Caterpillar Annual Report 2021

Plain-text annual report

2021 ANNUAL REPORT The information in this document is for general information purposes only, and does not purport to be complete. It should be read in conjunction with Catapult’s other market announcements. Readers should make their own assessment and take professional independent advice prior to taking any action based on the information. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the presented figures. 2 0 2 1 A N N U A L R E P O R T 1.0 I M P O R T A N T N O T I C E This document may contain forward looking statements including plans and objectives. Do not place undue reliance on them as actual results may differ, and may do so materially. They reflect Catapult’s views as at the time made, are not guarantees of future performance and are subject to uncertainties and risks, such as those described in Catapult’s most recent financial report. Subject to law, Catapult assumes no obligation to update, review or revise any information in this document. The financial information in pages 4 to 19 (inclusive) is pro forma, non-IFRS, and has not been independently audited or reviewed. It does not form part of Catapult’s FY21 financial results. Catapult recently changed its financial year end from June 30 to March 31, with a nine-month transitionary FY21 consisting of an interim period ended December 31, 2020 and a final period ended March 31, 2021. Catapult also changed its presentation currency from A$ to US$, which commenced with reporting in US$ for the six-month period ended December 31, 2020. The pro forma information is provided solely for the purpose of illustrating the effects of these two changes on certain historical financial results. It has been compiled from management accounts and comprises the audited financial statements for the nine-month period ended March 31, 2021 and the unaudited accounts for the three-month period ending June 30, 2020. It has been prepared and presented so as to assist the market’s understanding of these two changes. Because of its hypothetical nature the pro forma information may not give a true picture of the effects of the changes on those results. Subject to law, Catapult assumes no obligation to update, review or revise the pro forma information. While Catapult’s results are reported under IFRS, this document also includes non-IFRS information such as the pro forma information referred to above, EBITDA, Contribution Margin, free cash flow, Annualized Contract Value (ACV), Lifetime Duration (LTD), and ACV Churn. These measures are provided to assist in understanding Catapult’s financial performance. They have not been independently audited or reviewed, and should not be considered an indication of, or an alternative to, IFRS measures. C A T A P U L T S P O R T S . C O M 2 2 0 2 1 A N N U A L R E P O R T 2.0 C O N T E N T S ➔ F Y 2 1 K E Y A C H I E V E M E N T S 4 ➔ C H A I R M A N A N D C E O L E T T E R S 6 ➔ F Y 2 1 R E V I E W O F O P E R A T I O N S 1 0 ➔ R E P O R T O F T H E D I R E C T O R S A N D F I N A N C I A L R E P O R T 2 0 I M P O R T A N T N O T I C E R E G A R D I N G P R O F O R M A F I N A N C I A L I N F O R M A T I O N The financial information on pages 4 to 19 (inclusive) is pro forma, non-IFRS, and has not been independently audited or reviewed (the Pro Forma Information). It does not form part of Catapult’s FY21 statutory financial results. Catapult recently changed its financial year end from June 30 to March 31, with a nine-month transitionary FY21 consisting of an interim period ended December 31, 2020 and a final period ended March 31, 2021. Catapult also changed its presentation currency from A$ to US$, which commenced with reporting in US$ for the six-month period ended December 31, 2020. The Pro Forma Information is provided solely for the purpose of illustrating the effects of these two changes on certain historical financial results. It has been compiled from management accounts and comprises the audited financial statements for the nine- month period ended March 31, 2021 and the unaudited accounts for the three-month period ending June 30, 2020. It has been prepared and presented so as to assist the market’s understanding of these two changes. Because of its hypothetical nature the Pro Forma Information may not give a true picture of the effects of the changes on those results. Subject to law, Catapult assumes no obligation to update, review or revise the Pro Forma Information. The notice on page 2 also applies to the Pro Forma Information. C A T A P U L T S P O R T S . C O M 3 2 0 2 1 A N N U A L R E P O R T 3.0 F Y 2 1 K E Y A C H I E V E M E N T S ➔ Strong progress against our key SaaS growth metrics despite the toughest conditions for sports since WW2 o ACV +16.5% and ACV Churn -14.1% to 5.5% ➔ Strong progress against our key SaaS efficiency metrics o Delivering 16.7% growth in customers with multi-solutions and an average customer duration of almost 6 years ➔ Exiting the year with accelerated momentum o ACV +35% (annualised growth) in H2 o Churn was lower in H2 than H1 o Cross-selling improved with multi- solution customers up 41% in H2 (annualised growth) ➔ Two consecutive years of positive and growing Free Cash Flow ($2.9m -> $4.9m) – underscoring our long-term cash generation capability C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 4 2 0 2 1 A N N U A L R E P O R T 3.1 O P E R A T I O N A L H I G H L I G H T S ➔ Sales Highlights • Achieved 100% penetration of teams in the NFL • New multi-solution customers in FY21 include Seattle Seahawks, Stanford University American Football, Stade Français Paris Rugby, Arizona Coyotes and Swindon Town • Performance and Health contract with US Army Special Forces to help with soldier training • Video Exchange contract with 130 Football Bowl Subdivision (FBS) teams in the US ➔ Technology Highlights • Covid solutions, including our Remote Athlete Solution and Athlete Proximity Reporting are all heavily utilized • New solutions for American Football season including cloud based full-resolution video analysis and seamless indoor/outdoor athlete experience for training sessions • Launched the player Movement Profile software analytics package for soccer • $6.8m invested in R&D • Acquisition of Science for Sport • Began platform partnerships • Achieved 100% penetration of teams in the NFL ➔ Company improvements and scaling progress • Prioritized high-margin subscription sales over capital sales • Enhanced capabilities of the Board, and introduced the SaaS Scaling Committee Improved capabilities of the senior executive team Introduced SaaS metrics • • Changed reporting currency • and year-end C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 5 2 0 2 1 A N N U A L R E P O R T 4.1 C H A I R M A N ’ S L E T T E R Dear Shareholders, On behalf of your Board of Directors, it is our pleasure to share with you the Catapult Group International Ltd Annual Report for the financial year ended 31 March 2021 (FY21). We are very proud of the significant progress Catapult has made during this historically challenging year. Entering the year, the Company faced a sports industry dealing with world-wide postponements and cancellations of major competitions. Catapult’s customers faced huge financial challenges from the pandemic’s impact. Despite the challenges presented, Catapult stayed focused on customer retention, high margin subscription sales, and efficiency improvements. Catapult leveraged its technology leadership to introduce new solutions dedicated to supporting its customers dealing with COVID impacts, including the ability to train athletes remotely, provision of an athlete proximity report for contact tracing, and the ability for coaches to conduct high-definition video analysis remotely. Catapult’s subscription revenue model proved to be resilient in ensuring the health of the Company’s balance sheet, and the sustainability of its investments in growth. More information on our FY21 achievements and in particular the second half momentum highlights is provided in the CEO letter and pages following. D R . A D I R S H I F F M A N E X E C U T I V E C H A I R M A N Catapult’s major FY21 financial and operating highlights included: ● Growth in Annualized Contract Value (ACV) of 16.5% ● ACV growth in EMEA and APAC was 57% and 34%, respectively ● ACV in Performance & Health grew 32% in FY21, far exceeding pre-COVID FY20 growth of 12% ● FY21 ACV Churn of 5.5%, a 14.1% improvement from FY20, despite COVID challenges ● Customers with two or more solutions grew 17%, highlighting the value of Catapult’s platform Increased Contribution Margin from 47.1% to 48.2%, as efficiency improved ● ● Subscription revenue was 79% of total revenue, up from 71% in FY20, reflecting the strategic focus on high-quality SaaS revenue over one-time capital sales ● Second consecutive year of positive and growing Free Cash Flow ($2.9m to $4.9m), underscoring the Company’s long-term cash generation capability C U S T O M E R S W I T H T W O O R M O R E S O L U T I O N S G R E W 1 7 % , H I G H L I G H T I N G T H E V A L U E O F C A T A P U L T ’ S P L A T F O R M C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 6 2 0 2 1 A N N U A L R E P O R T Preparations to scale Catapult for high growth and sustained technology leadership continued. Late in the year, Catapult announced the appointment of Tom Bogan to the Board as an Independent Non Executive Director. Tom is Catapult’s first US based director and the Chairman of the newly established SaaS Scaling Committee. Tom has a diverse, long, and celebrated history in successfully hyper-scaling numerous US based B2B SaaS businesses as a CEO, Chairman, and investor, including leading several billion-dollar transactions. The enhancement of executive team capability continued and we have welcomed a new CTO, COO, CPO, SVP of Product, and SVP of Revenue Operations. As the Executive Chairman of a high-growth SaaS company, with a growing global customer base and market leadership, I am pleased the broader investment market is beginning to recognise the value and opportunity in Catapult. In early June 2021 Catapult’s stock price had outperformed our ASX listed technology peers in the S&P/ASX All Technology Index by 30% over 12 months. OUTLOOK The Board and management are excited about Catapult’s growth potential. Catapult is increasingly confident in the short- to medium-term, for continued strong organic ACV growth. The Company is also confident in its long-term strategy of expanding ACV to 10x its current size. As the Company’s confidence in growth increases, it sharpens the focus on accelerating opportunities that Catapult is uniquely positioned to capture. Of interest are specific investment opportunities (organic and inorganic) that expand ACV and TAM as well as technology that deepens Catapult’s entrenched position in customers’ daily workflows and delivers sustainable EBITDA margin growth. The Company will maintain a disciplined approach in applying the SaaS “Rule of 40” as its core philosophy in investing for growth. Catapult recently announced a transition of Performance & Health capital deals to subscriptions. This transition will temporarily reduce reported revenue and EBITDA, as sales will be recognized over the life of the subscription contract. Contribution margin and EBITDA will also be lower as there will not be a corresponding reduction in variable operating expenses which will continue to be recognized in the P&L up-front. Longer term, Catapult expects this to yield higher gross margins, contribution margins, and EBITDA margins associated with subscription sales, in part due to the improved customer experience, customer retention and pricing power provided by subscription contracts. I am extremely thankful for the continued commitment of the Board, the Executive team and our employees around the world in what has been an incredibly challenging year. Finally, the Board is enormously grateful to athletes, teams and shareholders for their continued support in the past year. It really was a year like no other. Catapult’s continued growth would not be possible without your support and loyalty. Thank you. Regards Dr Adir Shiffman Executive Chairman C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 7 2 0 2 1 A N N U A L R E P O R T 4.2 C E O ’ S L E T T E R Dear Shareholders, FY21 completes my first full fiscal year as Catapult’s CEO. Despite the hurdles COVID presented, I am proud of what the Catapult team accomplished this year. Pre-pandemic, I said we would begin to operate the Company as a true SaaS business, augment our management team, improve our corporate governance and return to high-growth rates. At the end of my first full fiscal year, I am pleased we met these goals and did it during the most difficult period for world sport since World War II. The fact we delivered such strong results during such a unique year, only enhanced our leadership position and the future potential of Catapult. STRONG PROGRESS AGAINST ALL KEY SAAS METRICS Annualized Contract Value (ACV), Catapult’s leading SaaS metric, grew globally at a 35% annualized rate during the second half of FY21 against a full-year growth rate of 16.5%. This growth highlights the Company’s global leadership footprint, delivering regional FY21 ACV growth of 57% in EMEA and 34% in APAC. While the Americas region, the largest market for the Company, was severely disrupted by COVID with approximately 90% of NCAA competition cancelled, it delivered an FY21 ACV growth of 4%. The acceleration of growth in regions less impacted by COVID highlights the significant growth potential of the Americas once COVID impacts subside. This potential was underscored by the growth in the Company’s Performance & Health vertical, where Q4 momentum delivered an annualized ACV growth of 55% globally, almost 3x faster in FY21 than in FY20, with all regions growing more than 40% annualized in the quarter, including the Americas. The growth momentum did not impact the Company’s world- class retention rates. Catapult’s successful focus on customers during the pandemic saw its annual ACV Churn rate of 5.5% improve 14.1% on the FY20 rate of 6.4%. This was particularly evident in H2 where annual ACV Churn to March 31, 2021 was 5.5% compared to 6.8% in the 12 months to September 30, 2020. These sustained world-class SaaS churn rates highlight just how important our solutions are to our customers, W I L L L O P E S C H I E F E X E C U T I V E O F F I C E R despite the challenging financial year for professional sports. The growth momentum was further highlighted by the Company’s ability to upsell and cross-sell to its current customer base. Catapult delivered an H2 annualized growth of 41% in customers with two or more solutions, versus an annual growth of 17%. Of particular note was the success in cross-selling existing Performance & Health customers into the Company’s Vision video solution. FINANCIAL RESULTS - ACCELERATING GROWTH IN SUBSCRIPTION REVENUE In line with the growth momentum of Catapult’s SaaS metrics, subscription revenue growth accelerated to 12.5% in Q4 versus 3.3% for FY21. High- quality subscription revenue comprised 79% of total revenue in FY21, up from 71% a year ago. Notably, subscription revenue in the Performance & Health vertical, the largest vertical by revenue, grew by 15.8%. EBITDA remained positive at $6.5 million but declined $3.9 million with the switch from capital sales to higher-quality margin SaaS deals and the impact of COVID. Free cash flow remained positive and grew 69% to $4.9 million. SALES MOMENTUM Sales highlights through FY21 included signing the Atlanta Falcons to achieve 100% penetration of teams in the NFL; growing multi-solution customer base with marquee teams such as the Seattle Seahawks, Stanford University American Football, Stade Français Paris Rugby, Arizona Coyotes and Swindon Town; signing a Performance & Health contract with US Army Special Forces to help with C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 8 2 0 2 1 A N N U A L R E P O R T T H E F A C T W E D E L I V E R E D S U C H S T R O N G R E S U L T S D U R I N G S U C H A U N I Q U E Y E A R , O N L Y E N H A N C E D O U R L E A D E R S H I P P O S I T I O N A N D T H E F U T U R E P O T E N T I A L O F C A T A P U L T . soldier training; and a Video Exchange contract with 130 Football Bowl Subdivision (FBS) teams in the US. reporting currency to USD, and moved the financial year end to March. TECHNOLOGY INVESTMENT HIGHLIGHTS UNIQUELY POSITIONED FOR GROWTH Catapult expanded its technology platform through FY21 with COVID solutions, including a Remote Athlete Solution and Athlete Proximity Reporting, both heavily utilized by customers; new solutions for the American Football season including cloud-based full-resolution video analysis; and a seamless indoor/outdoor athlete monitoring function for training sessions. Catapult also launched the player Movement Profile analytics package for soccer. With continued commitment to R&D, Catapult invested $6.8 million in R&D in FY21 and expanded its solutions with the acquisition of Science for Sport and the signing of several strategic partnerships. SCALING FOR GROWTH As the Chairman mentioned in his letter, preparations to scale Catapult for high growth and sustained technology leadership continued. I was delighted to welcome so many highly capable and experienced executives to Catapult during FY21 including Chris Cooper as COO, Parem Hedge as CTO and Zoe Rumford as CPO. All of our new executives are experienced with scaling high-growth, global businesses. As planned, Catapult started migrating its sales to higher-quality multi-year SaaS subscription contracts away from one-time capital sales, despite the expected short-term negative impact on recognized revenue. There were also several efforts to ensure the Company is delivering on its promise of disciplined and value-generating growth, and appropriately reflecting results against its largest market in North America. As such, Catapult introduced a new set of SaaS metrics for growth and efficiency, changed its To reinforce the Chairman’s outlook, Catapult is uniquely positioned to leverage our leadership position in sports technology. We have a large customer base, working with 3,254 pro sports teams. Catapult’s experience of working with pro sports teams since 2007 means we have the most comprehensive data set as we capture and analyze sports science data from tens of thousands of athletes, providing our customers with unrivalled accuracy and insights. As we continue to develop new algorithms and provide enhancements for our customers we remain strongly positioned to lead the analysis evolution from descriptive, to predictive, and eventually prescriptive data. The Company is confident in its long-term strategy of expanding ACV to 10x its current size. Finally, thank you to the Board for their support and thank you to our customers. I am proud of the results and progress Catapult made in our key SaaS metrics. We finished the year with an annualized ACV growth rate of 35% and world-class customer retention, demonstrating the value our SaaS solutions provide our customers each day. Catapult remained focused on customers during the pandemic and the business is benefitting as the pandemic’s impact lessens. Catapult is a business with strong SaaS fundamentals with the potential to become the ‘Salesforce’ of the sports performance technology world. Regards, Will Lopes CEO C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 9 2 0 2 1 A N N U A L R E P O R T FY21 REVIEW OF OPERATIONS C A T A P U L T S P O R T S . C O M 10 2 0 2 1 A N N U A L R E P O R T 5.1 F Y 2 1 S A A S R E S U L T S A N D F I N A N C I A L H I G H L I G H T S SAAS RESULTS S FINANCIAL HIGHLIGHTS C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 11 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S Commentary in the Review of Operations refers to the 12-month period that ended March 31, 2021, unless otherwise specified. FY21 was the most difficult period in the sports industry since WW2. Due to the impacts of the COVID-19 pandemic there was global shutdown of major sporting events, delays in return to play, and most games were played in empty stadiums. This environment impacted Catapults’ customers significantly, creating a major revenue loss for sports during this year. Although the first half of FY21 was significantly impacted, Catapult began to see positive signs during the second half of FY21 with events such as the NCAA March Madness tournament return, along with the return of some fans in stadium across the globe. As Catapult navigated this turbulent year the Company stayed focused on its customers. Catapult prioritized customer retention, the continued shift to high- margin subscription sales, increasing the adoption of multiple-solutions for customers, and generating cash. This focus has improved Catapult’s financial strength and positioned the Company well for future growth. Catapult delivered strong progress against key SaaS metrics in FY21, reporting accelerated growth in the second half of FY21. Catapult believes the SaaS metrics it reports are leading indicators of future revenue and profit growth. Catapult was pleased with the FY21 progress against the SaaS metrics, especially considering the challenges presented from the COVID-19 pandemic in the year. C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 12 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S CATAPULT PERFORMED STRONGLY AGAINST KEY SAAS GROWTH METRICS ACV, that is Annualized Contracted Revenue growth was up 16.5% during this incredibly challenging year. Catapult’s global footprint allowed it to deliver growth even when one region was more challenged. EMEA was up 54% and APAC up 34%. While Americas was up only 4%, Catapult sees growth from the Americas as a significant growth opportunity as the impact of COVID lessens in the region. There was evidence of this during the second half of FY21 with ACV growth accelerating, delivering annualized growth of 35%. All regions contributed to this growth momentum, reporting annualized growth above 40% in the last quarter of FY21. MOMENTUM IN ACV GROWTH DRIVEN BY APAC AND EMEA ➔ Covid still impacting US customers relatively more than customers in other regions ➔ Significant potential for ACV growth in the US, our largest market, once Covid impacts subside further ➔ Professional sports and NCAA have both flagged a full return to play in FY22 ACV Growth by Region ACV by Region ($USm) 57% 34% 60 50 40 30 20 10 0 4% Americas APAC EMEA FY19 FY20 FY21 Americas APAC EMEA C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 13 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S At the solution level, Catapult’s largest solution vertical by ACV and revenue, Performance & Health (P&H) ACV grew almost 3x faster in FY21 than in FY20 (32% versus 12%), despite COVID. P&H is an ”early cycle” solution, with athletes needing to train with or without games being played. Tactics & Coaching (T&C) ACV was -1% across FY21, being slightly down on a historic growth rate of approximately 5%, due to COVID. T&C is a “late cycle” solution, dependent more on return-to-play than preparatory training. T&C is expected to benefit as sports return post-COVID. ACV Churn is Catapult’s second key SaaS growth metric. It measures Catapult’s success with customer retention. It has continued to stay at world-class levels and in FY21 dropped to 5.5%. This is a 14.1% improvement and is an incredible result in the best of years, but it is hugely significant considering the challenges that COVID presented in FY21. ACV RETENTION AT WORLD CLASS SAAS LEVELS 6.6% 6.4% 6.2% 6.0% 5.8% 5.6% 5.4% 5.2% 5.0% ➔ Churn is at world class SaaS levels ➔ A reduction in ACV Churn was achieved during an extremely challenging year for our customers ➔ Low churn reflects strong customer engagement and the embedded nature of Catapult’s SaaS solutions in its customers’ critical daily workflows FY19 FY20 FY21 C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 14 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S Complementing this strong growth in Catapult’s key SaaS growth metrics was improvement across SaaS efficiency metrics in FY21. There was 17% growth in customers with multi-solutions reflecting success with cross sell. Customers recognise the value in Catapult’s solutions and the solutions are deeply embedded in their daily workflows with an average customer duration of almost 6 years. There was improved momentum in the second half of FY21 with annualized growth of 41% for customers with multi-solutions. % of Customers with 2 or more Solutions Multi-Solution Customers – by Quarter 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 235 216 209 252 241 FY19 FY20 FY21 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 ➔ Last two quarters saw positive shift in growth • 41% annualized growth for H2 FY21 ➔ Significant upside remains for further multi-solution growth 300 250 200 150 100 50 0 Multi-Solution Customers 252 216 126 FY19 FY20 FY21 C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 15 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S Catapult’s business model efficiency has improved as the business scales. The contribution margin increased by 2.3% to 48% and the gross margin continued to rise, up 1.4% to 74%. Catapult anticipates some contribution margin pressures in the short-term as the business transitions from capital sales to subscription sales, but expects this to pay off as gross margins should improve due to this shift in sales mix. A summary of the improved performance against Catapult’s key SaaS growth and SaaS efficiency metrics is provided in the table following. ACCELERATING GROWTH IN SUBSCRIPTION REVENUE Catapult is seeing a strong return to growth in SaaS metrics as the impact of the pandemic lessens. The accelerated growth momentum in ACV translated to stronger subscription revenue growth of 12.5% in last quarter of FY21, well ahead of the full year growth rate of 3.3%. ACV growth is the lead indicator for growth in subscription revenue. Subscription Revenue % of Total Revenue 80% 70% 60% FY19 FY20 FY21 C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 16 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S The growth in subscription revenue was driven by strong subscription growth from Performance & Health solutions which were up by 16%. In FY21, subscription revenue represented 79% of total revenue, a 12% growth reflecting a positive trend for the strategy of growing higher-margin subscription revenue. FINANCIAL SUMMARY AND TECHNOLOGY INVESTMENT Cash generation remained a critical focus in FY21 and Catapult was pleased to deliver a second year of positive and growing free cash flow. Catapult delivered a positive free cash flow of $4.9 million, up 69%. Recognized Revenue and EBITDA were down on FY20, as Catapult continued to successfully switch away from capital sales to higher-margin SaaS deals, and COVID- 19 impact the licensing business.  Catapult expanded its technology platform through FY21 with COVID solutions, including a Remote Athlete Solution and Athlete Proximity Reporting, both heavily utilized by customers; new solutions for the American Football season including cloud- based full resolution video analysis; and a seamless indoor/outdoor athlete monitoring function for training sessions. Catapult also launched the player Movement Profile analytics package for soccer. With continued commitment to R&D, Catapult invested $6.8 million in R&D in FY21 and expanded its solutions with the acquisition of Science for Sport and the signing of several strategic partnerships. C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 17 2 0 2 1 A N N U A L R E P O R T 5.2 R E V I E W O F O P E R A T I O N S PROSUMER Despite the impacts of the pandemic in FY21, Prosumer revenue remained above $3 million. The achievement is notable, as the Company restructured the Prosumer business to deliver cost containment and lower marketing spend, while it tries to understand customers’ key acquisition levers of the product set. The result was a reduction in the Cost to Acquire Customers (CAC) by more than 90%, reducing cash burn and improving Prosumer EBITDA by 79%. A new growth strategy for Prosumer is expected later in FY22. BUILDING A WORLD CLASS SAAS BUSINESS Preparations to scale Catapult for high growth and sustained technology leadership continued. Late in the year, the Company appointed Tom Bogan to the Board, its first US based independent Director, and established a SaaS Scaling Committee. The enhancement of executive team capability continued with appointments of a new CTO, COO, CPO, SVP of Product, and SVP of Revenue Operations. To ensure the Company is delivering on its promise of disciplined and value-generating growth, and appropriately reflecting results against its largest market in North America, Catapult introduced a new set of SaaS metrics for growth and efficiency, changed its reporting currency to USD, and moved the financial year end to March. The Company had many key sales wins including expanding multi-solutions customers with major teams, signing new deals with the US Army, and delivering a contract that supported the top 130 teams in NCAA American Football. Catapult’s clients are the very best in world team sport. Catapult works with many of the top teams in American Football, Rugby, European Soccer, National Federations, and top US Universities across more than 20 sports. Catapult has a large and growing customer base and its experience is unique, having worked with pro sports teams since 2007. This experience provides catapult with a most comprehensive data set as it captures and analyzes sports science data from tens of thousands of athletes. Catapult remains focused on providing new algorithms and enhancements for its customers and is strongly positioned to lead the analysis evolution from descriptive, to predictive, and eventually prescriptive data. C A T A P U L T S P O R T S . C O M Important Note: Financial information on this page is pro forma, has not been independently audited or reviewed, and is provided solely to illustrate the effects of Catapult’s change in financial year end and presentation currency. See page 2 for its compilation method and other important notices. 18 2 0 2 1 A N N U A L R E P O R T 2 0 2 1 A N N U A L R E P O R T C A T A P U L T S P O R T S . C O M 19 2 0 2 1 A N N U A L R E P O R T REPORT OF THE DIRECTORS AND FINANCIAL REPORT C A T A P U L T S P O R T S . C O M 20 2 0 2 1 A N N U A L R E P O R T 6.0 C O N T E N T S ➔ D I R E C T O R S ’ R E P O R T ➔ C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S 2 2 5 3 ➔ A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N ➔ N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 3 7 5 4 ➔ R E M U N E R A T I O N R E P O R T ( A U D I T E D ) ➔ D I R E C T O R S ’ D E C L A R A T I O N 3 8 1 0 6 ➔ C O N S O L I D A T E D S T A T E M E N T O F P R O F I T A N D L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E ➔ I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E M E M B E R S O F 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 T D 4 9 1 0 7 ➔ C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N ➔ S H A R E H O L D E R I N F O R M A T I O N 5 1 1 1 0 ➔ C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y ➔ C O R P O R A T E D I R E C T O R Y 5 2 1 1 3 In this Appendix 4E, the terms ‘Catapult’, the ‘Company’, the ‘Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to Catapult Group International Ltd and, except where the context otherwise requires, its subsidiaries. C A T A P U L TS P O R T S . C O M 21 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T The Directors of Catapult Group International Ltd (‘Catapult’ or the 'Company’) present their Report together with the financial statements of the consolidated entity, being the Company and its controlled entities (the ‘Group’) for the 9-month period ended March 31, 2021 (‘FY21’). DIRECTOR DETAILS The following persons were Directors of Catapult Group International Ltd during or since the end of the period year. DR ADIR SHIFFMAN MBBS, Medicine Executive Chairman Appointed September 4, 2013 Member of Nomination and Remuneration Committee Member of SaaS Scaling Committee Dr Adir Shiffman, Executive Chairman of Catapult, has extensive CEO and board experience in the technology sector. Adir has founded and sold more than half a dozen technology startups, many of which were high growth SaaS (software as a service) businesses. His expertise includes strategic planning, international expansion, mergers and acquisitions, and strategic partnerships. Adir currently sits on several boards. He is regularly featured in the media in Australia, the US and Europe. Adir graduated from Monash University 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: None Previous Directorships (last 3 years): None MR SHAUN HOLTHOUSE B.E. (Hon), Mechanical Engineering, GAICD Founder, Non-Executive Director (previously CEO until April 30, 2017) Shaun co-founded Catapult in 2006 and served as CEO up until April 30, 2017. During that time, he played a central role in developing Catapult’s wearable technology and is the author of many of its patents. Under his leadership Catapult launched and expanded sales into more than 15 countries - including establishing subsidiaries in the US and UK and becoming the dominant elite wearable company globally. Shaun was responsible for raising early capital, listing on the ASX, acquiring GPSports, XOS and Kodaplay (Playertek) and developing Catapult’s strategy to grow from a wearable only company to building out the technology stack for elite sport and leveraging this into consumer team sports. Prior to Catapult, Shaun had extensive experience in new technology transitioning into commercial products, including biotechnology, MEMS, fuel cells, and scientific instrumentation. Shaun holds a Bachelor of Engineering (Hons) from the University of Melbourne and is a graduate member of the Australian Institute of Company Directors. He is the author of numerous patents and patent applications in athlete tracking, analytics and other technologies. He also works as a professional director as well as providing advisory services for technology start-ups. Other current Directorships: None Previous Directorships (last 3 years): None C A T A P U L TS P O R T S . C O M 22 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T MR IGOR VAN DE GRIENDT B.E. Electrical Engineering MR JAMES ORLANDO BSc, MBA, GAICD Founder, Non-Executive Director Independent Non-Executive Director Member of Audit and Risk Committee Appointed October 24, 2016 Chair of Audit and Risk Committee Member of Nomination and Remuneration Committee Mr James Orlando has held senior finance positions driving growth and shareholder value in the United States, Asia and Australia. Most recently he was the CFO of Veda Group Ltd (VED.ASX), leading the company through its successful IPO in December 2013. Before joining Veda, James was the CFO of AAPT where he focused on improving the company’s earnings as well as divesting its non-core consumer business. He also served as the CFO of PowerTEL Ltd, an ASX- listed telecommunications service provider which was sold to Telecom New Zealand in 2007. James also held various international treasury positions at AT&T and Lucent Technologies in the US and Hong Kong including running Lucent’s international project and export finance organisation. Other current Directorships: 360 Capital Digital Infrastructure Fund Rapid Response Revival Pvt. Ltd. Previous Directorships (last 3 years): None Mr Igor van de Griendt has served as Chief Operating Officer, Chief Technology Officer (CTO) and as an Executive Director before moving into a Non- Executive Director role in July 2019. In his capacity as CTO, he was responsible for providing strategic direction and leadership in the development of Catapult’s products, both in the analytical and cloud space, as well as with respect to Catapult’s various wearable product offerings. Igor also provided guidance and operational support to Catapult’s R&D, software and cloud development teams during that time. 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 several sensor platforms and technologies ultimately leading to the founding of Catapult. Prior to joining the CRC for MicroTechnology, Igor ran his own 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, Siemens, NEC Australia and Telstra. Igor holds a Bachelor of Electrical Engineering from Darling Downs Institute of Advanced Education (now University of Southern Queensland). Igor is also the author of numerous patents and patent applications in athlete tracking, and other sensor technologies. Other current Directorships: Symego Pty Ltd Previous Directorships (last 3 years): None C A T A P U L TS P O R T S . C O M 23 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T MS MICHELLE GUTHRIE BA/Law (Hons) MR THOMAS F. BOGAN BSBA Independent Non-Executive Director Independent Non-Executive Director Appointed December 1, 2019 Appointed April 1, 2021 Chair of Nomination and Remuneration Committee Chair of SaaS Scaling Committee Tom Bogan is currently the vice chairman at Workday, a leading provider of enterprise cloud applications for finance and human resources with an annual revenue of over $4 billion for its most recently completed fiscal year. Tom joined Workday in 2018 following its US$1.5bn acquisition of Adaptive Insights, where he served as CEO. Prior to this he was a board member of several public and private software companies including Chairman of Citrix Systems (Nasdaq: CTXS). He was also Chairman of Nasdaq-listed Apptio until its approximate US$2bn acquisition by Vista Equity Partners in 2019. Previously, Tom spent more than five years as a partner at high-profile venture capital fund Greylock Partners, where he focused on enterprise software investments. He also served as president and COO at Rational Software until it was acquired by IBM for US$2.1bn in 2003, as well as CEO at Avatar Technologies and Pacific Data. As Chairman of the new SaaS Scaling Committee, Tom supports the board and management with growth-oriented SaaS-model innovations. Other current Directorships: Salient Systems, Aspire Previous Directorships (last 3 years): Acquia, Apptio Member of Audit and Risk Committee Over the last 25 years Michelle has held senior management roles at leading media and technology companies in Australia, the UK and Asia, including BSkyB, Star TV and Google. She has extensive experience and expertise in media management, and content development, with deep knowledge of traditional broadcasting, the digital media landscape and the transformation necessary to embrace the digital consumer. From 2003 to 2007, Michelle was based in Hong Kong as Chief Executive Officer of STAR TV, responsible for pay TV platforms and content development in India, China, Indonesia and across Asia. She then spent several years as an equity adviser and investor for Providence Equity covering Asia Pacific from Hong Kong, before moving to Singapore for a senior role at Google Asia Pacific. In her role at Google as Managing Director for Agencies, Michelle developed business partnerships with key global advertising agencies. From 2016 to 2018, Michelle was the Managing Director of the Australian Broadcasting Corporation where she led the transformation of the organisation, increasing the efficiency and effectiveness of work across the ABC as well as investing in investigative journalism, regional journalism and innovative Australian content. Michelle holds a Bachelor of Arts and Law (Honours) from the University of Sydney. Other current Directorships: Hoppr Ltd, StarHub Ltd, Chair of Mighty Kingdom Ltd Previous Directorships (last 3 years): Australian Broadcasting Corporation (ABC) C A T A P U L TS P O R T S . C O M 24 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T INFORMATION ON FORMER DIRECTORS(1) MR BRENT SCRIMSHAW Former Independent Non-Executive Director Appointed November 24, 2014 Resigned effective November 17, 2020 Former Chair of Nomination and Remuneration Committee Mr Brent Scrimshaw has over 25 years of experience in consumer innovation, executive business leadership and brand management within the global sports industry. Brent had an 18-year career at Nike Inc, where he held senior leadership roles in Australia, Europe and the United States, including Vice President and Chief Executive of Nike Western Europe; Chief Marketing Officer and Vice President of Category Businesses for Nike Europe, Middle East and Africa; and General Manager of Nike’s East Coast United States operations in New York. As one of Nike Inc’s 30 most senior leaders worldwide, Brent also served on Nike’s Global Corporate Leadership Team, where he helped lead the creation of Nike’s overall brand and global operating strategy, as well as playing a senior role as a key member of the Global Commercial Operations Executive Team, responsible for sales and distribution strategies worldwide. Brent is also a Non-Executive Director at Rhinomed Ltd, an ASX listed medical technology company focused on enhancing human efficiency through innovative respiratory technologies and also a Non- Executive Director at ASX listed Kathmandu Holdings Ltd, a specialty outdoor clothing and equipment retailer with over 160 stores in AUS, NZ and the UK. Brent was formerly a Director of Fox Head Inc, the world’s largest manufacturer and marketer of performance Moto-X and actions sports lifestyle products, and Founder and CEO of Unscriptd Ltd which was acquired by New York media company The Players Tribune in Dec 2018. Other current Directorships: Rhinomed Ltd (ASX:RNO) Kathmandu Ltd (ASX:KAT) Previous Directorships (last 3 years): Unscriptd Ltd (1) Information provided is at the date of cessation as a Director of the Company. C A T A P U L TS P O R T S . C O M 25 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T COMPANY SECRETARY Jonathan Garland commenced as Company Secretary on August 12, 2020. Jonathan’s career includes extensive ASX-listed general counsel and Company secretarial experience, as well as a wide-ranging international corporate legal background. Jonathan graduated with honours degrees in both Law and Commerce from the University of Melbourne. KEY PERFORMANCE METRICS The Company measures its performance through the achievement of a number of principal SaaS metrics, and is pleased to report the following movements in all of these metrics: METRIC As at Mar 31, 2021 As at Mar 31, 2020 Change % US$’000 US$’000 ACV ACV churn Lifetime duration (LTD) Multi-solution customers PRINCIPAL ACTIVITIES 48.4 5.5% 5.8 252 41.5 6.4% 6.5 216 16.5 (14.1) (11.5) 16.7 Catapult’s vision is to create the platform of solutions for teams and athletes, in order to improve the performance of athletes and teams globally. Within this platform Catapult has identified five “verticals” of technology solutions across two customer segments. During the period, the principal activities of the entities within the Group and across the verticals were: ➔ In the Management vertical, AMS or the ‘athlete management system’, which is a cloud-based repository for wellness information that teams use to better understand athlete welfare, and an administration tool to plan rostering and the like. C A T A P U L TS P O R T S . C O M 26 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T ➔ ➔ ➔ ➔ In the Performance & Health vertical, a range of SaaS tracking technologies that use proprietary algorithms to quantify the load, effort and fatigue levels of athletes enabling them to maximize performance and minimize injury. In the Tactics & Coaching vertical, a range of video analysis software that segments game footage, enables instant video manipulation and replay, scouting of upcoming opponents, and more effective tactical and coaching practices and outcomes. In the Professional Services vertical, a range of services that maximize the productivity of customers’ sports technology, providing them with sports science insights and perspectives to gain a competitive edge. In the Media & Engagement vertical, a range of services to manage and monetize the video content assets (i.e., footage) of customers, to drive fan engagement via social media, generate revenue from media licensing, and facilitate talent scouting of athletes. The Group’s wearable and video solutions are provided to elite clients on both a subscription and upfront sales basis, with subscription sales forming the majority of all sales to elite clients. Catapult is the global leader in wearable tracking technology and analytics solutions for the sports performance market with more than 3,200 teams. Catapult is also a market leader in providing innovative digital and video analytic software solutions to elite sports teams in the United States. With major offices in Australia, the United States and the United Kingdom and over 350 staff in 26 countries, Catapult is a global technology success story that is committed to advancing the way data is used in elite sports. REVIEW OF OPERATIONS & FINANCIAL RESULTS FOR THE 9-MONTHS ENDED MARCH 31, 2021 ➔ Subscription revenue in Q3 was 87% of total revenue, as the Company continues to switch from one-time capital deals to higher quality and higher margin subscription deals. ➔ Second consecutive year of positive free cash flow ($6.4 million to $6.3 million), underscoring Catapult’s long- term cash generation capability. ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ The Company is well positioned financially with $22.2 million of cash at bank as of March 31, 2021. The Company commenced lifting its COVID-19 operating cost mitigation measures as the negative impact to the business was less than anticipated. The Company was awarded a contract with the Football Bowl Subdivision to provide video exchange services to all 130 Division 1 American football teams. The Company closed its largest capital deal to date; a contract with BMSK Sport Közhasznú Nonprofit Kft. to provide video analysis and wearable technology services to 16 sports academies and teams. The Company released a Movement Profile analytics package for soccer. The French Ligue Nationale de Rugby appointed the Company as the preferred supplier of technology to all teams that compete in France’s Top 14 and Pro D2 professional rugby competition for four years. The Company launched new solutions to provide customers with greater workplace flexibility amidst new COVID-19 restrictions. The Company released Catapult Form, a dedicated athlete feedback and wellness management software solution which provides coaches an end-to-end view of an athlete’s performance. C A T A P U L TS P O R T S . C O M 27 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T ➔ ➔ The Company renewed agreements with NFL Productions and Bleacher Report and supported global brands in creating commercial campaigns for the 2021 football season. The Company entered partnerships with PUSH, a sports technology company which helps coaches plan, track, assess and improve athlete performance off the field; and Pro Quick Draw, a software platform that allows American football coaches to organise playbooks, scout cards and presentations. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The following significant changes occurred during FY21: ➔ The Company’s registry management services were transferred from Computershare Investor Services Pty Ltd to Boardroom Pty Limited. The Company changed its year-end to March 31, and its presentation currency to the US dollar. ➔ Chris Cooper was appointed Chief Operating Officer in July 2020. ➔ ➔ ➔ Jonathan Garland was appointed as Company Secretary effective August 12, 2020. The Company acquired the subscription online sport learning platform, Science for Sport on November 9, 2020. ➔ Brent Scrimshaw resigned from the Board effective November 17, 2020. ➔ Zoe Rumford was appointed as Chief People Officer in December 2020. EVENTS ARISING SINCE THE END OF THE REPORTING PERIOD Thomas Bogan was appointed to the Board as an Independent Non-Executive Director effective April 1, 2021. The Board established a new SaaS Scaling Committee to assist the Company with its next stage of growth. The Company signed the Atlanta Falcons as a customer, and now works with every team in the NFL. ➔ ➔ ➔ ➔ Catapult’s annualised ACV growth reached 35% in the March 2021 quarter. ➔ Param Hedge was appointed as Chief Technology Officer in May 2021. ➔ Courtney Maunsell was appointed Senior Vice President, Revenue Operations in May 2021. Aside from the above, the Directors are not aware of any matter or circumstance that has arisen since the end of the financial year that, in their opinion, has significantly affected, or may significantly affect in future years, Catapult’s operations, the results of those operations or the state of Catapult’s affairs. LIKELY DEVELOPMENTS, BUSINESS STRATEGIES AND PROSPECTS Based on the expected demand for athlete analytics globally and the continued growth in the Group’s sales and marketing platform across key regions, we are optimistic about the long-term growth opportunity. Furthermore, Catapult has broadened its suite of athlete analytics solutions through organic growth and through acquisitions, resulting in a substantially larger addressable market opportunity across a wider range of customers in both elite and prosumer sporting leagues. Catapult expects to benefit in these and other segments with increasing sales and technical functionality. C A T A P U L TS P O R T S . C O M 28 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T BUSINESS RISK In executing its growth plans, Catapult is subject to the market, operational and acquisition risks including those outlined below: COVID-19 RISKS The COVID-19 crisis has caused significant disruption in sports globally. As Catapult announced on March 27, 2020, the Company acted decisively to ensure the safety of all employees and customers, while minimally impacting the business. Catapult also implemented operating cost mitigation measures. As announced on July 13, 2020, pleasingly Catapult commenced lifting its COVID-19 cost mitigation measures as the negative impact to Catapult’s business was less than anticipated. Despite this, COVID-19 remains a risk for the Company. A resurgence of COVID-19 may cause the closure or disruption of sporting events, reduce customer demand, adversely affect supply chain management, cause people movement disruptions and financial market volatility (including currency markets) and otherwise adversely affect the business. COVID-19 may affect the ability of Catapult’s customers or suppliers to comply with their obligations under their agreements and influence renewal or subsequent contracting decisions. Catapult continues to assess the impact of COVID-19 on the business and ways to mitigate any risks to the Company. ECONOMIC RISK Catapult may be affected by general economic conditions. Changes in the broader economic and financial climate may adversely affect the conduct of Catapult’s operations. In particular, sustained economic downturns in key geographies or sectors (in particular sports business and consumer sectors), where Catapult is focused, may adversely affect its financial performance. Changes in economic factors affecting general business cycles, global health risks such as the pandemic which commenced during the reporting period, inflation, legislation, monetary and regulatory policies, as well as changes to accounting standards, may also affect the performance of Catapult. INDUSTRY AND COMPETITION RISK Catapult’s performance could be adversely affected if existing or new competitors reduce Catapult’s market share, or its ability to expand into new market segments. Catapult’s existing or new competitors may have substantially greater resources and access to more markets than Catapult. Competitors may succeed in developing new technologies or 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. TECHNOLOGY AND HOSTING PLATFORMS Catapult relies on third-party hosting providers to maintain continuous operation of its technology platforms, servers and hosting services and the cloud-based environment in which Catapult provides its products. There is a risk that these systems may be adversely affected by various factors such as damage, faulting or aging 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. Further, if Catapult’s third-party hosting provider ceased to offer its services to Catapult and Catapult was unable to obtain a replacement provider quickly, this could lead to disruption of service to the Catapult website and cloud infrastructure. This could lead to a loss of revenue while Catapult is unable to provide its services, as well as C A T A P U L TS P O R T S . C O M 29 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T adversely affecting its reputation. This could have a material adverse effect on Catapult’s financial position and performance. CYBER SECURITY AND DATA BREACHES Catapult provides its services through cloud based and other online platforms. Hacking or exploitation of any vulnerability on those platforms could lead to loss, theft or corruption of data. This could render Catapult’s services unavailable for a period while data is restored. Catapult’s services frequently involve processing sensitive personal or corporate confidential information. Such sensitive information could be taken, lost or viewed by unauthorised persons, either maliciously or via administrative or user error. Such a data breach or other cyber incident could 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 improve the quality of its administrative processes and global cyber security review, including ongoing external cyber threat assessments 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, profitability and growth prospects. The loss of client data could have severe impacts to client service, reputation, and the ability for clients to use the products. MANUFACTURING AND PRODUCT QUALITY RISKS Catapult currently uses third party manufacturers to produce components of its products. There is no guarantee that these manufacturers will be able to meet the cost, quality and volume requirements that are required to be met for Catapult to remain competitive. Catapult’s products must also satisfy certain regulatory and compliance requirements which may include inspection by regulatory authorities. Failure by Catapult or its suppliers to continuously comply with applicable requirements could result in enforcement action being taken against Catapult. As a manufacturer, importer and supplier of products, product liability risk, faulty products and associated recall and warranty obligations are key risks of the Catapult business. While Catapult has product liability insurance not all claims will be covered by this and any issues arising from product liability faults may be significant and beyond the protection of Catapult’s existing insurance coverage. FOREIGN EXCHANGE Foreign exchange rates are particularly important to Catapult’s business given the significant amount of revenue which Catapult derives outside Australia. Catapult’s financial statements are prepared and presented in US dollars. Adverse movements in foreign currency markets could affect Catapult’s profitability and financial position. Refer to note 4.4 for further information on the Company’s change of presentation currency. DEVELOPMENT AND COMMERCIALISATION OF INTELLECTUAL PROPERTY Catapult relies on its ability to develop and commercialise its intellectual property. A failure to protect, develop and commercialise its intellectual property successfully could lead to a loss of opportunities and adversely impact 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 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. The granting of a patent does not guarantee that Catapult’s intellectual property is protected and that others will not develop similar technologies that circumvent such patents. There can be no assurance that any patents C A T A P U L TS P O R T S . C O M 30 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T 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 current 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. FURTHER PRODUCT DEVELOPMENT RISK Catapult has developed its athlete video and tracking technology and software products and continues to invest in further systems and product development. Catapult cannot be certain that further development of its video and athlete tracking technology, software products, or online sport learning platform 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. 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 Catapult’s business and its future growth and profitability. LITIGATION Catapult may, in the ordinary course of business, be involved in disputes. These disputes could give rise to litigation which may be costly and may adversely affect the operational and financial results of Catapult. Catapult Sports LLC is the subject of a patent infringement claim filed by Forutome IP LLC (a non-practising entity) filed before the Middle District Court of Florida. This claim does not involve any current Catapult products or C A T A P U L TS P O R T S . C O M 31 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T services and the patent the subject of the claim expired on September 16, 2018. It is not anticipated that this claim will materially affect the operation of Catapult or cause disruption to Catapult’s products and services. Catapult Group International Ltd is the subject of a trademark opposition procedure filed before the United States Trademark Trial and Appeal Board (TTAB) by adidas AG in respect of a pending trademark application in the United States. It is not anticipated that this trademark opposition will materially affect the operation of Catapult or cause disruption to Catapult’s products and services. Given the above circumstances, no provisions have been recognised at March 31, 2021 in respect of either matter. DIVIDENDS In respect of the current financial period, no dividend has been paid by Catapult Group International Ltd. DIRECTORS’ MEETINGS The number of Directors’ meetings (including meetings of Committees of Directors) held during the 9-month period, and the number of meetings attended by each Director, is as follows: DIRECTOR’S NAME Adir Shiffman Shaun Holthouse Igor van de Griendt Brent Scrimshaw James Orlando Michelle Guthrie Where: BOARD MEETINGS AUDIT AND RISK COMMITTEE NOMINATION AND REMUNERATION COMMITTEE A 5 5 5 4 5 5 B 5 5 5 4 5 5 A - - 3 - 3 3 B - - 3 - 3 3 A 4 - - 2 4 2 B 4 - - 1 4 2 (i) (ii) column A is the number of meetings the Director was entitled to attend; and column B is the number of meetings the Director attended. C A T A P U L TS P O R T S . C O M 32 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T UNISSUED SHARES UNDER OPTION AND RIGHTS Unissued ordinary shares of the Company under option at the date of this report are as follows: DATE OPTIONS GRANTED EXPIRY DATE EXERCISE PRICE OF OPTIONS NUMBER UNDER OPTIONS April 14, 2016 April 14, 2021 September 22, 2016 July 30, 2021 September 22,2016 February 1, 2022 November 30, 2016 November 1, 2021 July 1, 2017 July 30, 2022 November 1, 2017 October 30, 2022 December 19, 2017 December 18, 2022 January 23, 2019 June 30, 2023 August 20, 2019 August 31, 2024 November 11, 2019 August 31, 2024 November 27, 2019 March 24, 2024 September 14, 2020 May 31, 2025 January 28, 2021 August 31, 2024 A$2.20 A$2.50 A$2.50 A$3.00 A$2.13 A$1.72 A$1.83 A$1.42 A$1.26 A$1.50 A$0.78 A$1.30 A$1.50 388,756 15,234 67,281 197,875 54,000 65,000 490,000 587,000 1,738,468 557,105 611,112 3,820,181 78,071 8,670,083 During the financial period ended March 31, 2021, the Company issued 4,274,869 options as part of the Employee Share Plan. The options were issued at an average exercise price of A$1.30 and an average fair value of A$0.75 (US$0.55). C A T A P U L TS P O R T S . C O M 33 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T Unissued ordinary shares of the Company under rights at the date of this report are as follows: DATE RIGHTS GRANTED EXPIRY DATE EXERCISE PRICE OF RIGHTS NUMBER UNDER RIGHTS January 23, 2019 August 31, 2021 August 20, 2019 August 31, 2022 November 1, 2019 August 31, 2022 November 11, 2019 August 31, 2022 November 27, 2019 March 31, 2021 January 28, 2020 August 31, 2022 April 21, 2020 October 20, 2021 April 21, 2020 August 31, 2022 July 20, 2020 July 20, 2021 July 20, 2020 July 20, 2022 July 20, 2020 July 13, 2021 September 14, 2020 May 31, 2023 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 A$0.00 25,555 260,036 5,600 184,227 154,412 33,145 192,848 325,006 97,574 97,576 48,246 1,112,625 2,536,850 All options and rights expire on their expiry date. All options and rights are issued in accordance with the CSESP, as approved by shareholders. SHARES ISSUED DURING OR SINCE THE END OF THE YEAR AS A RESULT OF EXERCISE During the 9 months to March 31, 2021, the Company transferred to employees 2,111,773 treasury shares as part of options and rights exercised under the Employee Share Plan. The options and rights were exercised at an average exercise price of $1.72 and $0.00 respectively. REMUNERATION REPORT The Remuneration Report (audited) which is incorporated by reference into, and forms part of, this Directors’ Report, is presented separately on page 38. ENVIRONMENTAL LEGISLATION Catapult’s 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, the Company 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 C A T A P U L TS P O R T S . C O M 34 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T 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 period, 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 financial period, Grant Thornton Audit Pty Ltd, 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 financial period 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 Audit Pty Ltd, and its related practices for audit and non-audit services provided during the financial period are set out in Note 25 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 37 of this financial report and forms part of this Directors’ Report. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, to taking responsibility on behalf of the Company for all or part of those proceedings. ROUNDING OF AMOUNTS The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 relating to the ‘rounding off’ of amounts in the Directors’ Report and, in accordance with that instrument, amounts in the Directors’ Report have been rounded off to the nearest thousand dollars, or in certain cases, to the nearest dollar. Signed in accordance with a resolution of the Directors. Dr Adir Shiffman C A T A P U L TS P O R T S . C O M 35 2 0 2 1 A N N U A L R E P O R T 7.0 D I R E C T O R S ’ R E P O R T Executive Chairman May 26, 2021 I MP OR T ANT N OT I CE This document including the Directors’ Report, Remuneration Report and financial statements may contain forward looking statements including plans and objectives. Do not place undue reliance on them as actual results may differ and may do so materially. They reflect Catapult’s views as at the time made, are not guarantees of future performance and are subject to uncertainties and risks, such as those described in Catapult’s most recent financial report. Subject to law, Catapult assumes no obligation to update, review or revise any information in this document. While Catapult’s results are reported under IFRS, this document may also include non-IFRS information (such as EBITDA, contribution margin, free cash flow, annual recurring revenue (ARR), annualised contract value (ACV), lifetime duration (LTD), and churn). These measures are provided to assist in understanding Catapult’s financial performance. They may not have been independently audited or reviewed, and should not be considered an indication of, or an alternative to, IFRS measures. The information in this document is for general information purposes only and does not purport to be complete. It should be read in conjunction with Catapult’s other market announcements. Readers should make their own assessment and take professional independent advice prior to taking any action based on the information. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the presented figures. C A T A P U L TS P O R T S . C O M 36 2 0 2 1 A N N U A L R E P O R T 8.0 A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N I C A T A P U L TS P O R T S . C O M 37 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) The Directors of the Company present the Remuneration Report for Non-Executive Directors, Executive Directors, and other Key Management Personnel (‘KMP’), prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. Overview The Board’s Nomination and Remuneration Committee, which operates in accordance with its charter as approved by the Board, is responsible for determining and reviewing remuneration arrangements for executive management and Directors. Catapult's remuneration policy emphasises the Board’s desire to align executive remuneration with shareholder interests, attract and retain business critical talent, and preserve cash. As outlined in last year’s Remuneration Report, FY21 was the first financial year that all executives participated in an equity based short-term incentives (STI) plan completing the transition away from cash awards. Along with the long-term incentives (LTI) plan, all executive ‘at risk’ remuneration is now delivered through equity-based incentives. As such, FY21 executive remuneration arrangements comprised of the following components: • • • a market competitive remuneration mix consisting of fixed and ‘at risk’ components. The ‘at risk’ components consist of (STI and LTI under a clearly defined framework); equity-based deferred STI awards with key metrics focused on customers, annual contract value (ACV), revenue, scalability and talent as Catapult continues to drive for growth and sustained financial performance over time; and equity-based LTI awards with a total shareholder return hurdle, with a nil award where Compounding Annual Growth Rate (CAGR) is below 12.5%. Catapult’s target remuneration mix for FY21 was as follows: Remuneration Mix Base Salary CEO Other executive management KMP Other executive management Non-KMP 36% 48% 58% STI 28% 26% 20% LTI 36% 26% 22% Total Target Remuneration 100% 100% 100% The remuneration objectives and structure, including participation and the associated terms and conditions for both the STI and LTI plans are reviewed annually by the Nomination and Remuneration Committee with recommendations for change put to the full Board for approval as part of regular reviews of Catapult’s Remuneration Policy. Variations within the Policy are considered on a case-by-case basis to ensure Catapult retains flexibility in the various international markets in which it operates. FY22 Remuneration Arrangements As disclosed in last year’s Remuneration Report, in line with the evolution of our strategy and operating plans, the Company commenced a review of incentive plans during FY21. The objectives of the review were to ensure such plans drive a sense of collective ownership in the Company's short, medium and long-term success at all levels in the organisation, emphasised through greater use of equity as opposed to cash. The plans were to remain aligned with shareholder interests, be reflective of a modern technology company at Catapult's stage of evolution and be consistent with market practice within the key regions Catapult operates within. The review has now been completed with Board approved changes effective from FY22. Catapult will disclose further details in the FY22 Remuneration Report. C A T A P U L TS P O R T S . C O M 38 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) Catapult’s remuneration strategy relating specifically to executives during FY21 is set out in the following diagram. Catapult Executive KMP Remuneration Objectives Shareholder value creation through equity components An appropriate balance of ‘fixed’ and ‘at risk’ components Creation of award differentiation to drive performance culture and behaviours Attract, motivate and retain executive talent required at stage of development Base Salary and Total Target Remuneration (TTR) is set by reference to relevant market benchmarks Fixed At Risk Short Term Incentives Long Term Incentives (STI) (LTI) STI performance criteria are set by reference to Company, Business Unit and Individual performance targets appropriate to the specific position and set each performance year Targets are linked to Catapult company objectives such as TSR CAGR or other specified metrics as determined by the Board each performance year Base Salary Fixed remuneration is set based on relevant market relativities reflecting responsibilities, performance, qualifications, experience, and geographic location Remuneration to be delivered as: Base salary Performance Rights, subject to the achievement of performance conditions at the end of the relevant performance period, with deferral. Options, subject to the achievement of performance conditions at the end of the relevant three-year performance period TTR is intended to be positioned in the 3rd quartile compared to relevant market-based comparisons. 4th quartile TTR may be derived if demonstrable out performance is achieved by the Catapult Group C A T A P U L TS P O R T S . C O M 39 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) Short Term Incentive (STI) – FY21 For FY21, STI awards continued to be measured against annually set business critical, financially focussed, enterprise-wide Company objectives. Performance hurdles are set annually to determine and drive executive performance alignment with shareholder interests. The Board applied measurable and controllable objectives which align with strategic objectives and enhance shareholder value. The Board determined that for FY21 the best alignment with company strategy was for Executives to be assessed against a range of relevant KPIs which formed a Company scorecard. The scorecard included an ACV metric with hurdles between $42.3 million and $55.7 million, a contribution margin metric with hurdles between 45% and 49%, and other metrics aligned with revenue, customer and people priorities. The scorecard achieved a 55.90% outcome against the target hurdles. Some additional key financial performance measures are highlighted in the following table: Item 2021 2020 2019 2018 2017 EPS (US Cents) (0.046) (0.027) (0.049) (0.077) (0.065) (9 months) (12 months) (12 months) (12 months) (12 months) Dividends (US cents per share) - - - - - Revenue ($’000) 50,042 67,678 67,963 59,541 45,862 Underlying EBITDA*($’000) 3,447 9,423 3,908 740 2,156 EBITDA (US$’000) 2,208 8,875 2,721 (1,508) (2,802) Net loss (US$’000) (8,841) (5,161) (9,175) (13,460) (10,247) Share price (A$) 1.890 1.125 1.095 1.225 2.330 * Underlying EBITDA is operating profit/(loss), adding back employee share plan costs and severance costs. In previous years acquisition and integration costs have also been added back to underlying EBITDA. C A T A P U L TS P O R T S . C O M 40 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) In line with the FY21 results, the following STI awards (which are pro-rata for the nine-month period) were earned during the period: Name Adir Shiffman – Executive Chairman Will Lopes – Chief Executive Officer (CEO) Matthew Bairos – Chief Commercial Officer (CCO) Hayden Stockdale – Chief Financial Officer (CFO) TOTAL AT RISK AMOUNT ($) Percentage achieved during the period FY21 STI achieved FY21 STI forfeited 110,948 55.90% 62,020 48,928 262,500 55.90% 146,738 115,762 150,000 55.90% 83,850 66,150 110,948 55.90% 62,020 48,928 * All amounts for Australian based KMPs translated from Australian Dollars to United States Dollars at an average exchange rate for the period ended March 31, 2021 of 0.7397. C A T A P U L TS P O R T S . C O M 41 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) The FY21 awards were made in accordance with the following STI Plan features: STI criteria Participants STI $ Value Performance Criteria and Weightings Performance Period STI vehicle Equity allocation methodology STI Deferral Vesting date Service restriction Clawback Description KMP and other employees as determined by the Board. Individual STI opportunities vary based on remuneration strategy. The related KPIs consisted of a mix of financial, customer and talent related objectives with KPIs weighted more towards financial outcomes for KMP. July 1, 2020 to March 31, 2021. The award was made in the form of Performance Rights for executives and cash for the Executive Chairman. Where equity was the vehicle, the number of Performance Rights offered at the commencement of the reporting period was determined using the 5-day VWAP as at July 1 and based on an estimated 100% achievement. Following the end of the performance period, the portion of Performance Rights to be retained was calculated with the balance being forfeited. A one-year STI deferral will apply to the FY21 awards for the executives and selected others, with grants vesting in May 2022. Vesting is contingent on continued employment. For equity awards, on or before May 31, 2022, at the end of the deferral period. For cash awards, on or before June 30, 2021, once the STI outcome has been determined. Any STI award will be forfeited if the participant terminates their employment before the vesting date. The Board has the discretion to apply discretion to this restriction, in exceptional circumstances. STI awards will be subject to a Clawback and Malus policy that may apply from time to time. C A T A P U L TS P O R T S . C O M 42 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) Long Term Incentive (LTI) - FY21 For FY21, LTI awards continued to comprise premium-priced share options with a hurdle rate to be achieved at the end of the three-year performance period of a minimum CAGR of 12.5% in Total Shareholder Return (TSR). If that hurdle is met at the relevant vesting date, 50% of the options will become exercisable. The proportion of options vesting increases to 100% if a 17.5% TSR CAGR is achieved, with a pro rata entitlement between 12.5% and 17.5% TSR CAGR. The FY21 awards were made in accordance with the following LTI Plan Rules: LTI Criteria Participants LTI $ Value LTI vehicle Exercise Price Allocation methodology Issue Price Performance Criteria Hurdle Rates Description KMP and other employees as determined by the Board. Individual opportunities vary based on the remuneration strategy. Options. 15% above the VWAP as at July 1. The number of Options will be determined by dividing the LTI $ value by the Option value determined using the ‘Contract Life’ value of the option at the date of pricing of the Option. None. Absolute TSR. TSR CAGR <12.5% p.a. (0% vesting); 12.5% p.a. to 17.5% p.a. (50% to 100% pro-rata). Service and Performance Period 3-year term applies for service and TSR measurement. Last Exercise Date 5 years after grant. Dilution Clawback Minimum Shareholding Change of Control Total dilutive impact and Prospectus relief calculation to be determined once final allocations approved. Unexercised LTI will be subject to any Clawback Policy that may apply from time to time. No minimum shareholding guidelines or policies are in place. If a Change of Control occurs during the performance period or between the end of the performance period and vesting, the number of Options available to be exercised will be determined by the Board in its absolute discretion. C A T A P U L TS P O R T S . C O M 43 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) The relative proportions of remuneration, earned by Executive Directors and KMP during FY21, that are linked to performance and those that are fixed are as follows: Name Directors Adir Shiffman Fixed remuneration At risk - STI At risk - options Fixed rem STI Options Total 73% 27% N/A 166,423 62,020 - 228,443 Other Key Management Personnel Will Lopes Matt Bairos Hayden Stockdale 36% 48% 16% 16% 48% 330,493 146,738 440,208 917,439 36% 254,605 83,850 190,449 528,904 55% 14% 31% 252,068 62,020 142,943 457,031 For FY21, long term incentives were provided exclusively by way of options, and the percentages disclosed reflect the valuation of remuneration consisting of options, based on the value of options expensed during the period. 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 agreements with persons occupying such roles as at March 31, 2021 and which relates to remuneration are set out below: Name Position Base Salary Term of Agreement Notice Period Adir Shiffman Executive Chairman Will Lopes Chief Executive Officer Matt Bairos Chief Commercial Officer Hayden Stockdale Chief Financial Officer 221,897 450,000 335,000 295,862 Contract Permanent Permanent Permanent 1 month 6 months 12 months 6 months C A T A P U L TS P O R T S . C O M 44 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) Details of remuneration Details of the nature and amount of each element of the remuneration of each KMP of Catapult Group International Ltd shown in the table below: DIRECTOR AND OTHER KEY MANAGEMENT PERSONNEL REMUNERATION Year Short term employee benefits Post- employment benefits Long- term benefits Share-based payments Total Performance based percentage of remuneration Cash salary and fees Bonus Other (i) Pension Long service leave Options and Performance Rights $ $ $ $ $ $ $ - 228,443 27.1% (38,463) 258,066 40.8% EXECUTIVE DIRECTORS Adir Shiffman Executive Chairman 2021 166,423 62,020 2020 191,287 105,242 NON-EXECUTIVE DIRECTORS Shaun Holthouse James Orlando Igor van de Griendt Brent Scrimshaw Calvin Ng Michelle Guthrie 2021 42,730 2020 100,125 2021 47,756 2020 251,329 2021 42,730 2020 65,573 2021 26,366 2020 60,524 2021 - 2020 29,127 2021 42,730 2020 28,103 - - - - - - - - - - - - - - - - - - - 6,137 9,178 4,537 - - - - - - 48,867 (38,463) 70,840 - 52,293 (4,511) 18,904 (52) 752,537 1,018,207 - - - - - - - - 4,059 8,246 2,505 5,750 - 2,767 4,059 2,670 - - - - - - - - - 46,789 (38,463) 35,356 - 28,871 (38,463) 27,811 - - (38,463) (6,569) - - 46,789 30,773 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a (i) (ii) Other remuneration includes annual leave and company benefits such as health insurance. All 2021 amounts translated from Australian Dollars to United States Dollars at an average exchange rate for the period ended March 31, 2021 of 0.7397. (iii) All 2020 amounts translated from Australian Dollars to United States Dollars at an average exchange rate for the year ended June 30, 2020 of 0.6712. (iv) During the 2019 reporting period Directors Shiffman, Holthouse, van de Greindt, Scrimshaw and Ng each voluntarily relinquished 100,000 options issued in accordance with shareholder resolutions passed at the 2016 AGM, and part of the accounting charge for these options were reversed in the previous reporting period. C A T A P U L TS P O R T S . C O M 45 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) DIRECTOR AND OTHER KEY MANAGEMENT PERSONNEL REMUNERATION (CONTINUED) Year Short term employee benefits Post- employm ent benefits Long-term benefits Share-based payments Total Performance based percentage of remuneration Cash salary and fees Bonus Other (i) Pension Long service leave Options and Performance Rights $ $ $ $ $ $ $ Joe Powell Former Chief Executive Officer Will Lopes Chief Executive Officer Hayden Stockdale Chief Financial Officer Barry McNeill Former Chief Operating Officer Matt Bairos (v) Chief Commercial Officer 2021 - 2020 89,050 - - - - - - - (49,019) 3,524 (734) (348,550) (305,729) n/a n/a 2021 315,673 146,738 12,743 2,077 2020 217,875 160,792 8,697 - - - 440,208 917,439 16.0% 53,148 440,512 36.5% 2021 220,182 62,020 19,566 12,035 285 142,943 457,031 13.6% 2020 105,230 44,282 10,319 6,140 2021 - 2020 131,646 - - - - - 1,720 2021 240,942 131,142 5,113 8,550 2020 314,333 150,801 13,916 21,664 - - - - - 8,746 174,717 25.3% - - (11,022) 122,344 n/a n/a 190,449 576,196 22.8% 49,068 549,782 27.4% 2021 Total 2021 1,145,532 401,920 37,422 43,959 285 773,600 2,402,718 2020 Total 2020 1,584,202 461,117 (20,598) 80,563 (786) 311,612 2,416,110 16.7% 19.1% (v) During the 9-months ended March 31, 2021 Matt Bairos was paid a cash bonus of $47,292 in lieu of options that had lapsed. C A T A P U L TS P O R T S . C O M 46 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) 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 review and approval by the Nomination and Remuneration Committee and Board. Options Role Opening Balance Granted during the period Vested during the period Exercised during the period Matt Bairos Will Lopes CCO CEO 1,374,082 535,714 557,105 1,205,357 Hayden Stockdale CFO 78,071 375,000 James Orlando NED 611,112 - - - - - - - - - Lapsed/Forfeited during the period Closing Balance (701,180) 1,208,616 - - - 1,762,462 453,071 611,112 Performance Rights Role Opening Balance Granted during the period Vested during the period Exercised during the period Lapsed/Forfeited during the period Closing Balance Matt Bairos Will Lopes CCO CEO 193,239 189,634 412,861 331,859 Hayden Stockdale CFO 113,720 132,743 James Orlando NED 154,412 - - - - - - - - - (41,740) (89,178) (24,564) - 341,133 655,542 221,899 154,412 Options vesting schedule Balance held at March 31, 2021 Vesting Date Expiry Date Value per Option/Right at Grant Date (AUD) Value per Option/Right at Grant Date (USD) Total Value of Option/ Right at Grant Date AUD Total Value of Option/ Right at Grant Date USD Exercise price per option (AUD) 672,902 Aug 31, 2022 Aug 31, 2024 $0.42 $0.29 285,714 193,691 $1.26 535,714 May 31, 2023 May 31, 2025 557,105 Aug 31, 2022 Aug 31, 2024 1,205,357 May 31, 2023 May 31, 2025 $0.75 $0.76 $0.75 $0.55 401,786 294,643 $1.30 $0.52 420,614 288,586 $1.50 $0.55 904,018 662,946 $1.30 78,071 Aug 31, 2022 Aug 31, 2024 $1.08 $0.73 84,317 56,878 $1.50 375,000 May 31, 2023 May 31, 2025 $0.75 $0.55 281,250 206,250 $1.30 Options Role Matt Bairos CCO Will Lopes CEO Hayden Stockdale CFO James Orlando NED 611,112 Mar 25, 2020 Mar 24, 2022 $1.37 $0.93 838,201 568,735 $0.78 C A T A P U L TS P O R T S . C O M 47 2 0 2 1 A N N U A L R E P O R T 9.0 R E M U N E R A T I O N R E P O R T ( A U D I T E D ) Performance rights vesting schedule Performance Rights Role Balance held at March 31, 2021 Vesting Date Expiry Date Matt Bairos CCO 49,123 Aug 31, 2021 Aug 31, 2022 102,376 Aug 31, 2021 Aug 31, 2022 189,634 May 31, 2022 May 31, 2023 184,227 Aug 31, 2021 Aug 31, 2022 Will Lopes CEO 139,456 Aug 31, 2021 Aug 31, 2022 331,859 May 31, 2022 May 31, 2023 33,145 Aug 31, 2021 Aug 31, 2022 Hayden Stockdale CFO 56,011 Aug 31, 2021 Aug 31, 2022 132,743 May 31, 2022 May 31, 2023 James Orlando NED 154,412 March 31, 2020 March 31, 2021 Other notable activity during FY21 Value per Option/Right at Grant Date (AUD) Value per Option/Right at Grant Date (USD) Total Value of Option/Right at Grant Date AUD Total Value of Option/Rig ht at Grant Date USD Exerci se price per option (AUD) $1.20 $0.96 $1.90 $1.66 $0.96 $1.90 $2.07 $0.96 $1.90 $0.81 122,339 82,936 $0.60 47,158 29,626 $1.38 360,305 261,695 $1.14 305,817 209,823 $0.60 133,878 84,105 $1.38 $1.40 630,532 457,965 68,610 46,283 $0.60 53,771 33,780 $1.38 252,212 183,185 $2.10 $1.42 324,265 220,020 - - - - - - - - - - As stated in last year’s report, the Board approved a grant of 1.9 million service rights to our employees during the FY20 reporting period to recognise our employees' commitment and contribution, and as an effort to retain talent and stabilize the organisation through an exceptionally challenging Covid-19 pandemic. The grant vested in October 2020 and 0.9 million units were still held by employees at the end of the FY21 reporting period evidencing our employees’ commitment to remaining aligned with shareholder interests. Details of shareholdings The movement during the year in the number of ordinary shares held directly, indirectly or beneficially, by each KMP, including their related parties, is as follows: Name Held at July 1, 2020 Received on exercise of options/ rights Purchased or sold during period Net change other* Held at March 31, 2021 Adir Shiffman 6,542,100 Shaun Holthouse 18,775,000 Igor van de Griendt 20,508,000 James Orlando(a) Brent Scrimshaw Michelle Guthrie 80,000 15,150 - - - - - - - (500,000) (1,100,000) - - - - - - - - - - 6,042,100 17,675,000 20,508,000 80,000 15,150 - (a) (b) James Orlando holds a relevant interest in 80,000 shares by way of his relationship with Kimberly Ann Foltz. Brent Scrimshaw holds a relevant interest in 15,150 shares held by B&A Scrimshaw Superannuation Fund which is controlled by Mr Scrimshaw. Refer to note 29 in the financial statements for details regarding related party transactions and transactions with Key Management Personnel. C A T A P U L TS P O R T S . C O M 48 2 0 2 1 A N N U A L R E P O R T 10.0 C O N S O L I D A T E D S T A T E M E N T O F P R O F I T A N D L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E Revenue Other income Cost of goods sold Employee benefits expense Employee share option compensation expense Capital raising and listing expenses Travel, marketing and promotion Occupancy Professional fees Other expenses Operating profit before depreciation and amortisation Note 2021 2020 7 8 19 19 (9 months) (12 months) US$'000 US$'000 50,042 67,678 508 (13,198) (25,833) (1,900) (138) (1,203) (417) (1,682) (3,971) 2,208 881 (17,852) (28,846) (1,408) (151) (3,641) (733) (1,581) (5,472) 8,875 Depreciation and amortisation (10,218) (14,405) Loss from operations Finance costs Finance income Other financial items Loss before income tax expense Income tax expense/(benefit) Loss after income tax expense for the period / year attributable to the owners of Catapult Group International Ltd 22 22 23 24 (8,010) (256) 27 (389) (8,628) (213) (5,530) (328) 45 262 (5,551) 389 (8,841) (5,162) Earnings per share Basic and diluted earnings per share (US$ cents per share) 26 (4.6) (2.7) This statement should be read in conjunction with the notes to the financial statements. C A T A P U L TS P O R T S . C O M 49 2 0 2 1 A N N U A L R E P O R T 10.0 C O N S O L I D A T E D S T A T E M E N T O F P R O F I T A N D L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E Note 2021 2020 (9 months) (12 months) US$'000 US$'000 Loss for the period / year from continuing operations (8,841) (5,162) Other comprehensive income Items that will not be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations, net of tax 1,880 (429) Other comprehensive income for the period / year, net of tax 1,880 (429) Total comprehensive loss for the period / year attributable to the owners of Catapult Group International Ltd (6,961) (5,591) Loss for the period / year attributable to: -Members of the parent entity -Non-controlling interests Total comprehensive loss for the period / year attributable to: -Members of the parent entity -Non-controlling interests (8,799) (42) (8,841) (5,162) - (5,162) (6,919) (42) (6,961) (5,591) - (5,591) This statement should be read in conjunction with the notes to the financial statements. C A T A P U L TS P O R T S . C O M 50 2 0 2 1 A N N U A L R E P O R T 11.0 C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Trade and other receivables Property, plant and equipment Goodwill Intangible assets Deferred tax assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Contract liabilities Other liabilities Employee benefits Borrowings Other financial liabilities Total current liabilities Non-current liabilities Contract liabilities Employee benefits Deferred tax liabilities Other financial liabilities Total non-current liabilities Total liabilities Net assets Equity Share capital Share option reserve Foreign currency translation reserve Accumulated losses Equity attributable to owners of Catapult Group International Ltd Non-controlling interests Total equity Note March 2021 US$’000 June 2020 US$’000 9 10 11 10 12 13 14 15 16 17 17 19.3 21 17 19.3 15 21 20 22,171 13,329 3,884 39,384 306 9,473 41,994 23,183 7,503 82,459 121,843 6,898 17,822 1,312 6,311 1,738 1,907 18,888 22,899 5,023 46,810 336 8,405 41,695 23,611 7,229 81,276 128,086 4,770 21,891 1,324 5,299 5,102 1,368 35,988 39,754 3,091 82 3,148 2,609 8,930 44,918 76,925 130,452 5,260 (2,309) (56,436) 76,967 (42) 76,925 1,671 41 3,068 2,489 7,269 47,023 81,063 127,981 4,908 (4,189) (47,637) 81,063 - 81,063 This statement should be read in conjunction with the notes to the financial statements. C A T A P U L TS P O R T S . C O M 51 2 0 2 1 A N N U A L R E P O R T 12.0 C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y Share Capital Share Option Reserve Foreign Currency Translation Reserves Accumulated Losses Non- Controlling Interests Total equity US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance at July 1, 2019 126,810 4,063 (3,760) (42,475) Loss after income tax benefit for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share-based payments Total transactions with owners - - - - - (5,162) (429) - 126,810 4,063 (4,189) (47,637) - 1,171 1,171 - 845 845 - - - - - - Balance at June 30, 2020 127,981 4,908 (4,189) (47,637) - - - - - - - - 84,638 (5,162) (429) 79,047 - 2,016 2,016 81,063 Share Capital Share Option Reserve Foreign Currency Translation Reserves Accumulated Losses Non- Controlling Interests Total equity US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance at July 1, 2020 127,981 4,908 (4,189) (47,637) - 81,063 Loss after income tax expense for the period Other comprehensive income for the period, net of tax Total comprehensive loss for the period Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share-based payments Total transactions with owners - - - - - (8,799) (42) (8,841) 1,880 - - 1,880 127,981 4,908 (2,309) (56,436) (42) 74,102 143 2,328 2,471 - 352 352 - - - - - - - - - 143 2,680 2,823 Balance at March 31, 2021 130,452 5,260 (2,309) (56,436) (42) 76,925 This statement should be read in conjunction with the notes to the financial statements. C A T A P U L TS P O R T S . C O M 52 2 0 2 1 A N N U A L R E P O R T 13.0 C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S Note 2021 2020 (9 months) (12 months) US$'000 US$'000 Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest received Government grants and other income Income taxes paid Net cash flows from operating activities 28 Cash flows from investing activities Acquisition of subsidiaries net of cash acquired Payments for property, plant and equipment Payments for intangibles Net cash (used in) investing activities Cash flows from financing activities Loans paid Loans received Repayments of leasing liabilities Interest paid Proceeds from issue of shares Proceeds from share options Net cash (used in) / from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period / year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial period / year This statement should be read in conjunction with the notes to the financial statements. 57,724 (44,522) 13,202 27 1,141 (118) 14,252 (431) (1,738) (5,823) (7,992) (5,077) 1,728 (1,056) (236) 143 731 (3,767) 2,493 18,888 790 22,171 73,594 (59,092) 14,502 45 965 (226) 15,286 (25) (2,483) (6,386) (8,894) (154) 5,022 (1,103) (277) - 601 4,089 10,481 8,238 169 18,888 C A T A P U L TS P O R T S . C O M 53 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 1. NATURE OF OPERATIONS Catapult Group International Ltd and its controlled entities (the ‘Group’) principal activities are the development and supply of innovative technologies that improve the performance of athletes and sports teams. This includes the development and sale of performance and health technology solutions, including wearable tracking and analytics, to elite sporting teams, leagues and associations; the development and sale of tactical and coaching technology solutions, including digital video and analytics, to elite sporting teams, leagues and associations; the development and sale of performance and health technology solutions, including wearable tracking and analytics, to prosumer athletes, sporting teams and associations; the development and sale of an athlete management platform and analytics to elite sporting teams, leagues and associations; and the development and growth of a subscription online sport learning platform. NOTE 2. GENERAL INFORMATION AND BASIS OF PREPARATION 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 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 Securities Exchange. The address of its registered office and its principal place of business is 75 High Street, Prahran, Victoria, Australia. The consolidated financial statements for the 9-month period ended March 31, 2021 were approved by the Board of Directors and authorised for issue on May 26, 2021. NOTE 3. CHANGES TO ACCOUNTING POLICIES During the 9-month period the Group has not adopted any new accounting policies. NOTE 4. SIGNIFICANT 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 March 31, 2021. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and could affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of March 31, with the exception of Catapult Sports Technology Beijing Co Ltd (based in China) which has a reporting date of December 31. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains 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 is recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. C A T A P U L TS P O R T S . C O M 54 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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. 4.3 Business combination 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 acquiree, 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. 4.4 Foreign currency translation Change in presentation currency As previously advised to the market on July 24, 2020, and consistent with AASB 121 "The effects of change in foreign exchange rates", the Group changed its presentation currency to the US dollar with effect from July 1, 2020. The change in reporting currency was made to transparently represent the economic effects of the underlying transactions, events and conditions that are relevant to the Group. Prior to July 1, 2020, the Group reported its annual and half year consolidated statement of profit or loss and other comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated statement of cashflows in AUD. In accordance with AASB 121, the financial statements for all years and periods presented have been translated into the new presentation currency. Under this method, the consolidated statement of profit or loss and comprehensive income and consolidated statement of cashflows for each year and period have been translated into the presentation currency using the average exchange rates prevailing during each reporting period. All assets and liabilities have been translated using the exchange rate prevailing at the reporting dates. Shareholders' equity transactions have been translated using the rates of exchange in effect as of the dates of the various capital transactions. All resulting exchange differences arising from the translation are included in other comprehensive income. All comparative information has been restated to reflect the Group's results as if they had been historically reported in US dollars. 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 re-translated at period-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. C A T A P U L TS P O R T S . C O M 55 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Foreign operations In the Group’s financial statements, all assets, liabilities, and transactions of Group entities with a functional currency other than the US dollar are translated into the US dollar 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 the US dollar at the closing rate at the reporting date. Under this method, the consolidated statement of profit or loss and comprehensive income and consolidated statement of cash flows for each year and period have been translated into the presentational currency using the average exchange rates prevailing during each reporting period (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transaction).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 the Group is entitled to, excluding sales taxes, rebates, and trade discounts. The Group enters into sales transactions involving an outright sale to the client, on a subscription basis or for the rendering of services. 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. To determine whether to recognise revenue, the Group follows a five-step process: 1. Identifying the contract with a customer 2. Identifying the performance obligations 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations 5. Recognising revenue when/as performance obligation(s) are satisfied When the Group enters into transactions involving its products and services, the total transaction price for a contract is allocated amongst the various performance obligations. Revenue is recognised either at a point in time or over time, when the Group satisfies performance obligations by transferring the promised goods or services to customers. Capital Capital revenue is the sale of good to third parties and is recognised at a point in time when the Group has transferred to the buyer the significant risks and rewards of ownership, and control of the goods. The timing of the transfer of risks and rewards/control varies depending on the individual terms of the sales agreement. For sales of wearable units and sale of hardware in the video analytics business the transfer usually occurs on dispatch of the goods from Catapult’s premises. Subscription and services Subscription revenue comprises the recurring monthly recognition of revenue from wearables subscription sales, rendering of software services and content licensing. Unbilled revenue at the period end is recognised in the Consolidated Statement of Financial Position as contract assets and included within trade and other receivables C A T A P U L TS P O R T S . C O M 56 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S and contract assets. Unearned revenue at the period end is recognised in the Consolidated Statement of Financial Position as deferred revenue and included within contract liabilities. Revenue is recognised as performance obligations under customer contracts are met. Performance obligations consist of the provisioning of the software/cloud/SaaS subscription and related maintenance and support services over the term of the contract. (i) Wearables subscription sale The Group generates revenues from subscription sales typically whenever the goods have been dispatched from Catapult's premises and the software has been activated for the customer. The revenue from the subscription agreement is recognised on a monthly basis in equal amounts for each month of the subscription agreement. In determining that the wearable subscription agreement constitutes a lease under AASB 16 the Group considers the nature and term of the agreement and the useful life of the goods being provided under the subscription agreement. (ii) Rendering of services The Group is involved in providing software, support and maintenances services. The Group recognises revenue from such activities on a monthly basis in equal amounts for each month of the subscription agreement. (iii) Content licensing The Group is involved in the provision of licensed video content to customers. Where video content is purchased on a one-off basis, associated revenue is recognised upon delivery of the licensed content. Where video content is purchased via a term contract with content available for consumption during the contract term, associated revenue is recognised on a monthly basis in equal amounts for each month of the content licensing agreement. (iv) Multiple element contracts The Group may enter into a contract or multiple contracts with customers that may include multiple performance obligations. Where multiple contracts are entered into, the Group determines whether it is required to be measured with another pre-existing contract by determining whether the performance obligations promised are being sold at their stand-alone selling price (‘SASP’). Where pricing is equal to SASP, the contract is treated as a stand-alone contract. Where pricing is not equal to SASP, the contract is combined with the pre-existing contract with the customer as a multiple-performance obligation (multi-PO) arrangement. Where a multi-PO arrangement is entered into, each performance obligation is allocated a proportional amount of revenue based on the transaction price of the contract and the relative SASP of each performance obligation. (v) Prepaid purchase Prepaid purchases comprise of subscription contracts entered into whereby the customer pays for the subscription either annually or all in advance. This results in recurring monthly revenue (primarily from wearable/performance and health sales). Unearned revenue at the year-end is recognised in the Consolidated Statement of Financial Position as deferred revenue and included within the contract liabilities. (vi) 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. Other revenue Other revenue is additional revenue related to the sale of hardware, consisting of media, shipping, training and installation income. Revenue is recognised either at a point in time or over time, when the Group satisfies performance obligations by transferring the promised goods or services to customers. 4.6 Operating expenses C A T A P U L TS P O R T S . C O M 57 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. 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 22). 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 13.1 for a description of impairment testing procedures. 4.9 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 & hardware IP Expenditure on the research phase of projects to develop new customised software and 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 software/hardware; and • the software/hardware will generate probable future economic benefits. • Development costs not meeting these criteria for capitalisation are expensed as incurred. • Directly attributable costs include employee costs and costs incurred on software & hardware development. 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. During FY21, the Group undertook a review of the useful lives of its brand name intangible assets and deemed that these assets had a remaining useful life of two years. The Group has begun amortising these assets and expects the assets to be fully amortised by FY23. The following useful lives are applied: • software (licenses and internally developed): 3–5 years, except with regard to identified projects with 2 years • brand names: 2 years • customer lists: 7–10 years C A T A P U L TS P O R T S . C O M 58 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S • hardware IP: 3 years • distributor relationships: 10 years • distributor contracts: 10 years • goodwill: annually assessed by management for impairment 4.10 Property, plant and equipment Plant and office equipment and fixtures and fittings 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 and office equipment as well as fixtures and fittings are subsequently measured using the cost model, cost less subsequent precaution and impairment losses. During the period, the Group undertook a review of the useful lives of its property, plant and equipment and decided to change its depreciation accounting estimate from diminishing value to straight line to better reflect the value-in- use of these assets. The following useful lives are applied: • plant and office equipment - 2-20 years • fixture and fittings - life of lease • property improvements - life of lease • Right of use assets - life of lease Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of subscription, service and demonstration wearable units over their useful life of four 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 Low value leases Where the Group is a lessee, payments on low value lease agreements are recognised as an expense on a straight- line basis over the lease term if they do not meet the criteria to be recognised under AASB 16 Leases. The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease payments are not permitted to be recognised as lease liabilities and are expensed as incurred (see Note 21). Associated costs, such as maintenance and insurance, are expensed as incurred. Leases as lessor The Group generates revenues from subscription sales and the revenue from the subscription agreement is recognised on a monthly basis in equal amounts for each month of the subscription agreement. When entering into these subscription agreements, the Group provides hardware to the customer alongside the software, and the hardware is leased to the customer for the duration of the agreement (typically three to four years). At the end of the agreement the hardware is returned to Catapult. In determining that the wearable subscription agreement C A T A P U L TS P O R T S . C O M 59 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S constitutes a lease under AASB 16 the Group considers the nature and term of the agreement and the useful life of the goods being provided under the subscription agreement. 4.12 Impairment testing of goodwill, intangible assets, property, plant and equipment and right of use assets 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. 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 assets 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 discount 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 across the other assets in the cash-generating unit to the extent that the charge does not reduce the value of the assets below their fair value. 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, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets are de-recognised 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 de-recognised 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: • Amortised cost; • Financial assets at Fair Value Through Profit or Loss (‘FVTPL’); • Financial assets reported through Other Comprehensive Income (‘FVOCI’); C A T A P U L TS P O R T S . C O M 60 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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. Amortised cost 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. 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. C A T A P U L TS P O R T S . C O M 61 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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. Catapult Group International Ltd and its wholly owned Australian controlled entities have formed a tax consolidated group. Therefore, 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. AASB Interpretation 23 requires the assessment of whether the effect of uncertainty over income tax treatments should be included in the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The interpretation outlines the requirements to determine whether any entity considers uncertain tax treatments separately, the assumptions an entity makes about the examination of tax treatments by taxation authorities, how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates and how an entity considers changes in facts and circumstances. The Group has adopted Interpretation 23, based on an assessment of whether it is “probable” that a taxation authority will accept an uncertain tax treatment. There has been no financial reporting impact from the adoption of Interpretation 23 in this reporting period. 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. C A T A P U L TS P O R T S . C O M 62 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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 USD (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 Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. 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 employees to require 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 recognized 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 recognized in the current period. No adjustment is made to any expense recognized 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. 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. C A T A P U L TS P O R T S . C O M 63 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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. Restructuring provisions (when applicable) will only be recognised 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. 4.21 Goods and Services Tax, Sales taxes and Value Added 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 appropriate tax authority in the relevant tax jurisdiction. 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 Group 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 they must return the unit to the Group at the end of the subscription period. Management have considered various factors under AASB 16 Leases as to whether a component of the subscription agreements represents a finance or operating lease. These include: • The GPS tracking units for the majority of subscription contracts have a subscription period no more than 75% of the useful life of the units. • Risk in the wear and tear of GPS tracking units remains with the Group. C A T A P U L TS P O R T S . C O M 64 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S As a result, 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. 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 15. 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. Business combinations 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. 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 US$8.841m and had net cashflows from operating activities of US$14.252m. C A T A P U L TS P O R T S . C O M 65 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Notwithstanding this, the Directors are of the view that the going concern principle is appropriate due to the following factors: • The COVID-19 pandemic began to impact global sport in March 2020, and the impact was at its worst in the first half of FY21. Early on Catapult management adopted a conservative approach by instituting cost control measures and managing working capital, ensuring that the business maintained a strong cash position. During the period ended March 31, 2021 Catapult lifted these cost measures as the negative impact of COVID-19 was less than anticipated, and management believe that the worst of the pandemic is behind us; • The business delivered positive free cashflow of US$6.260m in FY21, being the second consecutive year of free cash generation; and • The business had cash on hand of US$22.171m at March 31, 2021. 4.24 Change of year-end With effect from July 1, 2020, the Group changed its financial year-end reporting date from June 30 to March 31. In transitioning to this change the Group has reported a 2021 financial year of nine months, consisting of an interim period ended December 31, 2020 and a final period ended March 31, 2021. C A T A P U L TS P O R T S . C O M 66 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 5. INTERESTS IN SUBSIDIARIES Set out below are details of the subsidiaries held directly by the Group: Parent Entity Catapult Group International Ltd (i),(iii) Principal Place of Business / 2021 2020 Group Ownership Interest Name of the Subsidiary** Principal Activity Catapult Sports Pty Ltd (i),(ii),(iii) Catapult Gameday Pty Ltd Catapult International Pty Ltd (i),(ii) GPSports Systems Pty Ltd (iii) Catapult Innovations Pty Ltd Catapult Group US Inc. (iii) Catapult Sports LLC (iii) XOS Technologies Inc Collegiate Images LLC Catapult Sports Limited (iii) Catapult Sports Godo Kaisha Australia - design and sale of wearable products and software Australia - trading entity for relationships with Media sector Australia - holding company Australia - design and sale of wearable products and software Australia - non trading entity United States of America - holding company United States of America - North American sales operations United States of America - Video Analytics United States of America - Content Licensing United Kingdom - European sales operations Japan - Asia sales operations Catapult Sports Europe Limited Ireland - holding company Kodaplay Ltd (iii) Catapult Sports SAS Catapult Sports Technology Beijing Co Ltd Science for Sport Limited * Refer to Note 35 for further information. Ireland - manufacturing and selling for Catapult sub-elite and consumer products Argentina - South American sales operations China - Asia sales operations United Kingdom - subscription online 75* sport learning platform % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - ** Catapult is in the process of dissolving its US wholly owned subsidiaries, Forbes Recruit Evaluation, Inc. and Forbes Recruit Evaluation, LLC. C A T A P U L TS P O R T S . C O M 67 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S (i) Catapult Group International Limited (the Company) and Catapult Sports Pty Ltd are party to a Deed of Cross Guarantee dated June 26, 2017. Catapult International Pty Ltd joined the Deed of Cross Guarantee via a Deed of Assumption dated March 29, 2021. The Company, Catapult Sports Pty Ltd and Catapult International Pty Ltd together constitute the ‘Closed Group’. The effect of the deed is that the Company has guaranteed to each creditor to pay any deficiency in the event of the winding up of any of the controlled entities in the Closed Group. All entities in the Closed Group have also given a similar guarantee in the event that the Company is wound up – refer to Note 34. (ii) Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785 Order 98/1418 (as amended) relief has been granted to Catapult Sports Pty Ltd and Catapult International Pty Ltd from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and directors' reports. (iii) These entities have provided guarantees to Western Alliance Bank in respect of credit facilities of USD 5,000,000 granted to XOS Technologies Inc and Collegiate Images LLC. NOTE 6. SEGMENT INFORMATION For the 9-month period ended March 31, 2021 Management identifies its operating segments based on the Group’s business units which represent the main products and services provided by the Group. The Group’s three main operating segments are: • Wearables: design, development and supply of wearable technology and analytic software to athletes and sports teams. • Video Analytics: develops and provides innovative digital and video analytic software solutions to elite sports teams. • New Products: development of the prosumer product and entry into the prosumer market. These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results. The revenues and profit generated by each of the Group’s operating segments and segment assets are summarised as follows: 9 months to March 31, 2021 Revenue - external customers Segment EBITDA Segment Operating profit/(loss) Segment Assets Segment Liabilities Video New Wearables Analytics Products Total US$'000 US$'000 US$'000 US$'000 24,622 6,999 2,311 45,403 24,877 22,640 2,780 50,042 6,451 874 69,953 17,532 (277) (287) 6,487 2,509 13,173 2,898 121,843 44,918 C A T A P U L TS P O R T S . C O M 68 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 12 months to June 30, 2020 Revenue - external customers Segment EBITDA Segment Operating profit/(loss) Segment Assets Segment Liabilities Video New Wearables Analytics Products Total US$'000 US$'000 US$'000 US$'000 32,407 9,736 4,361 40,180 21,114 32,006 10,002 2,220 81,091 24,482 3,265 (391) (1,270) 6,815 1,427 67,678 19,347 5,311 128,086 47,023 The Group's segment operating loss reconciles to the Group's loss before tax as presented in its financial statements as follows: Total reporting segment operating EBITDA Depreciation and amortisation for the segments Finance segment costs Finance segment income Other financial segment (costs)/income Total reporting segment operating profit Corporate costs Other income Employee benefits expense Employee share option compensation expense Capital raising and listing expenses Travel, marketing and promotion Occupancy Professional fees Other expenses Total corporate costs Finance segment expense Finance segment income Other financial (expenses) Group loss before tax C A T A P U L TS P O R T S . C O M 2021 2020 (9 months) (12 months) US$'000 US$'000 13,173 19,347 (10,218) (14,405) (12) 12 (57) (20) 26 363 2,898 5,311 509 (5,940) (1,601) (138) (73) (171) (1,564) (1,987) 879 (5,499) (1,195) (151) (278) (312) (1,693) (2,226) (10,965) (10,475) (243) 15 (333) (8,628) (308) 19 (98) (5,551) 69 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Revenue by Geography The Group’s revenues from external customers (excludes government grants) and are divided into the following geographical areas: Wearables Video Analytics New Products 2021 2021 2021 Total 2021 US$'000 US$'000 US$'000 US$'000 (9 months) (9 months) (9 months) (9 months) 2,547 2,772 9,514 9,791 24,624 15 46 137 22,442 22,640 366 57 1,605 750 2,778 Wearables Video Analytics New Products 2020 2020 2020 2,928 2,875 11,256 32,983 50,042 Total 2020 US$'000 US$'000 US$'000 US$'000 (12 months) (12 months) (12 months) (12 months) 3,092 3,756 10,965 14,594 4 31 123 31,848 32,407 32,006 310 67 1,796 1,092 3,265 3,406 3,854 12,884 47,534 67,678 Revenue - external customers Australia APAC EMEA Americas Total Revenue - external customers Australia APAC EMEA Americas Total All revenue is generated from external customers and there are no inter segment revenues. Revenues from external customers in the Group’s domicile, Australia, as well as its major markets, Europe and the Middle East (EMEA), Asia-Pacific (APAC) and the Americas, have been identified on the basis of the customer’s geographical location. C A T A P U L TS P O R T S . C O M 70 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 7. REVENUE Revenue has been generated from the following types of sales transactions: Capital revenue Subscription and service Other revenues Total revenue NOTE 8. OTHER INCOME Other income has been generated from the following sources: Government grants and assistance* Other income Total other income 2021 2020 US$'000 US$'000 9,118 40,489 435 14,797 52,011 870 50,042 67,678 2021 2020 US$'000 US$'000 312 196 508 449 432 881 *Government grants represents the JobKeeper and cash flow boost payments received from the Federal Government in response to the ongoing novel coronavirus (COVID-19) pandemic. Government grants are recognised in the financial statements at their fair values when there is a reasonable assurance that the Consolidated Entity will comply with the requirements and that the grant will be received. NOTE 9. CURRENT ASSETS - CASH AND CASH EQUIVALENTS Cash and cash equivalents include the following components: Cash at bank and in hand AUD EUR GBP USD JPY CNY ARS Total cash and cash equivalents 2021 2020 US$'000 US$'000 1,487 6,171 1,645 11,361 171 1,235 101 22,171 1,471 2,171 1,435 12,810 204 710 87 18,888 C A T A P U L TS P O R T S . C O M 71 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S The amount of cash and cash equivalents inaccessible to the Group as at March 31, 2021 amounts to US$380,548 (2020: US$369,839) relating to Letter of Credit for rental leases held by the company. NOTE 10. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES & CONTRACT ASSETS Trade and other receivables consist of the following: Trade receivables, gross Contract assets Allowance for credit losses Trade receivables Taxes receivable Other receivables Prepayments Non-financial assets Trade and other receivables Other long-term financial assets Total trade and other receivables 2021 2020 US$'000 US$'000 9,390 2,648 (1,753) 19,618 1,906 (1,362) 10,285 20,162 210 837 1,997 3,044 13,329 306 240 835 1,662 2,737 22,899 336 13,635 23,235 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. Trade receivables are written-off when there is no reasonable expectation of recovery. Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written-off are credited against the same line item. During the 9-month period ended March 31, 2021, an amount of US$80,999 (2020: US$459,243) was found to be impaired and subsequently these bad debts were written off. NOTE 11. CURRENT ASSETS - INVENTORIES Raw materials and consumables Finished goods Total inventories 2021 2020 US$'000 US$'000 533 3,351 3,884 906 4,117 5,023 In 2021, the total cost of US$7,711,763 associated with inventories was included in the Consolidated Statement of Profit and Loss and Other Comprehensive Income as an expense (2020: US$11,413,993). At March 31, 2021, the provision for obsolete stock was US$999,177 (2020: US$971,954). C A T A P U L TS P O R T S . C O M 72 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 12. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT Details of the Group's property, plant and equipment and their carrying amount are as follows: Rental & Demo Units Plant & Office Equipment Furniture & Fittings Leasehold Improve- ments Leased Assets Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 6,981 1,227 (187) - 589 8,610 4,814 932 (551) - 99 5,294 (3,869) (853) 187 (357) (3,300) (1,023) 551 (62) 126 7 (1) - 1 133 (8) (3) 1 (3) 1,527 32 - - 91 4,347 1,574 - - 179 17,795 3,772 (739) - 959 1,650 6,100 21,787 (1,053) (1,160) (9,390) (150) - (68) (1,078) (3,107) - (66) 739 (556) (4,892) (3,834) (13) (1,271) (2,304) (12,314) 3,718 1,460 120 Rental & Demo Units US$'000 Plant & Office Equipment US$'000 Furniture & Fittings US$'000 379 Leasehold Improve- ments US$'000 3,796 9,473 Leased Assets US$'000 Total US$'000 6,265 1,974 (1,278) - 20 6,981 4,158 498 (12) 80 90 4,814 (2,984) (1,241) 349 - 7 (3,869) (2,246) (1,034) 1 - (21) (3,300) 3,112 1,514 204 - - (80) 2 126 (5) (1) - - (2) (8) 118 1,456 36 - - 35 1,527 (716) (335) - - (2) (1,053) - 4,348 (1) 4,347 - (1,187) - - 27 (1,160) 12,083 6,856 (1,290) - 146 17,795 (5,951) (3,798) 350 - 9 (9,390) 474 3,187 8,405 73 Gross carrying amount Balance at July 1, 2020 Additions Disposals Transfer Net exchange Differences Balance at March 31, 2021 Depreciation and impairment Balance at July 1, 2020 Depreciation Disposals Net exchange Differences Balance at March 31, 2021 Carrying amount at March 31, 2021 Gross carrying amount Balance at July 1, 2019 Additions Disposals Transfer Net exchange difference Balance at June 30, 2020 Depreciation and impairment Balance at July 1, 2019 Depreciation Disposals Transfer Net exchange differences Balance at June 30, 2020 Carrying amount at June 30, 2020 C A T A P U L TS P O R T S . C O M 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S All depreciation and amortisation charges are included within depreciation and amortisation expense. During FY21, the Group wrote off rental and demo units with a net book value of US$Nil (2020: US$912,913) pertaining to the return of devices that had been upgraded to a new device in line with Catapult's subscription agreements. These devices were transferred from Rental & Demo Units back into inventory upon return, and after review were deemed to be obsolete and subsequently written-off. During FY21, the Group also conducted a review of the subscription unit register and disposed of old rental units on the register that were no longer reconciled to existing subscription contracts. These units had a net book value of US$Nil (2020: US$40,593). The net book value of assets held under leases at March 31, 2021 was US$95,526 (2020: US$58,371) and are included in Office Equipment. NOTE 13. NON-CURRENT ASSETS - GOODWILL The movements in the net carrying amount of goodwill are as follows: Balance at July 1 Foreign exchange effect on goodwill Balance at period/year end 13.1 Impairment Testing 2021 US$'000 41,695 299 41,994 2020 US$'000 41,766 (71) 41,695 For the purpose of annual impairment testing goodwill is allocated to the cash-generating units which are expected to benefit from the synergies of the business combinations in which goodwill arises. Elite Wearables Sub-Elite Wearables Video Analytics Balance at period/year end 2021 2020 US$'000 US$'000 1,789 3,046 37,159 41,994 1,615 2,921 37,159 41,695 The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering the detailed five-year forecast, followed by a terminal growth rate of expected cash flows for the units. Growth rates are determined by management. The present value of the expected cash flows of each segment is determined by applying a suitable discount rate. In measuring value in use cash flow projections are based on: (a) reasonable and supportable assumptions that represent management’s best estimate of the range of economic conditions that will exist over the remaining useful life of the asset; (b) most recent financial budgets/forecasts approved by management, but exclude any estimated future cash inflows or outflows expected to arise from future restructurings or from improving or enhancing the asset’s performance; and C A T A P U L TS P O R T S . C O M 74 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S (c) estimates cash flow projections beyond the period covered by the most recent budgets/forecasts by extrapolating the projections based on the budgets/forecasts using a steady or declining growth rate for subsequent years. Elite Wearables Sub-Elite Wearables Video Analytics Impact of possible changes in key assumptions Terminal Growth rate Discount Rates 2021 2.9% 2.9% 2.9% 2020 2.9% 2.9% 2.9% 2021 10.7% 10.7% 10.7% 2020 10.7% 10.7% 10.7% The Directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the CGUs above to exceed its recoverable amount. 13.2 Brand names The carrying value of brand names associated with each cash generating unit of the Group are outlined below: Elite Wearables Video Analytics Balance at period/year end 2021 2020 US$'000 US$'000 182 3,448 3,630 171 3,598 3,769 During FY21, the Group undertook a review of the useful lives of its brand name intangible assets and deemed that these assets had a remaining useful life of two years. The Group has begun amortising these assets and expects the assets to be fully amortised by FY23. The useful life now applied to existing brand names is two years. 13.3 Growth Rates Five years of cash flows were included in the discounted cash flow model. The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management’s estimate of the long-term compound annual EBITDA growth rate, consistent with the assumptions that a market participant would make. • Revenue growth was projected taking into account the average growth levels experienced over the past five years and the estimated sales volume and price growth for the next five years. It was assumed that the sales price would increase in line with forecast inflation over the next five years. • Continued investment in core product development to underpin revenue growth particularly in video and tactical products. The growth rates reflect management’s estimates, as publicly published growth rates for this industry segment are not readily available. C A T A P U L TS P O R T S . C O M 75 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 13.4 Discount Rates The discount rate reflects appropriate adjustments relating to market risk and specific risk factors of the business unit. The discount rate was a post-tax measure estimated based on the historical industry average weighted-average cost of capital. C A T A P U L TS P O R T S . C O M 76 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 14. NON-CURRENT ASSETS - INTANGIBLE ASSETS Acquired Software Licences Hardware IP Brand Name Distributor Relation- ships Distributor Contracts Customer Relationships Internally Developed Software Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Gross carrying amount balance at July 1, 2020 Additions Net exchange difference Balance at March 31, 2021 Balance at July 1, 2020 Amortisation and impairment Net exchange difference Balance at March 31, 2021 Carrying amount March 31, 2021 780 103 7,762 1,326 74 465 3,769 - 19 292 - 31 66 14,995 - 7 216 43 30,100 4,110 57,764 5,755 1,397 2,036 957 9,553 3,788 323 73 15,254 35,607 65,555 (491) (3,806) - (175) (66) (8,330) (21,285) (34,153) (94) (1,128) (158) (49) (406) (23) (20) - (1,624) (4,084) (7,111) (7) (20) (606) (1,108) (634) (5,340) (158) (218) (73) (9,974) (25,975) (42,372) 323 4,213 3,630 105 - 5,280 9,632 23,183 C A T A P U L TS P O R T S . C O M 77 2 0 2 1 A N N U A L R E P O R T 14.0 Gross carrying amount balance at July 1, 2019 Additions Net exchange difference Balance at June 30, 2020 Balance at July 1, 2019 Amortisation and impairment Net exchange difference Balance at June 30, 2020 Carrying amount at June 30, 2020 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Acquired Software Licences Hardware IP Brand Name Distributor Relationships Distributor Contracts Customer Relationships Internally Developed Software Total US$'000 US$'000 US$'000 US$'000 $US$'000 US$'000 US$'000 US$'000 762 6,795 3,773 32 1,056 (14) (89) - (4) 780 7,762 3,769 298 - (6) 292 67 - (1) 66 15,002 25,458 52,155 - 4,831 5,919 (7) (189) (310) 14,995 30,100 57,764 (378) (2,377) (117) (1,438) 4 9 (491) (3,806) - - - - (149) (67) (6,202) (14,351) (23,524) (28) 2 - 1 (2,130) (6,981) (10,694) 2 47 65 (175) (66) (8,330) (21,285) (34,153) 289 3,956 3,769 117 - 6,665 8,815 23,611 In addition, other operating research costs of US$20,472 (2020: US$42,575) were recognised as other expenses. C A T A P U L TS P O R T S . C O M 78 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 15. NON-CURRENT ASSETS - DEFERRED TAX ASSETS Deferred taxes arising from temporary differences and unused tax losses can be summarised as attributable to the following: Deferred Tax Liabilities/(Assets) Deferred Tax Assets Provision for annual leave Provision for long service leave Other employee obligations Professional fees and doubtful debts Other provisions Change in tax interpretation (i) Tax losses Section 40-880 expenditure Adoption of AASB 16 July 1, 2020 $'000 167 29 235 254 188 - 6,019 288 49 7,229 Recognised directly in equity Recognised in Profit & Loss March 31, 2021 $'000 $'000 $'000 - - - - - - - - - - 102 25 22 113 322 1,192 (1,341) (150) (11) 274 269 54 257 367 510 1,192 4,678 138 38 7,503 Deferred Tax Liabilities Other intangible assets Capitalised R&D Deferred Tax Movement (2,889) (179) (3,068) - - - - - (131) 51 (80) 194 (3,020) (128) (3,148) - (i) IFRIC 23 requires that the company assess the ongoing appropriateness of its tax treatments given changes in interpretation of tax law. C A T A P U L TS P O R T S . C O M 79 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Deferred Tax Liabilities/(Assets) Deferred Tax Assets Provision for annual leave Provision for long service leave Other employee obligations Professional fees and doubtful debts Other provisions Tax losses Section 40-880 Expenditure Adoption of AASB 16 Deferred Tax Liabilities Other intangible assets Capitalised R&D Foreign exchange Deferred Tax Movement July 1, 2019 $'000 Recognised directly in equity $'000 Recognised in Profit & Loss June 30, 2020 $'000 $'000 177 21 258 152 (9) 6,080 638 - 7,317 (2,952) (872) (9) (3,833) - - - - - - - - - - - - - - (10) 8 (23) 102 197 (61) (350) 49 (88) 63 693 9 765 167 29 235 254 188 6,019 288 49 7,229 (2,889) (179) - (3,068) - 677 - NOTE 16. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES Trade and other payables consist of the following: Current Trade payables and other payables 2021 2020 US$'000 US$'000 6,898 4,770 All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable approximation of fair value. C A T A P U L TS P O R T S . C O M 80 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 17. CURRENT LIABILITIES - CONTRACT LIABILITIES AND OTHER LIABILITIES Contract liabilities and other liabilities consist of the following: Contract liabilities - current Advances received for future service work Other liabilities Other liabilities - current Contract liabilities Contract liabilities – non-current 2021 2020 US$'000 US$'000 17,822 21,891 2021 2020 US$'000 US$'000 331 981 1,312 3,091 3,091 273 1,051 1,324 1,671 1,671 All amounts recognised relating to contract liabilities 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 $17,821,568 (FY20: $21,891,390) of contract liabilities during the next 12 months following March 31, 2021, with the balance falling into FY22 and FY23. NOTE 18. FINANCIAL ASSETS AND LIABILITIES 18.1 Categories of financial assets and liabilities Note 4.13 provides a description of each category of financial assets and financial liabilities and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows: Notes Loans and receivables (carried at amortised cost) Other assets (carried at amortised cost) Total March 31, 2021 US$'000 US$'000 US$'000 Financial assets Other long-term financial assets Trade and other receivables Cash and cash equivalents 10 10 9 306 10,285 - 10,591 - - 22,171 22,171 306 10,285 22,171 32,762 C A T A P U L TS P O R T S . C O M 81 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S March 31, 2021 Financial liabilities Trade and other payables Borrowings Other financial liabilities Non-current other financial liabilities Other Liabilities (carried at amortised cost) Other Liabilities at FVTPL Total Notes US$'000 US$'000 US$'000 16 18.2 18.2 18.2 6,898 1,738 1,907 2,609 13,152 Loans and receivables (carried at amortised cost) - - - - - 6,898 1,738 1,907 2,609 13,152 Other assets Total (carried at amortised cost) June 30, 2020 Financial Assets Notes US$'000 US$'000 US$'000 Other long-term financial assets Trade and other receivables Cash and cash equivalents 10 10 9 - - 18,888 18,888 336 20,162 - 20,498 Other Liabilities (carried at amortised cost) Other Liabilities at FVTPL 336 20,162 18,888 39,386 Total June 30, 2020 Financial Liabilities Trade and other payables Borrowings Other financial liabilities Non-current other financial liabilities Notes US$'000 US$'000 US$'000 16 18.2 18.2 18.2 4,770 5,102 1,368 2,489 13,729 - - - - - 4,770 5,102 1,368 2,489 13,729 C A T A P U L TS P O R T S . C O M 82 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 18.2 Borrowings & other financial liabilities Borrowings include the following financial liabilities: Financial Liabilities Borrowings and other financial liabilities Finance loans 2021 Current 2020 Non-Current 2021 2020 US$'000 US$'000 US$'000 US$'000 3,494 151 3,645 6,382 88 6,470 2,609 - 2,609 2,489 - 2,489 Borrowings and other financial liabilities at amortised cost Bank borrowings are secured by all property of XOS Technologies Inc. and Collegiate Images LLC, while finance loans are secured against the computer equipment purchased. The Group's US Subsidiary, XOS Technologies Inc, entered into a secured loan facility with Western Alliance Bank in April 2017. At March 31, 2021, the total facility is for USD $6.0 million. Of this amount, US$ Nil was drawn down at March 31, 2021. Current interest rates on the bank borrowing are variable and average 5.00% (2020: 5.00%) while the finance loans are fixed at 5.50%. The carrying amount of the other bank borrowings and finance loans are considered to be a reasonable approximation of the fair value. NOTE 19. CURRENT LIABILITIES - EMPLOYEE REMUNERATION 19.1 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 benefit expenses 19.2 Share-base employee remuneration 2021 2020 US$'000 US$'000 22,927 1,962 1,900 944 27,733 25,463 2,206 1,408 1,177 30,254 Catapult has continued to utilise its established 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. C A T A P U L TS P O R T S . C O M 83 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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. The key terms of the Employee Plan are set out below: Eligibility Eligibility to participate in the Employee Plan and the number of Options, Performance Rights or other Awards offered to each individual participant, will be determined by the Board. Grants Under the rules of the Employee Plan, Options, Performance Rights and/or other Awards may be offered or granted to eligible employees of Catapult or any related body corporate of Catapult from time to time, subject to the discretion of the Board. Terms and conditions The Board has the discretion to set the terms and conditions (including conditions in relation to vesting, disposal restrictions or forfeiture and any applicable exercise price) on which it will offer or grant Options, Performance Rights or other Awards under the Employee Plan and may set different terms and conditions which apply to different participants in the Employee Plan. The Board will determine the procedure for offering or granting Options, Performance Rights and/or other Awards (including the form, terms and content of any offer, invitation or acceptance procedure) in accordance with the rules of the Employee Plan. Options and Performance Rights and other Awards will vest and become exercisable to the extent that the applicable performance, service, or other vesting conditions specified at the time of the grant are satisfied (collectively the “Vesting Conditions”). Vesting Conditions are more fully described in the Remuneration Report contained in the Director’s Report above. Shares issued (including shares issued upon exercise of Options or Performance Rights granted) under the Employee Plan will rank equally in all respects with the other issued shares. Subject to satisfaction of Vesting Conditions, a participant may exercise an Option, Performance Right or other Award by lodging an exercise notice with Catapult and complying with any requirements under the Employee Plan. A participant will have a vested and indefeasible entitlement to any dividends declared and distributed by Catapult on any shares which, at the books closing date for determining entitlement to those dividends, are standing to the account of the participant. A participant may exercise any voting rights attaching to shares registered in the participant’s name. Catapult may, in its discretion, issue new shares or cause existing shares to be acquired or transferred to the participant, or a combination of both alternatives, to satisfy Catapult’s obligations under the Employee Plan. If Catapult determines to cause the transfer of Shares to a participant, the shares may be acquired in such manner as Catapult considers appropriate, including from a trustee appointed under the Employee Plan. Pursuant to the Employee Plan, Catapult has appointed the Employee Plan Trustee to acquire and hold Shares on behalf of participants and for the purposes of the Employee Plan. Catapult may give directions to the Employee Plan Trustee as contemplated in the trust deed or if in connection with any Award. During FY21, Catapult subscribed for 9,432,117 shares to the Catapult Employee Share Plan Trust. At March 31, 2021 the Employee Plan Trustee holds 7,979,640 (2020:659,296) shares on behalf of participants and for the purposes of the Employee Plan. Options, Performance Rights and other Awards which have not been exercised will be forfeited if the applicable Vesting Conditions and any other conditions to exercise are not met during the prescribed vesting period or if they are not exercised before the applicable expiry date. In addition, Options, Performance Rights and other Awards will C A T A P U L TS P O R T S . C O M 84 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S lapse if the participant deals with the Options, Performance Rights or other Awards in breach of the rules of the Employee Plan or in the opinion of the Directors, a participant has acted fraudulently or with gross misconduct. Options, Performance Rights and other Awards will not be quoted on the ASX. Catapult will apply for official quotation of any Shares allotted under the Employee Plan, unless the Board resolves otherwise. The Board may in its absolute discretion determine that a participant is required to pay an exercise price to exercise the Options, Performance Rights or other Awards offered or granted to that participant. Grants of Options, Performance Rights or other Awards under the Employee Plan to a Director may be subject to the approval of Shareholders, to the extent required under the ASX Listing Rules. Participants in the Employee Plan must not enter into transactions or arrangements, including by way of derivatives or similar financial products, which limit the economic risk of holding unvested Awards. Subject to the rules of the Employee Plan, the Board must not offer Options, Performance Rights or other Awards if the total of the following exceeds 5% of the number of Shares on issue at the time of the offer: • the number of Shares which are the subject of the offer of Awards; • the number of Shares which are the subject of any outstanding offers of Awards; • the number of Shares issued during the previous 5 years under the Employee Plan, but not including existing Shares transferred to a participant after having been acquired for that purpose; and • the number of Shares which would be issued under all outstanding Awards that have been granted but which have not yet been exercised, terminated or expired, assuming all such Awards were exercised ignoring any Vesting Conditions, but disregarding any offer made, or Award offered or issued or Share issued by way or as a result of: − an offer that does not meet disclosure to investors because of section 708 or section 1012D of the Corporations Act; − an offer made pursuant to a disclosure document or product disclosure statement; or − other offers that are excluded from the disclosure requirements under the Corporations Act. The Board may impose restrictions on dealing in Shares or Awards which are acquired under the Employee Plan, for example, by prohibiting them from being sold, transferred, mortgaged, pledged, charged or otherwise disposed of or encumbered for a period of time. If the Board determines that for taxation, legal, regulatory or compliance reasons it is not appropriate to issue or transfer Shares, Catapult may in lieu of and in final satisfaction of Catapult’s obligation to issue or transfer Shares as required upon the exercise of an Award by a participant, make a cash payment to the participant equivalent to the fair market value of the Awards. Where there is a change of control of Catapult, including where any person acquires a relevant interest in more than 50% of the Shares, or where the Board concludes that there has been a change in the control of Catapult, the Board will determine, in its sole and absolute discretion, the manner in which all unvested and vested Awards will be dealt with. Where there is a takeover bid made for all of the Shares or a scheme of arrangement, selective capital reduction or other transaction is initiated which has a similar effect to a full takeover bid for Shares, then participants are entitled to accept into the takeover offer or participate in the other transaction in respect of all or part of their Awards notwithstanding any restriction period has not expired. Further, the Board may in its discretion waive unsatisfied Vesting Conditions in relation to some or all Awards in the event of such a takeover or other transaction. C A T A P U L TS P O R T S . C O M 85 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S If, prior to the exercise of an Award, Catapult makes a pro-rata bonus issue to Shareholders, and the Award is not exercised prior to the record date in respect of the bonus issue, the Award will, when exercised, entitle the participant to one Share plus the number of bonus shares which would have been issued to the participant if the Award had been exercised prior to the record date. If Catapult undergoes a capital reorganisation, then the terms of the Awards for the participant will be changed to the extent necessary to comply with the ASX Listing Rules. The Employee Plan also contains terms having regard to Australian law for dealing with the administration, variation and termination of the Employee Plan. Share options and weighted average exercise prices are as follows for the reporting periods presented: Options Program Performance Rights Weighted average exercise price (A$) Weighted average exercise price (A$) Number of Shares Number of Shares Outstanding at July 1, 2020 8,608,061 1.5054 3,112,305 Granted Forfeited Exercised Expired 4,274,869 1.3000 1,442,304 (3,187,314) 1.3664 (490,786) (584,800) (440,733) 1.7205 (1,526,973) 2.1855 - Outstanding at March 31, 2021 8,670,083 1.4062 2,536,850 Exercisable at March 31, 2021 1,889,258 1.7230 372,815 - - - - - - - C A T A P U L TS P O R T S . C O M 86 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Options Program Performance Rights Weighted average exercise price (A$) Weighted average exercise price ($) Number of Shares 1.7583 405,116 1.2291 3,495,006 1.8235 (477,860) 0.6391 (309,957) 3.5781 1.5054 1.7894 - 3,112,305 154,412 - - - - - - - Number of Shares 8,714,371 4,801,639 (3,206,949) (1,381,000) (320,000) 8,608,061 2,441,291 Outstanding at July 1, 2019 Granted Forfeited Exercised Expired/lapsed Outstanding at June 30, 2020 Exercisable at June 30, 2020 19.3 Employee benefits The liabilities recognised for employee benefits consist of the following amounts: Current Wages and salaries Social security costs & payroll taxes Defined contribution plans Accrued leave entitlements Total current employee benefits Non-current Accrued leave entitlements Total current employee benefits 2021 2020 US$'000 US$'000 3,561 629 675 1,446 6,311 3,486 549 244 1,020 5,299 82 82 41 41 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. C A T A P U L TS P O R T S . C O M 87 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 20. EQUITY - 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 for: 200,431,654 190,895,116 130,452 127,981 March 31, 2021 June 30, 2020 March 31, 2021 June 30, 2020 Notes Shares Shares US$'000 US$'000 Beginning of the period / year Shares issued to the Catapult Employee Share Plan Trust Shares issued for cash Exercise of performance options and equity options Total contributed equity at Treasury Shares 20. (a) 190,895,116 190,895,116 127,981 126,810 9,432,117 104,421 - - - - 200,431,654 190,895,116 (7,979,640) (659,296) - 143 2,328 130,452 - - - 1,171 127,981 - Total contributed equity 192,452,014 190,235,820 130,452 127,981 During the financial period the Group awarded: • 243,396 performance rights as part of the Employee Share Plan. The rights were issued at an average price of AUD$0.00 and a fair value of A$1.42 (US $0.99). • 1,198,908 performance rights as part of the Employee Share Plan. The rights were issued at an average price of AUD$0.00 and a fair value of A$1.90 (US $1.38). • 4,274,869 options as part of the Employee Share Plan. The options were issued at an average exercise price of AUD$1.30 and a fair value of A$0.75 (US $0.55). During the 9-month period ended March 31, 2021, the Group issued 104,421 shares as settlement of service rights awarded. Shares were issued at an average price of A$1.95 per share. The amount raised was A$203,984 (US$143,439). 20(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: Balance at July 1 Transactions during the period/year Balance at period/year end 2021 Shares 2020 Shares 659,296 2,350,253 7,320,344 (1,690,957) 7,979,640 659,296 C A T A P U L TS P O R T S . C O M 88 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S During the financial period a number of shares were issued under the Employee Share Plan: • On October 21, 2020, the Group issued 1,432,117 ordinary shares to the Catapult Employee Share Plan Trust. • On November 17, 2020, the Group issued 8,000,000 ordinary shares to the Catapult Employee Share Plan Trust. • The number of shares exercised under the option plan was 25,000 at an average exercise price of A$1.72. The amount raised was A$43,000 (US $31,362). • The number of shares exercised under the option plan was 300,000 at an average exercise price of A$1.55. The amount raised was A$465,000 (US $327,557). • The number of shares exercised under the option plan was 144,800 at an average exercise price of A$2.08. The amount raised was A$301,184 (US $221,313). • The number of shares exercised under the option plan was 25,000 at an average exercise price of A$1.83. The amount raised was A$45,750 (US $35,383). • The number of shares exercised under the option plan was 90,000 at an average exercise price of A$1.68. The amount raised was A$151,201 (US $114,947). • The number of shares exercised under the performance rights/service rights plan was 1,526,973 at an average exercise price of A$0.00. The amount raised was A$0.00 (US $0.00). 20. (b) Options and performance rights on issue The following sets out the weighted average exercise price calculations for all outstanding options (however, excluding the effect of the performance rights as detailed at Note 20.2): Weighted average exercise price Outstanding at the beginning of the period 1.5054 Outstanding at the end of the period 1.4062 Exercisable at the end of the period 1.7230 NOTE 21. CURRENT LIABILITIES - LEASES 21.1 Lease liabilities The Group has certain computer equipment held under lease arrangements. As of March 31, 2021, the net carrying amount of the computer equipment held under lease arrangements (included as part of Office Equipment) is US$95,526 (2020: US$58,371). The Group’s lease liabilities, which are secured by the related assets held under leases, are classified as follows: Lease liabilities - AASB 16 lease liabilities (current) - AASB 16 lease liabilities (non-current) - lease liabilities (current) 2021 2020 US$'000 US$'000 1,907 2,609 151 1,368 2,489 88 C A T A P U L TS P O R T S . C O M 89 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Future minimum lease payments at the end of each reporting period under review were as follows: Minimum lease payments due March 31, 2021 Lease payments Finance charges Net present values June 30, 2020 Lease payments Finance charges Net present values Within 1 year 1-5 years After 5 years Total US$'000 US$'000 US$'000 US$'000 2,203 (145) 2,058 2,581 (91) 2,490 136 (17) 119 4,920 (253) 4,667 1,589 (134) 1,455 2,510 (134) 2,376 133 (19) 114 4,232 (287) 3,945 Lease payments not recognised as a liability The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease payments are not permitted to be recognised as lease liabilities and are expensed as incurred. The expense relating to payments not included in the measurement of a lease liability is as follows: Short-term leases: 21.2 Leases as lessor US$’000 70 The Group leases out wearable athlete tracking units and laptops on a subscription basis to its clients. The future minimum revenues are as follows: Minimum lease payments due March 31, 2021 June 30, 2020 Within 1 year 1-5 years After 5 years Total US$'000 US$'000 US$'000 US$'000 17,875 17,336 14,489 15,076 - - 32,364 32,412 Lease revenues during the period amounted to US$19,666,557 (2020: US$22,613,398) representing the minimum subscription payments for these lease units. Subscription agreements are in place with a number of clients across a broad range of expiry dates, based on the commencement of this kind of arrangement in 2012 and contracts typically of 36 months with standard wording incorporating rolling renewals of these agreements upon expiry of the initial term. The athlete tracking units and C A T A P U L TS P O R T S . C O M 90 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S their associated equipment are included as The Group’s Rental and Demo Units and are depreciated over their useful life of 4 years (see Note 12). NOTE 22. FINANCE COSTS AND FINANCE INCOME Finance costs for the reporting periods consist of the following: Interest expenses for borrowings and other financial liabilities at amortised cost: Interest expense (256) (328) 2021 2020 US$'000 US$'000 Finance income for the reporting periods consists of the following: Interest income from cash and cash equivalents 27 45 2021 2020 US$'000 US$'000 NOTE 23. OTHER FINANCIAL ITEMS Other financial items consist of the following: Other financial items consist of the following: Gain/(loss) on exchange differences on payables and receivables (389) 262 2021 2020 US$'000 US$'000 C A T A P U L TS P O R T S . C O M 91 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 24. CURRENT LIABILITIES - INCOME TAX The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of Catapult Group International Ltd at 30% (2020: 30%) are: Numerical reconciliation of income tax benefit and tax at the statutory rate Loss before income tax (expense)/benefit Prima facie tax payable at Australia tax rate of 30% Overseas tax rate differential Tax losses not recognised Current year tax charge for the Australian tax group Prior year tax losses utilised in the current period Adjustments for prior periods Other non-deductible expenses Actual tax (benefit)/expense Adjustments for prior periods Current tax Deferred tax 2021 2020 2021 2020 US$'000 US$'000 US$'000 US$'000 (8,628) (5,551) (8,628) (5,551) (2,541) (1,665) (2,588) (1,665) 173 1,237 2,108 (2,241) 157 1,367 213 152 2,171 (2,110) 213 (321) 329 - (891) 134 2,025 (389) 134 261 (784) (389) Income tax (benefit)/expense (2,541) (1,665) Accounting policy for income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled, and it is probable that the temporary difference will not reverse in the foreseeable future. C A T A P U L TS P O R T S . C O M 92 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. NOTE 25. AUDITOR’S REMUNERATION Assurance Services Audit and review of the Financial Statements Overseas Grant Thornton Network firms: 2021 US$ 2020 US$ 150,109 26,596 176,705 156,159 15,783 171,942 Other services Taxation compliance and general accounting advice 79,862 18,809 Overseas Grant Thornton Network firms Taxation compliance and general accounting advice Other review services Total auditor’s remuneration - 15,993 2,887 98,742 - - 5,634 24,443 275,447 196,385 C A T A P U L TS P O R T S . C O M 93 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 26. EARNINGS PER SHARE 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 2019 or 2020). 12,609,704 options and performance rights have not been included in calculating diluted EPS because their effect is anti-dilutive. The reconciliation of the weighted average number of shares for the purpose of diluted earnings per share to the weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 26.1 Basic and diluted loss per share Basic loss and diluted loss per share attributable to the ordinary equity holders of the Company 26.2 Reconciliation of loss used in calculating loss per share 2021 2020 (US Cents) (US Cents) (4.6) (2.7) 2021 US$’000 2020 US$’000 Basic and diluted loss per share Loss attributable to the ordinary equity holders of the company used in calculating loss per share: From continuing operations (8,841) (5,162) 26.3 Weighted average number of shares used as the denominator Weighted average number of shares used in basic and diluted earnings per share 192,037 189,757 2021 2020 Shares ‘000 Shares ‘000 C A T A P U L TS P O R T S . C O M 94 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 27. EQUITY - DIVIDENDS Nil paid in the period. 27.1 Dividends paid and proposed Nil. 27.2 Franking credits 2021 2020 US$'000 US$'000 The amount of the franking credits available for subsequent reporting periods are: Balance of franking account at the beginning of the period/year (2,636) (2,636) Impact of foreign exchange rates 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 period/year (284) (2,920) (2,636) During the 9-month period ended March 31, 2021, the Group made no payments related to income tax, refunds or dividends paid that would have an impact to the franking credits. C A T A P U L TS P O R T S . C O M 95 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 28. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FROM/(USED IN) OPERATING ACTIVITIES Loss after income tax (expense)/benefit for the year Adjustments for: Depreciation and amortisation Share-based payments Foreign exchange differences Net interest and dividends received included in investing and financing Impairment losses on obsolete stock, receivables and other items Gain on deferred consideration Change in operating assets and liabilities: Decrease in trade and other receivables & contract assets Increase in inventories Decrease/(increase) in non-current tax assets Decrease in trade and other payables Increase in provision for income tax Decrease in deferred tax liabilities Increase in employee benefits Increase in other provisions Net cash from/(used in) operating activities 2021 US$'000 (8,841) 2020 US$'000 (5,162) 10,218 1,900 (363) 236 37 - 9,600 1,139 (274) 2,128 (48) 80 1,053 (2,613) 14,252 14,405 1,408 210 277 1,842 (214) 3,569 (836) (69) (1,294) 41 (683) 126 1,666 15,286 C A T A P U L TS P O R T S . C O M 96 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 29. RELATED PARTY TRANSACTIONS The Group’s related parties include its associates and joint venture, key management, post-employment benefit plans for the Group’s employees and others as described below. Transactions with key management 2021 US$ - 2020 US$ 2,099 Calvin Ng is a director of Aura Group Pty Ltd (a subsidiary of Aura Group Services Ltd). During the year Catapult rented office space from Aura Group Services Ltd in Singapore for a total cost of US$Nil (2020: US$2,099) and had no amount payable as at March 31, 2021 (2020: US$Nil). 29.1 Transactions with key management personnel Key management of the Group are the executive members of Catapult Group International’s Board of Directors and certain members of Catapult’s executive team. 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. 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 NOTE 30. FINANCIAL INSTRUMENT RISK 30.1 Risk management objectives an polices 2021 US$ 2020 US$ 1,584,874 2,024,721 43,959 80,563 1,628,833 2,105,284 285 285 (786) (786) 773,600 311,612 2,402,718 2,416,110 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 18.1. 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. C A T A P U L TS P O R T S . C O M 97 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 30.2 Market risk analysis The Group is exposed to currency risk resulting 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 Australian dollars (AUD), Pound Sterling (GBP), Euro (EUR), Japanese Yen (JPY). Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those translated into US$ at the closing rate: AUD GBP EUR JPY CNY Other currencies US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Short term exposure March 31, 2021 Financial assets Financial liabilities Total exposure Long term exposure March 31, 2021 Financial assets Financial liabilities Total exposure 1,340 871 1,261 (2,273) (933) (325) 546 (496) 765 9 (2) 7 120 (56) 64 20 - 20 AUD GBP EUR JPY AED Other currencies US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 - - - - - - - - - - - - - - - - - - C A T A P U L TS P O R T S . C O M 98 2 0 2 1 A N N U A L R E P O R T 14.0 Short term exposure June 30, 2020 Financial assets Financial liabilities Total exposure Long term exposure June 30, 2020 Financial assets Financial liabilities Total exposure N O T E S T O T H E F I N A N C I A L S T A T E M E N T S AUD GBP EUR JPY CNY Other currencies US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 907 976 1,786 - 89 (1,176) (269) (125) 851 (395) 1,391 (2) (2) (38) 51 AUD GBP EUR JPY AED 2 - 2 Other currencies US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 - - - - - - - - - - - - - - - - - - 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 period ended at March 31, 2021 (2020:10%). 30.3 Market risk analysis Foreign currency sensitivity If the USD had strengthened by 10% against the respective currencies then this would have had the following impact: Foreign currency risk AUD GBP EUR JPY Other currencies Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 March 31, 2021 June 30, 2020 (1) (41) (163) (168) (597) (299) (16) (18) (127) (77) (904) (603) C A T A P U L TS P O R T S . C O M 99 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S If the USD had weakened by 10% against the respective currencies, then this would have had the following impact: AUD GBP EUR JPY Other currencies Total March 31, 2021 June 30, 2020 US$'000 1 50 US$'000 200 205 US$'000 730 366 US$'000 20 22 US$'000 US$'000 1,106 737 155 94 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. 30.4 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 the financial assets recognised at the reporting date, as summarised below: Classes of financial assets − cash and cash equivalents − trade receivables − other long term financial assets 2021 2020 US$'000 US$'000 22,171 10,285 306 32,762 18,888 20,162 336 39,386 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 March 31 reporting dates under review are of good credit quality. At March 31, 2021, 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 March 31, 2021 analysed by the length of time past due, are: Not more than (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 2021 2020 US$'000 US$,000 7,058 454 1,029 848 9,389 17,515 889 777 437 19,618 In respect of trade 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 C A T A P U L TS P O R T S . C O M 100 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 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. 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. The Group's US Subsidiary, XOS Technologies Inc, entered into a secured loan facility with Western Alliance Bank in April 2017. At March 31, 2021, the total facility is for US$6.0 million. Of this amount, US$ Nil million (2020: US$ $5.0 million) was drawn down at March 31, 2021. As at March 31, 2021, the Group's non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below: March 31, 2021 US-Dollar loans Other financial liabilities Trade and other payables Within Current Non-current 6 months 6 - 12 months 1-5 years 5+ years US$'000 US$'000 US$'000 US$'000 1,738 845 6,898 9,481 - 982 - 982 - 2,556 - 2,556 - 133 - 133 This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows: June 30, 2020 US-Dollar loans Other financial liabilities Trade and other payables Within Current Non-current 6 months 6 - 12 months 1-5 years 5+ years US$'000 US$'000 US$'000 US$'000 5,102 692 4,770 10,564 - 676 - 676 - 2,376 - 2,376 - 113 - 113 NOTE 31. CAPITAL MANAGEMENT POLICIES AND PROCEDURES The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Consistent with others in the industry, the Group monitors capital on the basis of its gearing ratio. In order to maintain or adjust its capital structure, the Group considers its issue of new capital, return of capital to shareholders and dividend policy as well as its plan for acquisition or disposal of assets. The Group was fully compliant with all bank facility covenants during the financial year. C A T A P U L TS P O R T S . C O M 101 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 32. CONTINGENT LIABILITIES There were no contingent liabilities as at March 31, 2021. NOTE 33. PARENT ENTITY INFORMATION Information relating to Catapult Group International Ltd (‘the Parent Entity’): Statement of financial position Current assets Total assets Current liabilities Total liabilities Net assets Issued capital Foreign currency reserve Retained earnings Share option reserve Total equity Statement of profit and loss and other comprehensive income Loss for the year Other comprehensive income/(loss) Total comprehensive income/(loss) 2021 2020 US$'000 US$'000 2,415 1,707 116,489 106,839 787 1,608 114,881 130,452 (4,381) (16,251) 5,061 384 1,125 105,714 127,981 (14,762) (12,413) 4,908 114,881 105,714 (3,838) 10,381 6,543 (844) (1,814) (2,688) The Parent Entity has no capital commitments at the period end (2020: $Nil). The parent entity entered into the following guarantee on the June 26, 2017: A Deed of Cross Guarantee with the effect that the Group guarantees debts in respect of one of its subsidiaries. Further details to the Deed Cross Guarantee and the subsidiaries subject to the deed, are disclosed in Note 34. C A T A P U L TS P O R T S . C O M 102 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 34. DEED OF CROSS GUARANTEE A consolidation income statement and consolidation balance sheet comprising the Company and controlled entity which are a party to the Deed of Gross Guarantee (members of the “Closed Group”), after eliminating all transactions between parties to the Deed of Gross Guarantee are as follows. Summarised income statement and statement of comprehensive income and accumulated losses Profit/(Loss) before income tax expense Income tax benefit/(expense) Profit after income tax Accumulated losses at the beginning of the financial year Accumulated losses at the end of the financial year Statement of Financial position Current assets Cash and equivalents Trade and other receivables Inventories Other current assets Total current assets Non-current assets Property, plant and equipment Intangible assets Investments Deferred tax assets Other non-current assets Total non current assets Total assets Closed Group 2021 2020 US$'000 US$'000 (4,390) 28 (4,362) (30,159) (34,521) (4,534) 741 (3,793) (26,366) (30,159) 9,006 13,152 2,045 1,651 25,854 4,466 9,113 71,030 2,825 11 87,445 113,299 4,621 10,185 2,358 1,233 18,397 4,399 7,273 9,336 2,551 61,469 85,028 103,425 C A T A P U L TS P O R T S . C O M 103 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Current liabilities Trade and other payables Employee benefits Other current liabilities Total current liabilities Non-current liabilities Employee benefits Other non-current liabilities Total non-current liabilities Total Liabilities Net assets Shareholders' equity Issued capital Share option reserve Foreign currency reserve Accumulated losses Total Shareholders’ equity 2,680 2,185 7,630 12,495 82 2,961 3,043 15,538 97,763 1,350 2,279 5,732 9,361 41 2,314 2,355 11,716 91,709 130,452 5,061 (3,229) (34,521) 97,763 127,981 4,908 (11,021) (30,159) 91,709 THE MEMBERS OF THE CLOSED GROUP COMPRISE CATAPULT GROUP INTERNATIONAL LIMITED AND CATAPULT SPORTS PTY LTD. (i) Catapult Group International Limited (the Company) and Catapult Sports Pty Ltd are party to a Deed of Cross Guarantee dated June 26, 2017. Catapult International Pty Ltd joined the Deed of Cross Guarantee via a Deed of Assumption dated March 29, 2021. The Company, Catapult Sports Pty Ltd and Catapult International Pty Ltd together constitute the ‘Closed Group’. The effect of the deed is that the Company has guaranteed to each creditor to pay any deficiency in the event of the winding up of any of the controlled entities in the Closed Group. All entities in the Closed Group have also given a similar guarantee in the event that the Company is wound up. Prior year comparatives have been restated to include: (ii) Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785 Order 98/1418 (as amended) relief has been granted to Catapult Sports Pty Ltd and Catapult International Pty Ltd from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and directors' reports. (iii) These entities have provided guarantees to Western Alliance Bank in respect of credit facilities of USD 5,000,000 granted to XOS Technologies Inc and Collegiate Images LLC. C A T A P U L TS P O R T S . C O M 104 2 0 2 1 A N N U A L R E P O R T 14.0 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S NOTE 35. ACQUISITION OF SCIENCE FOR SPORT (SFS) On November 9, 2020, Catapult acquired the subscription online sport learning platform, Science for Sport Limited (SfS). Catapult has agreed to acquire 75.45% of the entire issued share capital of the company now for a total consideration of US$450,000. There is also a Put and Call Option whereby Catapult has the option to acquire the remaining 24.55% of the issued share capital of SfS for US$300,000 in two years’ time. NOTE 36. EVENTS AFTER THE REPORTING PERIOD Other than those events described on page 28 of the Directors’ Report, no matter or circumstance has arisen since 31 March 2021 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years. C A T A P U L TS P O R T S . C O M 105 2 0 2 1 A N N U A L R E P O R T 15.0 D I R E C T O R S ’ D E C L A R A T I O N In the opinion of the Directors of Catapult Group International Ltd: ➔ the attached financial statements and notes set out on pages 49 to 105 are in accordance with the Corporations Act 2001, including: − − complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and giving a true and fair view of the consolidated entity’s financial position as at March 31, 2021 and of its performance for the financial period ended on that date; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 34 to the financial statements. ➔ ➔ The effect of the first bullet is that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and the Chief Financial Officer for the 9-month period ended March 31, 2021. Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001. Dr Adir Shiffman Executive Chairman May 26, 2021 C A T A P U L TS P O R T S . C O M 106 2 0 2 1 A N N U A L R E P O R T 16.0 A U D I T O R ’ S R E P O R T C A T A P U L TS P O R T S . C O M 107 2 0 2 1 A N N U A L R E P O R T 16.0 A U D I T O R ’ S R E P O R T C A T A P U L TS P O R T S . C O M 108 2 0 2 1 A N N U A L R E P O R T 16.0 A U D I T O R ’ S R E P O R T C A T A P U L TS P O R T S . C O M 109 2 0 2 1 A N N U A L R E P O R T 17.0 S H A R E H O L D I N G S (AS AT MAY 12, 2021) Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. 1. CORPORATE GOVERNANCE STATEMENT Catapult’s corporate governance statement for the period ended 2021 will be available at the following URL: www.catapultsports.com/investor/corporate-governance/ 2. SUBSTANTIAL SHAREHOLDERS As at May 12, 2021, there are six substantial shareholders of which the Group is aware: Substantial holder Charlaja Pty Ltd; Charlaja Pty Ltd < Van De Griendt Family A/C >; Igor Van De Griendt Manton Robin Pty Ltd; Manton Robin Pty Ltd Date of last notice Number of securities in last notice % Sep 7, 2020 20,508,000 10.74 < Shaun Holthouse Family A/C >; Shaun Holthouse Sep 7, 2020 17,675,000 Quest Asset Partners Pty Ltd ICE Investors Pty Ltd Mar 27, 2020 15,400,811 Apr 6, 2021 13,573,002 One Managed Investment Funds Limited Apr 24, 2021 11,083,762 BNP Paribas Nominees Pty Limited Oct 5, 2020 10,106,193 9.26 8.07 6.77 5.53 5.29 The above table sets out the number and percentage of securities held by substantial shareholders in the Company as disclosed in their last substantial shareholder’s notice. Note that those shareholders may have acquired or disposed of securities in the Company since the date of that notice. A substantial shareholder is only required to disclose acquisitions or disposals where there has been a movement of at least 1% in their shareholding. 3. NUMBER OF HOLDERS OF EACH CLASS OF EQUITY SECURITY Equity security class Ordinary shares Employee options and performance rights Number of holders 10,353 222 4. 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 a 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. Option and performance rights holders do not have voting rights. C A T A P U L TS P O R T S . C O M 110 2 0 2 1 A N N U A L R E P O R T 17.0 S H A R E H O L D I N G S 5. DISTRIBUTION SCHEDULE IN EACH CLASS OF EQUITY SECURITIES Ordinary Shares Range (size of holding) 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-9,999,999,999 Employee options and performance rights Range (size of holding) 1-5,000 5,001-10,000 10,001-100,000 100,001-9,999,999,999 Total Holders 4,186 4,293 1,037 Number of Shares 2,328,450 11,161,855 7,868,348 786 18,778,384 % 1.16 5.57 3.93 9.37 51 160,294,617 79.97 10,353 200,431,654 100.00 Total Holders 85 34 87 16 Number of Units 252,843 253,889 2,512,838 % 2.13 2.13 21.11 8,884,461 74.63 222 11,904,031 100.00 6. UNMARKETABLE PARCELS Number of holders holding less than a marketable parcel of the Group’s main class of securities (in this case, fully paid ordinary shares) based on the closing market price on May 12, 2021 of $1.97. Minimum $500 parcel (at May 12, 2021 closing price of $1.97 per share) Number of holders 561 C A T A P U L TS P O R T S . C O M 111 2 0 2 1 A N N U A L R E P O R T 17.0 S H A R E H O L D I N G S 7. 20 LARGEST SHAREHOLDERS (as at 12 May 2021) The 20 largest holders of ordinary shares and number of ordinary shares and percentage of capital held by each are follows: Rank Substantial holder Shares Held % held 1 2 3 4 5 6 7 8 9 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CHARLAJA PTY LTD MANTON ROBIN PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED BNP PARIBAS NOMINEES PTY LTD ONE MANAGED INVESTMENT FUNDS CERTANE CT PTY LTD NATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED 10 BNP PARIBAS NOMS PTY LTD B B H F PTY LTD SANDHURST TRUSTEES LTD 3RD WAVE INVESTORS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 LEHAMLET PTY LTD SUPER PROPERTIES PTY LTD RADICAL INVESTMENTS LP MR MARK CUBAN 20 BNP PARIBAS NOMINEES PTY LTD 11 12 13 14 15 16 17 18 19 34,700,033 17.313 20,490,000 10.223 17,675,000 8.818 14,265,924 12,374,554 7.118 6.174 11,083,762 5.530 7,979,640 3.981 6,773,647 3.380 6,042,986 5,857,670 5,609,000 3.015 2.923 2.798 1,258,105 0.628 1,012,415 0.505 828,729 0.413 781,244 0.390 769,231 0.384 763,800 727,272 652,684 0.381 0.363 0.326 150,617,249 75.148 ROBERTS PIKE FOUNDATION PTY LTD 971,553 0.485 C A T A P U L TS P O R T S . C O M 112 2 0 2 1 A N N U A L R E P O R T 18.0 C O R P O R A T E D I R E C T O R Y REGISTERED OFFICE Catapult Group International Ltd ABN 53 164 301 197 75 High Street, Prahran, VIC 3181, Australia Telephone: +61 (0)3 90958401 COMPANY SECRETARY Jonathan Garland General Counsel and Company Secretary company.secretary@catapultsports.com SHAREHOLDER ENQUIRIES: Share Registry Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 Telephone: 1300 737 760 Fax: +61 (0)2 9279 0664 Email: enquiries@boardroomlimited.com.au, www.boardroomlimited. com.au Investor Relations Investor.relations@catapultsports.com +61 400 400 380 AUDITOR Grant Thornton Audit Pty Ltd Collins Square, Tower 5/727 Collins Street, Melbourne, VIC 3008, Australia SECURITIES EXCHANGE LISTING Catapult Group International Ltd’s shares are listed on the Australian Securities Exchange (ticker: CAT) WEBSITE www.catapultsports.com FIND US HERE instagram.com/catapultsports/ linkedin.com/company/catapultsports twitter.com/catapultsports facebook.com/catapultsports/ youtube.com/user/catapultSports C A T A P U L TS P O R T S . C O M 113 2 0 2 1 A N N U A L R E P O R T C A T A P U L T S P O R T S . C O M 114 P L A Y S M A R T C A T A P U L T S P O R T S . C O M

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