TABLE OF CONTENTS
TABLE OF CONTENTS
CORPORATE DIRECTORY
BUSINESS OVERVIEW
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2: PARENT ENTITY INFORMATION
NOTE 3: REVENUE AND OTHER INCOME
NOTE 4: PROFIT/(LOSS) FOR THE YEAR
NOTE 5: INCOME TAX EXPENSE
NOTE 6: DISCONTINUED OPERATIONS
NOTE 7: KEY MANAGEMENT PERSONNEL (KMP)
NOTE 8: AUDITOR’S REMUNERATION
NOTE 9: DIVIDENDS
NOTE 10: EARNINGS PER SHARE
NOTE 11: CASH AND CASH EQUIVALENTS
NOTE 12: TRADE AND OTHER RECEIVABLES
NOTE 13: INVENTORIES
NOTE 14: CONTROLLED ENTITIES
NOTE 15: PROPERTY, PLANT AND EQUIPMENT
NOTE 16: INTANGIBLE ASSETS
NOTE 17: TRADE AND OTHER PAYABLES
NOTE 18: BORROWINGS
NOTE 19: TAX
NOTE 20: PROVISIONS
NOTE 21: ISSUED CAPITAL
NOTE 22: CAPITAL AND LEASING COMMITMENTS
NOTE 23: CONTINGENT LIABILITIES
NOTE 24: SEGMENT REPORTING
NOTE 25: CASH FLOW INFORMATION
NOTE 26: SHARE BASED PAYMENTS
NOTE 27: EVENTS AFTER THE REPORTING DATE
NOTE 28: FINANCIAL RISK MANAGEMENT
NOTE 29: RESERVES
NOTE 30: COMPANY DETAILS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
TABLE OF CONTENTS
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1
2010 - 2011Jumbo Interactive Annual Report CORPORATE DIRECTORY
CORPORATE DIRECTORY
DIRECTORS
David K Barwick
Mike Veverka
Bill Lyne
(non-executive Chairman)
(Chief Executive Officer)
(non-executive Director)
CHIEF FINANCIAL OFFICER
David Todd
COMPANY SECRETARY
Bill Lyne
REGISTERED OFFICE
Level 1
601 Coronation Drive
Toowong Qld 4066
Telephone:
Facsimile:
07 3831 3705
07 3369 7844
BANKERS
ANZ Banking Group
Commonwealth Bank of Australia
Westpac Banking Corporation
SHARE REGISTRAR
Computershare Investor Services Pty Ltd
117 Victoria Street
West End Qld 4101
Telephone:
Facsimile:
07 3237 2100
07 3229 9860
AUDITORS
BDO Audit (QLD) Pty Ltd
Level 18, 300 Queen Street
GPO Box 457
Brisbane Qld 4001
Telephone:
Facsimile:
07 3237 5999
07 3221 9227
INTERNET ADDRESS
www.jumbointeractive.com
AUSTRALIAN BUSINESS NUMBER
66 009 189 128
2
2010 - 2011Jumbo Interactive Annual Report BUSINESS OVERVIEW
BUSINESS OVERVIEW
REKINDLING THE ENJOYMENT OF PLAYING THE LOTTERY
The internet is the clear future for lotteries around the world
and for over 11 years Jumbo has been at the forefront of
this reinvigoration. Thousands of players from Australia and
overseas today enjoy playing their favourite lottery on their
computer or even on their smartphone through technology
developed by Jumbo.
Customers of www.ozlotteries.com were treated last year to
the release of the new smartphone service m.ozlotteries.com
and also the customer loyalty program
www.lottopoints.com. The smartphone service allows
customers to experience the moment of checking their
numbers and also buy new games conveniently from their
iPhone, Blackberry or other smartphone device.
These advances have rejuvinated many players and even
opened new markets for lotteries. Sales have tripled over
the past three years to $76 million resulting in over $17
million of additional state government revenue. A record $34
million was won by www.ozlotteries.com customers last year
including one lucky player who scooped the pool with a $15
million win.
Email alert, featuring Steven Bradbury,
Australia’s first Winter Olympic Gold Medalist.
Social media has become central to Jumbo’s new interactive marketing initiatives. The Facebook page for
www.ozlotteries.com has grown to over 2,500 people sharing information about prizes, promotions and games
featured on the site. Advertisements are purchased on Facebook during jackpots driving a new breed of players
into lotteries.
www.lottopoints.com is the successful Customer Loyalty
Program on www.ozlotteries.com
Syndicates
www.ozlotteries.com offers popular
syndicates for customers to play as a
group.
Autoplay
Customers use the Autoplay feature to
automatically play upcoming games.
3
2010 - 2011Jumbo Interactive Annual Report BUSINESS OVERVIEW
THE 2011 YEAR IN REVIEW
Technological developments and interactive marketing initiatives were key to opening new markets and adding
value to customers that have grown to record numbers. Sales have reached a record $76 million delivering a
record Net Profit After Tax of $4.8 million. A 0.5c final dividend was declared bringing the full year dividend to
1.0c. Jumbo has a sound balance sheet with Net Assets of $10 million putting the Company into a strong position
to seek further opportunities. Directors effectively closed the loss-making Manaccom software division that
affected results in 2010 and Jumbo has no further involvement in that business.
1 Loss in 2010 due to the software division that was closed in 2011
1
4
2010 - 2011Jumbo Interactive Annual Report BUSINESS OVERVIEW
LOTTERIES IN AUSTRALIA
Jumbo’s lottery division began selling official
Australian lotteries via terminals as long ago
as 1984 and then via the internet in 2000.
This long history is testament to Jumbo’s
commitment to the industry and to its
partners, most notably the Tatts Group. Adding
value to partnerships is a key ingredient to
success and this has driven the partnership
with the Tatts Group for over 25 years.
Agreements were renewed in 2005 and again in
2008, and will once again go through a renewal
process in 2013.
The $3.6 billion Australian lottery market has
reached approximately 6% internet sales since
the launch of www.ozlotteries.com over seven
years ago. Similar markets overseas such as the
UK have reached 15% of overall sales, giving a
guide to the potential growth ahead.
5
2010 - 2011Jumbo Interactive Annual Report BUSINESS OVERVIEW
LOTTERIES IN EUROPE
Jumbo Lotteries (www.jumbolotteries.com) exhibited at the European Lottery Congress in Helsinki in June 2011
in its first major drive into the European lottery market. This lottery market is already quite advanced with over
$110 billion of ticket sales occurring annually in various European countries.
Internet sales have already been accepted in many countries and have shown very encouraging growth rates.
Finland, for example, has over 25% of lottery ticket sales occurring from their website. The UK is another
example of growth with over 15% of their lottery ticket sales occurring via the internet.
Jumbo also exhibited at the World
Lottery Association conference held
in Brisbane and hosted by the Tatts
Group. Jumbo made the most of its
home town advantage by sponsoring
key activities at this event and raised
its profile within the world lottery
industry.
LOTTERIES IN NORTH AMERICA
Federal legislation currently prohibits any form of internet based gaming in the USA, including the $60 billion state
lottery market. However these state lotteries have been proactive in challenging this legislation and beginning
the process of debate in order to bring about change. For example, DC Lottery based in Washington publicly
announced their intention to move onto the internet triggering a debate that is currently underway. Other state
lotteries are watching with interest.
Jumbo Lotteries has also been proactive in offering
its services to the various state lotteries with
ambitions to open up their internet channel. In
September 2010, Jumbo Lotteries exhibited at
the lottery industry’s premier event, NASPL 2010
(National Association of State and Provincial
Lotteries) in Grand Rapids, Michigan.
In the year ahead, the momentum will be maintained
with further exhibitions organised in Chicago, Miami
and again at NASPL 2011 in Indianapolis in October
2011.
6
2010 - 2011Jumbo Interactive Annual Report BUSINESS OVERVIEW
INTERACTIVE LOTTERY ASSETS
The cornerstone to Jumbo’s success is the lottery technology that has been in constant development and real life
use for over ten years. Together with new innovative marketing techniques, these new advances have cast a new
light over lotteries opening up new markets and reinvigorating existing markets.
1. Smart phone accessibility
The smart phone version of www.ozlotteries.com was released during the year and players immediately took
advantage of this new dimension in lottery play. Over 5.7 million Australians currently own a smart phone and the
number is growing rapidly.
2. Autoplay, Alerts and Syndicates
Customers of www.ozlotteries.com are treated to features such as Autoplay (never miss a week), Alerts (prizes
and results) and Syndicates (group play for more numbers). Customers regularly give feedback and new features
are currently in development.
3. Lotto Points
The loyalty program on www.lottopoints.com was expanded further and is proving to be a key feature building
brand loyalty to the site. Players earn points with each dollar they spend and are able to redeem those points for
games and competitions in the future.
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2010 - 2011Jumbo Interactive Annual Report BUSINESS OVERVIEW
4. The Lottery Results Network
Jumbo’s unique Lottery Results Network is also a key asset to expansion into overseas markets. This chain
of websites, dedicated to giving players results to their favourite lotteries, went live in 2010 and is showing
encouraging signs of growth. The strategy is simple - give people lottery results in an interactive manner and grow
the customer database into a valuable asset, especially if lottery sales begin to take off in the USA.
The jewel in the crown of the Lottery Results Network is www.lotteryresults.com. This unique domain name
was purchased by Jumbo and is a key asset in achieving a high search engine listing, especially for the search term
“lottery results”. Every month, millions of people search for “lottery results” as well as typing “lottery results”
directly into the web address. This positions www.lotteryresults.com as an authority attracting people to the site.
Every month, millions of people search for “lottery results” as well as typing “lottery results” directly into the web address. This positions
www.lotteryresults.com as an authority attracting people to the site.
Converting these people searching for lottery results into ticket sales is a key goal for the Lottery Results
Network in the years ahead. Having a ready-to-go list of eager lottery players ready to buy tickets on the internet
represents an asset to any state lottery and a boost to Jumbo’s chances of success in the US and other markets.
8
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors of Jumbo Interactive Limited (the Company), formerly Manaccom Corporation Limited, present their report
on the consolidated entity (Group), consisting of Jumbo Interactive Limited and the entities it controlled at the end of, and
during, the financial year ended 30 June 2011.
DIRECTORS
The following persons were Directors of Jumbo Interactive Limited during the whole of the financial year and up to the date
of this report, unless otherwise stated:
• David K Barwick (non-executive Chairman)
• Mike Veverka (Chief Executive Officer)
•
•
Bill Lyne (non-executive Director)
Bonita Boezeman A.O. (non-executive Director appointed 28 July 2010, resigned 31 May 2011)
COMPANY SECRETARY
The following person held the position of Company Secretary at the end of the financial year: Mr Bill Lyne – refer to
Information on Directors for details.
COMPANY NAME CHANGE
As announced by the Company on 15 November 2010, the Company changed its name from Manaccom Corporation Limited
to Jumbo Interactive Limited as approved by the shareholders at the Annual General Meeting held on 15 November 2010.
This reflects the Company’s future plans in the internet lottery industry.
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN NATURE OF ACTIVITIES
The principal activities of the Group during the financial year were the retail of lottery tickets sold both in Australia
and eligible overseas jurisdictions, the publishing and distribution of third party software programmes, and the design,
development, sale and maintenance of proprietary software programmes for accounting systems (refer to Note 24: Segment
Reporting for details).
Significant changes in the nature of the Group’s principal activities that occurred during the financial year were as follows
(refer to Note 6: Discontinued Operations for details):
• Discontinuation of the publishing and distribution of third party software programmes, when the subsidiary involved in
these activities was placed into voluntary administration on 31 January 2011; and
• Discontinuation of the design, development, sale and maintenance of proprietary software programmes for accounting
systems, when the business involved in these activities was sold on 12 November 2010.
DIVIDENDS
Details of dividends paid to members of Jumbo Interactive Limited during the financial year are as follows:
Interim dividend of 0.5 cent per share on ordinary shares for the year ended 30 June 2011,
paid on 6 May 2011
$197,266
$197,266
In addition to the above dividend, since the end of the financial year, the Directors have declared a final ordinary dividend for
the financial year ended 30 June 2011 of 0.5 cent per share on ordinary shares, to be paid on 30 September 2011.
9
2010 - 2011Jumbo Interactive Annual Report
DIRECTORS’ REPORT
OPERATING RESULTS AND REVIEW OF OPERATIONS FOR THE YEAR
Information on the operations and financial position of the Group and its business strategies and prospects for future financial
years is set out below.
Operating Results
The consolidated profit of the consolidated Group amounted to $4,834,455, after providing for income tax (2010: $7,311,048
loss after $8,290,292 impairments), which is a large increase on the results reported for the year ended 30 June 2010. The
significant improvement was largely from continued growth in the online lottery business and a reduction in the losses of the
software publishing and distribution business until 31 January 2011 when it ceased operating. Further detail on the Group’s
operations now follows:
Review of Operations
(a)
Online Lottery
The Company continues to make significant investment in its internet intellectual properties, notably www.ozlotteries.com,
and customer management, with 15% growth in operating revenues to $76,006,981 (2010: $66,079,365) being achieved mainly
through an increasing customer database.
These investments, as well as investments in staff and improvements to underlying technology, have increased the operating
costs. This has supported the strong growth in revenues which in turn, has increased operating profit contribution to
$5,548,730 (2010: $3,754,414).
(b)
Software Publishing and Distribution
This division consisted of the Manaccom and Star businesses, and ceased operations on 31 January 2011.
The divisional loss after providing for income tax was $98,396 (2010: $10,571,845 loss).
The ongoing depressed economic conditions, particularly in the main USA market, led to continued weak trading for the Star
business and on 12 November 2010 this business was sold at a loss of $6,007.
Although the loss contribution by the Manaccom business had been reduced since 2010 through cost reductions, the business
was unable to return to profitability due to continued adverse conditions in the local over-the-counter software market,
which resulted in the business being placed into voluntary administration on 31 January 2011.
As a result of the above, the software publishing and distribution segment has ceased operating.
(c)
Summary of Results
The results for Jumbo Interactive Limited are summarised below:
Performance
Revenue
EBITDA
PROFIT - NPAT
2011
2010
$75.9 million¹
$7,024,810¹
$4,834,455
$75.1 million¹
$2,392,566
($7,311,048)²
2009
$58.6 million
$5,059,248
$2,957,335
2008
$37.8 million
$2,866,437
$2,730,526
2007
$17.9 million
$38,113
($739,790)
¹ continuing operations
² after impairment losses of $8,290,292
Five Year Asset Growth
Cash at Bank¹
Net Assets
NTA
2011
$11.8 million
$10.1 million
$3.7 million
2010
$9.5 million
$6.4 million
$0.4 million
2009
$9.8 million
$14.2 million
$1.1 million
2008
$5.6 million
$11.8 million
$3.0 million
2007
$4.8 million
$6.8 million
$3.8 million
¹ includes cash held under term deposit and customer account balances payable (refer to Note 11: Cash and Cash Equivalents and Note 17: Trade and Other
Payables for details)
10
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
Five Year Share Price Analysis
PROFIT - NPAT
EPS
Share Price
Shares on Issue
Market Cap
2011
$4,834,4552
12.2¢
37.0¢
39.5 million
$14.6 million
2010
($7,311,048)1
(17.0¢)1
27.0¢
43 million
$11.6 million
2009
$2,957,335
6.9¢
21.5¢
43 million
$9.2 million
2008
$2,730,526
6.5¢
22.5¢
43 million
$9.7 million
2007
($739,790)
(0.22¢)
3.3¢
368 million
$12.2 million
1 after impairment losses of $8,290,292
2 after impairment reversal of $1,258,354 and voluntary administration expenses of $1,224,339
Financial Position
The net assets of the Group have increased by $3,701,649 from 30 June 2010 to $10,081,974. This increase is largely due to
the following factors:
-
-
Improved operating performance of the Group; and
Sale of the Star business.
The sale of the Star business has enabled the Group to reduce its borrowings by $1,529,790. The Group’s working capital,
being current assets less current liabilities, has improved from $1,029,494 in 2010 to $4,603,183 in 2011 due mainly to the
increased cash and cash equivalents through operating activities and a change in the classification of bank borrowings between
current and long term following the rectification of the 2010 covenant breach. (refer to Note 18: Borrowings (d) for details).
The Directors believe the Group is in a sound financial position to expand and grow its current operations.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Significant changes in the state of affairs of the Group for the financial year were as follows:
a)
Decrease in contributed equity of $1,042,478 resulting from (see Note 21: Issued Capital for details):
Buy back of 3,578,057 shares from interests of a previous director Mr Ian Mackay
Issue of 83,377 shares under the Dividend Reinvestment Plan
$
(1,073,422)
30,944
1,042,478
b)
Discontinuation of the software publishing and distribution reportable segment as a result of the sale of
the Star Systems Solutions business on 12 November 2010 and placing the Manaccom Pty Ltd business into
voluntary administration on 31 January 2011 (see Note 6: Discontinued Operations for details).
KEY BUSINESS STRATEGIES AND FUTURE PROSPECTS
The Group will continue to retail lottery tickets through the internet.
Other than information disclosed elsewhere in this annual report, information on likely developments in the operations of
the Group and the expected results of those operations in future financial years has not been included in this Directors’
report because the Directors believe, on reasonable grounds, that to include such information would be likely to result in
unreasonable expectations of the Group.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
There were no material events after the balance sheet date.
LIKELY DEVELOPMENTS
Other than information disclosed elsewhere in this annual report, information on likely developments in the operations of
the Group and the expected results of those operations in future financial years has not been included in this Directors’
report because the Directors believe, on reasonable grounds, that to include such information would be likely to result in
unreasonable prejudice to the Group.
11
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
ENVIRONMENTAL REGULATION
The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or
of a State or Territory.
INFORMATION ON DIRECTORS
Name
Qualifications
Experience
Directorships currently held in
other listed entities
Interest in shares and options¹
Special responsibilities
Directorships formerly held in
other listed entities during the
three years prior to the current
year
Name
Qualifications
Experience
Directorships currently held in
other listed entities
Interest in shares and options¹
Special responsibilities
Directorships formerly held in
other listed entities during the
three years prior to the current
year
Name
Qualifications
Experience
David K Barwick
N/A
Appointed as a Board member on 30 August 2006 and Chairman on 7 November
2007. David Barwick is an accountant by profession with over 38 years experience in
the management and administration of publicly listed companies both in Australia and
North America. During this period David has held the position of Chairman, Managing
Director or President of over 27 public companies covering a broad range of activities.
Current Director and Chairman of Metallica Minerals Limited (since 11 March 2004),
current Director and Chairman of MetroCoal Limited (since 6 July 2007), current
Director and Chairman of Orion Metals Limited (since 28 November 2008), current
Director and Chairman of Planet Metals Limited (since 9 June 2009).
101,345 ordinary shares and 550,000 options in Jumbo Interactive Limited.
Chairman (non-executive); Chair of the Nomination and Remuneration Committee;
member of the Audit Committee.
Previous Director of Macarthur Minerals Limited ({TSX Venture Exchange} from 24
October 2005 to 31 August 2009); and Cape Alumina Limited (from 2 February 2004
to 29 January 2009).
Mike Veverka
Bachelor of Engineering
Mike Veverka has been Chief Executive Officer and a Director of Jumbo Interactive
Limited since the restructuring of the Company in September 1999. Mike was
instrumental in the development of the e-commerce software that is the foundation to
the various Jumbo operations. Mike was the original founder of Benon Technologies in
1995 when development of the software began.
Mike also established a leading Internet Service Provider in Queensland which
operated successfully for three years before being sold. Mike is regarded as a pioneer
in the Australian internet industry with many successful internet endeavours to his
name. Mike graduated with an honours degree in engineering in 1987.
None
9,398,278 ordinary shares and 550,000 options in Jumbo Interactive Limited.
Chief Executive Officer
None
Bill Lyne
Bachelor of Commerce; Chartered Accountant
Appointed as a Board member on 30 October 2009. Bill Lyne is the principal of
Australian Company Secretary Service, providing company secretarial, compliance and
governance services to public companies. He is currently Company Secretary of three
other publicly listed companies, is a former Secretary and/or Director of a number
of other listed companies, and has a wealth of experience in corporate governance
principles and practices.
Bill is a fellow of Chartered Secretaries Australia and has been a presenter at CSA
courses in company secretarial practice.
12
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
None
550,000 options in Jumbo Interactive Limited.
Chair of the Audit Committee; Member of the Nomination and Remuneration
Committee; Company Secretary.
None
Bonita Boezeman A.O.
PMD Harvard Business School
Appointed as a Board member on 28 July 2010 (and resigned on 31 May 2011).
Bonita Boezeman A.O. has a wealth of experience having previously served in top
executive and non executive positions with more than ten public and private boards
or subsidiaries, and 12 philanthropic boards and committees in the past 27 years,
covering a varied range of businesses and charities. Bonita was the Deputy Chair of
NSW State Lottery Corporation for 14 of the 16 years she served on the Board. She
is experienced in strategy, marketing and financial management.
None
1,769 ordinary shares in Jumbo Interactive Limited.
Previous Chair of the Audit Committee.
None
Directorships currently held in
other listed entities
Interest in shares and options¹
Special responsibilities
Directorships formerly held in
other listed entities during the
three years prior to the current
year
Name
Qualifications
Experience
Directorships currently held in
other listed entities
Interest in shares and options¹
Special responsibilities
Directorships formerly held in
other listed entities during the
three years prior to the current
year
¹ includes transactions since the end of the reporting date up to and including the date of the Directors’ Report.
MEETINGS OF DIRECTORS
The number of meetings of the Board of Directors (including Board committees) held during the year ended 30 June 2011
and the number of meetings attended by each Director is set out below:
Board
Audit Committee
Name
David Barwick
Mike Veverka
Bill Lyne
Bonita
Boezeman A.O.
Eligible to
attend
17
17
17
15
SHARE OPTIONS
Attended
17
17
17
15
Eligible to
attend
7
-
7
7
Attended
7
-
7
7
Nominations and
Remuneration Committee
Eligible to
attend
5
-
5
4
Attended
5
-
5
4
Unissued ordinary shares of Jumbo Interactive Limited under option at the date of this report are as follows:
Date options granted
1 May 2009
21 October 2009
15 November 2010
15 February 2011
Expiry date
1 May 2012
31 October 2012
15 November 2013
15 February 2014
Exercise price of shares
Number under option
50 cents
70 cents
70 cents
50 cents
1,450,000
1,350,000
300,000
1,000,000
4,100,000
13
2010 - 2011Jumbo Interactive Annual Report
DIRECTORS’ REPORT
The holders of these options do not have any rights under the options to participate in any share issue of the Company or of
any other entity.
During the financial year ended 30 June 2011, no ordinary shares of Jumbo Interactive Limited were issued as a result of the
exercise of options.
During the financial year ended 30 June 2011, 2,000,000 options were forfeited and since the financial year end, a further
50,000 were forfeited due to staff leaving employment.
During or since the end of the financial year, 1,150,000 options were granted by Jumbo Interactive Limited to the following
Directors and executives of the Group as part of their remuneration:
Name
Number of options granted Number of ordinary shares
Bill Lyne
Bonita Boezeman A.O.
David Todd
Xavier Bergade
300,000
550,000
150,000
150,000
1,150,000
under option
300,000
550,000
150,000
150,000
1,150,000
For details of options issued to Directors and executives as remuneration, refer to the Remuneration Report.
REMUNERATION REPORT (Audited)
This report details the nature and amount of remuneration for each key management person, including each Director of
Jumbo Interactive Limited and for the executives receiving the highest remuneration.
a)
Policy for determining the nature and amount of remuneration
The Remuneration Policy of Jumbo Interactive Limited has been designed to align Director and key management personnel
objectives with shareholder and business objectives by providing a remuneration component and offering specific long term
incentives based on key performance areas affecting the Group’s financial results. The Board of Jumbo Interactive Limited
believes the Remuneration Policy to be appropriate and effective in its ability to attract and retain the best directors and key
management personnel to run and manage the Group, as well as create goal congruence between Directors, executives and
shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members and key management
personnel of the Group is as follows:
• The Remuneration Policy, setting the terms and conditions for the executive Directors and key management personnel,
was developed by the Board.
• All key management personnel receive a base salary (which is based on factors such as level of responsibilities, experience
and length of service), superannuation and options (by invitation).
• The Board reviews executive and key management personnel packages annually by reference to the Group’s performance,
executive performance and comparable information from industry sectors and other listed companies in similar
industries.
The performance of executives and key management personnel is measured against criteria agreed annually with each
executive and is based predominantly on the Group’s profits and shareholder value. All bonuses and incentives must be linked
to predetermined performance criteria. Any changes must be justified by reference to measurable performance criteria. The
policy is designed to attract the highest calibre of executives and reward them for performance that results in long term
growth in shareholder wealth. Refer below for further details of performance based remuneration.
Key management personnel are also entitled to participate in the employee share option arrangements.
The executive Directors and key management personnel receive a superannuation guarantee contribution required by the
government, which is currently 9% and do not receive any other retirement benefits. Some individuals, however, may choose
to sacrifice part of their salary to increase payments towards superannuation.
All remuneration paid to Directors and key management personnel is valued at the cost to the Company and expensed.
Shares awarded to Directors and key management personnel are valued as the difference between the market price of those
shares and the amount paid by the Director or executive. Options are valued using the Black-Scholes, Binomial and Monte
Carlo Simulation methodologies.
14
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
The Board policy is to remunerate non-executive Directors at market rates for comparable companies for time, commitment
and responsibilities. The Board determines payments to the non-executive Directors and reviews their remuneration annually
based on market practice, duties and accountability. Independent external advice is sought when required. The maximum
aggregate amount of fees that can be paid to non-executive Directors is subject to approval by shareholders at the Annual
General Meeting. Fees for non-executive Directors are not linked to the performance of the Group. However, to align
Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company and are able to
participate in the employee option plan.
Performance Based Remuneration
As part of the executive’s remuneration package there is a performance based component, consisting of key performance
indicators (KPIs). The intention of this program is to facilitate goal congruence between executives with that of the business
and shareholders. These KPIs are set annually, with a certain level of consultation with executives to ensure buy-in. The
measures are specifically tailored to the areas each executive is involved in and has a level of control over. For example, a KPI
for the Chief Executive Officer has been net profit after tax of the Group.
Performance in relation to the KPIs is assessed annually by the Board, with bonuses being awarded depending on the number
and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Board in light of the
desired and actual outcomes, and their efficiency is assessed in relation to the Group’s goals and shareholder wealth before
the KPIs are set for the following year. This method of assessment was chosen because it provides the Board an objective
means of measuring performance.
In determining whether or not a KPI has been achieved, Jumbo Interactive Limited bases the assessment on audited figures.
Company Performance, Shareholder Wealth, and Directors’ and Executives’ Remuneration
The Remuneration Policy has been tailored to increase goal congruence between shareholders and Directors and executives.
The following table shows the gross revenue and profits/(loss) for the last five years for the listed entity, as well as the share
price at the end of the respective financial years.
Revenue
Net profit/(loss) – continuing
operations
Net profit/(loss) –
discontinued operations
Change in share price at year
end
Dividends paid per share
Return on capital employed –
continuing operations
Return on capital employed –
discontinued operations
2007
$17.9 mil
($739,790)
2008
$37.8 mil
$2,730,526
2009
$58.6 mil
$2,957,335
2010
$66.0 mil²
$3,260,797³
2011
$75.9 mil²
$4,932,851
n/a
n/a
n/a
($10,571,845)4
($98,396)5
(0.1¢)
(10.5¢)¹
-
(10.8%)
n/a
1.0¢
23.0%
n/a
(1.0¢)
1.5¢
20.8%
n/a
5.5¢
0.5¢
51.1%
10.0¢
0.5¢
48.9%
(165.7%)
(1.0%)
1 this is after the 1:10 share consolidation in 2008.
2 continuing operations.
3 this is after a one-off impairment expense of $348,585.
4 this is after a one-off impairment expense of $7,941,707.
5 this is after reversal of impairment expense $1,258,354, loss on loss of control of subsidiary placed into voluntary administration $639,644 and expenses
relating to the voluntary administration expenses $584,695.
15
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
b)
Key Management Personnel
The following persons were key management personnel of Jumbo Interactive Limited Group during the financial year:
Name
David K Barwick
Mike Veverka
Bill Lyne
Bonita Boezeman A.O.
David Todd
Xavier Bergade
Position held
Chairman (non-executive)
Director and Chief Executive Officer
Non-executive Director and Company Secretary
Non-executive Director (appointed 28 July 2010, resigned 31 May 2011)
Chief Financial Officer
Chief Technology Officer
Xavier Bergade has become a member of key management personnel for the financial year ended 30 June 2011 as a result
of the change in significance of the contribution from the Online Lottery segment subsequent to the sale of the Star System
Solutions business 12 November 2010 and the voluntary administration of subsidiary Manaccom Pty Ltd on 31 January
2011. Following the latter event, the Online Lottery unit has become the only reportable segment in the Group. As Chief
Technology Officer of this remaining segment, Xavier Bergade’s role has become significant with regards to strategic decisions
relating to the Group since 31 January 2011. Refer to Note 6: Discontinued Operations, for details.
All Group executives and Company executives receiving the highest remuneration have been included and there are no
others.
16
2010 - 2011Jumbo Interactive Annual Report s
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17
2010 - 2011Jumbo Interactive Annual Report
DIRECTORS’ REPORT
d)
Cash bonuses
Cash bonuses granted at the discretion of the Board to David Todd and Xavier Bergade during the financial year ended 30
June 2011 with no vesting conditions were paid on 8 July 2011. Refer to (h) regarding the Chief Executive Officer’s cash bonus.
e)
Options and rights granted as remuneration
Options are issued to executives and key management personnel as part of their remuneration at the discretion of the Board.
The options are not issued based upon performance criteria, but are issued to selected executives of Jumbo Interactive
Limited and its subsidiaries to increase goal congruence between executives, Directors and shareholders.
Details of the terms and conditions of options and rights granted to key management personnel and executives as
compensation during the reporting period are as follows:
2011
No.
options/
rights
granted
No.
options/
rights
vested
Fair value
per option
at grant
date
Amount
paid or
payable for
options
Exercise
price
Expiry date
Date granted
Name
Directors
Bill Lyne
Bonita Boezeman A.O.
300,000
550,000
850,000
Other key management personnel
David Todd
Xavier Bergade
150,000
150,000
300,000
-
-
-
-
-
-
$0.033
$0.033
$0.70
$0.70
$0.065
$0.065
$0.50
$0.50
-
-
-
-
15 Nov 2013
15 Nov 2013
15 Nov 2010
15 Nov 2010
15 Feb 2014
15 Feb 2014
15 Nov 2010
15 Nov 2010
Options will vest in executives and key management personnel when the share price equals the exercise price, and on
condition that they are currently employed by the Jumbo Interactive Limited Group at the time of vesting. If the executive or
key management person leaves before their options vest, then the options will lapse immediately. In the event of retirement
or retrenchment, the options will lapse one month after the event and if deceased, the options will lapse three months after
the event.
f)
Equity instruments issued on exercise of remuneration options
There were no equity instruments issued during the period to key management personnel and executives as a result of
options exercised that had previously been granted as compensation.
g)
Value of options to key management personnel and executives
Details of the value of options granted, exercised and lapsed during the year to key management personnel and executives as
part of their remuneration are summarised below:
Grant details
Date
No.
Value per
option at
grant date1
For the financial year ended 30 June 2011
Vested
Lapsed
Exercis-
No.
No.
ed No.
Exercis-
ed $
Lapsed
$
Overall
Unvested
%
Vested
%
Lapsed
%
300,000
$0.033
550,000
$0.033
-
-
-
-
-
-
550,000 18,150
-
-
-
-
100
-
-
100
Directors
Bill Lyne
Bonita
Boezeman
A.O.
15
Nov
2010
15
Nov
2010
18
2010 - 2011Jumbo Interactive Annual Report
Grant details
Date
No.
Value per
option at
grant date1
Other key management personnel
David Todd 15 Feb
150,000
$0.065
2011
15 Feb
2011
Xavier
Bergade
150,000
$0.065
1,150,000
For the financial year ended 30 June 2011
Exercis-
Vested
Lapsed
No.
No.
ed No.
Exercis-
ed $
Lapsed
$
DIRECTORS’ REPORT
Overall
Unvested
%
Vested
%
Lapsed
%
-
-
-
-
-
-
-
-
-
-
550,000
18,150
-
-
-
-
-
100
100
-
-
1 The value of options granted during the period differs from the expense recognised as part of each key management persons’ or executives’ remuneration
in (c) above because the value is the grant date fair value calculated in accordance with AASB 2 Share-based Payment.
Employment contracts of Directors and senior executives
h)
The employment conditions of Directors and senior executives are formalised in contracts of employment.
The employment contracts stipulate a range of terms and conditions. The Company may terminate an employment contract
without cause by providing generally four weeks written notice or making payment in lieu of notice, based on the individual’s
annual salary component. The notice period for the Chief Executive Officer is 52 weeks. A termination payment may or may
not be applicable dependent on the particular circumstances. Termination payments are generally not payable on resignation
or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any
time. Any options not exercised before or on the date of termination will lapse.
The policy of the Company is that service contracts are generally unlimited in term.
Unless otherwise stated, service agreements do not provide for pre-determined compensation values or the manner of
payment. Compensation is determined in accordance with the general remuneration policy outlined above. The manner of
payment is determined on a case by case basis.
Mike Veverka
Contract term:
Base salary:
Ongoing
$240,000 plus bonus of 5% of NPAT (before abnormal/extraordinary items as agreed by the
Nomination and Remuneration Committee), plus superannuation, to be reviewed annually by the
Nomination and Remuneration Committee.
The bonus component is proofed-up subsequent to the audited NPAT for the current financial
year being available, with an adjustment made in the following financial year.
The contract is currently under review with a base salary of $360,000 and the bonus structure
still to be finalised and agreed.
Termination payments:
Payment on early termination by the Group, other than for gross misconduct, equal to 12 months
base salary plus bonus.
David Todd
Contract term:
Base salary:
Ongoing
$200,000 plus superannuation, to be reviewed annually by the Nomination and Remuneration
Committee.
Termination payments:
Payment on early termination by the Group, other than for gross misconduct, equal to six months
base salary.
Xavier Bergade
Contract term:
Base salary:
Ongoing
$110,000 plus commission of 0.15% of online lottery sales, plus superannuation, to be reviewed
annually by the Nomination and Remuneration Committee.
With Xavier Bergade becoming a member of key management personnel during the financial year,
the contract is being reviewed with the base salary and bonus structure still to be finalised and
agreed.
Termination payments:
Payment on early termination by the Group, other than for gross misconduct, equal to six months
base salary.
END OF REMUNERATION REPORT
19
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ REPORT
INDEMNIFYING OFFICERS OR AUDITOR
During the financial year, Jumbo Interactive Limited paid a premium in respect of a contract insuring Directors, Secretaries
and executive officers of the Company and its controlled entities against a liability incurred as Director, Secretary or
executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the
nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer of the Company or any of its controlled entities against a liability incurred as
such an officer.
No indemnity has been provided to the auditor of the Group.
NON-AUDIT SERVICES
During the financial year, the following fees for non-audit services were paid or payable to the auditor, BDO, or their related
practices:
Consolidated
Taxation services
Amounts paid or payable to a related practice of BDO
-
-
Tax compliance services - tax returns
Other tax
Other services
Amounts paid or payable to a related practice of BDO
-
-
Accounting advice
Independent expert’s report
Total fees for non-audit services
2011
$
2010
$
30,560
7,440
21,500
23,890
18,500
-
56,500
13,980
25,000
84,370
The Audit Committee is satisfied that the provision of non-audit services, during the year, by the auditor (or by another
person or firm on behalf of the auditor), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
On the advice of the Audit Committee, the Directors are satisfied that the provision of non-audit services by the auditor,
as set out above, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following
reasons:
-
all non-audit services have been reviewed by the Audit Committee to ensure that they do not impact the
integrity and objectivity of the auditor; and
-
none of the non-audit services undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is attached to
this report.
This report is made in accordance with a resolution of Directors.
Mike Veverka
Director
Brisbane
5 September 2011
20
2010 - 2011Jumbo Interactive Annual Report
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 18, 300 Queen St
Brisbane QLD 4000,
GPO Box 457, Brisbane QLD 4001
Australia
The Directors
Jumbo Interactive Limited
PO Box 824
TOOWONG QLD 4066
Dear Directors,
DECLARATION OF INDEPENDENCE BY M R JUST TO THE DIRECTORS OF JUMBO INTERACTIVE LIMITED
As lead auditor of Jumbo Interactive Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and
belief, there have been no contraventions of:
• the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Jumbo Interactive Limited and the entities it controlled during the period.
M R Just
Director
BDO Audit (QLD) Pty Ltd
Brisbane, 5 September 2011
BDO Audit (QLD) Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (QLD) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
21
2010 - 2011Jumbo Interactive Annual Report CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION
This statement summarises the corporate governance practices that have generally applied in Jumbo Interactive Limited
throughout the reporting period except where otherwise stated. It is structured along the same lines as the ASX Corporate
Governance Council’s Principles and Recommendations, with sections dealing in turn with each of the Council’s corporate
governance Principles and addressing the Council’s Recommendations. This statement and the charters, codes and policies
referred to herein are posted on the Company’s website www.jumbointeractive.com and shareholders and other interested
readers are welcome to refer to them. The Board will keep its corporate governance practices under review.
Lay solid foundations for management and oversight
1.
The Council’s first Principle states that companies should “establish and disclose the respective roles and responsibilities of
board and management.” Jumbo has adopted a formal Board Charter that sets out the functions reserved to the Board and
those delegated to the Chief Executive Officer. This enables the Board to provide strategic guidance for the Company and
effective oversight of management.
Jumbo provides new Directors with a letter on appointment which details the terms and conditions of their appointment,
provides clear guidance on what input is required by them, and includes materials to assist with induction into the Company.
The Company has a similar approach for all senior executives whereby they are provided with a formal letter of appointment
setting out their terms of office, duties, rights and responsibilities as well as a detailed job description. The Board has delegated
responsibilities and authorities to the CEO and other executives to enable management to conduct the Company’s day to day
activities. Matters which exceed defined authority limits require Board approval.
The Board is also responsible for the performance of the Company’s executives, which is reviewed against appropriate
measures and the performance of the Company as a whole, and through an annual appraisal process.
Structure the Board to add value
2.
In its second Principle the Council states that companies should “have a board of an effective composition, size and
commitment to adequately discharge its responsibilities and duties.” Jumbo’s Board is so structured, and its Directors
adequately discharge their responsibilities and duties for the benefit of shareholders.
The Board presently comprises of only two non-executive Directors (David Barwick, Chairman and Bill Lyne, also the Company
Secretary) and the Chief Executive Officer (Mike Veverka). A fundamental requirement for the Jumbo Board is a deep
understanding of business management and financial markets. All Board members meet this requirement, and bring a diverse
range of skills and backgrounds. Additionally, Mr Veverka has had a very long involvement in key sections of the Company and
brings considerable relevant expertise and knowledge to the Board.
The Board formally meets monthly throughout the year, and informally at least every six to eight weeks to address issues that
may arise outside of the monthly meetings.
The qualifications, experience and relevant expertise of each Board member and their terms in office are set out in the
Directors’ Report section of the Company’s Annual Report. All Directors, apart from the CEO, are subject to re-election by
rotation at least every three years at the Company’s annual general meeting.
The Board’s view is that an independent Director is a non-executive Director who does not have a relationship affecting
independence on the basis set out in the Council’s guidelines and meets materiality thresholds agreed by the Board as
equating to payments to them or related parties of 5% of the Company’s annual revenue or representing 20% of the individual’s
business revenue.
The Board considers that David Barwick and Bill Lyne both meet these criteria. On the other hand, Mike Veverka is considered
to not be independent because he is a substantial shareholder in Jumbo (i.e. holds more than 5% as defined in Section 9 of
the Corporations Act) and is an executive officer of the Company. Consequently, the current structure meets the Council’s
recommendation that the majority of the Board should be independent, and the Board also considers the current composition
is appropriate given the Company’s and the Directors’ backgrounds and the current and foreseeable structure and size of the
Company.
During the year, the Jumbo Board established a Nomination and Remuneration Committee. This Committee’s composition
is designed to meet the Recommendations and until recently had three independent non-executive Directors; however at
the present time it only comprises David Barwick (as Chair) and Bill Lyne. The Committee operates under a Board approved
Nomination and Remuneration Committee Charter.
The performance of the Board, its Committees and the Directors is reviewed periodically by the Committee. The Committee’s
principal evaluation benchmark is the Company’s financial performance compared to similar organisations and the industry in
which it operates; but other than that no formalised annual evaluation process has yet been established for individual Directors
given the small size of the Board.
Details of Committee meeting attendances are set out in the Directors’ Report section of the Company’s annual report. Minutes
of all meetings are provided to the Board and its Chair reports to the Board after each Committee meeting.
The Company also complies with the Recommendations for Directors in relation to independent professional advice,
information access and contact with the Company Secretary.
22
2010 - 2011Jumbo Interactive Annual Report
CORPORATE GOVERNANCE STATEMENT
The Directors may seek external professional advice at the expense of the Company on matters relating to their role as
Directors of Jumbo. However, they must first request approval from the Chairman, which must not be unreasonably withheld. If
withheld then it becomes a matter for the whole Board.
The Company Secretary attends all Board and committee meetings, is responsible for monitoring adherence to Board policy
and procedures, and is accountable on governance matters.
Promote ethical and responsible decision making
3.
In Principle 3 the Council states that companies should “actively promote ethical and responsible decision-making”. To
this end, Jumbo has formally adopted a Code of Conduct covering Directors and officers. The Code is based on respect
for the law and acting accordingly, dealing with conflicts of interest appropriately, and ethical matters such as acting with
integrity, exercising due care and diligence in fulfilling duties, acting in the best interests of the Company and respecting the
confidentiality of all sensitive corporate information. If a Director or officer becomes aware of unlawful or unethical behaviour by
anyone in the Company then he is obliged under the Code to report such activities to the Chairman.
The Board has also recently approved a Whistle Blower Policy pursuant to which employees who have genuine suspicions
about improper conduct feel safe to report it without fear of reprisal.
In addition, Directors recognise the legal obligations relevant to their role and the reasonable expectations of shareholders,
other stakeholders and the wider financial community.
The Company realises the benefits that can arise to the organisation from diversity in the workplace covering gender, age,
ethnicity and cultural background and in various other areas. So, the Board has recently established a Diversity Policy which
details the Company’s approach to promoting a corporate culture that embraces diversity when selecting and appointing its
employees and Directors.
This policy outlines the need for the Board to establish measurable objectives for achieving gender diversity throughout the
Company over the longer term, and progress towards achieving them will be assessed annually by the Board and disclosed in
future Annual Reports. In this regard, the Company already has one woman in senior management and, until recently, one of
the Directors was a woman.
Jumbo also has a documented Share Trading Policy for Directors, key management personnel and other staff and consultants
which was revised in December 2010 and released on the ASX. The policy prohibits Directors and other persons from
dealing in the Company’s securities during stated ‘closed’ and ‘prohibited’ periods and whilst in possession of price sensitive
information. Otherwise, those persons may generally deal in securities during stated ‘trading windows’ and at other times
provided they obtain the prior consent of the Board Chairman (or, in the case of the Chairman himself, from the Chair of the
Audit Committee).
The Board will ensure that restrictions on dealings in securities are strictly enforced.
Safeguard integrity in financial reporting
4.
The Council states that companies should “have a structure to independently verify and safeguard the integrity of their financial
reporting.” Jumbo has an established Audit Committee which operates under an Audit Committee Charter. The role of this
Committee is to ensure the truthful and factual presentation of the Company’s financial position and to monitor and review
on behalf of the Board the effectiveness of the Company’s control environment, reporting practices and responsibilities in the
areas of accounting, risk management and compliance. To assist this process, as required by Section 295A of the Corporations
Act, the CEO and the Chief Financial Officer must certify to the Board in writing that the Company’s financial reports are
complete and present a true and fair view, in all material respects, of the financial condition and operational results of the
Company and are in accordance with relevant accounting standards.
The Committee’s Charter includes information on procedures for the selection and appointment of the external auditor and
rotation of the engagement audit partner. The external auditor is required to attend the Company’s annual general meeting
and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit
report.
In accordance with the Council’s Recommendations the Audit Committee’s Charter requires it to have three non-executive
Directors, with a majority being independent, which has been the case until recently. However, currently it has only two
members, being the non-executive Directors, Bill Lyne (as Chair) and David Barwick, both of whom have strong finance and
accounting backgrounds, experience and appropriate technical expertise. The qualifications of the Committee and meeting
attendances are set out in the Directors’ Report section of the Company’s annual report.
Minutes of all Committee meetings are provided to the Board and its Chair also reports to the Board after each Committee
meeting.
Make timely and balanced disclosure
5.
In this Principle the Council states that companies should “promote timely and balanced disclosure of all material matters
concerning the company.” Jumbo is committed to the promotion of investor confidence by ensuring that trading in the
Company’s securities takes place in an informed market. Also to assist compliance with continuous disclosure requirements
under the ASX Listing Rules, the Company has a Continuous Disclosure Policy in place to ensure that material price
sensitive information is identified, reviewed by management and disclosed to the ASX and published on the Company’s website
in a timely manner. The CEO is accountable for compliance with this policy.
23
2010 - 2011Jumbo Interactive Annual Report
CORPORATE GOVERNANCE STATEMENT
In addition, all changes in Directors’ interests in the Company’s securities are promptly reported to the ASX in compliance
with Section 205G of the Corporations Act and the ASX Listing Rules.
The Company’s annual report is also used to keep investors informed, particularly in its review of operations and activities.
6.
Respect the rights of shareholders
In Principle 6 the Council states that companies should “respect the rights of shareholders and facilitate the effective
exercise of those rights”. Jumbo supports its desire to provide shareholders with adequate information about the Company
and its activities through a published Communications Policy. It is also committed to electronic communications through
its website, www.jumbointeractive.com, which provides access to all recent ASX announcements, shareholder updates,
boardroom broadcasts, notices of meetings, explanatory memoranda, annual reports and key contact details, as well as
comprehensive information about the Company and its products and operations. Shareholders and other interested parties
may sign up to receive email notification of all ASX releases and other important announcements.
Company general meetings also represent a good opportunity for shareholders to meet with, and ask questions of, the
Board of Jumbo and all shareholders are notified of such meetings and encouraged to attend.
As part of the Company’s management of investor relations the CEO does, at times, also undertake briefings with investors
and analysts to assist their understanding of the Company and its operations, and provide explanatory background and
technical information.
7.
Recognise and manage risk
In this Principle the Council states that companies should “establish a sound system of risk oversight and management and
internal control”. Jumbo maintains documented policies for identifying, assessing and monitoring risk, summarised in a Risk
Management Policy. Through the Audit Committee the Company monitors key business and financial risks, taking into
consideration their likelihood and impact, and reviews and appraises risk control measures.
The CEO and senior executives have operational responsibility for risk management through Board approved guidelines.
Some of these measures include formal authority limits for management to operate within, policies on treasury-related
risk management, an information technology plan and a business continuity plan. The CEO reports to the Board on any
departures from policy or matters of concern that might be seen as or become material business risks.
In addition, the CEO and CFO are required to state in writing annually to the Board that to the best of their knowledge the
integrity of the Company’s risk management, internal control and compliance systems are sound and such systems are
operating efficiently and effectively in all material respects in relation to financial reporting risks.
8.
Remunerate fairly and responsibly
The Council’s final Principle states that companies should “ensure that the level and composition of remuneration is
sufficient and reasonable and that its relationship to performance is clear”. To this end the Board has established during the
year a Nomination and Remuneration Committee, as noted above under Principle 2.
The Board considers that the Committee members are sufficiently qualified to consider and decide on remuneration matters.
However, external professional advice may be sought from experienced consultants where appropriate to assist in their
deliberations.
Non-executive Directors’ remuneration is reviewed periodically with reference to comparable businesses and the trend in
Directors’ fees generally, with the object of ensuring maximum stakeholder benefit from the retention of an effective Board.
Shareholders, at the Company’s AGM, determine any increase in the aggregate fees payable to non-executive Directors,
but it is those Directors who decide amongst themselves the split of such remuneration. The current maximum annual
aggregate remuneration which can be paid to all non-executive Directors is $250,000, last approved by shareholders in
October 2009. In addition, shareholders have approved share option incentives for the non-executive Directors.
The CEO’s remuneration is based on a fixed amount and may include short term incentives (calculated on audited figures)
linked to the Company’s financial performance and share options provided as long term incentives. The base amount is
designed to attract and retain an appropriately qualified and experienced CEO, and any incentive element is to reward him
for his contribution towards the Company’s success.
Other senior executives are offered remuneration packages necessary to attract and retain appropriately qualified key
personnel as well as being commensurate with the skill and attention required to manage an organisation of the size
and scope of the Jumbo Group as it is today and taking into account its plans and forecasts into the future. In addition,
the Company has an Employee Option Plan in place and from time to time has granted options to deserving staff as a
reward for performance. However, the Board prohibits transactions by executives which might limit the economic risk of
participating in unvested entitlements under any equity-based remuneration scheme.
Further information about the Jumbo remuneration policy, along with details of all emoluments of Directors and key
management personnel can be found in the Remuneration Report section of the Directors’ Report in the Company’s Annual
Report. There are no separate retirement benefits for non-executive Directors, other than statutory superannuation.
24
2010 - 2011Jumbo Interactive Annual Report STATEMENT OF COMPREHENSIVE INCOME
Jumbo Interactive Limited and its Controlled Subsidiaries
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2011
Revenue from continuing operations
Cost of sales
Gross profit
Other revenue/income
Distribution expenses
Marketing costs
Occupancy expenses
Administrative expenses
Impairment of intangible assets
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense from continuing operations
Profit/(loss) from discontinued operations
Profit/(loss) for the year attributable to the owners of Jumbo Interactive
Limited
Other comprehensive income
Foreign currency translation differences
Total comprehensive income for the year attributable to the owners of
Jumbo Interactive Limited
Earnings Per Share (cents per share)
Overall operations
Basic and diluted earnings per share (cents per share)
Continuing operations
Basic and diluted earnings per share (cents per share)
Discontinued operations
Basic and diluted earnings per share (cents per share)
Note
3
4
3
4
4
5
6
10
10
10
Consolidated Group
2010
2011
$
$
75,946,130
66,039,971
(53,052,708)
(61,366,755)
12,987,263
14,579,375
273,123
474,179
(81,601)
(44,347)
(945,162)
(742,913)
(438,098)
(707,563)
(6,617,212)
(7,554,346)
(348,585)
-
(143,803)
(150,249)
5,854,136
4,685,925
(921,285)
(1,425,128)
4,932,851
3,260,797
(98,396)
(10,571,845)
4,834,455
(7,311,048)
27,087
(47,271)
4,861,542
(7,358,319)
11.4
11.2
(0.2)
(17.0)
7.6
(24.6)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
25
2010 - 2011Jumbo Interactive Annual Report STATEMENT OF FINANCIAL POSITION
Jumbo Interactive Limited and its Controlled Subsidiaries
STATEMENT OF FINANCIAL POSITION
As at 30 June 2011
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
Note
Consolidated Group
2010
2011
$
$
11
12
19
13
15
16
19
17
18
20
18
20
19
21
11,770,674
276,647
576,016
39,894
12,663,231
460,368
5,708,356
696,586
6,865,310
19,528,541
6,949,523
811,476
299,419
8,060,418
1,069,680
68,114
248,355
1,386,149
9,446,567
10,081,974
9,461,658
1,514,896
194,485
683,230
11,854,269
812,719
5,198,083
828,461
6,839,263
18,693,532
8,106,023
2,428,733
290,019
10,824,775
1,188,033
80,693
219,706
1,488,432
12,313,207
6,380,325
27,113,586
(17,398,827)
367,215
10,081,974
28,156,064
(22,036,016)
260,277
6,380,325
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
26
2010 - 2011Jumbo Interactive Annual Report STATEMENT OF CHANGES IN EQUITY
Jumbo Interactive Limited and its Controlled Subsidiaries
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2011
CONSOLIDATED GROUP
Balance at 1 July 2009
Total comprehensive income for
the year
Profit/(loss) for the year
Other comprehensive income
Foreign currency translation differences
Total comprehensive income for the year
Transactions with owners in their
capacity as owners
Dividends paid
Share-based payments
Other
Transactions with owners in their
capacity as owners
Balance at 30 June 2010
Total comprehensive income for
the year
Profit/(loss) for the year
Other comprehensive income
Foreign currency translation differences
Total comprehensive income for the year
Transactions with owners in their
capacity as owners
Issue of shares
Buy back of shares
Dividends paid
Share-based payments
Transactions with owners in their
capacity as owners
Issued
capital
$
28,155,664
Accumulated
losses
$
(14,079,494)
Share-
based
payments
reserve
$
183,529
Foreign
currency
translation
reserve
$
(22,563)
Total
equity
$
14,237,136
-
-
-
-
-
(7,311,048)
-
(7,311,048)
-
-
-
-
(7,311,048)
(47,271)
(47,271)
(47,271)
(7,358,319)
(645,474)
-
-
-
146,582
-
(645,474)
146,582
400
400
-
-
-
-
(645,474)
146,582
400
(498,492)
28,156,064
(22,036,016)
330,111
(69,834)
6,380,325
-
-
-
4,834,455
-
4,834,455
30,944
(1,073,422)
-
-
-
-
(197,266)
-
(1,042,478)
(197,266)
-
-
-
-
-
-
79,851
79,851
-
4,834,455
27,087
27,087
27,087
4,861,542
-
-
-
-
-
30,944
(1,073,422)
(197,266)
79,851
(1,159,893)
Balance at 30 June 2011
27,113,586
(17,398,827)
409,962
(42,747)
10,081,974
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
27
2010 - 2011Jumbo Interactive Annual Report STATEMENT OF CASHFLOWS
Jumbo Interactive Limited and its Controlled Subsidiaries
STATEMENT OF CASH FLOWS
For the year ended 30 June 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Income tax received
Income tax paid
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for intangibles
Payment for loss of control of subsidiary
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangibles
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for buyback of shares
Proceeds of borrowings
Repayment of borrowings
Dividends paid
Net cash provided by (used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
Consolidated Group
2010
2011
$
$
83,600,662
(77,116,874)
415,247
(183,154)
405,398
(593,826)
6,527,453
79,069,368
(74,557,362)
258,245
(239,990)
-
(1,240,109)
3,290,152
25 (a)
(250,729)
(2,067,960)
(374,656)
2,043
-
(2,691,302)
(1,073,422)
181,561
(486,112)
(166,322)
(1,544,295)
2,291,856
17,160
9,461,658
11,770,674
(534,448)
(2,211,785)
-
171,976
46,186
(2,528,071)
-
97,770
(507,478)
(645,472)
(1,055,180)
(293,099)
-
9,754,757
9,461,658
21
11
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
28
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Jumbo Interactive Limited and its Controlled Subsidiaries
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of Jumbo Interactive Limited for the year ended 30 June 2011 were authorised in accordance with
a resolution of the Directors on 31 August 2011 and cover the consolidated entity consisting of Jumbo Interactive Limited
and its subsidiaries as required by the Corporations Act 2001. Separate financial statements for Jumbo Interactive Limited as an
individual entity are no longer presented as a consequence of a change to the Corporations Act 2001. However, limited financial
information for Jumbo Interactive Limited as an individual entity is included in Note 2: Parent Entity Information.
As announced by the Company on 15 November 2010, the Company changed its name from Manaccom Corporation Limited
to Jumbo Interactive Limited as approved by the shareholders at the Annual General Meeting held on 15 November 2010.
This reflects the Company’s rapid growth and future plans in the internet lottery industry.
The financial statements are presented in the Australian currency.
Jumbo Interactive Limited is a company limited by shares incorporated and domiciled in Australia whose shares are publicly
traded on the Australian Securities Exchange.
BASIS OF PREPARATION
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial
Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below.
They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs except for where applicable,
available-for-sale financial assets and held-for-trading investments that have been measured at fair value.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies have been adopted in the preparation and presentation of the financial
statements:
(a)
Basis of Consolidation
Subsidiaries
The consolidated financial statements comprise the financial statements of Jumbo Interactive Limited and its subsidiaries at
30 June each year (“the Group”). Subsidiaries are entities over which the Group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting rights. Potential voting rights that
are currently exercisable or convertible are considered when assessing control. Consolidated financial statements include all
subsidiaries from the date that control commences until the date that control ceases. The financial statements of subsidiaries
are prepared for the same reporting period as the parent, using consistent accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intragroup transactions have been
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred.
(b)
Business Combinations
The acquisition method of accounting is used to account for all business combinations regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the
fair values of the assets transferred, liabilities incurred and the equity interests issued by the Group. The consideration
transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Where equity instruments are issued, the value of the equity instruments is their published market price as at the date
of exchange unless, in rare circumstances it can be demonstrated that the published price at the date of exchange is an
unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value.
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2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in business combinations are, with limited
exceptions, measured initially at their fair values at acquisition date.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or
at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable
assets acquired is recorded as goodwill (refer Note 1{n}). If those amounts are less than the fair value of the net identifiable
assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly
in profit or loss as a bargain purchase.
Where settlement of any part of the cash consideration is deferred, the amounts payable in future are discounted to present
value at the date of exchange using the entity’s incremental borrowing rate as the discount rate, being the rate at which a
similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent
consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit or loss.
(c)
Foreign Currency Translation
The functional and presentation currency of Jumbo Interactive Limited and its Australian subsidiaries is Australian dollars (A$).
Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling
at the end of the reporting period. Foreign exchange gains and losses resulting from settling foreign currency transactions, as
well as from restating foreign currency denominated monetary assets and liabilities, are recognised in profit or loss, except
when they are deferred in other comprehensive income where they relate to differences on foreign currency borrowings that
provide a hedge against a net investment in a foreign entity.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when
fair value was determined.
The functional currency of the overseas subsidiaries is measured using the currency of the primary economic environment
in which that entity operates. At the end of the reporting period, the assets and liabilities of these overseas subsidiaries are
translated into the presentation currency of Jumbo Interactive Limited at the closing rate at the end of the reporting period
and income and expenses are translated at the average exchange rates for the year. All resulting exchange differences are
recognised in other comprehensive income as a separate component of equity (foreign currency translation reserve). On
disposal of a foreign entity, the cumulative exchange differences recognised in foreign currency translation reserves relating to
that particular foreign operation is recognised in profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
(d)
Revenue Recognition
Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and duties and taxes paid. The following specific recognition criteria must also be met before
revenue is recognised:
Sale of Goods
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have passed to the buyer and
can be reliably measured. Risks and rewards are considered passed to buyer when goods have been delivered to the customer.
Rendering of Services
Revenue from software maintenance contracts is recognised in equal monthly instalments over the period of the contracts.
Revenue from rendering other services is recognised in accordance with the percentage of completion method. The stage of
completion is measured by reference to labour hours incurred to date as a percentage of estimated total labour hours for
each contract. Where the contract outcome cannot be reliably measured, revenue is recognised only to the extent of the
expenses recognised that are recoverable.
Interest
Revenue is recognised as interest accrues using the effective interest method.
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2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Dividends
Dividends are recognised as revenue when the Group’s right to receive payment is established.
(e)
Income Tax
The income tax expense for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused
tax losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets
are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.
Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or
taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of
investments in subsidiaries, associates and interests in joint ventures where the parent entity is able to control the timing of
the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income are also
recognised directly in other comprehensive income.
Jumbo Interactive Limited and its wholly owned subsidiaries have implemented the tax consolidation legislation for the
whole of the financial year. The Group notified the Australian Tax Office that it had formed an income tax consolidated
group to apply from 1 July 2006. Jumbo Interactive Limited is the head entity in the tax consolidated group. The stand-alone
taxpayer/separate taxpayer within a group approach has been used to allocate current income tax expense and deferred tax
expense to wholly-owned subsidiaries that form part of the tax consolidated group. Jumbo Interactive Limited has assumed
all the current tax liabilities and the deferred tax assets arising from unused tax losses for the tax consolidated group via
intercompany receivables and payables because a tax funding arrangement has been in place for the whole financial year.
The amounts receivable/payable under tax funding arrangements are due upon notification by the head entity, which is issued
soon after the end of each financial year. Interim funding notices may also be issued by the head entity to its wholly owned
subsidiaries in order for the head entity to be able to pay tax instalments.
(f)
Impairment of Assets
At the end of each reporting period the Group assesses whether there is any indication that individual assets are impaired.
Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss
where the asset’s carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the
cash-generating unit to which the asset belongs.
(g)
Cash and Cash Equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits
held at call with financial institutions, other short term, highly liquid investments with maturities of three months or less, that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank
overdrafts.
(h)
Trade Receivables
Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts, and have repayment
terms between seven and 60 days. Collectibility of trade receivables is assessed on an ongoing basis. Debts which are known
to be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms. Objective evidence of impairment includes
financial difficulties of the debtor, default payments or debts more than 90 days overdue. On confirmation that the trade
receivable will not be collectible the gross carrying value of the asset is written off against the associated provision.
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2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has
previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes
to the amounts owed and are not, in the view of the Directors, sufficient to require the derecognition of the original
instrument.
(i)
Inventories
Raw Materials, Work in Progress and Finished Goods
Inventories are stated at the lower of cost and net realisable value. Cost comprises all direct materials, direct labour and an
appropriate portion of variable and fixed overheads. Fixed overheads are allocated on the basis of normal operating capacity.
Costs are assigned to inventories using the first-in-first-out basis. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated cost of completion and selling expenses.
(j)
Investments and Other Financial Assets
All investments and other financial assets (except for those of fair value through the profit and loss) are initially stated at the
fair value of consideration given plus transaction costs. Purchases and sales of investments are recognised on trade date which
is the date on which the Group commits to purchase or sell the asset. Accounting policies for each category of investments
and other financial assets subsequent to initial recognition are set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of
the reporting period.
Impairments
Impairment losses are measured as the difference between the asset’s carrying amount and the present value of the estimated
future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the asset’s
original effective interest rate. Impairment losses are recognised in profit or loss.
(k)
Fair Values
Fair values may be used for financial asset and liability measurement as well as for sundry disclosures.
Fair values for financial instruments traded in active markets are based on quoted market prices at the end of the reporting
period. The quoted market price for financial assets is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values
due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting
the future contractual cash flows at the current market interest rate that is available to the Group for similar financial
instruments.
(l)
Property, Plant and Equipment
Property, plant and equipment is stated at historical cost, including costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by management, less depreciation
and any impairments.
Depreciation is calculated on a straight-line basis over the estimated useful life, or in the case of leasehold improvements and
certain leased plant and equipment, the shorter lease term, as follows:
- Plant and equipment — two to five years
- Leasehold improvements — five years
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.
Gains and losses on disposals are calculated as the difference between the net disposal proceeds and the asset’s carrying
amount and are included in profit or loss in the year that the item is derecognised.
(m)
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are
32
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
classified as finance leases and capitalised at inception of the lease at the fair value of the leased property, or if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction
of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
charged to profit or loss over the lease period.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and rewards of ownership of the asset are classified as operating
leases. Payments made under operating leases (net of incentives received from the lessor) are charged to profit or loss on a
straight-line basis over the period of the lease.
When assets are leased out under finance leases, the present value of the lease payments is recognised as a lease receivable.
The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.
Lease income is recognised over the lease term using the net investment method which reflects a constant periodic rate of
return.
Lease income from operating leases is recognised in profit or loss on a straight-line basis over the lease term. Initial direct
costs incurred in negotiating operating leases are added to the carrying value of the leased asset and recognised as an
expense over the lease term on the same bases as the lease income.
(n)
Intangible Assets
Goodwill
Goodwill represents the excess of the cost of the business combination over the Group’s share of the net fair value of
the identifiable assets, liabilities and contingent liabilities acquired. Goodwill is not amortised but is measured at cost less
any accumulated impairment losses. Goodwill is tested for impairment annualy, or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergies.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Impairment losses on goodwill cannot be reversed.
Intellectual Property
Acquired intellectual property is stated at cost, and is measured at cost less any accumulated impairment losses. Intellectual
property is considered to have an indefinite useful life and is not amortised (refer Note 16{b}) for reasons for the indefinite
useful life). The carrying value of intellectual property is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that the carrying value may be impaired. Impairment losses are recognised in profit or loss.
Any reversal of impairment losses of intellectual property is recognised in profit or loss.
Website Developments Costs
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are
capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these
benefits can be measured reliably.
Development costs have a finite life and are amortised on a straight-line basis matched to the future economic benefits over
the useful life of the project of three years.
Domain Names
Acquired domain names are stated at cost and are considered to have indefinite useful lives and are not amortised (refer
Note 16(b) for reasons for the indefinite useful life). The useful life is assessed annually to determine whether events or
circumstances continue to support an indefinite useful life assessment. The carrying value of domain names is tested semi-
annually at each reporting date for impairment.
Customer Acquisition Costs
Expenditure on customer acquisition is recognised at cost of acquisition. Customer acquisition costs have a finite life and
are amortised on a straight-line basis matched to the future economic benefits over their useful life of one and a half
years. Customer acquisition costs are tested semi-annually at each reporting date for impairment and carried at cost less
accumulated amortisation and any impairment losses.
Software
Items of computer software which are not integral to the computer hardware owned by the Group are classified as intangible
assets with a finite life. Computer software is amortised on a straight line basis over the expected useful life of the software.
These lives range from one and a half to four years.
33
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(o)
Trade and Other Payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and which
are unpaid. These amounts are unsecured and have seven to 60 day payment terms.
(p)
Interest-bearing Liabilities
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the loans and borrowings using the effective interest method.
(q)
Borrowing Costs
Borrowing costs incurred for the construction of a qualifying asset are capitalised during the period of time that it is required
to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed when incurred.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest
rate on the Group’s borrowings outstanding during the year, being 7.24% (2010: 5.11%).
(r)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is
probable that that an outflow of economic resources will be required to settle the obligation and the amount can be reliably
estimated. Provisions are not recognised for future operating losses.
Where the effect of the time value of money is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability.
(s)
Employee Benefits
Wages and Salaries, Annual Leave and Sick Leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the end of the reporting period are recognised in respect of employees’ services rendered up to
the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. Liabilities
for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable.
Long Service Leave
Liabilities for long service leave are recognised as part of the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services provided by employees to the end of the reporting
period. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods
of service. Expected future payments are discounted using national government bond rates at the end of the reporting period
with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Profit-sharing and Bonus Plans
The Group recognises an expense and a liability for bonuses and profit-sharing based on when the entity is contractually
obliged to make such payments or where there is past practice that has created a constructive obligation.
Retirement Benefit Obligations
Employees have defined contribution superannuation funds. Contributions are recognised as expenses as they become
payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is
available.
(t)
Contributed Equity
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of
any income tax benefit.
(u)
Dividends
Provision is made for dividends declared, and no longer at the discretion of the Group, on or before the end of the reporting
period but not distributed at the end of the reporting period.
34
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(v)
Share-Based Payments
The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for shares or options over shares (“equity-settled
transactions”).
The Jumbo Interactive Limited Employee Share Option Plan (ESOP) provides these benefits to Directors and senior
executives.
The fair value of options granted under the Jumbo Interactive Limited Employee Share Option Plan are recognised as an
employee benefit expense with a corresponding increase in equity (share option reserve). The fair value is measured at
grant date and recognised over the period during which the employees become unconditionally entitled to the options. Fair
value is determined by an independent valuer using the Black-Scholes, Bi-nomial, and Monte Carlo Simulation option pricing
models. In determining fair value, no account is taken of any performance conditions other than those related to the share
price of Jumbo Interactive Limited (“market conditions”). The cumulative expense recognised between grant date and vesting
date is adjusted to reflect the Directors’ best estimate of the number of options that will ultimately vest because of internal
conditions of the options, such as the employees having to remain with the Group until vesting date, or such that employees
are required to meet internal sales targets. No expense is recognised for options that do not ultimately vest because internal
conditions were not met. An expense is still recognised for options that do not ultimately vest because a market condition
was not met.
Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the
terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase in
fair value of the transaction as a result of the change.
Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses are
taken immediately to profit or loss. However, if new options are substituted for the cancelled options and designated as a
replacement on grant date, the combined impact of the cancellation and replacement options are treated as if they were a
modification.
(w)
Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to members of Jumbo Interactive Limited, adjusted
for the after-tax effect of preference dividends on preference shares classified as equity, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by the after-tax effect
of dividends and interest associated with dilutive potential ordinary shares. The weighted average number of shares used
is adjusted for the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
(x)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable
to, the taxation authority is included as part of receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
35
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(y)
Financial Guarantees
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially
measured at fair value and at the end of each subsequent reporting period at the higher of the amount determined under
AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation,
where appropriate.
(z)
Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group.
i. Impairment of Assets
Under AASB 136: Impairment of Assets, the recoverable amount of an asset is determined as the higher of fair value less costs
to sell, and value in use. In determining value in use, projected future cash flows are discounted using a risk adjusted pre-tax
discount rate and impairment is assessed for the individual asset or at the ‘cash generating unit’ level. A ‘cash generating unit’
is determined as the smallest group of assets that generates cash inflows that are largely independent of the cash inflows from
other assets or groups of assets. Refer to Note 16(c) for details.
Goodwill
No impairment has been recognised in respect of goodwill at the end of the reporting period.
Domain names
No impairment has been recognised in respect of domain names at the end of the reporting period.
Intellectual property
No impairment has been recognised in respect of intellectual property at the end of the reporting period.
ii. Recognition of the DTA on tax losses
Tax losses have been recognised as a DTA as management expect future profits to be earned based on profit and cash flow
forecasts.
(aa) Adoption of New and Revised Accounting Standards
The following new and amended standards and interpretations are mandatory for the first time for the financial year
beginning 1 July 2010:
•
•
•
•
•
AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project
AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-settled Share-based Payment Transactions
AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues
AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments and related amendments; and
AASB 2010-3 Amendments to Australian Accounting Standards arising from Annual Improvements Project.
The adoption of these standards and interpretations did not have any material impact on the current or any prior period and
is not likely to materially affect future periods.
(ab) New and amended standards and interpretations not yet adopted
A number of new standards, amendments and interpretations are effective for annual periods beginning after 1 July 2010, and
have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the
financial statements, except for the following:
(i)
AASB 9 Financial Instruments (effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial
liabilities. It simplifies the approach for classification and measurement of financial assets compared with the requirements
of AASB 139. Financial assets are to be classified based on (a) the objective of the entity’s business model for managing the
financial assets; and (b) the characteristics of the contractual cash flows. This replaces the numerous categories of financial
assets in AASB 139. The Group does not have any financial liabilities measured at fair value through profit and loss. There will
therefore be no impact on the financial statements when these amendments to AASB 9 are first adopted.
36
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(ii)
AASB 1054 Australian Additional Disclosures (effective from 1 July 2011)
The amendments made to AASB 1054 removes the requirement to disclose each class of capital commitment and
expenditure commitment contracted for at the end of the reporting date (other than commitments for the supply of
inventories). When this standard is adopted by the Group for the first time for the year ended 30 June 2012, the financial
statements will no longer include disclosures about capital and other expenditure commitments as these are no longer
required by AASB 1054.
In addition to the above, new and amended standards dealing with Consolidated Financial Statements, Separate Financial
Statements, Joint Arrangements, Disclosure of Interests in Other Entities, Transfers of Financial Assets and Fair Value
Measurement have recently been released. These standards are effective from 1 January 2013. The Group does not plan to
adopt these standards early nor has the extent of their impact been determined.
(ac) Comparatives
An error occurred in the 2010 Statement of Cash Flows and Note 25: Cash Flow Information with cash payments to acquire
intangibles, specifically website development costs and customer acquisition costs. An amount of $1,211,069 was shown as a
non-cash flow item in the reconciliation of operating activities rather than on the face of the statement of cash flows as an
item in investing activities. This error has been corrected in the 2010 comparative figures and therefore is no longer in the
reconciliation of the operating activities and is correctly shown in the investing activities.
37
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: PARENT ENTITY INFORMATION
The Corporations Act requirement to prepare parent entity financial statements where consolidated financial statements are
prepared has been removed and replaced by regulation 2M.3.01 which requires the following limited disclosure in regards
to the parent entity (Jumbo Interactive Limited). The consolidated financial statements incorporate the assets, liabilities and
results of the parent entity in accordance with the accounting policy described in Note 1 (a).
Parent entity
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Share based payment reserve
Retained earnings/(accumulated losses)
Total shareholders’ equity
Profit/(loss) for the year
Total comprehensive income for the year
2011
$
36,730
4,077,708
4,114,438
674,856
339,517
1,014,373
3,100,065
27,113,586
409,962
(24,423,483)
3,100,065
200,746
200,746
2010
$
326,900
5,841,440
6,168,340
2,109,130
-
2,109,130
4,059,210
28,156,064
330,111
(24,426,965)
4,059,210
(2,546,018)
(2,546,018)
Guarantees
The parent entity has provided guarantees to third parties in relation to the obligations of controlled entities in respect to
banking facilities. The guarantees are for the terms of the facilities per Note 18: Borrowings, and are ongoing.
Contractual commitments
There were no contractual commitments for the acquisition of property, plant and equipment entered into by the parent
entity at 30 June 2011 (2010: $0).
Contingent liabilities
The parent entity has no contingent liabilities other than the guarantees referred to above.
38
2010 - 2011Jumbo Interactive Annual Report NOTE 3: REVENUE AND OTHER INCOME
From continuing operations
Sales revenue
— Revenue from sale of goods
— Revenue from rendering services
Revenue from continuing operations
Other revenue/income
— Interest
- Cash
— Other income
- Foreign exchange gains
- Other
From discontinued operations (note 6)
— Revenue from sale of goods
— Interest received
- Cash
- Reversal of impairment of intangible assets
NOTE 4: PROFIT/(LOSS) FOR THE YEAR
Profit/(loss) before income tax from continuing operations includes the following specific
expenses:
Cost of sales
— Sale of goods
— Rendering of services
Finance costs
— Interest on financial liabilities not at fair value through profit and loss
— Fees arising from financial liabilities not at fair value through profit and loss
Depreciation of non-current assets1
— Plant and equipment
Amortisation of non-current assets1
— Leasehold improvements
— Intangibles
Other expenses
— Operating lease rentals – minimum lease payments
— Employee benefits expense1
— Defined contribution superannuation expense1
— Impairments losses on intangible assets
NOTES TO THE FINANCIAL STATEMENTS
Note
Consolidated Group
2010
2011
$
$
75,946,130
-
75,946,130
65,997,416
42,555
66,039,971
413,328
251,339
18,036
42,815
474,179
76,420,309
10,996
10,788
273,123
66,313,094
4,020,877
8,792,989
1,919
1,258,354
5,281,150
6,908
-
8,799,897
Consolidated Group
2010
2011
$
$
61,366,755
-
53,052,708
-
103,518
46,731
98,181
45,622
21,092
72,737
64,628
1,394,764
707,563
3,009,390
270,018
-
27,401
953,419
438,098
2,669,430
215,748
348,585
39
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Consolidated Group
2010
$
2011
$
— Loss on derecognition of intangible assets1
73,151
-
1 included in administration expense
NOTE 5: INCOME TAX EXPENSE
Note
19
Consolidated Group
2010
2011
$
$
(325,742)
443,797
(300,942)
(123,524)
(306,411)
1,358,413
(18,172)
234,159
23,955
(377,506)
(406,365)
(300,942)
(123,524)
-
(696,429)
(306,411)
921,285
(1,227,696)
(306,411)
259,173
12,923
(6,669)
1,158
266,585
(1,974,662)
42,859
189,946
43,975
2,476,178
(33,394)
(6,669)
-
(4,500)
(467,148)
266,585
1,425,127
(1,158,542)
266,585
Reconciliation:
The components of tax expense comprise:
a.
— Current tax
— Deferred tax arising from origination and reversal of temporary differences
— Under/over provision tax prior years
— Under/over provision overseas tax prior years
Total income tax expense in profit and loss
b.
— Tax at the Australian tax rate of 30% (2010: 30%)
— Income tax effect of overseas profits
— R&D expense
— Share options expensed during year
— Impairment losses/(reversal) on intangible assets
— Other
— Under/over provision for income tax in prior year
— Under/over provision for overseas income tax in prior year
— Investment allowance
— R&D concession
Total income tax expense in profit and loss
Income tax expense/(benefit) attributable to continuing operations
Income tax expense/(benefit) attributable to discontinued operations
Total income tax expense/(benefit) in profit and loss
40
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: DISCONTINUED OPERATIONS
Description
i.
As disclosed in the 2010 Half Year Report, subsequent to approval by the Company’s executive management committee on
4 November 2010, the Company announced on 4 November 2010 its decision to dispose of the Star System Solutions Pty
Ltd software business. The business was sold on 12 November 2010.
As announced by the Company on 31 January 2011, the Manaccom software publishing and distribution business was placed
into voluntary administration on 31 January 2011 due to adverse market conditions in the over-the-counter software security
market.
As at 31 January 2011 the entity ceased to be controlled by Jumbo Interactive Limited and became subject to the control of
the appointed liquidators. As a result, Jumbo has treated the loss of control as a disposal of a subsidiary in accordance with
AASB 127.
Both the Star System Solutions business and Manaccom Pty Ltd formed the Software Publishing and Distribution operating
segment which consequently ceased operations as a result of the above.
Financial performance and cash flow information
ii.
Financial information relating to the discontinued operations for the period to the date of disposal and for the year ended
30 June 2011 is set out below. Further information is set out in Note 24: Segment Reporting.
2011
Revenue (note 3)
Expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to members of the parent entity
Loss on sale of business
Loss on loss of control of subsidiary in voluntary
administration
Profit/(loss) on sale before income tax expense
Income tax expense
Profit/(loss) on sale after income tax
Star System
Solutions
Pty Ltd
$
1,674,388
(516,508)
1,157,880
581,766
1,739,646
(6,007)
-
(6,007)
-
(6,007)
Manaccom
Pty Ltd
$
3,606,762
(5,445,083)
(1,838,321)
645,930
(1,271,686)
-
(639,644)
(639,644)
-
Total
$
5,281,150
(5,961,591)
(680,441)
1,227,696
547,255
(6,007)
(639,644)
(645,651)
-
(639,644)
(645,651)
Total profit/(loss) after income tax from discontinued
operations
1,733,639
(1,832,035)
(98,396)
Profit/(loss) attributable to owners of the parent entity
relates to:
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
4,932,851
(98,396)
4,834,455
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities
(includes an outflow of $374,656 from the loss of control
of the subsidiary in voluntary administration)
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash generated by the
discontinued operations
(31,065)
(690,978)
(722,043)
9,882
(114,350)
364,634
(71,368)
374,516
(185,718)
(135,533)
(397,712)
(533,245)
41
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
2010
Revenue (note 3)
Expenses
Impairment of intangible assets
Profit/(loss) before tax from discontinued operations
Income tax benefit
Profit/(loss) after income tax from discontinued
operations
Profit/(loss) attributable to owners of the parent entity
relates to:
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash generated by the
discontinued operations
iii.
Details of the sale of the Star business
Star System
Solutions
Pty Ltd
$
870,608
(912,253)
(3,190,570)
(3,232,215)
31,532
Manaccom
Pty Ltd
$
7,929,289
(11,676,324)
(4,751,137)
(8,498,172)
1,127,010
Total
$
8,799,897
(12,588,577)
(7,941,707)
(11,730,387)
1,158,542
(3,200,683)
(7,371,162)
(10,571,845)
3,260,797
(10,571,845)
(7,311,048)
(1,909,716)
1,104,930
(66,352)
53,243
(96,357)
9,585
(1,962,959)
1,201,287
(75,937)
(33,529)
(837,759)
(871,288)
Sale consideration
Consisting of:
Cash
Consideration offset against outstanding deferred consideration payable as at 15 December
2010 under the 14 November 2008 purchase agreement
Total disposal consideration
Cash consideration received and cash inflow
Carrying amount of net assets sold
Loss on sale before income tax
Income tax benefit
Loss on sale after income tax
The carrying amounts of the assets and liabilities as at the date of sale (12 November 2010) were:
Property, plant and equipment
Intellectual property
Total assets
Total liabilities
Net Assets
42
2011
$
1,529,790
-
1,529,790
1,529,790
-
(1,535,797)
(6,007)
-
(6,007)
12 November
2010
$
16,007
1,519,790
1,535,797
-
1,535,797
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
iv.
Details of the voluntary administration of Manaccom Pty Ltd
Cash paid to administrator on loss of control
Total cash lost on loss of control
Carrying amount of net assets over which control was lost
Loss on loss of control of subsidiary before income tax
Income tax benefit
Loss in loss of control of subsidiary after income tax
2011
$
(374,656)
(374,656)
(264,988)
(639,644)
-
(639,644)
The carrying amounts of the assets and liabilities as at the date of voluntary administration (31 January 2011) were:
Property, plant and equipment
Intangible assets
Deferred tax asset
Trade and other receivables
Inventories
Total assets
Trade and other creditors
Borrowings
Provision for employee benefits
Other provisions
Total liabilities
Net assets
NOTE 7: KEY MANAGEMENT PERSONNEL (KMP)
(a)
Key management personnel compensation
Short term employee benefits
Post employment benefits
Other long term benefits
Share based payments
31 January
2011
$
377,623
31,350
273,831
640,217
789,903
2,112,924
1,501,860
119,298
201,778
25,000
1,847,936
264,988
Consolidated Group
2011
$
1,006,511
98,964
15,549
52,881
1,173,905
2010
$
984,825
80,687
12,695
91,966
1,170,173
Further information regarding the identity of key management personnel and their compensation can be found in the Audited
Remuneration Report contained in the Directors’ Report.
43
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(b)
Equity Instruments
Options Holdings
Details of options held directly, indirectly or beneficially by key management personnel and their related parties are as follows:
Granted
as
remuner-
ation
during
the year
-
-
300,000
550,000
150,000
150,000
1,150,000
Balance at
beginning
of year
550,000
550,000
250,000
-
550,000
550,000
2,450,000
Exercised
during
the year
Other
changes
during
the year
Balance
at end
of year
Vested
at end
of year
Vested
and
exercis-
eable
Vested
and
unexerci-
sable
-
-
-
-
-
-
-
-
-
-
(550,000)
-
-
550,000
550,000
550,000
-
700,000
700,000
(550,000) 3,050,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2011
David Barwick
Mike Veverka
Bill Lyne
Bonita Boezeman A.O.1
David Todd
Xavier Bergade
1 Bonita Boezeman A.O. was appointed as a Director on 28 July 2010 and ceased on 31 May 2011.
Granted
as
remuner-
ation
during
the year
550,000
550,000
250,000
-
-
1,350,000
Balance at
beginning
of year
-
-
-
550,000
550,000
1,100,000
Exercised
during
the year
-
-
-
-
-
-
Other
changes
during
the year
-
-
-
-
-
-
Balance
at end
of year
550,000
550,000
250,000
550,000
550,000
2,450,000
Vested
at end
of year
-
-
-
-
-
-
Vested
and
exercis-
able
-
-
-
-
-
-
Vested
and
unexerci-
sable
-
-
-
-
-
-
30 June 2010
David Barwick
Mike Veverka
Bill Lyne
David Todd
Xavier Bergade
Shareholdings
Details of ordinary shares held directly, indirectly or beneficially by key management personnel and their related parties are as
follows:
30 June 2011
David Barwick
Mike Veverka
Bill Lyne
Bonita Boezeman A.O.2
Balance at
beginning of
year
100,000
9,286,057
-
5,000
Granted as
remuneration
during the year
-
-
-
-
Issued on
exercise of
options during
the year
-
-
-
-
Other changes
during the
year1
1,345
112,221
-
(3,231)
Balance at
end of year
101,345
9,398,278
-
1,769
44
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
30 June 2011
David Todd
Xavier Bergade
Balance at
beginning of
year
Granted as
remuneration
during the year
Issued on
exercise of
options during
the year
Other changes
during the
year1
Balance at
end of year
10,000
500,000
9,901,057
-
-
-
-
-
-
135
10,135
(200,000)
(89,530)
300,000
9,811,527
1 includes on-market transactions and acquisitions under the Dividend Reinvestment Plan.
2 Bonita Boezeman A.O. was appointed as a Director on 28 July 2010 and ceased on 31 May 2011.
30 June 2010
David Barwick
Mike Veverka
Bill Lyne
Ian Mackay2
David Todd
Xavier Bergade
Balance at
beginning of
year
100,000
8,559,057
-
8,960,000
10,000
500,000
18,129,057
Granted as
remuneration
during the year
-
-
-
-
-
-
-
Issued on
exercise of
options during
the year
-
-
-
-
-
-
-
Other changes
during the year1
-
727,000
-
-
-
-
727,000
Balance at
end of year
100,000
9,286,057
-
8,960,000
10,000
500,000
18,856,057
1 includes on-market transactions and acquisitions under the dividend reinvestment plan.
2 Ian Mackay ceased being a part of key management personnel on 29 October 2009, and shares were bought back as detailed in Note 21(a): Issued Capital.
(c)
Other related party transactions
Transactions between related parties are on normal commercial terms and conditions no
more favourable than those available to other parties unless otherwise stated.
Company Secretary fees paid to Company Secretarial Services Pty Ltd t/a Australian
Company Secretary Service, an entity owned by Mr Bill Lyne (current Director). This
amount has been included in the short term employee benefits.
Consolidated Group
2010
2011
$
$
53,304
53,304
38,232
38,232
45
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: AUDITOR’S REMUNERATION
Audit services
Amounts paid/payable to BDO for audit or review of the financial statements for the entity
or any entity in the Group
Taxation services
Amounts paid/payable to a related practice of BDO for taxation services for the entity or
any entity in the Group:
-
-
review of income tax return
other taxation advice
Other services
Amounts paid/payable to a related practice of BDO for other services for the entity or any
entity in the Group:
-
-
accounting advice
independent expert’s report
Total
NOTE 9: DIVIDENDS
(a) Ordinary dividends
Interim fully franked ordinary dividend of 0.5 (2010: 0.5) cent per share franked at the
tax rate of 30% (2010: 30%)
Final fully franked ordinary dividend of nil (2009: 1.0) cent per share franked at the tax
rate of 30% (2009: 30%)
Total dividends paid or provided for
Dividends paid in cash or satisfied by the issue of shares under the Dividend
Reinvestment Plan during the years ended 30 June 2011 and 30 June 2010 were as
follows:
Paid in cash
Satisfied by issue of shares
Consolidated Group
2010
2011
$
$
92,403
84,000
92,403
84,000
30,560
7,440
38,000
21,500
23,890
45,390
18,500
-
18,500
148,903
13,980
25,000
38,980
168,370
Consolidated Group
2010
2011
$
$
197,266
215,159
-
197,266
430,315
645,474
166,322
30,944
197,266
645,474
-
645,474
(b) Dividends not recognised at the end of the reporting period
In addition to the above dividends, since year end the Directors have recommended
the payment of a final 2011 fully franked ordinary dividend of 0.5 (2010: nil) cent per
share franked at the rate of 30% (2010: 30%). The aggregate amount of the proposed
dividend expected to be paid on 30 September 2011, but not recognised as a liability at
year end, is:
197,684
-
46
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(c)
Franked dividends
The franked portions of dividends recommended after 30 June 2011 will be franked
out of existing franking credits or out of franking credits arising from the payment of
income tax in the year ending 30 June 2012.
Franking credits available for subsequent financial years based on a tax rate of 30%
(2010: 30%):
Consolidated Group
2010
2011
$
$
1,492,530
942,769
The above amounts represent the balance of the franking account as at the reporting date adjusted for:
(a)
(b)
Franking credits that will arise from the payment of the amount of the provision for income tax, and
Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.
The impact on the franking account of the dividend recommended by the Directors since the end of the reporting period, but
not recognised as a liability at the reporting date, will be a reduction in the franking account of $84,722 (2010: $0).
NOTE 10: EARNINGS PER SHARE
Reconciliation of earnings used in calculating earnings per share
Basic earnings/(loss) per share
Profit from continuing operations attributable to owners of Jumbo Interactive Limited
used to calculate basic earnings per share
Profit/(loss) from discontinued operations
Profit/(loss) attributable to owners of Jumbo Interactive Limited used to calculate
basic earnings per share
Diluted earnings/(loss) per share
Profit from continuing operations attributable to owners of Jumbo Interactive Limited
used to calculate diluted earnings per share
Profit/(loss) from discontinued operations
Profit/(loss) attributable to owners of Jumbo Interactive Limited used to calculate
diluted earnings per share
Consolidated Group
2010
$
2011
$
4,932,851
(98,396)
3,260,797
(10,571,845)
4,834,455
(7,311,048)
4,932,851
(98,396)
3,260,797
(10,571,845)
4,834,455
(7,311,048)
Consolidated Group
2010
2011
Number
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
39,995,382
43,031,525
39,995,382
43,031,525
4,150,000 options (2010: 4,250,000) were not included in the number of potential ordinary shares used to calculate diluted
earnings per share because they are currently out-of-the-money.
47
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
NOTE 11: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short term bank deposits
Online lottery customer account balances included in cash at bank and short term bank
deposits.
Consolidated Group
2010
2011
$
$
9,461,658
5,251,071
-
6,519,603
9,461,658
11,770,674
4,285,102
3,984,120
Customer account balances included in cash at bank and short term bank deposits being deposits and prize winnings
earmarked for payment to customers on demand.
NOTE 12: TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Allowance for doubtful debts
Other receivables
Prepayments
Consolidated Group
2011
$
2010
$
282,611
(153,123)
129,488
18,470
128,689
276,647
1,450,771
(124,764)
1,326,007
27,967
160,922
1,514,896
All receivables that are neither past due nor impaired are with long standing clients who have a good credit history with the
Group.
a. Analysis of the allowance account
Current trade receivables are non-interest bearing and generally on terms ranging from 30 days to 120 days. Trade
receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment
is recognised when there is objective evidence that an individual trade receivable is impaired. These amounts have been
included in the administrative expense items.
Movement in the trade receivables allowance for doubtful debts is as follows:
Opening balance
Provision for doubtful receivables
Reversal of amounts provided
Closing balance
Consolidated Group
2010
$
124,764
-
-
124,764
2011
$
124,764
77,025
(48,666)
153,123
There are no balances within trade and other receivables that are past due other than noted in (b) below. It is expected
these balances, other than those impaired, will be received when due. Impaired assets are provided for in full.
Receivables are pledged as per Note 18(a).
b. Age analysis of trade receivables that are past due at the end of the reporting period
The following provides an aging analysis of trade receivables which are past due and impairments which have been raised.
48
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
Consolidated Group
Not past due
Past due 30 days
Past due 60 days
Past due 90 days
Past due 90 days+
Total
2011
Amount
Impaired
$
-
-
-
-
153,123
153,123
Amount
not
impaired
$
128,916
-
-
-
572
129,488
Total
$
128,916
-
-
-
153,695
282,611
2010
Amount
Impaired
$
-
-
-
-
124,764
124,764
Amount
not
impaired
$
1,200,069
4,338
120,689
-
911
1,326,007
Total
$
1,200,069
4,338
120,689
-
125,675
1,450,771
Payment terms on receivables past due but not considered impaired have not been renegotiated. The Group has been in
direct contact with the relevant customers and are reasonably satisfied that payment will be received in full.
As at 30 June 2011 the Group had current trade receivables of $153,123 (2010: $124,764) that were impaired. The amounts
relate to customers who have not settled their debts within the terms and conditions between the Group and the customer,
and specific circumstances indicate that the debt may not be fully repaid to the Group.
NOTE 13: INVENTORIES
CURRENT
Finished goods at cost
NOTE 14: CONTROLLED ENTITIES
Consolidated Group
2011
$
2010
$
39,894
683,230
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 1(a).
Country of
Incorporation
Percentage
Ownership
Direct subsidiaries of the ultimate parent entity Jumbo Interactive
Limited:
Benon Technologies Pty Ltd
Editson Pty Ltd (in voluntary liquidation)1
TMS Global Services Pty Ltd
Jumbo Ventures Pty Ltd (formerly Star System Solutions Pty Ltd)
Intellitron Pty Ltd
Manaccom Pty Ltd2
Jumbo Lotteries Pty Ltd (formerly Jumbo Interactive Pty Ltd)
Cook Islands Tattslotto Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Cook Islands
2011
%
2010
%
100
100
100
100
100
100
100
1
100
100
100
100
100
100
100
1
49
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
Subsidiaries of TMS Global Services Pty Ltd:
TMS Global Services (NSW) Pty Ltd
TMS Global Services (VIC) Pty Ltd
TMS Fiji Limited
TMS Fiji On-Line Limited
TMS Global Services (PNG) Limited
Cook Islands Tattslotto Pty Ltd
Jumbo Lotteries USA Limited
Country of
Incorporation
Percentage Indirect
Ownership
2011
%
2010
%
Australia
Australia
Fiji
Fiji
Papua New Guinea
Cook Islands
United States of America
100
100
100
100
100
99
100
100
100
100
100
100
99
100
1 control of the company ceased on 24 November 2010 when it was placed into voluntary administration. From this date the company no longer forms part
of the Group.
2 control of the company ceased 31 January 2011 when it was placed into voluntary administration. From this date the company no longer forms part of the
Group.
50
2010 - 2011Jumbo Interactive Annual Report NOTE 15: PROPERTY, PLANT AND EQUIPMENT
NOTES TO THE FINANCIAL STATEMENTS
Plant and equipment
At cost
Accumulated depreciation
Leasehold improvements
Accumulated depreciation
Total property, plant and equipment
a. Movements in Carrying Amounts
Consolidated Group
2010
2011
$
$
817,403
(552,960)
264,443
291,552
(95,627)
195,925
460,368
1,533,864
(955,272)
578,592
265,126
(30,999)
234,127
812,719
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end
of the current financial year.
Consolidated Group
Year ended 30 June 2010
Balance at the beginning of year
Additions
Disposals
Depreciation expense – continuing operations
Depreciation expense – discontinued operations
Carrying amount at the end of year
Year ended 30 June 2011
Balance at the beginning of year
Additions
Disposals on sale of business
Disposals
Disposal through loss of control of subsidiary
Depreciation expense – continuing operations
Depreciation expense – discontinued operations
Carrying amount at the end of year
Plant and
Equipment
$
Leasehold
Improvements
$
Total
$
679,091
269,032
(167,111)
(72,737)
(129,683)
578,592
578,592
224,303
(16,007)
(2,043)
(377,623)
(21,092)
(121,687)
264,443
1,268
265,125
(4,865)
(27,401)
-
234,127
234,127
26,426
-
-
-
(64,628)
-
195,925
680,359
534,157
(171,976)
(100,138)
(129,683)
812,719
812,719
250,729
(16,007)
(2,043)
(377,623)
(85,720)
(121,687)
460,368
51
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: INTANGIBLE ASSETS
Goodwill
Accumulated impaired losses
Net carrying value
Intellectual property
Accumulated impairment losses
Net carrying value
Website development costs
Accumulated amortisation
Accumulated impairment losses
Net carrying value
Customer acquisition costs
Accumulated amortisation
Net carrying value
Software costs
Accumulated amortisation
Net carrying value
Domain names
Net carrying value
Other
Accumulated amortisation
Net carrying value
Total intangibles
Consolidated Group
2010
2011
$
$
8,964,379
3,686,355
(6,132,829)
(854,805)
2,831,550
2,831,550
3,013,004
23,499
(3,012,268)
(23,057)
736
442
2,293,168
3,106,028
(1,186,710)
(1,761,684)
(218,249)
(218,249)
888,209
1,126,095
1,691,949
2,775,359
(1,257,320)
(1,960,732)
434,629
814,627
292,869
125,035
(215,698)
(124,142)
77,171
893
864,772
816,434
864,772
816,434
149,993
192,641
(48,977)
(74,326)
101,016
118,315
5,198,083
5,708,356
52
2010 - 2011Jumbo Interactive Annual Report n
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53
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
b. Other Disclosures
Domain names have an indefinite useful life because:
- There is no time limit on the expected usage of the domain names;
- Licence renewal is automatic on payment of the renewal fee without satisfaction of further renewal
conditions;
- The cost is not significant when compared with future economic benefits expected to flow from renewal.
As such, the useful life can include the renewal period; and
- Since there is no limit on the number of times the licence can be renewed this leads to the assessment of
“indefinite” useful life.
This assessment has been based on:
- Technical, technological, commercial and other types of obsolescence;
- The stability of the industry in which the asset operates and changes in the market demand for the products
and/or services output from the asset;
- The level of maintenance expenditure required to obtain the expected future economic benefits from the
asset and the entity’s ability and intention to reach such a level; and
- The period of control over the asset and legal or similar limits on the use of the asset.
Intellectual property has an indefinite useful life because:
- There is no time limit on the expected usage of the intellectual property; and
- The intellectual property is proprietary in nature and only the Company has the source code.
The assessment has been based on:
- Technical, technological, commercial and other types of obsolescence;
- The stability of the industry in which the asset operates and changes in the market demand for the products
and/or services output from the asset; and
- The period of control over the asset and legal or similar limits on the use of the asset.
Intangible assets include capitalised website development costs, capitalised customer acquisition costs and domain names
with a carrying value of $2,757,156 (2010: $2,187,610). The amortisation period relating to the website developments
costs is three years and to the customer acquisition costs is 18 months. Domain names have an indefinite useful life and
therefore have no amortisation period.
c.
Impairment Testing of Cash-Generating Units Containing Goodwill or Intangible Assets with Indefinite
Useful Lives
Goodwill and domain names have been allocated to the Internet Lottery cash-generating unit which is an operating
segment:
Consolidated Group
2010
2011
$
$
2,831,550
2,831,550
2,831,550
2,831,550
816,434
816,434
864,772
864,772
Carrying amount of goodwill
Internet Lottery unit
Total
Carrying amount of domain names
Internet Lottery unit
Total
54
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
The recoverable amount of the cash-generating unit is based on a value-in-use calculation which uses management
approved budgets extrapolated over a five year period. The growth rate used in these budgets does not exceed the
historical growth rate of the relative cash-generating unit.
Key assumptions used for value-in-use calculation of the CGU are as follows:
- Annual growth rate of 3%
- Terminal growth rate of 3%
- Discount rate of 18% being the calculated weighted average cost of capital based on the capital asset pricing
model
- Reseller agreements will be renewed when they expire in 2013 for an additional five years
Management determined budgets based on past performance and its expectations for the future. The growth rate used
is consistent with those used in industry reports. The discount rate used is pre-tax and is specific to relevant segment in
which the unit operates.
Should both of the lottery reseller agreements not be extended for a further period when they expire in 2013, an
impairment loss would be recognised up to the maximum carrying value of $3.8m.
d.
Impairment Charge/Reversal
The impairment charge is recognised in the statement of comprehensive income:
From continuing operations:
Impairment of goodwill
From discontinued operations:
Impairment of goodwill
Impairment/ (impairment reversal) of intellectual property1
Consolidated Group
2010
2011
$
$
-
-
-
(1,258,354)
1,258,354)
(1,258,354)
348,585
348,585
4,929,439
3,012,268
7,941,707
8,290,292
1 an increase in the estimated service potential of the asset through sale was recognised when the Star business was sold on 12 November 2010 and
therefore the previous impairment expense was reversed.
NOTE 17: TRADE AND OTHER PAYABLES
CURRENT
Trade creditors
GST payable
Sundry creditors and accrued expenses
Customer account balances payable
Unearned revenue
Employee benefits
Consolidated Group
2010
2011
$
$
915,382
336,622
1,233,884
4,285,102
-
178,533
6,949,523
1,322,822
396,728
1,873,431
3,984,120
269,559
259,363
8,106,023
55
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
NOTE 18: BORROWINGS
CURRENT
Unsecured liabilities
Deferred consideration
Secured liabilities
Bank overdraft
Bank loans
Chattel mortgages
Total secured current interest-bearing liabilities
Total current interest-bearing liabilities
NON-CURRENT
Unsecured liabilities
Deferred consideration
Secured liabilities
Bank loans
Chattel mortgages
Total secured non-current interest-bearing liabilities
Total current and non-current secured liabilities
Bank loans
Chattel mortgages
Consolidated Group
2010
2011
$
$
-
238,069
110,061
666,667
34,748
811,476
811,476
-
1,999,998
190,666
2,190,664
2,428,733
-
1,188,033
1,041,666
28,014
1,069,680
-
-
-
1,818,394
62,762
1,881,156
1,999,998
190,666
2,190,664
Bank overdraft
A bank overdraft of $500,000 (2010: $500,000) is repayable on demand and currently bears interest at a current floating rate
of 11.19% p.a. (2010: 10.80% p.a.).
Bank loans
A bank loan is repayable in equal quarterly instalments of $125,000 from 14 June 2011 and the final instalment is due on 14
September 2013. The bank loan bears interest at a current floating of 7.00% p.a. (2010: 6.96% p.a.), up to a cap of 7.00% pa for
the term of the loan until maturity on 14 September 2013.
A bank loan is repayable in quarterly instalments of $41,667 from 13 March 2009 and the final instalment of $208,333 is due
on 14 November 2013. The bank loan bears interest at a current floating of 7.00% p.a. (2010: 6.93% p.a.), up to a cap of 7.00%
pa for the term of the loan until maturity on 14 November 2013.
a. Assets pledged as security
The bank liabilities are secured by a fixed and floating charge over all the assets of the Group.
Chattel mortgage liabilities are secured over the rights to the mortgaged assets recognised in the statement of financial
position which will revert to the mortgagor if the Group defaults.
The covenants within the bank liabilities require interest not to exceed 25% of profit before finance costs and income
tax (net profit before interest and tax/total interest expense > 4x), and debt not to exceed 67% of earnings before
interest, tax, depreciation and amortisation (consolidated debt/net profit before deduction of interest, tax, depreciation
and amortisation, and before significant items < 1.5x).
b. Bank overdraft facility
The bank overdraft facilities may be drawn down at any time but may be terminated by the bank without notice. The
bank loans may be drawn down at any time and have an average maturity of two years four months.
56
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
c. Defaults and breaches
There have been no defaults or breaches during the financial year ended 30 June 2011. In the prior year there was a
breach of the Interest Cover Ratio of not less than 4:1 due mainly to once-off impairment losses, and consequently all
bank liabilities were classified as current in accordance with AASB 101.74.
NOTE 19: TAX
CURRENT
Income tax payable/(refundable)
Deferred tax liabilities comprise temporary differences
recognised in the profit or loss as follows:
Property plant and equipment
- depreciation
-
lease
Amortisation
Other
Balance at 30 June 2010
Property plant and equipment
- depreciation
Amortisation
Other
Balance at 30 June 2011
Consolidated Group
2010
2011
$
$
(576,016)
(194,485)
Opening
Balance
$
Charged
to Profit
or Loss
$
Closing
Balance
$
8,228
6,793
101,429
84,339
200,789
5,986
126,849
86,871
219,706
(2,242)
(6,793)
25,420
2,532
18,917
(2,284)
117,804
(86,871)
28,649
5,986
-
126,849
86,871
219,706
3,702
244,653
-
248,355
57
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Deferred tax assets comprise temporary differences
recognised in the profit or loss as follows:
Attributable to tax losses
Property plant and equipment
- depreciation
-
lease
Amortisation
Accruals
Provisions
Other
Balance at 30 June 2010
Attributable to tax losses
Property plant and equipment
- depreciation
-
lease
Amortisation
Accruals
Provisions
Other
Balance at 30 June 2011
Opening
Balance
$
Charged
to Profit
or Loss
$
Closing
Balance
$
173,592
(29,121)
144,471
3,891
3,422
45,080
404,068
146,512
45,901
822,466
14,354
(3,422)
32,822
(65,320)
74,907
(18,225)
5,995
18,245
-
77,902
338,748
221,419
27,676
828,461
144,471
185,363
329,834
18,245
-
77,902
338,748
221,419
27,676
828,461
37,862
56,107
(22,184)
(288,155)
(63,679)
18,918
(131,875)
55,718
50,593
157,740
46,594
696,586
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set
out in Note 1(e) occur:
-
capital losses $1,165,483 (2010: $1,165,483)
NOTE 20: PROVISIONS
CURRENT
Long service leave
Make good provision
NON-CURRENT
Long service leave
Make good
Consolidated Group
2010
2011
$
$
145,982
153,437
299,419
68,114
68,114
177,470
112,549
290,019
80,693
80,693
The Group is required under the terms of certain leases to restore the leased premises at the end of the lease to its
original condition. A provision has been recognised for the present value of the estimated expenditure required to demolish
any leasehold improvements at the end of the lease. These costs have been capitalised as part of the cost of leasehold
improvements and are amortised over the shorter of the term of the lease or the useful life of the assets.
58
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Make good
provision
$
112,549
40,888
153,437
Consolidated Group
Consolidated Group
2011
Shares
2011
$
2010
Shares
2010
$
39,536,805
27,113,586
43,031,525
28,156,064
Number of
shares
43,031,525
43,031,525
(3,578,057)
83,337
39,536,805
Issue price
$
0.3000
0.3719
$
28,156,064
28,156,064
(1,073,422)
30,944
27,113,586
Balance at beginning of the year
Provisions made during the year
Balance at end of the year
NOTE 21: ISSUED CAPITAL
Share capital
Fully paid ordinary shares
Movements in ordinary share capital
Date
Details
1 July 2009
Opening balance
30 June 2010
23 August 2010
6 May 2011
30 June 2011
Balance
Shares bought back during the year1
Shares issued during the year2
Closing balance
a. Ordinary shares
Ordinary shares have no par value and the Company does not have a limited amount of authorised share capital.
Ordinary shareholders are entitled to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. Every ordinary shareholder present at a meeting in
person or by proxy is entitled to one vote on a show of hands and upon a poll each share is entitled to one vote.
1 As announced by the Company on 23 June 2010, the Company proposed buying back shares owned by a previous director, Mr Ian
Mackay, subject to shareholder approval. This was approved by shareholders at an Extraordinary General Meeting held on 19 August
2010 and transacted on 23 August 2010.
2 As announced by the Company on 9 March 2011, the Company declared a fully franked interim dividend of 0.5 cent per ordinary
share in which shareholders were invited to participate in the Company’s Dividend Reinvestment Plan. Shares were issued under the
DRP on the payment date on 6 May 2011.
b. Employee options
Details of the employee option plan, including details of options issued, exercised and lapsed during the financial year and
options outstanding at the end of the financial year are set out in Note 26: Share-based Payments.
c. Capital management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders
with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Board regularly reviews its capital management strategies in order to optimise shareholder value.
There are no externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt
levels, distributions to shareholders and share issues.
59
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
There have been no changes in the strategy adopted by management to control the capital of the Group since the
prior year. This strategy is to ensure that the Group’s gearing ratio remains between 20% and 40%. The gearing ratios
for the year ended 30 June 2011 and 30 June 2010 are as follows:
Total borrowings1
Total equity
Total capital
Gearing ratio
Note
18
Consolidated Group
2010
2011
$
$
2,190,664
1,881,156
6,380,325
10,081,974
8,570,989
11,963,130
26%
16%
1 total borrowings is all financial borrowings excluding those where repayment is dependent upon sales performance
The gearing ratio is below the lower range maintained by management due to the effect of the sale of the Star business
and voluntary administration of Manaccom Pty Ltd during the financial year, which has been approved by management.
Management’s strategy to control the capital of the Group will be reviewed during the first quarter of the 2012 financial
year.
NOTE 22: CAPITAL AND LEASING COMMITMENTS
a. Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the financial
statements
Payable
— Not later than one year
— Later than one year but not later than five years
Consolidated Group
2010
2011
$
$
745,524
1,348,450
2,093,974
1,100,437
2,410,647
3,511,084
The property leases are non-cancellable leases for occupied premises at various locations ranging from two to five year
terms, with rent payable monthly in advance. Options to renew leases at the end of the term range from terms of two to
five years. Rent and outgoings are paid on a monthly basis with periodic pricing reviews.
Under the sale of the Star business, the lease for premises occupied by this business was transferred to the purchaser
from the date of sale on 12 November 2010. Under the voluntary administration of Manaccom Pty Ltd, the commitments
under the lease for occupied premises for this subsidiary company were assumed by the administrator from the date of
voluntary administration on 31 January 2011.
b. Chattel Mortgage Commitments
Payable
— Not later than one year
— Later than one year but not later than five years
Less future finance charges
38,655
28,991
67,646
(4,884)
62,762
209,253
-
209,253
(18,587)
190,666
These commitments relate to motor vehicles and have terms of up to two and a half years with commitments paid
monthly based on fixed interest rates.
For the reporting period ended 30 June 2010, all chattel mortgage commitments were payable not later than one year as
detailed in Note 18(d).
60
2010 - 2011Jumbo Interactive Annual Report c. Other Commitments
NOTES TO THE FINANCIAL STATEMENTS
Consolidated Group
2011
$
2010
$
Software Licence Agreement
A subsidiary entity had signed an agreement with a key supplier to
publish and distribute certain of their computer software under licence
for three years until 31 May 2012. The agreement included a minimum
royalty payment to be paid if sales do not reach a certain level. The fair
value of the minimum royalty over the remaining term of the agreement
was determined by discounting future cash flows by the Reserve Bank of
Australia bond rate 4.57% (2010: 4.57%).
The subsidiary entity was placed into voluntary administration on 31
January 2011 and derecognised. As from this date, the entity falls outside
of the Group and there is no commitment by remaining Group entities.
Co-Branded Website Agreement
A subsidiary entity has signed a Co-Branded Website Agreement with
ninemsn Pty Ltd for two years until 31 July 2012. A monthly fee is paid by
the subsidiary entity to ninemsn Pty Ltd subject to a maximum payment
in cumulative monthly fees during each 12 month period of the term,
based on which the estimated commitment is as follows (the commitment
for the 2010 financial year under the previous agreement could not be
reasonably estimated):
NOTE 23: CONTINGENT LIABILITIES
Estimates of the potential financial effect of contingent liabilities that may
become payable:
Contingent Liabilities
Guarantees provided by the Group’s bankers
The Group’s bankers have provided guarantees to third parties in relation to
premises leased by Group companies. These guarantees have no expiry term
and are payable on demand, and are secured by a fixed and floating charge over
the Group’s assets.
Related party guarantees provided by subsidiary entities
A subsidiary entity has provided guarantees to third parties in relation to
premises leased by its wholly owned subsidiaries. These guarantees have no
expiry term and are payable on demand, and unsecured.
-
2,691,889
1,030,706
-
Consolidated Group
2010
$
2011
$
160,763
236,283
18,616
32,265
61
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
NOTE 24: SEGMENT REPORTING
Segment information is presented using a ‘management approach’, i.e. segment information is provided on the same basis as
information used for internal reporting purposes by the chief operating decision maker (strategic steering committee that
makes strategic decisions). Comparatives for 2010 were stated on this basis.
Accounting policies
Segment revenues and expenses are those that are directly attributable to a segment and the relevant portion that can be
allocated to the segment on a reasonable basis.
Segment information
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the strategic steering committee
that are used to make strategic decisions.
The committee considered the business from both a product and a geographic perspective and has identified the
reportable segments. The only continuing operations segment is Internet Lotteries.
Internet Lotteries segment consists of retail of lottery tickets sold both in Australia and legible international jurisdictions,
and internet database management/marketing. The committee monitors the performance of the regions combined.
The former software publishing and distribution segment consisted of publishing and distribution of third party software
programmes, and the design, development, sale and maintenance of proprietary software programmes for accounting
systems. This segment was reclassified as discontinued operations during the financial year (refer Note 6: Discontinued
Operations for further details). Accordingly, the Group has restated its segment information to disclose such information
for continuing operations as required by AASB 8.
(b) Segment information provided to the strategic steering committee
The segment information provided to the strategic steering committee for the reportable segments for the year ended
30 June 2011 is as follows:
2011
Total segment revenue/income
Inter-segment revenue
Revenue from external customers
NPBT
Interest revenue
Finance costs expense
Depreciation and amortisation
Loss on derecognition of intangible assets
Internet
Lotteries
$
76,006,981
-
76,006,981
5,548,730
413,328
1,732
1,480,484
73,151
The segment information provided to the strategic steering committee for the reportable segments for the year ended 30
June 2010 is as follows:
2010
Total segment revenue/income
Inter-segment revenue
Revenue from external customers
NPBT
Interest revenue
Finance costs expense
Depreciation and amortisation
62
Internet
Lotteries
$
66,079,363
-
66,079,363
3,754,414
251,339
-
1,053,848
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
(c) Other segment information
i. Segment revenue
The revenue from external parties reported to the strategic steering committee is measured in a manner consistent with
that in the profit or loss.
Revenues from external customers are derived from the sale of lottery tickets and provision of related services. A
breakdown of revenue and results is provided in the tables above.
Segment revenue reconciles to total revenue from continuing operations as follows:
Total segment revenue
Interest revenue
Other
Total revenue from continuing operations (note 3)
Consolidated Group
2010
2011
$
$
66,079,363
76,006,981
251,339
413,328
(17,608)
-
76,420,309
66,313,094
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $65,826,617 (2010:
$53,521,931), and the total revenue from external customers in other countries is $10,593,692 (2010: $12,791,163).
Revenues of $3,136,725 (2010: $3,242,912) are from external customer in Fiji. Segment revenues are allocated based on
the country in which the customer is located.
No single external customer derives more than 10% of total revenues.
ii. NPBT
The strategic steering committee assesses the performance of the operating segments based on a measure of NPBT. This
measure excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs and
impairments when the impairment is the result of an isolated, non-recurring event. Furthermore the measure excludes
the effects of foreign currency gains/(losses).
A reconciliation of the NPBT to operating profit before income tax is provided as follows:
NPBT
Inter-segment eliminations1
Interest revenue
Corporate expenses
Impairment losses on intangible assets
Finance costs expense
Share based payments expense
Directors’ remuneration
Salaries and wages
Other
Profit before income tax from continuing operations (per P&L)
1 the key items of the intersegment eliminations are:
Provision for non-recovery of inter-company loans
Dividends received by parent from subsidiary
Consolidated Group
2010
2011
$
$
3,754,414
5,548,730
2,586,897
1,437,338
251,339
413,328
-
(148,518)
(79,851)
(173,264)
(689,674)
(453,953)
5,854,136
(348,585)
(143,803)
(146,582)
(141,634)
(673,520)
(452,601)
4,685,925
1,437,338
-
4,679,553
(2,000,000)
63
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
NOTE 25: CASH FLOW INFORMATION
a. Reconciliation of Cash Flow from Operations with Profit/(Loss) after
Income Tax
Profit/(loss) for the year after income tax
Non-cash flows
Amortisation
Depreciation
Impairment losses/(reversals)
Derecognition of subsidiary in voluntary administration
(Gain)/Loss on sale of business
Derecognition of intangibles assets
Other
Share option expense
Increase/(decrease) in foreign exchange reserve excluding bank balances
Changes in operating assets and liabilities, net of the effects of purchase and
disposal of subsidiaries
Decrease/(increase) in trade receivables
Decrease/(increase) in other receivables
Decrease/(increase) in inventories
Decrease/(increase) in DTA
Increase/(decrease) in trade creditors
Increase/(decrease) in other creditors
Increase/(decrease) in other provisions
Increase/(decrease) in DTL
Increase/(decrease) in provision for income tax
Cash flow from operations
Facilities with Banks
b.
Credit facility
Facilities utilised
- Overdraft
- Multi Option/Chattel mortgages
- Loans
- Bank guarantees
Amount available
Consolidated Group
2010
2011
$
$
4,834,455
(7,311,048)
1,474,497
142,779
(1,258,354)
1,007,902
202,420
8,290,292
639,644
6,007
73,151
-
79,851
9,927
556,303
74,816
(173,296)
(141,955)
1,094,421
(668,323)
136,412
28,649
(381,531)
6,527,453
-
-
-
400
146,582
(47,271)
1,348,702
100,027
(176,630)
(5,995)
(314,242)
643,854
372,399
19,206
(986,446)
3,290,152
3,035,763
3,236,283
(110,061)
(62,762)
(1,708,333)
(160,763)
993,844
-
(190,666)
(1,999,998)
(236,283)
809,336
The facilities are provided by ANZ Group Limited subject to general and specific terms and conditions being set and
met periodically. Interest rates are both fixed and variable and subject to adjustment. Refer to Note 18 for terms of
these facilities.
c. Non-cash Financing and Investing Activities
(i) Share issue.
83,337 ordinary shares were issued at $0.3719 under the Dividend Reinvestment Plan on 6 May 2011.
(ii) Voluntary administration of Manaccom Pty Ltd.
$377,623 of plant and equipment and $31,350 of intangible assets, and $119,298 of borrowings were
derecognised under the voluntary administration process of Manaccom Pty Ltd and not reflected in the
statement of cash flow.
64
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
(iii)
Sale of Star business
$16,007 of plant and equipment and $1,519,790 of intangible assets, and $1,529,790 of borrowings were not
reflected in the statement of cash flow based on the terms of the sale of the Star business.
NOTE 26: SHARE BASED PAYMENTS
Share-based payment expense recognised during the financial year
Options issued under employee option plan
Consolidated Group
2011
$
79,851
79,851
2010
$
146,582
146,582
Employee option plan
The Jumbo Interactive Limited Employee Option Plan was ratified at the Annual General Meeting held on 28 October 2008.
Employees are invited to participate in the scheme from time to time. Options vest when the volume weighted average share
price over five consecutive trading days equals the exercise price and provided the staff member is still employed by the
Group. When issued on exercise of options, the shares carry full dividend and voting rights.
Options granted carry no dividend or voting rights.
Fair value of options granted
The weighted average fair value of options granted during the year was 5.5 cents (2010: 20.6 cents). The fair value at grant
date was determined by an independent valuer using the Monte Carlo Simulation option pricing model that takes into
account the share price at grant date, exercise price, expected volatility, option life, expected dividends, and the risk free rate.
The inputs used for the Monte Carlo Simulation option pricing model for options granted during the year ended 30 June 2011
were as follows:
- Options are granted for no consideration, have a three year life, and are exercisable when the share price equals the
exercise price and if the staff member is still employed by the Group
- Grant date:
-
Share price at grant date:
-
-
-
-
Exercise price:
Expected volatility:
Expected dividend yield:
Risk free rate:
2011
2010
15 Nov 2010
15 Nov 2010
21 Oct 2009
$0.38
$0.70
85.82%
3.95%
5.24%
$0.38
$0.50
86.58%
4.69%
5.15%
$0.48
$0.70
85.47%
3.13%
5.46%
Expected volatility was determined based on the historic volatility (based on the remaining life of the option), adjusted for any
expected changes to future volatility based on publicly available information.
65
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
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T
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: EVENTS AFTER THE REPORTING DATE
There are no material events after the reporting date.
NOTE 28: FINANCIAL RISK MANAGEMENT
a.
General objectives, policies and processes
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.
This note describes the Group’s objectives, policies and processes for managing those risks and the methods used
to measure them. Further quantitative information in respect of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies
and processes for managing those risks and measurement from previous periods unless otherwise stated in this note.
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, bank loans
and chattel mortgages.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance function.
The Group’s risk management policies and objectives are therefore designed to minimise the potential impacts of
these risks on the results of the Group where such impacts may be material. The Board receives periodic reports
from the Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The main purpose of non-derivative financial instruments is to raise finance for Group operations.
There are no derivative instruments recognised or unrecognised.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
i. Treasury Risk Management
An Audit Committee consisting of a majority of non-executive Directors meet on a regular basis to consider
currency and interest rate exposure and to evaluate treasury management strategies in the context of the most
recent economic conditions and forecasts.
The Committee’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst
minimising potential adverse effects on financial performance.
The Audit Committee operates under policies approved by the Board of Directors. Risk management policies are
approved and reviewed by the Board on a regular basis. These include the use of hedging derivative instruments,
credit risk policies, and future cash flow requirements.
ii. Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk,
liquidity risk and credit risk.
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices
will affect the entity’s income or the value of its holdings of financial instruments.
The Group is exposed to market risks from interest rates and foreign currency.
Interest rate risk
Interest rate risk arises principally from cash and cash equivalents, and borrowings.
The object of market risk management is to manage and control interest rate risk exposure within acceptable
parameters while optimising the return.
Interest rate risk is managed with a mixture of fixed and floating rate debt. At 30 June 2011 100% of Group interest
bearing debt is capped. The Group policy is to manage between 50% and 100% of interest bearing debt using capped
and fixed interest rates.
Foreign currency risk
The Group is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and services
in currencies other than the Group’s functional currency. Senior management monitor the Group’s exposure
regularly and utilise the spot market to buy and sell specified amounts of foreign currency to manage this risk.
67
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Liquidity risk
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash balances and
unutilised borrowing facilities are maintained.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations to the entity.
Credit risk arises principally from cash and cash equivalents and trade and other receivables.
The objective of the Group is to minimize risk of loss from credit risk exposure.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at the end of the
reporting period to recognised financial assets, is the carrying amount, net of any provisions for impairment of those
assets, as disclosed in the statement of financial position and notes to the financial statements. No collateral or
other security is held over these assets at balance sheet date.
Credit risk is managed on a Group basis and reviewed regularly by the Audit Committee.
The Audit Committee monitors credit risk by actively assessing the rating quality and liquidity of counter parties:
-
less than A:
surplus funds are only invested with banks and financial institutions with a Standard and Poor’s rating of no
-
all potential customers are rated for credit worthiness taking into account their size, market position and
financial standing; and
-
recognised credit cards.
customers that do not meet the Group’s strict credit policies may only purchase in cash or using
The trade receivables balance, before allowance for doubtful debts, at balance date by geographic region:
Australia
Fiji
USA
New Zealand
Cook Islands
Samoa
Other countries
2011
2010
$
100,478
16,688
69,668
-
84,373
11,404
-
282,611
%
35.6
5.9
24.7
-
29.8
4.0
-
100
$
1,106,599
64,365
150,022
3,093
84,365
34,117
8,210
1,450,771
%
76.3
4.4
10.3
0.2
5.8
2.4
0.6
100
The Group’s most significant customer, located in the Cook Islands, accounts for 30% of trade receivables as at
30 June 2011 (16% as at 30 June 2010, located in Australia), and has been fully provided for.
Credit risk is measured using debtor aging. Refer Note 12(b): Trade and Other Receivables for aging analysis.
b.
Financial Instruments
Categories of Financial Instruments
Financial Assets
Cash and cash equivalents - AA rated
Loans and receivables
Financial Liabilities
Borrowings
Trade and other payables
68
Consolidated Group
2010
$
9,461,658
1,514,896
2011
$
11,770,674
276,647
1,881,156
6,941,803
3,616,766
8,106,023
2010 - 2011Jumbo Interactive Annual Report
NOTES TO THE FINANCIAL STATEMENTS
i. Maturity analysis
Financial liabilities have differing maturity profiles depending on the contractual term and in the case of borrowings,
different repayment amounts and frequency. The table below shows the period in which the principal and interest
(if applicable) of financial liability balances will be paid based on the remaining period to repayment date assuming
contractual repayments are maintained.
Trade and other payables are expected to be paid as follows:
Less than six months
Borrowings are expected to be paid as follows:
Less than one year
One to five years
Consolidated Group
2010
$
8,106,023
8,106,023
2011
$
6,941,803
6,941,803
916,263
1,137,485
2,053,748
2,622,634
1,282,881
3,905,515
The bank facilities were classified as current for the 2010 reporting period due to a breach in one of the bank covenants
since rectified.
ii. Fair Values
The fair values of:
—
Cash, cash equivalent, and receivables approximate their carrying value because of their short term to maturity.
—
to maturity (or interest repricing profile).
Bank loans, overdrafts, trade and other payables approximate their carrying value because of their short term
The deferred consideration is valued at fair value based on discounting future cash flows by the current
—
interest rate of 5.41%: 2010 for liabilities with similar risk profiles. The deferred consideration was repaid in
2011 as part of the settlement of the sale of the Star System Solutions business.
No financial assets and financial liabilities are readily traded on organised markets in standardised form.
Fair values and carrying amounts of financial assets and liabilities at reporting date.
2011
2010
Carrying
Amount
$
11,770,674
276,647
12,047,321
Fair Value
$
11,770,674
276,647
12,047,321
Carrying
Amount
$
Fair Value
$
9,461,658
1,514,896
10,976,554
9,461,658
1,514,896
10,976,554
2011
2010
Carrying
Amount
$
1,881,156
6,941,803
8,822,959
Fair Value
$
2,053,748
6,941,803
8,995,551
Carrying
Amount
$
3,616,766
8,106,023
11,722,789
Fair Value
$
3,905,515
8,106,023
12,011,538
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Borrowings
Trade and other payables
Fair values are materially in line with carrying values.
69
2010 - 2011Jumbo Interactive Annual Report NOTES TO THE FINANCIAL STATEMENTS
Financial instruments measured at fair value
The financial instruments measured at fair value in the statement of financial position have been analysed and classified using
fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists
of the following levels:
—
quoted prices i active markets for identical assets and liabilities (Level 1);
—
(as prices) or indirectly (derived from prices) (Level 2); and
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
—
inputs for the asset or liability are not based on observable market data (unobservable inputs) (Level 3).
Consolidated Group
2011
Financial liabilities
Financial liabilities at fair value
deferred consideration
-
2010
Financial liabilities
Financial liabilities at fair value
deferred consideration
-
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
1,426,011
1,426,011
1,426,011
1,426,011
iii. Sensitivity Analysis
Interest Rate Risk and Foreign Currency Risk
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk at
reporting date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result
from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2011, the effect on profit/(loss) and equity as a result of changes in interest rates, with all other variables
remaining constant, would be as follows:
Change in profit/(loss)
- increase in interest rates by 2%
- decrease in interest rates by 2%
Change in equity
- increase in interest rates by 2%
- decrease in interest rates by 2%
Foreign Currency Risk Sensitivity Analysis
Consolidated Group
2010
$
2011
$
197,790
(197,790)
189,233
(189,233)
197,790
(197,790)
189,233
(189,233)
At 30 June 2011, the effect on profit/(loss) and equity as a result of changes in the value of the Australian Dollar to the
Fijian Dollar, with all other variables remaining constant is as follows:
70
2010 - 2011Jumbo Interactive Annual Report Change in profit/(loss)
- Improvement in AUD to FJD by 5%
- Decline in AUD to FJD by 5%
Change in equity
- Improvement in AUD to FJD by 5%
- Decline in AUD to FJD by 5%
NOTES TO THE FINANCIAL STATEMENTS
Consolidated Group
2011
$
2010
$
(146,908)
162,372
(176,437)
195,009
(146,908)
162,372
(176,437)
195,009
The above interest rate and foreign exchange rate sensitivity analysis has been performed on the assumption that all
other variables remain unchanged.
NOTE 29: RESERVES
a. Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled
subsidiaries. Amounts are reclassified to profit or loss when an entity is disposed of.
b. Share Based Payments Reserve
The share based payments reserve records items recognised as expenses on valuation of employee share options. This
reserve can be reclassified as retained earnings if options lapse.
NOTE 30: COMPANY DETAILS
The registered office of the Company is:
Jumbo Interactive limited
Level 1, 601 Coronation Drive, Toowong, QLD, 4066
The principal places of business are:
—
—
Level 1, 601 Coronation Drive, Toowong, QLD, 4066
Suite 604, 370 St Kilda Road, Melbourne, VIC, 3001
71
2010 - 2011Jumbo Interactive Annual Report DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
The financial statements, comprising the Statement of Comprehensive Income, Statement of Financial Position,
Statement of Changes in Equity and Statements of Cash Flows, and accompanying notes, are in accordance with
the Corporations Act 2001 and:
(a)
(b)
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its
performance for the year ended on that date.
2.
The Company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
3.
as and when they become due and payable.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
4.
The remuneration disclosures included in pages 14 to 19 of the Directors’ report (as part of the audited
Remuneration Report), for the year ended 30 June 2011, comply with section 300A of the Corporations Act 2001.
5.
required by section 295A.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
This declaration is made in accordance with a resolution of the Directors and is signed for and on behalf of the
Directors by:
Mike Veverka
Director
5 September 2011
72
2010 - 2011Jumbo Interactive Annual Report
INDEPENDENT AUDITOR’S REPORT
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 18, 300 Queen St
Brisbane QLD 4000,
GPO Box 457, Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Jumbo Interactive Limited
Report on the Financial Report
We have audited the accompanying financial report of Jumbo Interactive Limited, which comprises the
consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes comprising a summary of significant accounting policies and other explanatory information, and
the Directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the
year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that is free from
material misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that
gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the Directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
BDO Audit (QLD) Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (QLD) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
73
2010 - 2011Jumbo Interactive Annual Report INDEPENDENT AUDITOR’S REPORT
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
Directors of Jumbo Interactive Limited, would be in the same terms if given to the Directors as at the time of this
auditor’s report.
Opinion
In our opinion:
(a)
including:
the financial report of Jumbo Interactive Limited is in accordance with the Corporations Act 2001,
(i)
performance for the year ended on that date; and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 19 of the directors’ report for the year
ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Jumbo Interactive Limited for the year ended 30 June 2011 complies
with section 300A of the Corporations Act 2001.
BDO Audit (QLD) Pty Ltd
M R Just
Director
Brisbane, 5 September 2011
BDO Audit (QLD) Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (QLD) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
74
2010 - 2011Jumbo Interactive Annual Report ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The following additional information is required by the Australian Securities Exchange in respect of listed public companies
only.
1.
Shareholding
The Company has 39,536,805 ordinary shares on issue, each fully paid. There are 1,410 holders of these ordinary
shares as at 31 August 2011. Shares are quoted on the Australian Securities Exchange (Home branch: Brisbane) under
the code JIN and on the German Stock Exchange.
In addition, there are an aggregate total of 4,100,000 options over ordinary shares on issue but not quoted on the
Australian Securities Exchange.
a.
Distribution of Shareholder Numbers at 31 August 2011
Category (size of Holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Number
Holders of
Ordinary
Shares
351
531
178
301
49
1,410
Ordinary
Shares
Held
216,512
1,409,149
1,411,322
8,657,679
27,842,143
39,536,805
b.
c.
The number of shareholdings held in less than marketable parcels is:
490
400,364
The names of the substantial shareholders listed in the holding Company’s register as at 31 August 2011 are:
Name
Vesteon Pty Ltd and associates
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Ordinary Shares
9,398,278
2,664,443
2,295,916
Percentage Held
23.77%
6.74%
5.81%
d.
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
— Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
Options
— Optionholders have no voting rights until their options are exercised.
75
2010 - 2011Jumbo Interactive Annual Report
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
e.
20 Largest Shareholders — Ordinary Shares as at 31 August 2011
Name
Number of Ordinary
Fully Paid Shares Held
% Held of Issued
Ordinary Capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
VESTEON PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) PTY LTD
JP MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
WARAWONG PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR ANTHONY BROWN & MS MELISSA GOLLAN
MR BARNABY COLMAN CADDICK
META CAPITAL LIMITED
MR MIKE VEVERKA
MR VICTOR JOHN PLUMMER
MR CRAIG KUHN
MR DAVID PLATT & MRS SUE PLATT
MR XAVIER ROBERT BERGADE
BERNE NO 132 NOMINEES PTY LTD <323731 A/C>
BRAZIL FARMING PTY LTD
MR JOHN ROSAIA
AURO INVESTMENT MANAGEMENT PTY LTD
BERNE NO 132 NOMINEES PTY LTD <224266 A/C>
MR EDWARD KEITH HAWKINS + MRS BARBARA
JEAN HAWKINS
8,891,724
2,664,443
2,295,916
1,784,827
1,477,700
1,062,629
915,187
800,000
581,666
506,554
435,782
400,000
340,000
300,000
250,000
230,000
204,000
200,000
200,000
200,000
23,740,428
22.49
6.74
5.81
4.51
3.74
2.69
2.31
2.02
1.47
1.28
1.10
1.01
0.86
0.76
0.63
0.58
0.52
0.51
0.51
0.51
60.05
The name of the Company Secretary is Mr Bill Lyne.
The address of the principal registered office in Australia is Level 1, 601 Coronation Drive, Toowong, QLD, 4066.
Telephone (07) 3831 3705.
2.
3.
76
2010 - 2011Jumbo Interactive Annual Report
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
4.
Registers of securities are held at the following addresses:
Computershare Investor Services Pty Ltd
117 Victoria Street
West End Qld 4101
5.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange.
6.
Unquoted Securities as at 31 August 2011
Options over Unissued Shares.
A total of 4,100,000 options are on issue to employees under the Jumbo Interactive Limited Employee Option Plan.
Exercise Price
$0.50
$0.70
$0.70
$0.50
Expiry Date
Number on Issue
1 May 2012
30 October 2012
15 November 2013
15 February 2014
1,450,000
1,350,000
300,000
1,000,000
Number of Holders
4
3
1
8
7.
Other Disclosures
There are no other disclosures.
77
2010 - 2011Jumbo Interactive Annual Report 78
2010 - 2011Jumbo Interactive Annual Report