Table of ConTenTs
ConTenTs
CorporaTe direCTory
business overview
direCTors’ reporT
audiTor’s independenCe deClaraTion
CorporaTe GovernanCe sTaTeMenT
ConsolidaTed sTaTeMenT of CoMpreHensive inCoMe
ConsolidaTed sTaTeMenT of finanCial posiTion
ConsolidaTed sTaTeMenT of CHanGes in eQuiTy
ConsolidaTed 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: CONTRIBUTED EQUITY
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
1
2
3
6
19
20
23
24
25
26
27
27
37
38
38
39
39
42
44
44
45
46
46
47
47
48
49
52
53
54
55
55
57
58
58
60
61
65
65
68
68
69
70
72
1
2011 - 2012Jumbo 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 One
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 Pty Ltd
Level 18
300 Queen Street
Brisbane Qld 4000
Telephone:
Facsimile:
07 3237 5999
07 3221 9227
inTerneT address
www.jumbointeractive.com
ausTralian business nuMber
66 009 189 128
Cover Art done by Local Artist ‘BANX’
2
2011 - 2012Jumbo Interactive Annual Report
business overview
business overview
TeCHnoloGy drivinG posiTive CHanGe
The global lottery industry is in the midst of change driven by customer demand for technological advancements. The pace
is showing no signs of slowing down and Jumbo is investing in the development of these new technologies to help lotteries
around the world meet this demand.
Over the past 12 years, Jumbo has built a solid system for selling lotteries on the internet. This technology is driving sales of
Australian lotteries delivering profits for Jumbo and its partner lotteries as well as government revenue for social needs. The
system has also become a competitive edge in the Company’s efforts to expand into new countries.
The highlight from the 2012 results is a 39% increase in net profit after tax to $6.7 million. Total Transaction Value (TTV)
increased 32% from $76 million to $100 million and revenue increased 33% from $18 million to $24 million.
A 2.0c dividend was declared bringing the total for the year to 3.0c. Cash levels have reached $16.8 million plus $4.9 million for
customer account balances. Trade and other payables are $5.5 million resulting in net cash for Jumbo of $11.3 million. This is
earmarked for expansion into the US or other jurisdictions.
Lottery TTV - Total Transaction Value
$66M
$76M
$100M
100
90
80
70
60
50
40
30
20
10
$42M
2009
2010
2011
2012
Group Net Profit After Tax
$3M
2009
8
6
4
2
0
- 2
- 4
- 6
- 8
2010
$7.3M
1
1 One off loss in 2010 due to the software division that was closed in 2011
Dividend
3
2
1
0
1.5c
2009
0.5c
2010
$4.8M
2011
1.0c
2011
$6.7M
2012
3.0c
2012
3
2011 - 2012Jumbo Interactive Annual Report
Lottery TTV - Total Transaction Value
$66M
$76M
2009
2010
2011
2012
100
90
80
70
60
50
40
30
20
10
8
6
4
2
0
- 2
- 4
- 6
- 8
$42M
$3M
2009
Group Net Profit After Tax
business overview
Dividend
3
2
1
0
1.5c
2009
wHaT does JuMbo do
brinG fun To life!
2010
$7.3M
1
0.5c
2010
$100M
$6.7M
2012
3.0c
2012
$4.8M
2011
1.0c
2011
Jumbo markets government lotteries using technological advances to drive success. Twelve years ago the web brought a
new dimension to lottery play in Australia and Ozlotteries.com was created to provide customers with the convenience
and excitement they were looking for. In 2012 the website passed two important milestones; sales reached $100 million for
the first time and the customer database reached one million accounts (1.38 million by June 2012).
wHaT’s neXT? inTerneT loTTeries 2.0
At first, Jumbo’s flagship website was a simple website selling lottery tickets that over the years evolved with steady
innovation into a full digital service that includes smartphones, loyalty, social media and partner e-retailers to become the
lottery industry’s most complete internet lottery platform. In September 2012, Jumbo unveiled its future vision at the 2012
World Lottery Summit in Montréal with the release of five more products.
1. Jumbo smart signs
2. Jumbo e-retailer
3. Jumbo fun pickers
4. Jumbo Group play
5. Jumbo digital instants
All five products represent the next step forward and build on top of the existing smart phone, customer loyalty and web-
based platform that has been developed inhouse since 2000.
A new website was created at www.jumbostudios.com to showcase not only these five new products, but also the entire
Jumbo solution for internet lotteries.
4
2011 - 2012Jumbo Interactive Annual Report
inTerneT loTTery division
1. Jumbo smartsigns
Traditional lottery retailers now have the technology to participate in
internet lottery sales without losing commissions or customers. Jumbo
SmartSigns allow customers that see a lottery sign to instantly ‘snap, tap
or check-in’ to buy tickets instantly using their smartphone. ‘Snap’ refers
to the familiar QR code (Quick Response Code), ‘Tap’ refers to NFC
(Near Field Communications) or ‘Check-in’ via GPS to verify location.
Customers are given the convenience of purchasing their ticket directly
from their smartphone and the retailer that owns the sign location is
credited with the sale and commission. Bonuses and incentives can also
be offered as a way of driving customers back into the retailer’s store.
2. Jumbo e-retailer
Another new product for traditional retailers is the Jumbo e-Retailer
system that allows retailers to incorporate digital sales with their
traditional sales. Customers are able to purchase tickets through
the retailer’s own website and sales are linked back to that retailer.
Government required identity and age verification checks are handled
centrally to ensure compliance with all required laws. This system brings
together traditional and digital lotteries into a single harmonious system.
3. Jumbo funpickers
Lottery players love to choose their favourite numbers when playing
the lottery. Jumbo takes this one step further by giving them the choice
to also select their favourite star sign, sport, personality (or whatever)
adding an extra dimension to their lottery play. But the fun doesn’t stop
there. Players can also play classic arcade style casual games to choose
their numbers.
Jumbo has released its first game and has begun partnering with game
developers to provide a range of arcade style casual games as a fun way
to pick numbers for lotteries. Using the e-Retailer system, Jumbo is able
to share revenues with the game developers providing new revenue
models as well as new avenues for interactive marketing.
4. Jumbo Groupplay
Playing lotteries is fun, but playing lotteries with friends adds a whole
new dimension. Jumbo GroupPlay combines this with the rapid rise of
social media into an innovative way to play lotteries with friends via social
media. First, a player begins a game by inviting their Facebook friends to
join in. Social chatter begins and a group is formed to play the lottery.
Jumbo handles the transactions and notification of result and prizes. The
results create further social chatter rolling on to a new game each week.
5. Jumbo digital instants
Digital instant games are the digital equivalents of scratch tickets on the
internet. Currently not permitted in Australia, Jumbo has been active in
the debate to include online scratch games in the Australian Interactive
Gaming Act. Overseas, digital instants have been accepted and so Jumbo
has begun marketing its range of games in those jurisdictions that accept
this form of gaming.
Patent applications have been filed for protection of these new
technologies.
business overview
5
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
direCTors’ reporT
The Directors of Jumbo Interactive Limited (the Company), present their report on the consolidated entity (the Group),
consisting of Jumbo Interactive Limited and the entities it controlled at the end of, and during, the financial year ended
30 June 2012.
direCTors
The following persons were Directors of the Company 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)
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.
prinCipal aCTiviTies and siGnifiCanT CHanGes in naTure of aCTiviTies
The principal activity of the Group during the financial year was the retail of lottery tickets sold both in Australia and
eligible overseas jurisdictions.
There were no significant changes in the nature of the Group’s principal activities that occurred during the financial year.
dividends
Details of dividends paid to members of the Company during the financial year are as follows:
Final dividend of 0.5 cent per share on ordinary shares for the year ended 30 June 2011
paid on 30 September 2011
Interim dividend of 1.0 cent per share on ordinary shares for the year ended 30 June
2012 paid on 30 March 2012
$197,685
$416,157
$613,842
In addition to the above dividends, since the end of the financial year, the Directors have declared a final ordinary dividend
for the financial year ended 30 June 2012 of 2.0 cents per share on ordinary shares to be paid on 28 September 2012
(approximately $848,251).
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 Company now reports revenue on a net revenue inflow basis where it considers that it acts more as an Agent than
as a Principal such as the sale of lottery tickets. The gross inflow is advised as Total Transaction Value for information
purposes. Refer to Notes 1(d) and 1(aa)(i) for further details.
The consolidated profit of the Group amounted to $6,743,525 (2011: $4,834,455), after providing for income tax
$2,310,544 (2011: benefit $306,411), which is a large increase on the results reported for the year ended 30 June 2011. Net
reportable operating revenues increased 33% to $24,087,742 (2011: $18,118,334) and Total Transactional Value increased
by 32% to $100,256,769 (2011: $75,946,130). The significant improvement was largely from continued growth in the online
lottery business.
Total Transaction Value is the gross amount received for the sale of goods and rendering of services.
Other revenue, being mainly interest on cash, increased by 89% to $897,294 (2011: $474,179) due to higher cash and cash
equivalent balances and improved liquidity management.
Further discussion on the Group’s operations now follows:
6
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
review of operations
(a) online lottery segment
The Company continues to make significant investment in its internet intellectual properties, notably www.ozlotteries.
com, and customer management, with 30% growth in net reportable operating revenues to $23,584,433 (2011:
$18,081,812). Gross transactional value increased 31% to $99,719,424 (2011: $75,866,793), 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 $10,002,512 (2011: $5,495,205).
(b) all other segments
This segment consists of the sale of non-lottery products and services and is primarily an exploration in leveraging off the
current lottery customer database. Revenues increased to $548,760 (2011: $79,337) as the product range and customer
database expanded, with an operating loss of $33,866 (2011: profit $53,525) due to increased operating expenses to
support both increased current and future revenues.
2012
$100.3 million
$10,515,449
$6,743,525
2011
$75.9 million1
$7,024,8101
$4,834,455
2010
$66.0 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
Gross transactional value
EBITDA
PROFIT - NPAT
1 continuing operations
2 after impairment losses of $8,290,292
five year asset Growth
Cash at Bank1
Net Assets
NTA
2012
$21.7 million
$18.1 million
$11.3 million
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
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)
five year share price analysis
PROFIT - NPAT
EPS
Share Price
Shares on Issue
Market Cap
2012
$6,743,525
16.7¢
105.0¢
42.4 million
$44.5 million
2011
$4,834,4552
12.1¢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
1 after impairment losses of $8,290,292
2 after impairment reversal $1,258,354 and voluntary administration expenses $1,224,339
(c) summary of results
The results for the Company are summarised below:
financial position
The net assets of the Group have increased by $8,001,735 from 30 June 2011 to $18,083,709. This increase is largely due
to improved operating performance of the Group.
The Group’s working capital, being current assets less current liabilities, has improved from $4,602,813 in 2011 to
$11,686,335 in 2012 due mainly to the increased cash and cash equivalents through operating activities.
The Directors believe the Group is in a sound financial position to expand and grow its current operations.
7
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
siGnifiCanT CHanGes in sTaTe of affairs
Significant changes in the state of affairs of the Group for the financial year were as follows:
a)
Increase in contributed equity of $1,762,986 resulting from (see Note 21: Contributed Equity for details):
Issue of 2,910,000 shares as a result of exercise of options previously granted to
employees and directors
Issue of 295,779 shares under the Dividend Reinvestment Plan
Buyback of 330,024 shares under a sale of Unmarketable Parcels offer
b) Repayment of borrowings
Surplus cash was used to repay borrowings early in excess of arranged payments as follows:
$750,000 loan from the ANZ (see Note 18: Borrowings for details)
$
1,707,000
147,733
(91,747)
1,762,986
$
(750,000)
(750,000)
liKely developMenTs, Key business sTraTeGies and fuTure prospeCTs
The Company continues its efforts to grow the domestic lottery market while respecting responsible gaming commitments
and the needs of all industry stakeholders, including other lottery channels.
In December 2011, the Company signed a five year supply and marketing contract with South Australia Lotteries which is
expected to have a positive effect on revenue with the website being launched 3 September 2012.
In December 2008, the Company signed a five year co-branded website contract with New South Wales Lotteries (now
owned by the Tatts Group) to handle lottery sales for customers from www.nswlotteries.com.au. In May 2012, the Tatts
Group began accepting online orders from these NSW customers bringing NSW into line with the other states. As
previously advised, this will have the effect of reducing revenue from the co-branded website although growth of NSW
customers for www.ozlotteries.com is still expected to continue through ongoing marketing initiatives.
The domestic internet lottery market represents 7% of the total domestic lottery market compared to overseas lottery
markets which have recorded strong growth such as the more mature markets of UK and Finland where internet market
share has reached 15% and 30% respectively.
The Company is actively pursuing opportunities in international markets, most notably the USA market since the green
light for internet lottery sales was given by the Department of Justice in December 2011. The North America lottery
market is $60 billion compared to $4 billion in Australia.
New products and technologies are being developed to take advantage of the trend towards social media, interactive
gaming and e-tailing, which is expected to have the Company well placed in the domestic market and give it a competitive
edge in the international markets.
It is not possible at this stage to predict the overall impact on revenues of these upward and downward forces.
MaTTers subseQuenT To THe end of THe finanCial year
There were no material events after the balance sheet date.
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.
8
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
inforMaTion on direCTors
name
Experience
david K barwick
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 30 public companies covering a broad range
of activities.
Directorships currently held in
other listed entities
Current Director and Chairman of Metallica Minerals Limited (since 11 March 2004);
current Director of Orion Metals Limited (since 28 November 2008); and current
Director and Chairman of Planet Metals Limited (since 9 June 2009).
Interest in shares and options1
None
Special responsibilities
Chairman (Non-Executive); Chair of the Nomination and Remuneration Committee;
and member of the Audit Committee.
Directorships formerly held in
other listed entities during the three
years prior to the current year
Previous Director and Chairman of MetroCoal Limited (from 6 July 2007 to 30 June
2012).
name
Qualifications
Experience
Mike veverka
Bachelor of Engineering
Mike Veverka has been Chief Executive Officer and 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 subsidiary Benon
Technologies Pty Ltd 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.
Directorships currently held in
other listed entities
None
Interest in shares and options1
9,488,540 ordinary shares in Jumbo Interactive Limited.
Special responsibilities
Chief Executive Officer
Directorships formerly held in
other listed entities during the three
years prior to the current year
None
name
Qualifications
Experience
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.
9
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
Directorships currently held in
other listed entities
None
Interest in shares and options1
None
Special responsibilities
Chair of the Audit Committee; member of the Nomination and Remuneration
Committee; and Company Secretary.
Directorships formerly held in
other listed entities during the three
years prior to the current year
None
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 2012
and the number of meetings attended by each Director is set out below:
board
audit Committee
name
David Barwick
Mike Veverka
Bill Lyne
eligible to
attend
14
14
14
attended
14
14
12
eligible to
attend
7
-
7
attended
7
-
7
nomination and
remuneration Committee
attended
eligible to
attend
4
-
4
4
-
4
sHare opTions
Unissued ordinary shares of the Company under option at the date of this report are as follows:
date options granted
15 February 2011
14 December 2011
expiry date
15 February 2014
14 December 2014
exercise price of shares
50 cents
70 cents
number under option
800,000
1,000,000
1,800,000
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 2012, the following options were issued to consultants based in the USA as part of
payment for services being provided (refer to Note 26 Share-Based Payments for details):
name
Brian J Roberts
John Carson
number of options
granted
number of ordinary
shares under option
500,000
500,000
1,000,000
500,000
500,000
1,000,000
During or since the financial year ended 30 June 2012, the following ordinary shares of Jumbo Interactive Limited were issued
on the exercise of options granted. No amounts are unpaid on any of the shares.
Employees
Employees
Directors
Directors
Grant date
1 May 2009
15 February 2011
21 October 2009
15 November 2010
issue price of shares
50 cents
50 cents
70 cents
70 cents
number of shares issued
1,450,000
200,000
1,350,000
300,000
3,300,000
10
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
During the financial year ended 30 June 2012, 50,000 options were forfeited due to staff leaving employment.
During or since the end of the financial year, no options were granted by the Company to directors and executives of the
Group as part of their remuneration.
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.
a)
policy for determining the nature and amount of KMp remuneration
The Remuneration Policy of Jumbo Interactive Limited has been designed to align director and Key Management Personnel
(KMP) objectives with shareholder and business objectives by providing a remuneration component and offering specific
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
KMP 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 KMP of the Group is
as follows:
•
•
•
•
The Remuneration Policy, setting the terms and conditions for the directors and KMP, was developed by the
Nomination and Remuneration Committee and approved by the Board.
All KMP receive a base salary (which is based on factors such as individual performance skills, level of responsibilities,
experience and length of service, superannuation, options (by invitation) and performance incentives.
Performance incentives are generally only paid once predetermined key performance measures have been met.
The Board reviews KMP 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 KMP is measured against criteria agreed annually with each KMP 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 KMP and reward them for performance that results in long term growth in shareholder wealth. Refer
below for further details of performance based remuneration.
KMP are also entitled to participate in the employee share option arrangements.
The directors and KMP 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 KMP is valued at the cost to the Company and expensed. Options are valued using
the Black-Scholes, Binomial and Monte Carlo Simulation methodologies.
Following a “first strike” to the 2011 Remuneration Report, the board sought and obtained feedback from those
shareholders who had either voted against or abstained from voting with regards to the Remuneration Report. Following
this, the Board has increased the level of disclosure in the Remuneration Report and revised the remuneration and bonus
structures of KMP.
Fixed compensation
Fixed compensation consists of a base salary as well as employer contributions to superannuation funds.
Compensation levels are reviewed annually by the Board through a process that considers individual and overall
performance of the Group, and with reference to other KMP of comparable companies. If considered necessary, external
consultants provide analysis and advice to ensure the directors’ and KMP compensation is competitive in the market place.
Performance linked compensation
Performance linked compensation includes short term incentives only and is designed to reward KMP for superior
performance. The short term incentive (STI) is an “at risk” bonus provided in the form of cash. The Group does not have
long term incentives (LTI) such as the issue of ordinary shares or the grant of options over ordinary shares as a part of
performance linked compensation due to the relatively small market capitalisation of the Company, the concentrated
shareholding of the Company which could become further concentrated under such a scheme, and the desire of the Board
11
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
to limit shareholding dilution to as low a level as possible. The Board did not exercise any discretion on the payment of
bonuses.
Non-Executive Directors
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. The total compensation for all non-executive directors, last voted upon by
shareholders at the 2009 AGM, is not to exceed $250,000 per annum and is set with reference to other non-executive
directors of comparable companies. Fees for non-executive directors are not linked to the performance of the Group.
Fees are paid as follows and comprise cash and statutory superannuation:
Chairman of Board
Non-Executive Directors
Membership of Audit Committee and Nomination and
Remuneration Committee
Chairman of Audit Committee
Chairman of Nomination and Remuneration Committee
$76,300
$54,500
No additional fees
No additional fees
No additional fees
Performance Based Remuneration
As part of the KMP remuneration package there is a performance based component, consisting of key performance
indicators (KPI). The intention of this program is to facilitate goal congruence between executives with that of the business
and shareholders. These KPI are set annually, with a certain level of consultation with KMP to ensure buy-in. The KPI target
areas the Board believes hold greater potential for group expansion and profit, covering both financial and non-financial as
well as short and long-term goals. The level set for each KPI is based on combination of an improvement on the previous
year results, budgeted figures and market sector standards (Consumer Discretionary Sector – ASX:XDJ). Performance in
relation to the KPI is assessed annually by the Board, with bonuses being awarded depending on the number and deemed
difficulty of the KPI achieved. Following the assessment, the KPI are reviewed by the Board in light of the desired and actual
outcomes, and their efficacy is assessed in relation to the Group’s goals and shareholder wealth before the KPI are set for
the following year.
In determining whether or not a KPI has been achieved, the Company bases the assessment on audited figures.
Performance conditions linked to remuneration
The Group seeks to emphasise reward incentives for results and continued commitment to the Group through the
provision of various “at risk” cash bonus reward schemes.
Short term incentive bonus
Incentive payments are based on the achievement of financial targets of profit, return of equity and total shareholder
return and non-financial targets of strategic benefit such as signing of an additional lottery supplier and obtaining an agency
agreement in the USA. Payments of incentives for the 2012 financial year result were based on the Group’s overall financial
performance (with returns net profit after tax greater than 10% from the prior year, return on equity and total shareholder
returns maintained at greater than 20%), and non-financial target agreements being signed.
Long term incentive bonus
Options are issued to KMP as part of their remuneration at the discretion of the Board. These options are not issued
based upon performance criteria, but are issued to increase goal congruence between KMP, directors and shareholders.
Company Performance, Shareholder Wealth, and Directors’ and KMP Remuneration
The Remuneration Policy has been tailored to increase goal congruence between shareholders, directors and KMP.
The following table shows the total transaction value 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. Analysis of the figures shows an increase in profits each
year, except 2010 when an impairment of the software division was recognised. This division was subsequently closed in
the 2011 financial year. The improvement in the Company’s performance over the past five years has been reflected in
the Company’s share price with an increase each year, with the exception of 2009 when the share price fell slightly. The
12
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
Board is of the opinion that these results can be attributed, in part, to the previously described Remuneration Policy and is
satisfied with the upwards trend in shareholder wealth over the past five years.
Total Transaction Value
Net profit/(loss) – overall
operations
Net profit/(loss) – continuing
operations
Net profit/(loss) – discontinued
operations
Share price at year end
Dividends paid per share
Total shareholder return
Earnings per share
Return on capital employed –
overall operations
Return on capital employed –
continuing operations
Return on capital employed –
discontinued operations
2012
$100.3 mil
$6,743,525
2011
$75.9 mil1
$4,834,455
2010
$66.0 mil1
($7,311,048)
2009
$58.6 mil
$2,957,335
2008
$37.8 mil
$2,730,526
$6,476,516
$4,932,851
$3,260,797 2
$2,957,335
$2,730,526
$267,009 5
($98,396)4
($10,571,845) 3
n/a
n/a
105.0¢
1.5¢
187.8%
16.7¢
37.3%
35.8%
1.5%
37.0¢
0.5¢
38.9%
12.1¢
47.9%
48.9%
27.0¢
0.5¢
27.9%
(17.0¢)
(114.6%)
51.1%
21.5¢
1.5¢
2.2%
6.9¢
20.8%
20.8%
(1.0%)
(165.7%)
n/a
22.5¢
1.0¢
(28.8%)
6.5¢
23.0%
23.0%
n/a
1 continuing operations.
2 this is after a one-off impairment expense of $348,585.
3 this is after a one-off impairment expense of $7,941,707.
4 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.
5 this is only the tax effect of the subsidiary placed into voluntary administration.
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
David Todd
Xavier Bergade
Kate Waters
Position held
Chairman (Non-Executive)
Director and Chief Executive Officer
Non-Executive Director and Company Secretary
Chief Financial Officer
Chief Technical Officer
Operations and Human Resources Manager
Kate Waters has become a member of key management personnel for the financial year ended 30 June 2012 as a result of a
change in the role and responsibilities relating to the position during the financial year.
13
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
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2
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
d)
Cash bonuses
Cash bonuses granted by the Board during the financial year ended 30 June 2012 with no vesting conditions were paid on
19 January 2012 and 6 September 2012.
Incentive outcomes for 2012:
KMp
David Barwick
Bill Lyne
Mike Veverka
David Todd
Xavier Bergade
Kate Waters
included in remuneration
$
n/a
n/a
160,000
80,000
80,000
15,000
forfeited in year
$
n/a
n/a
120,000
40,000
40,000
-
e)
options and rights granted as remuneration
Options are issued to key management personnel as part of their remuneration at the discretion of the Board. The options
are not necessarily issued based upon performance criteria, but are issued to selected executives of the Company and its
subsidiaries to increase goal congruence between executives, directors and shareholders.
No options and rights were granted to key management personnel as compensation during the reporting period.
Options will vest in 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 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
Details of equity instruments issued during the period to key management personnel as a result of options exercised that
had previously been granted as compensation are as follows:
2012
Name
Directors
David Barwick
Bill Lyne
Mike Veverka
Other key management personnel
David Todd
Xavier Bergade
number of shares
issued on exercise
of options
number of options
exercised
amount paid
per share
amount unpaid
per share
550,000
550,000
160,000
1,260,000
700,000
550,000
1,250,000
550,000
550,000
160,000
1,260,000
700,000
550,000
1,250,000
$0.70
$0.70
$0.70
$0.50
$0.50
-
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-
15
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
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16
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
h)
employment contracts of directors and KMp
The employment conditions of non-executive directors are formalised by letters of appointment and KMP 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 fifty two (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
$360,000 plus incentive bonuses as determined by the Board from year to year, plus
superannuation, to be reviewed annually by the Board.
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:
Termination payments:
Xavier bergade
Contract term:
Base salary:
Termination payments:
Kate waters
Contract term:
Base salary
Termination payments:
Ongoing
$200,000 plus incentive bonuses as determined by the Board from year to year, plus
superannuation, to be reviewed annually by the Board.
Payment on early termination by the Group, other than for gross misconduct, equal to
six months base salary.
Ongoing
$200,000 plus incentive bonuses as determined by the Board from year to year, plus
superannuation, to be reviewed annually by the Board.
Payment on early termination by the Group, other than for gross misconduct, equal to
six months base salary.
Ongoing
$110,000 plus incentive bonuses as determined by the Board from year to year, plus
superannuation, to be reviewed annually by the Board.
Payment on early termination by the Group, other than for gross misconduct, equal to
three months base salary.
END OF REMUNERATION REPORT
indeMnifyinG offiCers or audiTor
During the financial year, the Company 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, or insurance paid on behalf of, the auditor of the Group.
17
2011 - 2012Jumbo Interactive Annual Report
direCTors’ reporT
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:
Taxation services
Amounts paid or payable to a related practice of BDO
- Tax compliance services - tax returns
- Other tax advice
other services
Amounts paid or payable to a related practice of BDO
- Accounting advice
Total fees for non-audit services
Consolidated
2012
$
39,297
18,689
-
57,986
2011
$
30,560
7,440
18,500
56,500
On the advice of the Audit Committee, the Directors are 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 the Directors.
david K barwick
Chairman
Brisbane
6 September 2012
18
2011 - 2012Jumbo 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 T J KENDALL TO THE DIRECTORS OF JUMBO INTERACTIVE LIMITED
As lead auditor of Jumbo Interactive Limited for the year ended 30 June 2012, 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 Jumbo Interactive Limited and the entities it controlled during the period.
T J Kendall
Director
BDO Audit Pty Ltd
Brisbane, 6 September 2012
BDO Audit 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 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.
19
2011 - 2012Jumbo Interactive Annual Report
CorporaTe GovernanCe sTaTeMenT
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION
This statement summarises the corporate governance practices that have generally applied in Jumbo Interactive Ltd (the
Company) throughout the reporting period except where otherwise stated. It is structured along the same lines as the ASX
Corporate Governance Council’s Principles and Council 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”. The Company 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.
The Company 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”. The Company’s Board is so structured, and its Directors adequately
discharge their responsibilities and duties for the benefit of shareholders.
The Board presently comprises only two Non-Executive Directors (David Barwick, Chairman and Bill Lyne, also the Company
Secretary) and the Chief Executive Officer (Mike Veverka). Fundamental requirements for Jumbo Directors are a deep
understanding of business management and financial markets and such experience, complemented where possible with industry
knowledge, are desirable attributes for Board membership. All Board members meet the fundamental requirements, 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 this criterion. On the other hand, Mike Veverka is considered
to not be independent because he is a substantial shareholder in the Company (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.
The Board has established a Nomination and Remuneration Committee which operates under a Board approved Nomination
and Remuneration Committee Charter. In accordance with the Council’s Recommendations the Nomination and Remuneration
Committee Charter requires it to have three Non-Executive Directors, with a majority being independent.. However, at the present
time it has only two members, being the Non-Executive Directors, David Barwick (as the Chair) and Bill Lyne, both of whom have
relevant 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.
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
20
2011 - 2012Jumbo Interactive Annual Report
CorporaTe GovernanCe sTaTeMenT
access and contact with the Company Secretary.
The Directors may seek external professional advice at the expense of the Company on matters relating to their role as Directors of
the Company, 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, the
Company 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 Whistleblower 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 Diversity Policy outlines requirements for the Board to develop measurable objectives for achieving diversity, and annually
assess both the objectives and the progress in achieving these objectives. Accordingly, the Board has developed the following
objectives regarding gender diversity and aims to achieve these objectives over the next five years as director and senior positions
become vacant and appropriately qualified candidates become available:
Women on the Board
Women in senior management roles
Women employees in the Company
Total employees in the Company
2012
%
-
25
46
100
No.
-
1
32
70
2017
To have at least 1 woman on the Board
Maintain the current number of women
Maintain the percentage of women in excess of 40%
The Company 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”. The Company 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. 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.
5.
Make timely and balanced disclosure
In this Principle the Council states that companies should “promote timely and balanced disclosure of all material matters
21
2011 - 2012Jumbo Interactive Annual Report
CorporaTe GovernanCe sTaTeMenT
concerning the Company”. The Company 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.
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.
Respect the rights of shareholders
6.
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 the
Company 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.
Recognise and manage risk
7.
In this Principle the Council states that companies should “establish a sound system of risk oversight and management and
internal control”. The Company 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 Company’s 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.
22
2011 - 2012Jumbo Interactive Annual Report
ConsolidaTed sTaTeMenT of CoMpreHensive inCoMe
Jumbo interactive limited and its Controlled subsidiaries
ConsolidaTed sTaTeMenT of CoMpreHensive inCoMe
for the year ended 30 June 2012
Revenue from continuing operations
Cost of sales
Gross profit
Other revenue/income
Distribution expenses
Marketing costs
Occupancy expenses
Administrative expenses
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)
from continuing and discontinued operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
from continuing operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
from discontinued operations
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
note
Consolidated Group
2012
$
2011
$
24,087,742
18,118,334
(4,215,602)
(3,538,959)
19,872,140
14,579,375
897,294
(29,367)
(1,344,409)
(715,173)
474,179
(44,347)
(742,913)
(707,563)
(9,518,739)
(7,554,346)
(107,677)
9,054,069
(2,577,553)
6,476,516
267,009
(150,249)
5,854,136
(921,285)
4,932,851
(98,396)
6,743,525
4,834,455
19,319
27,087
6,762,844
4,861,542
16.7
16.6
16.0
15.9
0.7
0.7
12.1
12.1
12.3
12.3
(0.2)
(0.2)
3
4
3
4
5
6
10
10
10
10
10
10
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
23
2011 - 2012Jumbo Interactive Annual Report
ConsolidaTed sTaTeMenT of finanCial posiTion
Jumbo interactive limited and its Controlled subsidiaries
ConsolidaTed sTaTeMenT of finanCial posiTion
as at 30 June 2012
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
Contributed equity
Accumulated losses
Reserves
TOTAL EQUITY
note
Consolidated Group
11
12
19
13
15
16
19
17
18
20
18
20
19
21
2012
$
21,686,797
401,718
383,245
98,625
22,570,385
360,372
6,398,707
394,334
7,153,413
29,723,798
10,354,686
194,680
334,684
10,884,050
250,000
103,708
402,331
756,039
11,640,089
18,083,709
2011
$
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
28,876,572
(11,269,145)
476,282
18,083,709
27,113,586
(17,398,827)
367,215
10,081,974
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
24
2011 - 2012Jumbo Interactive Annual Report
ConsolidaTed sTaTeMenT of CHanGes in eQuiTy
Jumbo interactive limited and its Controlled subsidiaries
ConsolidaTed sTaTeMenT of CHanGes in eQuiTy
for the year ended 30 June 2012
Contributed
equity
accumulated
losses
share-
based
payments
reserve
foreign
currency
translation
reserve
Total
equity
ConsolidaTed Group
$
$
$
$
$
Balance at 1 July 2010
28,156,064
(22,036,016)
330,111
(69,834)
6,380,325
Total transactions with owners in their
capacity as owners
(1,042,478)
(197,266)
79,851
balance at 30 June 2011
27,113,586
(17,398,827)
409,962
(42,747)
10,081,974
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
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
-
-
-
4,834,455
-
4,834,455
30,944
(1,073,422)
-
-
(197,266)
-
79,851
-
-
-
6,743,525
-
6,743,525
1,854,733
(91,747)
-
-
(613,843)
-
89,748
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,834,455
27,087
27,087
27,087
4,861,542
-
-
-
-
-
30,944
(1,073,422)
(197,266)
79,851
(1,159,893)
-
6,743,525
19,319
19,319
19,319
6,762,844
-
-
-
-
-
1,854,733
(91,747)
(613,843)
89,748
1,238,891
Total transactions with owners in their
capacity as owners
1,762,986
(613,843)
89,748
balance at 30 June 2012
28,876,572
(11,269,145)
499,710
(23,428)
18,083,709
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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2011 - 2012Jumbo Interactive Annual Report
ConsolidaTed sTaTeMenT of CasH flows
Jumbo interactive limited and its Controlled subsidiaries
ConsolidaTed sTaTeMenT of CasH flows
for the year ended 30 June 2012
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
note
Consolidated Group
2011
$
2012
$
24,914,449
19,990,087
(10,978,560)
(13,506,299)
776,414
(107,677)
1,055,794
(2,717,340)
415,247
(183,154)
405,398
(593,826)
Net cash inflows/(outflows) from operating activities
25 (a)
12,943,080
6,527,453
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
(67,811)
(250,729)
(2,696,152)
(2,067,960)
-
1,125
(374,656)
2,043
Net cash inflows/(outflows) from investing activities
(2,762,838)
(2,691,302)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payment for buyback of shares
Proceeds of borrowings
Repayment of borrowings
Dividends paid
Net cash inflows/(outflows) from financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of year
21
21
1,707,005
-
(91,747)
(1,073,422)
-
(1,436,476)
(466,115)
(287,333)
181,561
(486,112)
(166,322)
(1,544,295)
9,892,909
2,291,856
23,214
17,160
11,770,674
9,461,658
Cash and cash equivalents at end of year
11
21,686,797
11,770,674
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
26
2011 - 2012Jumbo 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 2012
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of Jumbo Interactive Ltd (the Company) for the year ended 30 June 2012 were authorised in
accordance with a resolution of the Directors on 6 September 2012 and cover the consolidated entity consisting of Jumbo
Interactive Ltd its subsidiaries (the Group) 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 the Company as an individual entity is included in Note 2: Parent Entity
Information.
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 (ASX: JIN). The Company is a for-profit entity for the purposes of preparing
these financial statements.
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. 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
27
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
value. 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
(AU$).
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 the Company 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.
Following a change in the illustrative examples to AASB 118 Revenue in relation to guidance in determining whether an
entity is acting as an Agent or as a Principal which applies to accounting periods beginning on or after 1 January 2011, the
Company now reports revenue on a basis where it considers that it acts more as an Agent than as a Principal for the sale
of lottery tickets. The 2011 comparatives have been restated accordingly.
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 rendering 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.
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2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
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.
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 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.
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2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
(h) Trade receivables
Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts, and have
repayment terms between seven and 30 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.
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 at 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
- up to five years
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.
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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
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 annually, 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.
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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 two and a half years.
(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 30 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 5.83% (2011: 7.24%).
(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 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.
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(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.
(v) share-based payments
The Group may provide benefits to employees (including Directors) or consultants of the Group in the form of share-
based payment transactions, whereby services may be undertaken 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 to Directors, employees and consultants is recognised as an 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 or consultants 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 as
appropriate. 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 the Company, 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.
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(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) Changes in accounting policies
(i) AASB 118: Revenue recognition
The Group changed its accounting policy relating to the recognition of revenues for the financial year ending 30 June 2012.
Revenues were previously recognised on a gross inflow basis and are now recognised on a net inflow basis. This change
has been implemented as management is of the opinion that, after judgment and consideration of all the relevant facts
and circumstances, it acts more as an agent then as a principal associated with the sale of lottery tickets and rendering of
related services. The aggregate effect of the change in accounting policy on the annual financial statements for the year
ended 30 June 2012 is as follows:
ConsolidaTed Group
statement of comprehensive income
2012
Revenue – sale of goods
Revenue – rendering of services
Total revenue from continuing operations
Cost of sales – sales of goods
Cost of sales – rendering of services
Total cost of sales
Gross profit
34
previous
policy
adjustment
revised
policy
$
$
$
100,256,769
-
100,256,769
(80,384,629)
-
(80,384,629)
19,872,140
(98,305,375)
22,136,348
(76,169,027)
79,205,183
(3,036,156)
76,169,027
-
1,951,394
22,136,348
24,087,742
(1,179,446)
(3,036,156)
(4,215,602)
19,872,140
2011 - 2012Jumbo Interactive Annual Report
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previous
policy
adjustment
revised
policy
$
$
$
75,946,130
-
75,946,130
(61,366,755)
-
(61,366,755)
14,579,375
(74,362,482)
16,534,686
(57,827,796)
60,308,656
(2,480,860)
57,827,796
-
1,583,648
16,534,686
18,118,334
(1,058,099)
(2,480,860)
(3,538,959)
14,579,375
2011
Revenue – sale of goods
Revenue – rendering of services
Total revenue from continuing operations
Cost of sales – sales of goods
Cost of sales – rendering of services
Total cost of sales
Gross profit
This changed accounting policy has no effect on profit, the Consolidated Statement of Financial Position, or Consolidated
Statement of Changes in Equity.
(ii) Adoption of AASBs and Improvements to AASBs 2011 – AASB 1054 and AASB 2011-1
The AASB has issued AASB 1054 Australian Additional Disclosures and 2011-1 Amendments to Australian Accounting
Standards arising from the Trans-Tasman Convergence Project, and made several minor amendments to a number of
AASBs. These standards eliminate a large portion of the differences between the Australian and New Zealand accounting
standards and IFRS and retain only additional disclosures considered necessary. These changes also simplify some current
disclosures for Australian entities and remove others.
(bb) standards, amendments and interpretations to existing standards that are not yet effective and have not
been adopted early by the Group
At the date of authorization of these financial statements, certain new standards, amendments and interpretations to
existing standards have been published but are not yet effective, and have not been adopted early by the Group.
Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for
the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and
interpretations that are expected to be relevant to the Group’s financial statements is provided below.
Certain other new standards and interpretations have been issued but are not expected to have a material impact on the
Group’s financial statements.
(i) AASB 9 Financial Instruments (effective from 1 January 2015)
The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement
standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and
derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning
1 January 2015. Further chapters dealing with impairment methodology and hedge accounting are still being developed.
The Group currently does not have any financial assets and liabilities measured at fair value through profit and loss.
There will therefore be no likely material impact on the financial statements when these amendments to AASB 9 are first
adopted.
(ii) Consolidation standards
A package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on
these new standards is presented below. The Group’s management have yet to assess the impact of these new and revised
standards on the Group’s consolidated financial statements.
AASB 10 Consolidated Financial Statements (AASB 10)
AASB 10 supersedes the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements (AASB
127) and Interpretation 112 Consolidation – Special Purpose Entities. It revised the definition of control together with
accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation
and the accounting for any non-controlling interest and changes in control remain the same.
AASB 11 Joint Arrangements (AASB 11)
AASB 11 supersedes AASB 131 Interest in Joint Ventures (AASB 131). It aligns more closely the accounting by the
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2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
investors with their rights and obligations relating to the joint arrangements. It introduces two accounting categories
(joint operations and joint ventures) whose applicability is determined based on the substance of the joint arrangements.
In addition, AASB 131’s option of using proportionate consolidation for joint ventures has been eliminated. AASB 11 now
requires the use of the equity accounting method for joint ventures, which is currently used for investments in associates.
AASB 12 Disclosure of Interest in Other Entities (AASB 12)
AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including
unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed
from its involvement with structured entities.
Consequential amendments to AASB 127 Separate Financial Statements (AASB 127) and AASB 128 Investments in
Associates and Joint Ventures (AASB 128)
AASB 127 Consolidated and Separate Financial Statements was amended to AASB 127 Separate Financial Statements which
now deals only with separate financial statements. AASB 128 brings investments in joint ventures into its scope, however
AASB 128’s equity accounting methodology remains unchanged.
(iii) AASB 13 Fair Value Measure (AASB 13)
AASB 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides
related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods on or after 1
January 2013. The Group’s management have yet to assess the impact of this new standard.
(iv) AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive
Income (AASB 101 Amendments)
The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those
that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified
subsequently to profit or loss when specific conditions are met. It is applicable for annual reporting periods beginning
on or after 1 July 2012. The Group’s management does not expect this will change the presentation of items in other
comprehensive income; in any event, it will not affect the measurement or recognition of such items.
(v) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements (AASB 124 Amendments)
AASB 2011-4 makes amendments to AASB 124 Related Party Disclosures to remove individual key management personnel
disclosure requirements, to achieve consistency with the international equivalent (which includes requirements to disclose
aggregate (rather than individual) amounts of KMP compensation), and remove duplication with the Corporations Act 2011.
The amendments are applicable for annual periods on or after 1 July 2013. The Group’s management have yet to assess the
impact of these amendments.
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NOTE 2: PARENT ENTITY INFORMATION
The Corporations Act 2001 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
Guarantees
2012
$
436,148
5,324,886
5,761,034
961,252
1,460,736
2,421,988
3,339,046
28,876,572
499,710
2011
$
36,730
4,077,708
4,114,438
674,856
339,517
1,014,373
3,100,065
27,113,586
409,962
(26,037,236)
(24,423,483)
3,339,046
(999,905)
(999,905)
3,100,065
200,746
200,746
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.
During the financial year, the parent entity provided a guarantee in favour of the Lotteries Commission of South Australia
in respect of payment obligations of a subsidiary company in terms of the Agent agreement between its subsidiary and the
favouree.
Contractual commitments
There were no contractual commitments for the acquisition of property, plant and equipment entered into by the parent
entity at 30 June 2012 (2011: $0).
Contingent liabilities
The parent entity has no contingent liabilities other than the guarantees referred to above.
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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
- Bad and doubtful debt recovered
- Other
From discontinued operations (note 6)
— Revenue from sale of goods
— Interest
- Cash
— Other Income
- 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
— Loss on derecognition of intangible assets1
1 included in administration expense
38
Consolidated Group
2012
$
2011
$
1,951,394
22,136,348
24,087,742
1,583,648
16,534,686
18,118,334
776,414
413,328
37,248
37,090
46,542
897,294
24,985,036
-
-
-
-
18,036
-
42,815
474,179
18,592,513
4,020,877
1,919
1,258,354
5,281,150
Consolidated Group
2012
$
2011
$
1,179,446
3,036,156
1,058,099
2,480,860
65,311
42,366
99,341
67,341
2,005,801
715,173
3,550,413
308,796
-
103,518
46,731
21,092
64,628
1,394,764
707,563
3,009,390
270,018
73,151
2011 - 2012Jumbo Interactive Annual Report
NOTE 5: INCOME TAX EXPENSE
note
Consolidated Group
noTes To THe finanCial sTaTeMenTs
The components of tax expense comprise:
a.
— Current tax
— Deferred tax arising from origination and reversal of temporary
differences
Reconciliation:
— Under/over provision deferred tax prior years
— Under/over provision tax prior years
— Under/over provision overseas tax prior years
Total income tax expense/(benefit) in profit and loss
b.
— Tax at the Australian tax rate of 30% (2011: 30%)
— Income tax effect of overseas tax rates
— 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
— R&D concession/credit
Total income tax expense/(benefit) 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
NOTE 6: DISCONTINUED OPERATIONS
i. Description
2012
$
1,875,741
456,228
19
(61,251)
-
39,826
2,310,544
2,716,220
-
588,765
26,924
-
(276,172)
-
39,826
(785,019)
2,310,544
2,577,553
(267,009)
2,310,544
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)
The Star System Solutions Pty Ltd software business was sold on 12 November 2010.
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 in the 2011 financial year.
ii.
Financial performance and cash flow information
Financial information relating to the discontinued operations for the period to the date of disposal and for the year ended
30 June 2012 is set out below. Further information is set out in Note 24: Segment Reporting.
2012
Revenue (note 3)
Expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to members of the parent entity
star system
solutions
pty ltd
$
-
-
-
-
-
Manaccom
pty ltd
$
-
-
-
267,009
267,009
Total
$
-
-
-
267,009
267,009
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2011 - 2012Jumbo Interactive Annual Report
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NOTE 6: DISCONTINUED OPERATIONS (cont’d)
star system
solutions
pty ltd
$
Manaccom
pty ltd
$
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
-
-
-
-
2011
Revenue (note 3)
Expenses
Profit/(loss) before tax from discontinued operations
Income tax benefit
Profit/(loss) after income tax from discontinued operations
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
(1,192,391)
-
(639,644)
(639,644)
-
(639,644)
Total
$
6,476,516
267,009
6,743,525
-
-
-
-
Total
$
5,281,150
(5,961,591)
(680,441)
1,227,696
547,255
(6,007)
(639,644)
(645,651)
-
(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)
40
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 6: DISCONTINUED OPERATIONS (cont’d)
iii. Details of the sale of the Star business
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
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
$
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
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
31 January
2011
$
377,623
31,350
273,831
640,217
789,903
2,112,924
1,501,860
119,298
201,778
41
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 6: DISCONTINUED OPERATIONS (cont’d)
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
$
25,000
1,847,936
264,988
Consolidated Group
2012
$
1,358,601
119,250
20,038
73,059
1,570,948
2011
$
1,006,511
98,964
15,549
52,881
1,173,905
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.
(b) equity instruments
Options Holdings
Details of options held directly, indirectly or beneficially by key management personnel and their related parties are as follows:
30 June 2012
David Barwick
Mike Veverka
Bill Lyne
David Todd
Xavier Bergade
Kate Waters
balance at
beginning
of year
Granted
as
remun-
eration
during
the year
exercised
during the
year
other
changes
during
the year
balance
at end
of year
vested
at end
of year
vested
and
exerci-
sable
vested
and
unexerci-
sable
550,000
550,000
550,000
700,000
700,000
150,000
3,200,000
-
-
-
-
-
-
-
(550,000)
(160,000)
(550,000)
(700,000)
(550,000)
-
(2,510,000)
-
-
-
-
-
-
-
-
390,000
-
-
150,000
150,000
690,000
-
390,000
-
-
150,000
150,000
690,000
-
390,000
-
-
150,000
150,000
690,000
-
-
-
-
-
-
42
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 7: KEY MANAGEMENT PERSONNEL (KMP) (cont’d)
30 June 2011
David Barwick
Mike Veverka
Bill Lyne
Bonita Boezeman AO1
David Todd
Xavier Bergade
balance
at begin-
ning of
year
550,000
550,000
250,000
-
550,000
550,000
2,450,000
Granted
as remu-
neration
during
the year
-
-
300,000
550,000
150,000
150,000
1,150,000
exercised
during
the year
-
-
-
-
-
-
-
other
changes
during
the year
-
-
-
(550,000)
-
-
(550,000)
balance
at end of
year
vested
at end
of year
vested
and
exercis-
eable
vested
and
unexerci-
sable
550,000
550,000
550,000
-
700,000
700,000
3,050,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Bonita Boezeman AO was appointed as a Director on 28 July 2010 and ceased on 31 May 2011.
Shareholdings
Details of ordinary shares held directly, indirectly or beneficially by key management personnel and their related parties are
as follows:
30 June 2012
David Barwick
Mike Veverka
Bill Lyne
David Todd
Xavier Bergade
Kate Waters
balance at
beginning of
year
Granted as
remuneration
during the year
101,345
9,398,278
-
10,135
300,000
-
9,809,758
-
-
-
-
-
-
-
issued on
exercise of
options during
the year
550,000
160,000
550,000
700,000
550,000
-
other changes
during the
year1
balance at
end of year
(651,345)
(360,738)
(550,000)
(690,135)
(550,000)
-
-
9,197,540
-
20,000
300,000
-
2,510,000
(2,802,218)
9,517,540
1 includes on-market transactions and acquisitions under the dividend reinvestment plan.
30 June 2011
balance at
beginning of
year
Granted as
remuneration
during the year
David Barwick
Mike Veverka
Bill Lyne
Bonita Boezeman AO2
David Todd
Xavier Bergade
100,000
9,286,057
-
5,000
10,000
500,000
9,901,057
-
-
-
-
-
-
-
issued on
exercise of
options during
the year
-
-
-
-
-
-
-
other changes
during the
year1
balance at
end of year
1,345
112,221
-
(3,231)
135
(200,000)
(89,530)
101,345
9,398,278
-
1,769
10,135
300,000
9,811,527
1 includes on-market transactions and acquisitions under the dividend reinvestment plan.
2 Bonita Boezeman AO was appointed as a Director on 28 July 2010 and ceased on 31 May 2011.
43
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 7: KEY MANAGEMENT PERSONNEL (KMP) (cont’d)
(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.
Elegant Properties Pty Ltd is solely owned by Mr Mike Rosch, the father of Mr Mike
Veverka, the CEO and executive director of the Company. Elegant Properties Pty Ltd
rented an office from the Group and was engaged as a consultant during the financial year.
-
-
Office rent received
Consultancy fees paid
Mrs Julie Rosch, the mother of Mr Mike Veverka, the CEO and Executive Director of the
Company, is engaged as a full time employee within the Group.
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
Total
NOTE 9: DIVIDENDS
(a) ordinary dividends
Final fully franked ordinary dividend of 0.5 (2010: nil) cent per share franked at the tax
rate of 30% (2010: 30%)
Interim fully franked ordinary dividend of 1.0 (2011: 0.5) cent per share franked at the
tax rate of 30% (2011: 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 2012 and 30 June 2011 were as
follows:
Consolidated Group
2011
2012
$
$
3,275
59,911
67,496
1,300
-
67,799
Consolidated Group
2011
2012
$
$
111,714
111,714
39,297
18,689
57,986
92,403
92,403
30,560
7,440
38,000
-
-
169,700
18,500
18,500
148,903
Consolidated Group
2011
2012
$
$
197,685
416,157
613,842
-
197,266
197,266
44
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 9: DIVIDENDS (cont’d)
Paid in cash
Satisfied by issue of shares
(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 2012 fully franked ordinary dividend of 2.0 (2011: 0.5) cent per
share franked at the rate of 30% (2011: 30%). The aggregate amount of the proposed
dividend expected to be paid on 28 September 2012, but not recognised as a liability at
year end, is:
(c) franked dividends
The franked portions of dividends recommended after 30 June 2012 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 2013.
Franking credits available for subsequent financial years based on a tax rate of 30%
(2011: 30%):
Consolidated Group
2011
2012
$
$
466,115
147,727
613,842
166,322
30,944
197,266
848,251
197,684
2,352,755
1,492,530
The above amounts represent the balance of the franking account as at the reporting date adjusted for:
(a) Franking credits that will arise from the payment of the amount of the provision for income tax, and
(b) 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 $363,536 (2011: $84,722).
NOTE 10: EARNINGS PER SHARE
reconciliation of earnings used in calculating earnings per share
Basic earnings/(loss) per share
Profit after tax 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
Consolidated Group
2011
2012
$
$
6,476,516
267,009
4,932,851
(98,396)
6,743,525
4,834,455
Diluted earnings/(loss) per share
Profit after tax 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
6,476,516
267,009
4,932,851
(98,396)
6,743,525
4,834,455
45
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 10: EARNINGS PER SHARE (cont’d)
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
— options
Weighted average number of ordinary shares used as the denominator in calculating
diluted earnings per share
40,389,629
39,995,382
40,389,629
39,995,382
207,985
-
40,597,614
39,995,382
For the 30 June 2011 financial year, 4,150,000 options were not included in the number of potential ordinary shares used to
calculate diluted earnings per share because they were out-of-the-money.
NOTE 11: CASH AND CASH EQUIVALENTS
Total cash and cash equivalents
General account balances
Cash at bank and in hand
Short term bank deposits
Customer Funds
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
Note
Consolidated Group
2011
2012
$
$
11,770,674
21,686,797
2,905,785
13,905,199
16,810,984
1,875,813
3,000,000
2,965,969
4,519,603
7,485,572
2,285,102
2,000,000
17
4,875,813
4,285,102
Customer account balances 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
2012
$
$
163,678
-
163,678
82,916
155,124
401,718
282,611
(153,123)
129,488
18,470
128,689
276,647
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 seven days to 30 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.
46
2011 - 2012Jumbo Interactive Annual Report
NOTE 12: TRADE AND OTHER RECEIVABLES (cont’d)
Movement in the trade receivables allowance for doubtful debts is as follows:
noTes To THe finanCial sTaTeMenTs
Opening balance
Provision for doubtful receivables
Reversal of amounts provided
Closing balance
Consolidated Group
2011
2012
$
$
124,764
153,123
77,025
-
(48,666)
(153,123)
-
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.
Consolidated Group
Not past due
Past due 30 days
Past due 60 days
Past due 90 days
Past due 90 days+
Total
Total
$
161,650
-
-
-
2,028
163,678
2012
amount
impaired
$
-
-
-
-
-
-
amount
not
impaired
$
161,650
-
-
-
2,028
163,678
Total
$
128,916
-
-
-
153,695
282,611
2011
amount
impaired
$
-
-
-
-
153,123
153,123
amount
not
impaired
$
128,916
-
-
-
572
129,488
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 2012 the Group had current trade receivables of $0 (2011: $153,123) 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
2012
$
$
98,625
39,894
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).
47
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 14: CONTROLLED ENTITIES (cont’d)
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
Intellitron Pty Ltd
Manaccom Pty Ltd2
Jumbo Lotteries Pty Ltd
Cook Islands Tattslotto Pty Ltd
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
Jumbo Lotteries NC, Inc.3
Country of
incorporation
percentage
ownership
2012
%
2011
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Cook Islands
100
-
100
100
100
100
100
1
100
100
100
100
100
100
100
1
Country of
incorporation
percentage indirect
ownership
Australia
Australia
Fiji
Fiji
Papua New Guinea
Cook Islands
United States of America
United States of America
2012
%
100
100
100
100
100
99
100
100
2011
%
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. The company was subsequently de-registered 28 July 2011.
2 Control of the company ceased 31 January 2011 when it was placed into voluntary administration. Control was returned 19 June 2012 following
completion of the voluntary administration process. Between these dates the company did not form part of the Group. The company is in the process
of being de-registered.
3 This Company was established by the Group during this year.
NOTE 15: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Leasehold improvements - at cost
Accumulated amortisation
Total property, plant and equipment
48
Consolidated Group
2011
2012
$
$
876,006
(644,217)
231,789
291,551
(162,968)
128,583
360,372
817,403
(552,960)
264,443
291,552
(95,627)
195,925
460,368
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 15: PROPERTY, PLANT AND EQUIPMENT (cont’d)
(a) Movements in Carrying amounts
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 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
year ended 30 June 2012
Balance at the beginning of year
Additions
Disposals
Depreciation/amortisation expense
Carrying amount at the end of year
NOTE 16: INTANGIBLE ASSETS
Goodwill
Accumulated impaired losses
Net carrying value
Intellectual property
Accumulated impairment losses
Net carrying value
Website development costs
Accumulated amortisation
Net carrying value
Customer acquisition costs
Accumulated amortisation (and impairment)
Net carrying value
Software costs
Accumulated amortisation
Net carrying value
Domain names - cost
Net carrying value
Other
Accumulated amortisation
Net carrying value
Total intangibles
plant and
equipment
$
leasehold
improvements
$
578,592
224,303
(16,007)
(2,043)
(377,623)
(21,092)
(121,687)
264,443
264,443
67,811
(1,124)
(99,341)
231,789
234,127
26,426
-
-
-
(64,628)
-
195,925
195,925
-
(1)
(67,341)
128,583
Total
$
812,719
250,729
(16,007)
(2,043)
(377,623)
(85,720)
(121,687)
460,368
460,368
67,811
(1,125)
(166,682)
360,372
Consolidated Group
2012
$
3,686,355
(854,805)
2,831,550
53,499
(23,234)
30,265
4,081,602
(2,754,517)
1,327,085
4,446,799
(3,169,278)
1,277,521
127,327
(126,549)
778
854,337
854,337
192,641
(115,470)
77,171
6,398,707
2011
$
3,686,355
(854,805)
2,831,550
23,499
(23,057)
442
3,106,028
(1,979,933)
1,126,095
2,775,359
(1,960,732)
814,627
125,035
(124,142)
893
816,434
816,434
192,641
(74,326)
118,315
5,708,356
49
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
,
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A
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 16: INTANGIBLE ASSETS (cont’d)
(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 $3,458,943 (2011: $2,757,156). 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:
Carrying amount of goodwill
Internet Lottery unit
Total
Carrying amount of domain names
Internet Lottery unit
Total
Consolidated Group
2012
$
2,831,550
2,831,550
2011
$
2,831,550
2,831,550
854,337
854,337
816,434
816,434
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 is as follows:
•
Annual growth rate of 3%
51
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 16: INTANGIBLE ASSETS (cont’d)
•
Terminal growth rate of 3%
• Discount rate of 17% 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 5 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 $3,685,887.
(d) impairment reversal
The impairment reversal is recognised in the statement of comprehensive income:
From discontinued operations:
Impairment reversal of intellectual property1
Consolidated Group
2011
2012
$
$
-
(1,258,354)
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
Total trade and other payables
Current
Trade creditors
GST payable
Sundry creditors and accrued expenses
Employee benefits
Customer funds payable
Current
Customer funds payable
Note
Consolidated Group
2012
$
10,354,686
1,534,138
519,422
3,179,749
245,564
5,478,873
2011
$
6,949,523
915,382
336,622
1,233,884
178,533
2,664,421
11
4,875,813
4,285,102
52
2011 - 2012Jumbo Interactive Annual Report
NOTE 18: BORROWINGS
CURRENT
Secured liabilities
Bank overdraft
Bank loans
Chattel mortgages
Total secured current interest-bearing liabilities
Total current interest-bearing liabilities
NON-CURRENT
Secured liabilities
Bank loans
Chattel mortgages
Total secured non-current interest-bearing liabilities
Total current and non-current secured liabilities
Bank loans/overdraft
Chattel mortgages
Bank overdraft
noTes To THe finanCial sTaTeMenTs
Consolidated Group
2011
2012
$
$
-
166,666
28,014
194,680
194,680
250,000
-
250,000
416,666
28,014
444,680
110,061
666,667
34,748
811,476
811,476
1,041,666
28,014
1,069,680
1,818,394
62,762
1,881,156
A bank overdraft facility of $500,000 (2011: $500,000) is repayable on demand and currently bears interest at a current
floating rate of 10.24% p.a. (2011: 11.19% p.a.).
Bank loans
A bank loan with current outstanding $416,666 (2011: $1,708,333) is repayable in quarterly instalments of $41,667 and the
final instalment of $208,333 is due on 14 November 2013. The bank loan bears interest at a current floating of 5.83% p.a.
(2011: 7.00% 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 one year and four months.
(c) defaults and breaches
There have been no defaults or breaches during the financial year ended 30 June 2012.
53
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 19: TAX
CURRENT
Income tax refundable
NON-CURRENT
Deferred tax liabilities comprise temporary differences
recognised in the profit or loss as follows:
Property plant and equipment
- depreciation
Amortisation
Other
balance at 30 June 2011
Property plant and equipment
- depreciation
Amortisation
Other
balance at 30 June 2012
NON-CURRENT
Deferred tax assets comprise temporary differences recognised in
the profit or loss as follows:
Attributable to tax losses
Property plant and equipment
- depreciation
Amortisation
Accruals
Provisions
Other
balance at 30 June 2011
Attributable to tax losses
Property plant and equipment
- depreciation
Amortisation
Accruals
Provisions
Other
balance at 30 June 2012
54
Consolidated Group
2011
2012
$
$
383,245
576,016
opening
balance
$
Charged
to Profit
or loss
$
Closing
balance
$
5,986
126,849
86,871
219,706
3,702
244,653
-
248,355
(2,284)
117,804
(86,871)
28,649
1,311
138,603
14,062
153,976
3,702
244,653
-
248,355
5,013
383,256
14,062
402,331
opening
balance
$
Charged
to Profit
or loss
$
Closing
balance
$
144,471
185,363
329,834
18,245
77,902
338,748
221,419
27,676
828,461
37,862
(22,184)
(288,155)
(63,679)
18,918
(131,875)
56,107
55,718
50,593
157,740
46,594
696,586
329,834
(329,834)
-
56,107
55,718
50,593
157,740
46,594
696,586
18,922
(21,931)
30,370
573
(352)
(302,252)
75,029
33,787
80,963
158,313
46,242
394,334
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 19: TAX (cont’d)
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:
• Gross capital losses $3,884,942 (2011: $3,884,942)
NOTE 20: PROVISIONS
CURRENT
Long service leave
Make good provision
NON-CURRENT
Long service leave
Make good
Consolidated Group
2011
2012
$
$
181,247
153,437
334,684
103,708
103,708
145,982
153,437
299,419
68,114
68,114
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.
Balance at beginning of the year
Provisions made during the year
Balance at end of the year
NOTE 21: CONTRIBUTED EQUITY
share capital
Fully paid ordinary shares
Movements in ordinary share capital
date
details
1 July 2010
Opening balance
23 August 2010
6 May 2011
30 June 2011
Shares issued during the year
30 September 2011
6 March 2012
Shares bought back during the year1
Shares issued during the year2
Balance
Dividend reinvestment plan3
Exercise of options
Make good
provision
$
153,437
-
153,437
Consolidated Group
2012
2012
$
shares
Consolidated Group
2011
2011
$
shares
42,412,560
28,876,572
39,536,805
27,113,586
number of
shares
43,031,525
(3,578,057)
83,337
39,536,805
issue price
$
0.3000
0.3719
158,921
1,500,000
0.237
0.500
$
28,156,064
(1,073,422)
30,944
27,113,586
37,639
750,000
55
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 21: CONTRIBUTED EQUITY (cont’d)
details
date
6 March 2012
7 March 2012
22 March 2012
30 March 2012
11 April 2012
26 April 2012
Shares bought back during the year
23 December 2011
30 June 2012
Exercise of options
Exercise of options
Exercise of options
Dividend reinvestment plan4
Exercise of options
Exercise of options
Unmarketable parcel sale and buyback5
Closing balance
number of
shares
200,000
550,000
350,000
136,858
150,000
160,000
(330,024)
42,412,560
issue price
$
0.700
0.700
0.700
0.804
0.500
0.700
$
140,000
385,000
245,000
110,094
75,000
112,000
0.278
(91,747)
28,876,572
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.
3 As announced by the Company on 23 August 2011, the Company declared a fully franked final 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 30
September 2011.
4 As announced by the Company on 21 February 2012, the Company declared a fully franked interim dividend of 1.0 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 30
March 2012.
5 As announced by the Company on 27 October and 16 December 2011, the Company offered to buyback unmarketable parcels of shares. Shares were
bought back under the UMP on the payment date on 23 December 2011.
(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.
(b) options
i. 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.
For information relating to share options issued to third parties during the financial year, refer to Note 26:
ii.
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.
There was a change in the strategy adopted by management to control the capital of the Group for the current
financial year which strategy is to ensure that the Group’s gearing ratio remains below 40% (2011: between 20%
and 40%). The gearing ratios for the year ended 30 June 2012 and 30 June 2011 are as follows:
56
2011 - 2012Jumbo Interactive Annual Report
NOTE 21: CONTRIBUTED EQUITY (cont’d)
Total borrowings
Total equity
Total capital
Gearing ratio
noTes To THe finanCial sTaTeMenTs
Note
18
Consolidated Group
2011
2012
$
$
444,680
1,881,156
10,081,974
18,083,709
11,963,130
18,528,389
2%
16%
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
2011
2012
$
$
792,652
818,766
1,611,418
745,524
1,348,450
2,093,974
The property leases are non-cancellable leases for occupied premises at various locations ranging from month-to-month to
five year terms, with rent payable monthly in advance. Options to renew leases at the end of the term range from terms of
one to three years. Rent and outgoings are paid on a monthly basis with periodic pricing reviews.
(b) Chattel Mortgage Commitments
Payable
— Not later than one year
— Later than one year but not later than five years
Less future finance charges
28,991
-
28,991
(977)
28,014
38,655
28,991
67,646
(4,884)
62,762
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.
(c) other Commitments
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 over the
24 month term based on which the estimated commitment is as follows:
33,384
1,030,706
57
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
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.
The Group’s bankers have provided a performance guarantee to a third party in
respect of a Request for Proposal. This guarantee was subsequently cancelled 3 July
2012.
Consolidated Group
2011
2012
$
$
160,763
160,763
206,653
-
367,416
160,763
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 2011 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.
Internet Lotteries segment consists of retail of lottery tickets sold both in Australia and eligible international jurisdictions,
and internet database management/marketing. The committee monitors the performance of the regions on a combined
basis. Accordingly there is only one Internet Lotteries segment.
All other segments include operating segments of non-lottery business activities that are not reportable in terms of AASB
8 and revenues from external customers are derived from the sale of software and pet related products. Comparative
figures for 2011 are stated on this basis.
(b) segment information provided to the strategic steering committee
2012
The segment information provided to the strategic steering committee for the reportable segments for the year ended 30
June 2012 is as follows:
Total segment revenue/income
Inter-segment revenue
revenue from external customers
npbT
Interest revenue
Finance costs expense
Depreciation and amortisation
58
internet
lotteries
$
23,584,433
-
23,584,433
10,002,512
771,129
3,907
2,147,568
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 24: SEGMENT REPORTING (cont)
There was no impairment charge or other significant non-cash item recognised in 2012 relating to the segment.
2011
The segment information provided to the strategic steering committee for the reportable segments for the year ended 30
June 2011 is as follows:
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
(c) other segment information
internet
lotteries
$
18,081,812
-
18,081,812
5,495,205
413,328
1,732
1,480,484
73,151
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 principally from the sale of lottery tickets and provision of related services.
Segment revenue reconciles to total revenue/other income from continuing operations as follows:
Total Internet Lotteries segment revenue
All other segments
Interest revenue
Other
Consolidated Group
2012
$
23,584,433
548,760
776,414
75,429
2011
$
18,081,812
79,337
413,328
18,036
Total revenue/other income from continuing operations (note 3)
24,985,036
18,592,513
The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $22,086,403 (2011:
$16,139,019), and the total revenue from external customers in other countries is $2,898,633 (2011: $2,453,494). Revenues
of $1,664,189 (2011: $1,620,964) are from external customers 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).
59
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 24: SEGMENT REPORTING (cont)
A reconciliation of the NPBT to profit before income tax is provided as follows:
npbT
Inter-segment eliminations1
All other segments
Other
Interest revenue
Corporate expenses
Finance costs expense
Share based payments expense
Directors’ remuneration
Salaries and wages
Other
Consolidated Group
2012
$
10,002,512
-
(33,866)
1,091
776,414
(103,770)
(89,748)
(130,800)
(917,628)
(450,136)
2011
$
5,495,205
1,437,338
53,525
-
413,328
(148,518)
(79,851)
(173,264)
(689,674)
(453,953)
Profit before income tax from continuing operations (per P&L)
1 the key items of the intersegment eliminations are:
9,054,069
5,854,136
Provision for non-recovery of inter-company loans
-
1,437,338
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
Unrealised foreign currency (gain)/loss
Impairment reversals
Derecognition of subsidiary in voluntary administration
Gain/(Loss) on sale of business
Derecognition of intangibles assets
Share option expense
Other
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 payables
Increase/(decrease) in other payables
Consolidated Group
2012
$
2011
$
6,743,525
4,834,455
2,073,142
99,341
(23,214)
-
-
-
-
89,748
19,319
(34,190)
(90,881)
(58,732)
302,252
618,756
2,786,408
1,474,497
142,779
(17,160)
(1,258,354)
639,644
6,007
73,151
79,851
27,087
556,303
74,816
(173,296)
(141,955)
1,094,421
(668,323)
60
2011 - 2012Jumbo Interactive Annual Report
NOTE 25: CASH FLOW INFORMATION (cont)
noTes To THe finanCial sTaTeMenTs
Increase/(decrease) in other provisions
Increase/(decrease) in DTL
Increase/(decrease) in provision for income tax
Cash flow from operations
(b) facilities with banks
Credit facility
Facilities utilised
Overdraft
-
Multi Option/Chattel mortgages
-
Loans
-
Bank guarantees
-
Amount available
Consolidated Group
2012
$
70,859
153,976
192,771
12,943,080
2011
$
136,412
28,649
(381,531)
6,527,453
1,453,666
3,035,763
-
(28,014)
(416,666)
(367,416)
641,570
(110,061)
(62,762)
(1,708,333)
(160,763)
993,844
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
158,921 ordinary shares were issued at $0.237 ($37,639) under the dividend reinvestment plan on 30 September 2011.
136,858 ordinary shares were issued at $0.804 ($110,094) under the dividend reinvestment plan on 30 March 2012.
NOTE 26: SHARE BASED PAYMENTS
Share-based payment expense recognised during the financial year
Options issued under employee option plan
Options issued to third parties for services received
employee option plan
Consolidated Group
2011
2012
$
$
88,357
1,391
89,748
79,851
-
79,851
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.
61
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 26: SHARE BASED PAYMENTS (cont’d)
Third party options
Options have been issued to USA based consultants as part of the remuneration for their services to incentivise them
to procure a commercially acceptable transaction in the USA and/or other suitable overseas jurisdiction. Options vest
when the volume weighted average share price over five consecutive trading days equals the exercise price and provided
an acceptable transaction has been brought to the company with terms and conditions acceptable to the Company by
1 December 2012 failing which the options will lapse.
When issued on exercise of options, the shares carry full dividend and voting rights.
fair value of options granted
Employees
There were no options issued to employees during the 2012 year.
The weighted average fair value of options granted during the 2011 year was 5.5 cents.
- Options are granted for no consideration, have a three year life, and are exercisable when the share price equals the
exercise price and 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
Third parties
2011
15 Nov 2010
15 Nov 2010
$0.38
$0.70
85.82%
3.95%
5.24%
$0.38
$0.50
86.58%
4.69%
5.15%
The weighted average fair value of options granted during the year was 0.8 cents (2011: 0.0 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 2012 were as follows:
- Options are granted for no consideration, have a three year life, and are exercisable when the consultant provides
a commercially acceptable transaction by 1 December 2012, failing which the options will lapse, and the share price
equals the exercise price.
- Grant date:
-
Share price at grant date:
-
-
-
-
Exercise price:
Expected volatility:
Expected dividend yield
Risk free rate
2012
2011
14 Dec 2011
$0.40
$0.70
61.22%
3.23%
3.12%
-
-
-
-
-
-
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.
62
2011 - 2012Jumbo Interactive Annual Report
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2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
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T
2011 - 2012Jumbo 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 at the reporting date.
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 2012 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.
65
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 28: FINANCIAL RISK MANAGEMENT (cont’d)
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:
•
•
•
surplus funds are only invested with banks and financial institutions with a Standard and Poor’s rating of no
less than A:
all potential customers are rated for credit worthiness taking into account their size, market position and
financial standing; and
customers that do not meet the Group’s strict credit policies may only purchase in cash or using recognised
credit cards.
The trade receivables balance, before allowance for doubtful debts, at balance date by geographic region:
Australia
Fiji
USA
Cook Islands
Samoa
2012
2011
$
%
$
%
46,546
100,551
-
-
16,581
163,678
28.5
61.4
0
0
10.1
100
100,478
16,688
69,668
84,373
11,404
282,611
35.6
5.9
24.7
29.8
4.0
100
The Group’s most significant customer, located in Fiji, accounts for 1% of trade receivables as at 30 June 2012
(30% as at 30 June 2011, located in the Cook Islands, 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
66
Consolidated Group
2012
$
21,686,797
401,718
444,680
10,354,686
2011
$
11,770,674
276,647
1,881,156
6,949,523
2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 28: FINANCIAL RISK MANAGEMENT (cont’d)
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
ii. fair values
Consolidated Group
2011
2012
$
$
6,949,523
10,354,686
6,949,523
10,354,686
212,234
256,597
468,831
916,263
1,137,485
2,053,748
The fair values of:
• Cash, cash equivalent, and receivables approximate their carrying value because of their short term to maturity.
•
Bank loans, overdrafts, trade and other payables approximate their carrying value because of their short term
to maturity (or interest repricing profile).
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.
financial assets
Cash and cash equivalents
Trade and other receivables
financial liabilities
Borrowings
Trade and other payables
Carrying
amount
$
21,686,797
401,718
22,088,515
Carrying
amount
$
444,680
10,354,686
10,799,366
2012
fair value
$
21,686,797
401,718
22,088,515
2012
fair value
$
468,831
10,354,686
10,823,517
Carrying
amount
$
11,770,674
276,647
12,047,321
Carrying
amount
$
1,881,156
6,949,523
8,830,679
2011
fair value
$
11,770,674
276,647
12,047,321
2011
fair value
$
2,053,748
6,949,523
9,003,271
Fair values are materially in line with carrying values.
financial instruments measured at fair value
There were no financial instruments held for either the 2012 or 2011 financial years.
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2011 - 2012Jumbo Interactive Annual Report
noTes To THe finanCial sTaTeMenTs
NOTE 28: FINANCIAL RISK MANAGEMENT (cont’d)
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 2012, 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%
Consolidated Group
2011
2012
$
$
424,842
(424,842)
424,842
(424,842)
197,790
(197,790)
197,790
(197,790)
Foreign Currency Risk Sensitivity Analysis
At 30 June 2012, 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:
Change in profit/(loss)
— improvement in AUD to FJD by 3% (2011: 5%)
— decline in AUD to FJD by 3% (2011: 5%)
Change in equity
— improvement in AUD to FJD by 3% (2011: 5%)
— decline in AUD to FJD by 3% (2011: 5%)
Consolidated Group
2011
2012
$
$
(46,638)
52,709
(46,638)
52,709
(146,908)
162,372
(146,908)
162,372
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 and third party
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 One, 601 Coronation Drive, Toowong, QLD, 4066
The principal places of business are:
— Level One, 601 Coronation Drive, Toowong, QLD, 4066
— Suite 604, 370 St Kilda Road, Melbourne, VIC, 3001
68
2011 - 2012Jumbo Interactive Annual Report
direCTors’ deClaraTion
direCTors’ deClaraTion
The Directors of the Company declare that:
1. The financial statements, comprising the Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash
Flows, and accompanying notes, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the consolidated entity’s financial position as at 30 June 2012 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.
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
3.
as and when they become due and payable.
4. The remuneration disclosures included in pages 11 to 17 of the Directors’ report (as part of the audited
Remuneration Report), for the year ended 30 June 2012, comply with section 300A of the Corporations Act 2001.
5. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
by section 295A.
This declaration is made in accordance with a resolution of the Directors.
david K barwick
Chairman
Brisbane
6 September 2012
69
2011 - 2012Jumbo 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 2012, 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 gives a true and fair view
and 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 company’s preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating
the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
BDO Audit 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 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.
70
2011 - 2012Jumbo 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
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) the financial report of Jumbo Interactive Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its
performance for the year ended on that date; and
(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 11 to 17 of the directors’ report for the year ended 30
June 2012. 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 2012 complies with
section 300A of the Corporations Act 2001.
BDO Audit Pty Ltd
T J Kendall
Director
BDO Audit Pty Ltd
Brisbane, 6 September 2012
BDO Audit 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 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.
71
2011 - 2012Jumbo 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 42,802,560 ordinary shares on issue, each fully paid. There are 1,544 holders of these ordinary
shares as at 31 August 2012. Shares are quoted on the Australian Securities Exchange under the code JIN and on
the German Stock Exchange.
In addition, there are an aggregate total of 1,800,000 options over ordinary shares on issue but not quoted on the
Australian Securities Exchange.
a. distribution of shareholders number as at 31 august 2012
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
186
626
297
386
49
1,544
ordinary
shares Held
112,539
1,938,502
2,350,385
10,653,373
27,747,761
42,802,560
b. The number of shareholdings held in less than marketable parcels is:
57
5,798
c. The names of the substantial shareholders listed in the holding Company’s register as at 31 August 2012 are:
name
Vesteon Pty Ltd and associates
National Nominees Limited
d. voting rights
ordinary
shares
9,488,540
3,440,827
percentage
Held
22.17
8.04
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.
e. 20 largest shareholders — ordinary shares as at 31 august 2012
name
1.
VESTEON PTY LTD
2. NATIONAL NOMINEES LIMITED
3.
4.
JP MORGAN NOMINEES AUSTRALIA LIMITED
UBS NOMINEES PTY LTD
number of ordinary
fully paid shares Held
% Held of issued
ordinary Capital
8,935,873
3,440,827
2,021,582
2,013,766
20.88
8.04
4.72
4.70
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2011 - 2012Jumbo Interactive Annual Report
addiTional inforMaTion for lisTed publiC CoMpanies
name
5. MR BARNABY COLMAN CADDICK
6. WARAWONG PTY LTD
7.
MR IVAN TANNER + MRS FELICITY TANNER
8. MR MIKE VEVERKA
9.
MR YARON SHAMGAR
10. ANTSORM CONSULTING PTY LTD
11. MR VICTOR JOHN PLUMMER
12. MR CRAIG KUHN
13. MR SAM HARGREAVES ORR
14.
J P MORGAN NOMINEES AUSTRALIA LIMITED
15. TRUWIND PTY LTD
16. MR XAVIER BERGADE
17. CITICORP NOMINEES PTY LTD
18. MR DAVID PLATT + MRS SUE PLATT
19. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
20. MR JOHN ROSAIA
number of ordinary
fully paid shares Held
% Held of issued
ordinary Capital
917,000
874,733
650,348
552,667
500,000
488,348
450,504
400,000
361,000
348,980
314,871
300,000
281,717
270,000
232,047
204,000
2.14
2.04
1.52
1.29
1.17
1.14
1.05
0.93
0.84
0.82
0.74
0.70
0.66
0.63
0.54
0.48
2. The name of the Company Secretary is Mr Bill Lyne.
3. The address of the principal registered office in Australia is Level One, 601 Coronation Drive, Toowong, QLD,
4066. Telephone (07) 3831 3705.
23,558,263
55.04
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 2012
Options over Unissued Shares.
A total of 1,800,000 options are on issue to employees under the Jumbo Interactive Limited Employee Option Plan
and third parties for services rendered
exercise price
$0.50
$0.70
expiry date
15 February 2014
14 December 2014
number on issue
800,000
1,000,000
number of Holders
6
2
7. other disclosures
There are no other disclosures.
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2011 - 2012Jumbo Interactive Annual Report