are accounted for at FVTPL. Derivative financial instruments and hedge accounting Derivative financial instruments are accounted for at FVTPL except for derivatives designated as hedging instruments in cash flow hedge relationships, which requires a specific accounting treatment. 4.14 Inventories Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. 4.15 Income taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office (‘ATO’) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Group’s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively. 48 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 4. Summary of accounting policies continued Short-term Employee Benefits 4.15 Income taxes continued Catapult Group International Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. 4.16 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 4.17 Equity, reserves and dividend payments Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Other components of equity include the following: > foreign currency translation reserve – comprises foreign currency translation differences arising on the translation of financial statements of the Group’s foreign entities into AUD (see Note 4.4) > share option reserve – comprises the grant date fair value of options issued but not exercised. Retained earnings include all current and prior period retained profits. Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date. All transactions with owners of the parent are recorded separately within equity. 4.18 Post-employment benefits and short-term employee benefits Post-employment Benefit Plans The Group provides post-employment benefits through defined contribution plans. Short-term employee benefits are current liabilities included in employee benefits, measured at the undiscounted amount that the Group expects to pay as a result of the unused entitlement. Annual leave is included in ‘other long-term benefit’ and discounted when calculating the leave liability as the Group does not expect all annual leave for all employees to be used wholly within 12 months of the end of reporting period. Annual leave liability is still presented as current liability for presentation purposes under AASB 101 Presentation of Financial Statements. 4.19 Share-based employee remuneration The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example performance conditions). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share option reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs are allocated to share capital. Catapult Group International Limited Annual Report 2015 49 4.20 Provisions, contingent liabilities and contingent assets Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognised for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is recognised. 4.21 Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing and financing activities, which are disclosed as operating cash flows. 4.22 Significant management judgement in applying accounting policies When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. Significant management judgement The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements. Recognition of subscription revenue and rental units Determining when to recognise revenues from subscription agreements requires an understanding of the customer’s use and the useful life of the products, historical experience and knowledge of the market. The company provides GPS tracking units for team sports under both an up-front sales model and a subscription model. Under the subscription model, the customer has the right to use the GPS tracking units for the period of the subscription, however must return the unit to the Group at the end of the subscription period. Management have considered various factors under AASB 117 Leases as to whether a component of the subscription agreements represents a finance or operating lease. As the GPS tracking units have for the majority of subscription contracts have a subscription period no more than 75% of the useful life of the units, this component of the subscription agreements has been considered an operating lease with the Group as lessor. As such, those GPS tracking units provided under subscription agreements have been capitalised as ‘Rental Units’ under property, plant and equipment and are amortised over their estimated useful life. All revenue under subscription sales is therefore recognised on a straight-line basis over the term of the subscription period, reflecting management’s best estimate of the delivery of services and provision of the rental units over the term of the agreements. 50 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 4. Summary of accounting policies continued Business combinations 4.22 Significant management judgement in applying accounting policies continued Significant management judgement continued Recognition of deferred tax assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilised, as described in note 16. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions. Estimation uncertainty Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different. Impairment In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 4.12). Useful lives of depreciable assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and IT equipment. Inventories Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices. Management uses valuation techniques in determining the fair values of the various elements of a business combination (see Note 4.3). Particularly, the fair value of contingent consideration is dependent on the outcome of many variables that affect future profitability (see Note 5). 4.23 Going concern The financial statements have been prepared on the basis that the consolidated entity is a going concern, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. The consolidated group incurred a loss after tax of $4,309,230 and had cash outflows from operations of $4,048,568. Notwithstanding this, the directors are of the view that the going concern principle is appropriate due to the following factors: > The consolidated entity has continued to successfully secure sale arrangements with many leading sporting organisations across the world for which revenues and cash inflows will be recognised in future reporting periods; and > The business has put in place appropriate staffing globally to execute the initial growth strategy outlined in the IPO. 5. Acquisitions and disposals The Group had no acquisitions or disposals of business’s or business units during the period. During the year, the Group paid $2,386,892 as consideration for the acquisition of GPSports which was acquired in the prior year. This amount includes the contingent consideration of $275,000, being paid in full, based on the successful retention of key employees. Catapult Group International Limited Annual Report 2015 51 6. Interests in subsidiaries Set out below details of the subsidiaries held directly by the Group: Name of the Subsidiary Country of Incorporation & Principal Place of Business Principal Activity 30-Jun-15 30-Jun-14 Group Proportion of Ownership Interests Catapult Sports Pty Ltd Australia / The Clocktower, 1 Aurora Lane, Docklands, Victoria, Australia Manufacturing and Selling for Catapult products Catapult Gameday Pty Ltd Australia / The Clocktower, 1 Aurora Lane, Docklands, Victoria, Australia Trading entity for relationships with Media 100% 100% 100% 100% Catapult International Pty Ltd Australia / The Clocktower, 1 Aurora Lane, Docklands, Victoria, Australia Holding Company 100% 100% GPSports Systems Pty Ltd Australia / Level 2, 18 Barrier Street, Canberra, ACT, Australia Manufacturing and Selling for GPSports products Catapult Sports LLC USA / 8770 W Bryn Mawr Ave, Suite 1300, Chicago, Illinois 60631 North American Sales Operations Catapult Sports Limited UK / 1 Aire Street, Leeds, UK LS1 4PR European Sales Operations 100% 100% 100% 100% 100% 100% 7. Segment reporting The Chief Operating Decision Maker currently reviews consolidated financial information when making decisions about the allocation of resources, and therefore there are currently no separate reportable operating segments in the Group. The Group’s revenues from external customers (excludes government grants) and its non-current assets (other than financial instruments and deferred tax assets) are divided into the following geographical areas: Australia (Domicile) Asia Pacific (ex Australia) Europe (including UK) USA Rest of World Total 2015 $ 2014 $ Revenue Non-current Assets Revenue Non-current Assets 1,804,659 5,949,544 1,880,044 4,569,763 1,575,183 3,295,966 7,845 6,600 264,825 1,723,753 5,230 80,583 4,283,354 1,840,659 1,101,665 298,833 301,849 6,538 60,168 – 11,261,011 8,069,411 4,772,230 4,954,409 Revenues from external customers in the Group’s domicile, Australia, as well as its major markets, the Europe and the USA, have been identified on the basis of the customer’s geographical location. Non-current assets are allocated based on their physical location. During 2015, no single customer accounted for greater than 2% of the Group’s revenue (2014 $ 481,325 or 9% attributed to 1 customer). 52 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 8. Revenue Revenue has been generated from the following types of sales transactions Capital revenue Subscription revenue Three year sales Media revenue Project revenue Total Revenue 9. Other Income Other income has been generated from the following sources Government grants – EMDG Government grants – R & D Tax Offset Other income Total Other Income 2015 $ 2014 $ 6,114,222 2,014,988 5,083,939 1,862,055 62,850 – – 93,417 481,325 320,445 11,261,011 4,772,230 2015 $ 118,755 339,371 58,245 516,371 2014 $ 133,965 286,197 200,786 620,948 A further amount of Government grants from R&D tax offsets of $543,197 (2014: $448,618) were recognised as a reduction in intangibles, based on the proportion of development, capitalised. 10. Cash and cash equivalents Cash and cash equivalents include the following components: Cash at bank and in hand: AUD EUR GBP USD Short term deposits (AUD) Cash and cash equivalents 2015 $ 2014 $ 3,454,980 3,396,555 235,089 561,230 1,421,126 – 86,729 224 195,859 74,835 5,672,425 3,754,202 The amount of cash and cash equivalents inaccessible to the Group as at 30 June 2015 amounts to $nil (2014: $74,835). Catapult Group International Limited Annual Report 2015 53 11. Trade and other receivables Trade and other receivables consist of the following: Trade receivables, gross Allowance for credit losses Trade receivables Social security and other taxes Other Prepayments Non-financial assets 2015 $ 2014 $ 4,140,327 1,376,292 (36,092) – 4,104,235 1,376,292 228 25,629 369,268 395,125 142,721 12,232 164,839 319,792 4,499,360 1,696,084 All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. All of the Group’s trade and other receivables have been reviewed for indicators of impairment. An amount of $36,092 was found to be impaired and subsequently an allowance for credit losses has been made (2014: Nil). 12. Inventories Raw materials and consumables Work in progress Finished goods 2015 $ 2014 $ 1,944,676 1,106,081 – 633,922 156,058 230,451 2,578,598 1,492,590 In 2015, a total of $1,884,256 of inventories was included in profit and loss as an expense (2014: $771,362). $Nil (2014: $112,596) resulted from write down of inventories, associated with change in device models. 54 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 13. Property, plant and equipment Details of the Group’s property, plant and equipment and their carrying amount are as follows: Gross carrying amount Balance 1 July 2014 Additions Acquisition through business combination Disposals Net exchange differences Rental Units $ Plant & Equipment $ Furniture & Fittings $ Office Equipment $ Leasehold Improve- ments $ Total $ 1,294,850 1,400,221 223,148 287,222 – (860,879) – (3,535) 3,629 3,916 – – – – 92,702 36,864 193,289 1,807,905 26,188 1,750,495 – – – – – – (864,414) 3,629 Balance 30 June 2015 1,834,192 510,464 3,916 129,566 219,477 2,697,615 Depreciation and impairment Balance 1 July 2014 Disposals Net exchange differences Depreciation Balance 30 June 2015 (698,654) 860,879 – (458,813) (296,588) Carrying amount 30 June 2015 1,537,604 (85,630) 658 (1,656) (90,470) (177,098) 333,366 Gross carrying amount Balance 1 July 2013 Additions Acquisition through business combination Disposal Net exchange differences 598,011 696,839 125,538 73,928 – – – 23,805 – (123) (858) (8,102) (2,198) (795,442) – – (236) (1,094) 2,822 14,013 – – (10,097) – – – – – (13,099) (21,201) (27,666) (29,864) 861,537 (1,656) (590,284) (525,845) 108,365 189,613 2,171,770 17,651 75,913 – 755,213 193,289 1,039,969 – (862) – – – – 23,805 (10,959) (123) Balance 30 June 2014 1,294,850 223,148 3,916 92,702 193,289 1,807,905 Depreciation and impairment Balance 1 July 2013 Net exchange differences Disposals Depreciation Balance 30 June 2014 Carrying amount 30 June 2014 (360,985) (38,131) (1,975) (5,086) – – (337,669) (698,654) 596,196 22 (2,635) (44,886) (85,630) 137,518 – 2,245 (1,128) (858) 3,058 – 470 (3,486) (8,102) – – – (406,177) 22 80 (2,198) (2,198) (389,367) (795,442) 84,600 191,091 1,012,463 All depreciation and impairment charges are included within depreciation and amortisation expense. The group wrote back $860,879 worth of rental units which had been fully depreciated and subsequently upgraded to the new device under Catapult’s subscription agreements. There were no material contractual commitments to acquire property, plant and equipment at 30 June 2015 (2014: None). Catapult Group International Limited Annual Report 2015 55 14. Goodwill The movements in the net carrying amount of goodwill are as follows: Balance 1 July Acquired through business combinations Balance 30 June 14.1 Impairment testing 2015 $ 1,212,735 2014 $ – – 1,212,735 1,212,735 1,212,735 For the purpose of annual impairment testing goodwill is allocated to the cash-generating units which expected to benefit from the synergies of the business combinations in which the goodwill arises. GPSports Systems Goodwill allocation at 30 June 2015 $ 2014 $ 1,212,735 1,212,735 1,212,735 1,212,735 The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering detailed five-year forecast, followed by an extrapolation of expected cash flows for the units remaining useful lives using the growth rates determined by management. The present value of the expected cash flows of each segment is determined by applying a suitable discount rate. GPSports Systems 14.2 Growth Rates Growth Rates Discount Rates 2015 10.0% 2014 – 2015 14.60% 2014 – The growth rates reflect a conservative management estimate, as publicly published growth rates for this industry segment are not readily available. 14.3 Discount Rates The discount rate reflects appropriate adjustments relating to market risk and specific risk factors of the business unit. 56 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 15. Other intangible assets Acquired Software Licenses $ Hardware IP $ Brand Names $ Distributor Relationship $ Distributor Contracts $ Customer Relationship $ Internally Developed Software $ Total $ Gross carrying amount Balance at 1 July 2014 395,000 327,949 249,685 425,000 96,000 387,000 498,498 2,379,132 Acquisition through business combination Additions – – – 121,711 – – – – – – – – – – 542,197 663,908 Balance at 30 June 2014 395,000 449,660 249,685 425,000 96,000 387,000 1,040,695 3,043,040 Amortisation and impairment Balance at 1 July 2014 – – Amortisation (79,000) (109,316) Balance at 30 June 2015 (79,000) (109,316) – – – – – – (37,377) (37,377) (42,500) (48,000) (38,700) (179,867) (497,383) (42,500) (48,000) (38,700) (217,244) (534,760) Carrying amount 30 June 2015 Gross carrying amount 316,000 340,344 249,685 382,500 48,000 348,300 823,451 2,508,280 Balance at 1 July 2013 – – – – – – 75,137 75,137 Acquisition through business combination Additions 395,000 203,000 248,000 425,000 96,000 387,000 – 1,754,000 – 124,949 1,685 – – – 423,361 549,995 Balance at 30 June 2014 395,000 327,949 249,685 425,000 96,000 387,000 498,498 2,379,132 Amortisation and impairment Balance at 1 July 2013 Amortisation Balance at 30 June 2014 Carrying amount 30 June 2014 – – – – – – – – – – – – – – – – – – – – (37,377) (37,377) (37,377) (37,377) 395,000 327,949 249,685 425,000 96,000 387,000 461,121 2,341,755 In addition, research costs of $813,211 (2014: $635,993) were recognised as other expenses. Catapult Group International Limited Annual Report 2015 57 16. Deferred tax assets and liabilities Deferred taxes arising from temporary differences and unused tax losses can be summarised as attributable to the following: Recognised directly in equity $ Recognised in Business Combi- nation $ Recognised in Profit & Loss $ Deferred Tax Assets / (Liabilities) Deferred Tax Assets Inventories Property, plant and equipment Provision for annual leave Provision for long service leave Other employee obligations Other provisions Tax losses Section 40-880 expenditure Deferred Tax Liabilities Other intangible assets Foreign Exchange Deferred tax movement 1-Jul-14 $ 4,201 659 77,991 42,115 50,500 – – – – – – – – – 121,197 296,663 208,442 208,442 (395,400) (61,036) (456,436) – – – 208,442 30-Jun-15 $ – 527 106,188 41,796 120,820 37,018 (4,201) (132) 28,197 (319) 70,320 37,018 1,113,597 1,113,597 252,655 582,294 1,497,135 2,002,240 81,027 61,036 (314,373) – 142,063 (314,373) 1,639,198 – – – – – – – – – – – – – 58 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 16. Deferred tax assets and liabilities continued Deferred Tax Assets / (Liabilities) (unaudited) 1-Jul-13 $ Recognised directly in equity $ Recognised in Business Combi- nation $ Recognised in Profit & Loss $ Deferred Tax Assets Inventories Property, plant and equipment Provision for annual leave Provision for long service leave Other employee obligations Section 40-880 expenditure Deferred Tax Liabilities Other intangible assets Foreign Exchange Deferred tax movement – – 33,924 21,708 13,417 32,558 101,607 – (35,012) (35,012) – – – – – 96,740 96,740 – – – 96,740 30-Jun-14 $ 4,201 659 77,991 42,115 50,500 121,197 296,663 4,201 659 25,550 12,081 – – 42,491 – – 18,517 8,326 37,083 (8,101) 55,825 (395,400) – (395,400) – (26,024) (61,036) (395,400) (352,909) (26,024) (456,436) 29,801 The amounts recognised in other comprehensive income relate exchange differences on translating foreign operations. See Note 25 for the amount of the income tax relating to these components of other comprehensive income. All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial position. 17. Trade and other payables Trade and other payables consist of the following: Current: Trade payables Other payables Total Trade and Other Payables 2015 $ 2014 $ 1,528,358 – 841,692 549,893 1,528,358 1,391,585 All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable approximation of fair value. Catapult Group International Limited Annual Report 2015 59 18. Other liabilities Other liabilities consist of the following: Advances received for future service work Deferred income Deferred gain (lease incentive) Other Consideration payable on acquisition of GPSports Contingent consideration for the acquisition of GPSports Other Liabilities – Current Deferred income Other Liabilities – Non-Current 2015 $ – 2014 $ 13,200 4,825,078 1,842,718 207,027 520,353 – – 201,742 107,050 2,111,892 275,000 5,552,458 4,551,602 341,572 341,572 215,883 215,883 The deferred gain relates to the lease incentive associated with Aurora Lane premises commencing March, 2014. The excess of proceeds received over fair value was deferred and is being amortised over the lease term of 4 years. In 2015, deferred income of $58,188 (2014: $13,985) was recognised in profit or loss relating to this transaction. The subsequent leasing agreement is treated as an operating lease. The non-current part of the deferred gain will be amortised between 2015 and the end of the lease term. All amounts recognised relating to deferred income are assessed for current versus non-current classification and are applied to revenue as recognised in relation to the timing of the client contract. The Group expects to recognise $4,825,078 of deferred income during 2015 (2014: $1,842,718), and from non-current deferred income $249,026 (2014: $118,375) during 2017 and $27,126 during 2018, with the balance in subsequent years. 19. Financial assets and liabilities 19.1 Categories of financial assets and liabilities Note 4.13 provides a description of each category of financial assets and financial liabilities and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows: 30 June 2015 Financial assets Other long-term financial assets Trade and other receivables Cash and cash equivalents Note 11 10 Loans and Receivables $ (Carried at amortised cost) 174,386 4,140,327 5,672,425 9,987,138 Other Assets $ (Carried at fair value) – – – Total $ 174,386 4,140,327 5,672,425 9,987,138 60 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 19. Financial assets and liabilities continued 19.1 Categories of financial assets and liabilities continued 30 June 2015 Financial liabilities Trade and other payables 30 June 2014 Financial assets Other long-term financial assets Trade and other receivables Cash and cash equivalents Note 17 Note 11 10 30 June 2014 (unaudited) Note Financial liabilities Trade and other payables Non-current borrowings Current borrowings Consideration for GPSports Systems 17 19.2 19.2 18 Other Liabilities $ (Carried at amortised cost) Other Liabilities at FVTPL $ (Carried at fair value) Total $ – – 1,528,358 1,528,358 1,528,358 1,528,358 Loans and Receivables $ (Carried at amortised cost) 91,012 1,376,292 3,754,202 5,221,506 Other Assets $ (Carried at fair value) – – – Other Liabilities $ (Carried at amortised cost) Other Liabilities at FVTPL $ (Carried at fair value) 1,391,585 1,161,530 501,702 2,111,892 5,166,709 – – – 275,000 275,000 Total $ 91,012 1,376,292 3,754,202 5,221,506 Total $ 1,391,585 1,161,530 501,702 2,386,892 5,441,709 A description of the Group’s financial instrument risks, including risk management objectives and policies is given in Note 32. The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value: > trade and other receivables > cash and cash equivalents > trade and other payables The methods used to measure financial assets and liabilities reported at fair value are described in Note 33.1. Catapult Group International Limited Annual Report 2015 61 19. Financial assets and liabilities continued 19.2 Borrowings Borrowings include the following financial liabilities: Financial Liabilities Carrying amount at amortised cost: Loans from director related entities Convertible Note All borrowings are denominated in $AUD. Loans from director related entities 2015 $ – – – Current 2014 $ 501,702 – 501,702 Non-Current 2015 $ 2014 $ – – – – 1,161,530 1,161,530 All loans from directors and related entities were repaid in full during the year. Convertible Notes Proceeds from issued of convertible notes (15 notes at $100,000 par value) Borrowing costs Net proceeds Amortised borrowing costs Carrying amount 30 June 2015 $ – – – – – 2014 $ 1,500,000 (445,439) 1,054,561 106,969 1,161,530 The convertible notes were converted on 16 December 2014 for 6,201,600 ordinary shares. And the subordinated loan was repaid during the period. The Group borrowed $1,500,000 on a short term basis prior to it’s IPO, which was subsequently repaid on 22 December 2014. This facility was on an unsecured basis and was at an interest rate of 15%, with a minimum term of 6 months. 62 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 20. Employee remuneration 20.1 Employee benefits expense Expenses recognised for employee benefits are analysed below: Wages and salaries Social security costs Share-based payments Superannuation – Defined Contribution Plans Employee benefits expense 20.2 Share-based employee remuneration 2015 $ 2014 $ 5,534,192 2,360,886 1,371,628 214,060 335,104 294,323 14,737 184,688 7,454,984 2,854,634 Catapult has established an Employee Share Plan (Employee Plan) to assist in the motivation, retention and reward of executives and employees. The Employee Plan is designed to align the interests of employees with the interests of Shareholders by providing an opportunity for eligible employees (including any person who is a full-time or permanent part-time employee or officer, or director of Catapult or any related body corporate of Catapult) to receive an equity interest in Catapult through the granting of Options, Performance Rights or other Awards. The Shares held by the Employee Plan Trustee are Restricted Securities such that the Employee Plan Trustee is not able to dispose of them within 24 months of Official Quotation. In addition, participants in this program have to be employed until the end of the agreed vesting period. Upon vesting each option, excluding those identified for Key Management Personnel has an exercise price equivalent to the Groups IPO price. The Key Management Personnel shares identified in the directors report have an exercise price of the Groups IPO price plus 10%. The current maximum term for options and performance rights current ends at October 2019 and no options have vested during the period ended 30 June 2015. Share options and weighted average exercise prices are as follows for the reporting periods presented: Outstanding at 1 July 2014 Granted Forfeited Exercised Expired Outstanding at 30 June 2015 Exercisable at 30 June 2015 Options Program Performance Rights Weighted average exercise price ($) Number of Shares Weighted average exercise price ($) Number of Shares – – – 2,847,000 0.5871 510,000 – – – – – – – – – 2,847,000 0.5871 510,000 – – – – 0.00 – – – 0.00 – Catapult Group International Limited Annual Report 2015 63 20. Employee remuneration continued 20.2 Share-based employee remuneration continued The following principal assumptions were used in the valuation Valuation Assumptions Grant Date Vesting Period Ends Share price at date of grant Volatility Option life Dividend yield Risk free investment rate Fair value at grant date Weight average exercise price at grant date Key Management Options Options Program Performance Rights 31 October 2014 31 October 2014 31 October 2014 15 September 2018 31 October 2017 31 October 2017 $0.55 50% 5 Year 0% 2.5% $0.149 $0.605 $0.55 50% 5 Year 0% 2.5% $0.198 $0.55 $0.55 50% 5 Year 0% 2.5% $0.55 $0.0 Exercisable from Exercisable to 1 September 2015 31 October 2017 31 October 2017 31 October 2019 31 October 2019 30 November 2017 Weighted average remaining contractual life 4.3 years 4.3 years 4.3 years The underlying volatility was calculated with reference to a comparative set of ASX listed entities. In total $214,060 (2014: Nil) of employee remuneration expense (all of which related to equity-settled share based payment transactions) has been included in profit or loss and credited to share option reserve. 20.3 Employee benefits The liabilities recognised for employee benefits consist of the following amounts: Current Wages, salaries Social security & payroll taxes Defined Contribution Plans Accrued leave entitlements Total current employee benefits Non-current Accrued leave entitlements Total non-current employee benefits 2015 $ 2014 $ 1,249,678 200,259 52,039 608,768 2,110,744 51,101 51,101 – – 17,999 377,875 395,874 38,485 38,485 The current portion of these liabilities represents the Group’s obligations to its current and former employees that are expected to be settled during the next 12 months and its accrued annual leave liabilities and current accrued long service leave. 64 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 21. Share Capital The share capital of Catapult Group International Ltd consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of Catapult Group International Ltd. Shares issued and fully paid: 116,289,982 23,229 17,745,799 4,878,403 2015 Shares 2014 Shares 2015 $ 2014 $ Share capital Beginning of the year Share split (1:3,800) Shares issues to the Employee Share Plan Trust Share based payments Shares issue for cash Shares issued on conversion of convertible note Share issue costs Deferred tax credit recognised directly in equity on share issue costs (note 16) Other equity securities Treasury shares (a) 23,229 19,000 4,878,403 88,246,971 3,876,000 – 21,818,182 6,201,600 – – – – 229 – – – 95 – – 120,527 4,000 12,000,000 4,983,504 1,353,761 (694,807) (322,463) 208,442 96,740 – – 120,165,982 23,229 17,745,799 4,878,403 (3,876,000) – – – Total contributed equity at 30 June 116,289,982 23,229 17,745,799 4,878,403 The Group had the following transaction associated with its shares: > On 7 October 2014, the Group undertook to split its shares on the basis of 3,800 shares issued for each share held, resulting in a total of 88,270,200 shares being on issue. > On 17 November 2014, the group issued 3,876,000 ordinary shares to the Catapult Sports Employee Share Plan. This share plan is subject to various performance, service and other vesting conditions. > On 16 December 2014, the Group issued 6,201,600 ordinary shares on the conversion of the convertible notes previously on issue by the Group and held by One Managed Investment Funds Ltd. > On 16 December, the Group issued 21,818,182 ordinary shares as part of its capital raising program, being an Initial Public Offering (IPO) which resulted in gross cash proceeds of $12m. Catapult Group International Limited Annual Report 2015 65 21. Share Capital continued (a) Treasury Shares Treasury shares are shares in Catapult Group International Limited that are held by the Catapult Sports Employee Share Plan Trust for the purpose of issuing shares under the Catapult Sports Employee Share Plan in respect of options and performance rights issued under that Plan: Date 1 July 14 Opening balance 17 Nov 14 Shares issued to Catapult Sports ESP 30 Jun 15 Closing balance 22. Leases 22.1 Finance leases as lessee The Group’s has no finance leases as lessee. 22.2 Operating leases as lessee 2015 Shares – 3,876,000 3,876,000 2014 Shares – – – The Group leases an office and production building under an operating lease. The future minimum lease payments are as follows: 30 June 2015 30 June 2014 Minimum Lease Payments Due Within 1 year $ 236,298 227,210 1-5 years $ 435,537 671,835 After 5 years $ – – Total $ 671,835 899,045 Lease expense during the period amounted to $186,005 (2014: $136,355) representing the minimum lease payments. 22.3 Operating leases as lessor The Group leases out wearable athlete tracking units on a subscription basis to its clients. The future minimum revenues are as follows: 30 June 2015 30 June 2014 Minimum Lease Payments Due Within 1 year $ 1-5 years $ After 5 years $ Total $ 7,353,090 8,303,686 2,869,696 3,033,895 – – 15,656,776 5,903,591 Lease revenues during the period amounted to $5,064,007 (2014: $1,862,055) representing the minimum subscription payments. 66 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 22. Leases continued 22.3 Operating leases as lessor continued Subscription agreements are in place with over 130 clients with a broad range of expiry dates, based on the commencement of this kind of arrangements in 2012 and on average an initial term of 36 months and standard wording incorporates rolling renewals of these agreements upon expiry of the initial term. The athlete tracking units and their associated equipment are included as The Group’s Plant and Equipment and depreciated over their useful life of 4 years (see Note 13). 23. Finance costs and finance income Finance costs for the reporting periods consist of the following: Interest expenses for borrowings at amortised cost: Subordinated shareholder loan Shareholder borrowings at amortised cost Amortisation of borrowing costs Finance income for the reporting periods consists of the following: Interest income from cash and cash equivalents 24. Other financial items Other financial items consist of the following: Gain / (loss) from exchange differences on loans and receivables 2015 $ 2014 $ 27,744 281,123 308,867 58,207 367,074 9,682 87,150 96,832 106,969 203,801 2015 $ 2014 $ 72,044 15,869 2015 $ 2014 $ (67,985) (175,328) Catapult Group International Limited Annual Report 2015 67 25. Income tax expense The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of Catapult Group International Ltd at 30% (2014: 30%) and the reported tax expense in profit or loss are as follows: Profit before tax Expected tax expense at domestic tax rate for Catapult Group International Ltd at 30% Adjustment for tax-rate differences in foreign jurisdictions Tax losses in foreign jurisdictions not recognised Adjustment for tax-effect of non-assessable income: R&D tax offset recognised as grant income Adjustment for tax-effect of non-deductible expenses: Prior year DTL adjustment for foreign exchange R&D costs expensed and eligible for R&D tax offset Other non-deductible expenses Actual tax expense / (income) Tax expense comprises: Current tax expense Prior year adjustments Deferred tax expense / (income): Tax expense Deferred tax benefit recognised directly in equity relating to share issue costs Note 16 provides information on deferred tax assets and liabilities. 2015 $ 2014 $ (6,031,977) (1,326,811) (1,809,593) (398,043) (287,429) (32,319) 255,216 287,408 (101,899) (85,859) (61,036) 226,442 55,552 1,722,747 – 190,798 113,805 75,790 55,339 105,591 (138,887) (1,639,198) (1,722,747) (208,442) (29,801) 75,790 (90,170) 68 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 26. Auditor remuneration Audit and review of financial statements Audit of Catapult Group International Ltd and controlled entities – Grant Thornton Australia Specified audit procedures on GPSports acquisition Remuneration for audit and review of financial statements Other services Auditors of Catapult Group International Pty. Ltd. – Grant Thornton Australia: Taxation compliance and general accounting advice Services associated with capital raising Overseas Grant Thornton Network Firms Taxation compliance and general accounting advice Total other service remuneration Total auditor’s remuneration 27. Earnings per share 27.1 Earnings per share 2015 $ 2014 $ 59,141 – 59,141 55,387 270,090 22,609 348,086 407,227 32,000 2,000 34,000 33,105 – 10,583 43,688 77,688 Both the basic and diluted earnings per share have been calculated using the loss attributable to shareholders of the Parent Company (Catapult Group International Ltd) as the numerator (i.e. no adjustments to profit were necessary in 2014 or 2015). The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows: Weighted average number of shares used in basic and diluted earnings per share 103,316,439 60,834,200 The comparative number of shares has been adjusted to reflect the share split that occurred during the year. 2015 2014 Catapult Group International Limited Annual Report 2015 69 28. Dividends 28.1 Dividends paid and proposed 2015 2014 Dividend declared and paid during the year ended 30 June 2013 by Catapult Sports Pty Ltd Fully franked interim dividend ($1,578.95 per share) – 150,000 There is no dividend proposed for the period ended 30 June 2015. During the period ended 30 June 2014, Catapult Sports Pty Ltd declared and paid a fully franked dividend of $150,000 on 30 September 2013. Catapult Sports Pty was acquired by Catapult Group International Ltd on 1 October 2013 Ltd (refer to Note 2 to the financial statements for further information). Management have elected to present historical information, including comparatives, of the Catapult business (which includes Catapult Sports Pty Ltd) as if the combining of the entities had occurred at the beginning of the earliest comparative period presented. As such, this dividend paid by Catapult Sports Pty Ltd has been included in the results of the Group for the year ended 30 June 2014. The tax rate applicable to the franking credits attached to the dividend and is 30%. 28.2 Franking credits The amount of the franking credits available for subsequent reporting periods are: Balance of franking account at the beginning of the year (1,154,936) (507,035) Deferred debit that will arise from the receipt of the R&D tax offset for the current year (826,743) (647,901) Balance of franking account adjusted for deferred debits arising from past R&D tax offsets received and expected R&D tax offset to be received for the current year (1,981,679) (1,154,936) 2015 2014 70 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 29. Reconciliation of cash flows from operating activities Reconciliation of Cash Flows From Operating Activities Cash flows from operating activities Loss for the period Adjustments for: Depreciation, amortisation and impairment Foreign exchange differences Net interest and dividends received included in investing and financing Share based payments expense Net changes in working capital, excluding movements attributable to business combinations: Change in inventories Change in trade and other receivables Change in other assets Change in current tax assets Change in trade and other payables Change in other employee obligations 2015 $ 2014 $ (4,309,230) (1,402,601) 1,092,554 495,987 104,965 188,525 426,744 39,484 187,932 120,527 (1,086,008) (898,970) (2,803,276) (939,962) (128,374) (510,620) 136,773 (74,247) 121,059 890,816 1,727,686 (219,545) Change in deferred tax, excluding amounts recognised directly in equity (1,639,418) (25,968) Change in other current liabilities Net cash from operating activities 30. Related party transactions 2,591,868 1,032,153 (4,048,568) (742,578) The Group’s related parties include its associates, key management and others as described below. In addition, Catapult Group International Pty. Ltd. had a loan from its shareholder, One Managed Investments Ltd, which was repaid during the period, on which interest of $149,265 (2014: $84,486) was paid. Further Catapult Group International Ltd had a subordinated loan from related parties of its directors, Holthouse and Ng which was repaid during the period, on which interest of $27,744 (2014: $9,682) was paid. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. Catapult Group International Limited Annual Report 2015 71 30. Related party transactions continued 30.1 Transactions with key management personnel Key management of the Group are the executive members of Catapult Group International’s Board of Directors and executive team. Short term employee benefits > Salaries including bonuses and leave accruals > Social security costs Total short term employee benefits Long service leave Total other long-term benefits Share-based payments Total remuneration 2015 $ 2014 $ 1,957,807 72,238 2,030,045 32,272 32,272 90,099 2,152,416 521,649 49,628 571,277 8,359 8,359 14,737 594,373 Adir Shiffman is a director of Innovate Online Pty Ltd. During the year, the Group engaged Innovate Online Pty Ltd website services amounting to $6,000 (2014: Nil) and an amount payable as at 30 June 2015 of $1,000 (2014: Nil). Calvin Ng is a director of Aura Group Pty Ltd. During the year, the Group engaged Aura Capital Pty Ltd for advisory services amounting to $505,175 (2014: $44,000) and had an amount payable as at 30 June 2015 of $Nil (2014: Nil). 31. Contingent liabilities There were no contingent liabilities as at 30 June 2015. 32. Financial instrument risk 32.1 Risk management objectives and policies The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 19.1. The main types of risks are market risk, credit risk and liquidity risk. The Group’s risk management is coordinated in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short to medium-term cash flows by minimising the exposure to financial markets The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below. 72 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 32. Financial instrument risk continued 32.2 Market risk analysis The Group is exposed to currency risk which result from its operating activities. Foreign Currency Sensitivity Exposures to currency exchange rates arise from the Group’s overseas sales and purchases, which are primarily denominated in US dollars (USD), Pound Sterling (GBP) and Euro (EUR). Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those translated into $AUD at the closing rate: Short Term Exposure Long Term Exposure USD $ GBP $ EUR $ USD $ GBP $ EUR $ 30 June 2015 Financial assets 4,061,462 979,214 388,146 Financial liabilities (472,870) (15,588) – Total Exposure 3,588,592 963,626 388,146 30 June 2014 Financial assets 663,017 270,737 133,901 Financial liabilities (89,565) (39,130) – Total Exposure 573,452 231,607 133,901 – – – – – – – – – – – – – – – – – – The following table illustrates the sensitivity of profit and equity in regards to the Group’s financial assets and financial liabilities and the various exchange rates ‘all other things are equal’. It assumes a +/– 10% change of the various exchange rate for the year ended at 30 June 2015 (2014:10%). If the AUD had strengthened by 10% against the respective currencies then this would have had the following impact: 30 June 2015 30 June 2014 USD $ (358,859) (52,132) GBP $ (96,362) (21,055) EUR $ (38,814) (12,173) Total $ (494,036) (85,360) If the AUD had weakened by 10% against the respective currencies then this would have had the following impact: 30 June 2015 30 June 2014 USD $ 326,235 (6,625) GBP $ 87,602 9,140 EURO $ 35,286 – Total $ 449,123 2,515 Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk. Catapult Group International Limited Annual Report 2015 73 32. Financial instrument risk continued 32.3 Credit risk analysis Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for receivables to customers. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below: Classes of financial assets Carrying amounts: Cash and cash equivalents Trade receivables 2015 $ 2014 $ 5,672,235 3,754,202 4,104,462 1,376,292 9,776,976 5,130,494 The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties. The Group’s management considers that all of the above financial assets that are not impaired or past due for each of the 30 June reporting dates under review are of good credit quality. At 30 June the Group has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired. The amounts at 30 June, analysed by the length of time past due, are: Not more than three (3) months More than three (3) months but not more than six (6) months More than six (6)months but not more than one (1) year More than one (1) year Total 2015 $ 795,824 871,621 – 36,092 2014 $ 1,206,689 80,839 – – 1,703,537 1,287,528 In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various sports and geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good. The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. 32.4 Liquidity risk analysis Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. Liquidity needs are monitored on a week-to-week basis, as well as on the basis of a rolling 90-day projection. 74 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 32. Financial instrument risk continued 32.4 Liquidity risk analysis continued As at 30 June 2015, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below: 30 June 2015 Trade and other payables Total Current Non-current Within Six (6) Months $ Six (6) – Twelve (12) Months $ One (1) – Five (5) Years $ Later than Five (5) Years $ 1,528,358 1,528,358 – – – – – – This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows: Current Non-current Within Six (6) Months $ Six (6) – Twelve (12) Months $ One (1) – Five (5) Years $ Later than Five (5) Years $ 30 June 2014 Consideration payable on acquisition of GPSports 2,111,892 Contingent Liabilities for Acquisition Other Loans Convertible Note Trade and other payables Total – 19,050 61,380 1,391,585 3,583,907 – 275,000 262,700 – – 61,380 1,684,141 – – 599,080 1,684,141 – – – – – The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date. Director’s loans amounting to $245,437 have not been included as these are not currently treated as repayable and there is no interest accrued to this loan. 33. Fair value measurement 33.1 Fair value measurement of financial instruments Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows: > > level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly > level 3: unobservable inputs for the asset or liability Catapult Group International Limited Annual Report 2015 75 33. Fair value measurement continued 33.1 Fair value measurement of financial instruments continued The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at 30 June 2014 and 30 June 2013: 30 June 2015 Financial liabilities Contingent consideration Total liabilities 30 June 2014 Financial liabilities Contingent consideration Total liabilities Level 1 $ Level 2 $ Level 3 $ Total $ – – – – – – – – – – – – 275,000 275,000 275,000 275,000 There were no transfers between Level 1 and Level 2 in 2015 or 2014. Measurement of fair value of financial instruments The Group’s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation with third party valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. Valuation processes and fair value changes are discussed among the Board at least every year, in line with the Group’s reporting dates. The valuation techniques used for instruments categorised in Level 3 is described below: Contingent consideration (Level 3) The fair value of contingent consideration related to the acquisition of GPSports was settled during the period. Level 3 Fair Value Measurements The reconciliation of the carrying amounts of financial instruments classified within Level 3 is: Balance at 1 July Recognised through business combinations Settled during the period Balance at 30 June Contingent Consideration 2015 $ 275,000 2014 $ – – 275,000 (275,000) – – 275,000 76 Catapult Group International Limited Annual Report 2015 Notes to the Consolidated Financial Statements continued 34. Capital management policies and procedures The group’s objectives when managing capital are to safeguard its ability to continue as a going concern, to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Consistent with others in the industry, the group monitors capital on the basis of its gearing ratio. In order to maintain or adjust its capital structure, the group considers its issue of new capital, return of capital to shareholders and dividend policy as well as its plan for acquisition or disposal of assets. 35. Parent Entity information Information relating to Catapult Group International Ltd (‘the Parent Entity’): Statement of financial position Current assets Total assets Current liabilities Total liabilities Net assets Issued capital Retained earnings Share option reserve Total equity Statement of profit or loss and other comprehensive income Loss for the year Other comprehensive income Total comprehensive income 2015 $ 2014 $ 15,779,234 288,972 15,779,334 6,764,483 145,077 432,582 145,077 1,792,048 15,634,256 4,972,435 17,440,617 4,878,403 (2,293,037) (204,119) 486,676 298,151 15,634,256 4,972,435 (2,282,149) (197,607) – – (2,282,149) (197,607) The Parent Entity has no capital commitments at year end. The Parent Entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at the year end. 36. Post-reporting date events No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation. Catapult Group International Limited Annual Report 2015 77 Directors’ Declaration 1 In the opinion of the Directors of Catapult Group International Ltd: a The consolidated financial statements and notes of Catapult Group International Ltd are in accordance with the Corporations Act 2001, including i Giving a true and fair view of its financial position as at 30 June 2015 and of its performance for the financial year ended on that date; and ii Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and b There are reasonable grounds to believe that Catapult Group International Ltd will be able to pay its debts as and when they become due and payable. 2 The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2015. 3 Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors: Dr Adir Shiffman Executive Chairman Dated the 10th day of August 2015 78 Catapult Group International Limited Annual Report 2015 Independent Auditor’s Report 63 The Rialto, Level 30 525 Collins St Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Catapult Group International Ltd Report on the financial report We have audited the accompanying financial report of Catapult Group International Ltd (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ responsibility for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards. 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GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies. Catapult Group International Limited Annual Report 2015 79 64 Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion: a the financial report of Catapult Group International Ltd is in accordance with the Corporations Act 2001, including: i ii giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements. 80 Catapult Group International Limited Annual Report 2015 Independent Auditor’s Report continued 65 Report on the remuneration report We have audited the remuneration report included in pages 11 to 16 of the directors’ report for the year ended 30 June 2015. 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 responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Auditor’s opinion on the remuneration report In our opinion, the remuneration report of Catapult Group International Ltd for the year ended 30 June 2015, complies with section 300A of the Corporations Act 2001. GRANT THORNTON AUDIT PTY LTD Chartered Accountants Adrian Nathanielsz Partner - Audit & Assurance Melbourne, 10 August 2015 Catapult Group International Limited Annual Report 2015 81 Information provided under ASX Listing Rule 4.10 The information in this document is as at 31 August 2015 1. Substantial shareholders: Substantial Holder MANTON ROBIN PTY LTD CHARLAJA PTY LTD ONE MANAGED INVESTMENT FUNDS B B H F PTY LTD 2. Classes of equity securities on issue Shares Held 24,757,000 22,990,000 21,363,600 6,859,000 Notice Date 17 Dec 2014 17 Dec 2014 17 Dec 2014 17 Dec 2014 Equity Security Class Number of Holders Ordinary Shares Disruptive Options Employee Options 1,101 1 22 3. Voting rights attached to each class of equity security At a general meeting, every Shareholder present in person or by proxy, body corporate representative or attorney has one vote on a show of hands and one vote for each Share held on a poll. Votes are cast by show of hands unless a poll is demanded. A poll may be demanded by the chairperson or at least five Shareholders entitled to vote on the resolution or Shareholders with at least 5% of the votes that may be cast on the resolution on a poll. Options holders do not have voting rights. 4. Distribution schedule in each class of equity securities Range 1 – 100 101 – 1,000 1,001 – 10,000 10,001 – 100,000 100,001 and over 5. Unmarketable Parcels Total holders 8 215 551 278 49 Units 23 152,893 2,418,647 8,674,877 108,919,542 % of Issued Capital 0.00 0.13 2.01 7.22 90.64 Number of holders holding less than a marketable parcel of the Company’s main class of securities (in this case, fully paid ordinary shares) based on the closing market price at 31 August 2015. Minimum $500.00 parcel at $1.50 per share Marketable 334 Holders 19 82 Catapult Group International Limited Annual Report 2015 Information provided under ASX Listing Rule 4.10 continued 6. The 20 largest holders The 20 largest holders of ordinary shares and the number of ordinary shares and the percentage of capital held by each are as follows: Rank Name 1 2 3 4 5 6 7 8 9 10 11 MANTON ROBIN PTY LTD CHARLAJA PTY LTD ONE MANAGED INVESTMENT FUNDS B B H F PTY LTD CITICORP NOMINEES PTY LIMITED AET STRUCTURED FINANCE BNP PARIBAS NOMS PTY LTD MR SCHWIN CHIARAVANONT LUKE MILLAR NATIONAL NOMINEES LIMITED HSBC CUSTODY NOMINEES 12 WALLIS-MANCE PTY LIMITED 13 14 15 16 17 18 19 20 MR GRAHAM JOHN BAILEY & ACK PROPRIETARY LIMITED RADICAL INVESTMENTS LP PERLE VENTURES PTY LTD MR MARK CUBAN UBS NOMINEES PTY LTD AOTEAROA INVESTMENT COMPANY BLEACH FAMILY CO NO 2 PTY LTD Shares Held 24,757,000 22,990,000 21,363,600 6,859,000 4,687,873 3,876,000 2,482,915 2,207,602 2,166,000 2,129,404 2,050,141 1,315,434 934,021 805,600 763,800 729,654 727,272 660,482 570,000 570,000 % Held 20.60% 19.13% 17.78% 5.71% 3.90% 3.23% 2.07% 1.84% 1.80% 1.77% 1.71% 1.09% 0.78% 0.67% 0.64% 0.61% 0.61% 0.55% 0.47% 0.47% 7. Number and class of restricted securities or securities subject to voluntary escrow 102,645,798 85.42% Free Float Trading Day after FY15 Release 22 Nov 2015 Release 19 Dec 2015 Release 19 Dec 2016 Release Total 8. Unquoted equity securities 42,719,080 6,584,721 842,077 3,226,879 73,377,946 120,165,982 The Disruptive Option, being an option exercisable of 1,664,400 ordinary shares is held by Disruptive Asset Management Pty Ltd (DAM). DAM is an associated entity for both Calvin Ng and Adir Shiffman. Catapult Group International Limited Annual Report 2015 83 Corporate Directory Shareholder Information Shareholder enquiries Shareholders with queries should contact the Group’s share registry, Computershare, on phone 1300 850 505 (investors within Australia), +61 (0)3 9415 4000 (investors) or fax +61 (0)3 9473 2500, or through its website (www.computershare.com.au) or write to: Computershare Investor Services Pty Limited 452 Johnston Street Abbotsford VIC 3067 Securities exchange listing The Group’s shares are listed on the Australian Securities Exchange (ticker: CAT) General enquiries Company Secretaries: Anand Sundaraj, Brett Coventry The address and telephone of the registered office is: The Clocktower, 1 Aurora Lane, Docklands, Victoria, Australia Telephone: +61 (0)3 9095 8401 The postal address is: T47B Collins Square, 727 Collins Street Docklands, VIC 3008 Website: www.catapultsports.com. 84 Catapult Group International Limited Annual Report 2015 This page has been left blank intentionally. www.colliercreative.com.au #CAT0003 C a t a p u l t G r o u p I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 1 5