ANNUAL REPORT
ANNUAL REPORT
Jumbo Interactive Limited
Jumbo Interactive Limited
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Jumbo has clear
20/20 vision for
continued growth.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
3
Table of
Contents
5
6
8
10
12
20
22
24
38
39
44
Introduction
Highlights
Letter from the Chairman
Letter from the CEO
Review of Operations
Leadership Team
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
45
46
48
49
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial
Statements
80 Directors’ Declaration
81
84
86
Independent Auditor’s Report
Shareholder Information
Company Information
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
20/20 Vision
20/20 Vision
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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Introduction
22% online by 2020
The continuing rise in popularity of online lottery tickets
underpins the vision to grow internet penetration up
from 18% in 2018 to 22% by 2020. Jumbo has helped
drive this growth over the past decade and has put in
place the people and software to make the vision a
reality. Technological innovation and disciplined online
marketing particular to lottery sales will be the key
drivers in the years ahead.
Following landmark agreements with Tatts signed in
May 2017 and the completion of the merger between
Tatts and Tabcorp in December 2017, Jumbo is now
strongly aligned with the most significant player in
the Australian lottery and gaming industry. Tabcorp’s
significant shareholding in Jumbo provides the
stability for Jumbo to further develop the online lottery
market and deliver benefits not only to Tabcorp but all
shareholders alike.
Just as significant is the complete rewrite of the Jumbo
Lottery Software Platform that went live during 2017.
The extra tools and performance from the new software
platform drive the scalability that has delivered a 55%
increase in net profit after tax from a 23% increase in
revenue. Those tools have also underpinned the revenue
growth during a modest year in terms of major jackpots
that saw 32 large jackpots compared to 31 the year
before.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Highlights
A 55% increase in net profit after tax
from continuing operations is the
result of a strong performance by the
Australian business.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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Revenue
(continuing operations)
12 MONTHS TO 30 JUNE 2018
$39.8m
23% increase
over the previous year
Number of
Large Jackpots
OZ LOTTO/ POWERBALL JACKPOTS OF
$15 MILLION OR MORE, 12 MONTHS TO 30 JUNE 2018
32
3% increase
over 12 months
Net Profit After Tax
(total operations)
12 MONTHS TO 30 JUNE 2018
$12.1m
115% increase over
the previous year
Net Profit After Tax
(continuing operations)
12 MONTHS TO 30 JUNE 2018
$11.8m
55% increase
over 12 months
Dividends Declared
FULLY FRANKED ORDINARY DIVIDENDS (EXCLUDING
SPECIAL) FOR THE 12 MONTHS TO 30 JUNE 2018
12.5c
47% increase
over the previous year
Share Price
AS AT 30 JUNE 2018
$5.00
88% increase
over 12 months
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Letter
from the
Chairman
Dear Shareholder
The success of our strategy of continued focus on
growing the lottery business and expanding the
emerging charity business in Australia is evident in
board and Management for their continued dedication
to the growth of the Company and to our shareholders
who have followed our journey to the successful
Company Jumbo has become today.
the strong financial performance for the financial year
I trust that any questions you may have can and will
ended 30 June 2018. This has allowed us not only to
be addressed at our Annual General Meeting which is
increase the normal dividend payment, but to also once
scheduled for 25 October 2018.
again pay another special dividend of 8 cents per share
on 29 June 2018.
Yours Truly
We intend remaining focused on our current strategy
with the expectation that this will lead to a continuing
increase in the years ahead of Total Transaction Value
(TTV), Revenue and Profits available for distribution to
Shareholders.
With net assets of $47,211,000 and available cash of
$40,085,000 as at 30 June 2018, the Company may
consider other opportunities in the future. However, this
will not divert our focus from continuing to grow the
David K Barwick
Chairman
business under the current strategy which gives Jumbo a
clear vision leading up to the 2020’s.
Jumbo has benefited considerably from the decision
made two years ago to invest in its proprietary software
platform and also to exit the German market.
Jumbo’s success has been made possible by the focus
of the collective expertise of Management and all staff
ably led by Mr. Mike Veverka, who is both founder and
CEO.
I would like to take this opportunity to thank both the
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
9
Jumbo’s success has
been made possible
by the focus of the
collective expertise
of Management and
all staff ably led by
Mr. Mike Veverka,
who is both founder
and CEO.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Letter from
the CEO
Following the landmark agreements with Tatts signed in
May 2017, Jumbo went straight to work and has delivered
an exceptional year of growth.
From a modest run of Jackpots (32 large jackpots
compared to 31 the previous year) the Jumbo team were
able to significantly increase ticket sales and Revenue
by 26% and 23% respectively. This translated into a 55%
increase in net profit after tax (continuing operations)
due to the scalable nature of the business and a tight
rein on costs.
This scalable nature is made possible by the software
platform that has been completely rewritten from
scratch over the past few years. Jumbo is now able
to reap the rewards from this investment in software
development via the extra tools and performance the
new platform brings.
A new “Powered by Jumbo” initiative has begun to
further extract value from this software platform. For the
first time Jumbo is able to offer other lottery operators
around the world a software system to power their ticket
sales and deliver the scale of growth that Jumbo is
accustomed to.
With exciting times ahead I sense genuine excitement
around the Jumbo offices and wish to thank all staff
for their enthusiasm for making Jumbo not only a great
place to work but also capable of delivering exceptional
growth for shareholders.
Mike Veverka
CEO and Founder
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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Following
the landmark
agreements with
Tatts signed in May
2017, Jumbo went
straight to work
and has delivered
an exceptional
year of growth.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Reviewof Operations
Customer engagement is
well up with 438,000 active
customers compared to
Financial Performance
From a modest run of Jackpots in FY18 that saw one more large jackpot than in
FY17 (32 large jackpots compared to 31 the previous year) the Jumbo team were
able to significantly increase Revenue and Profit. The result was a 26% increase
in Total Transaction Value (a measure of total ticket sales) and a 23% increase in
354,000 the previous year.
Revenue to $39.8 million.
Net profit after tax (for continuing operations) increased 55% to $11.8 million and Net
profit after tax (for the group) increased 115% to $12.1 million. Earnings before interest,
tax, depreciation and amortisation (EBITDA) increased 38% to $19 million.
Charity Lotteries
Sales of charity lotteries increased 60% to $6.1 million after another
successful year of growth. Charity games were added three years ago to
complement the traditional national lotteries and provide customers with
more choice. Buying behaviour has been complementary with customers
choosing to play charity games as well as their favourite national games.
The portfolio of charity games has increased to include Surf Lifesaving
Lotteries and winners choice games, Mater Prize Home and Mater Cars
for Cancer, Endeavour Foundation Prize Home Lottery and Ultimate Life
Changer Lottery, Act for Kids and the Deaf Lottery Australia.
Image: Mater Prize Home’s luxury Hope Island waterfront home from draw 278
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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New Software Platform
During FY17, a 3 year project to rewrite the Jumbo Lottery Software Platform
went live opening the door for improved performance. The impact was felt
immediately on ticket sales as old road blocks were quickly removed. New
features such as the Lotto Party and Lotto Voice were quickly released with more
currently in development. Customer satisfaction increased with faster response
times and a sleek user interface made the process of buying tickets more
streamlined.
Customer engagement is well up with 438,000 active customers compared
to 354,000 the previous year. This is a result of a strong focus on the user
experience and improved customer service. The average spend per customer
per year reached $371 and the number of new accounts for the year reached
215,000 compared to 161,000 the previous year.
For the first time Jumbo is able to offer other lottery operators around the world
a software system to power their ticket sales and deliver the scale of growth
that Jumbo is accustomed to. A “Powered by Jumbo” initiative has commenced
aimed at forming relationships with lottery operators in need of an industry-
leading software platform.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Jumbo growth at 20% CAGR over 7 years
Jumbo’s flagship website www.ozlotteries.com has delivered a
consistent 20% compound annual growth rate over 7 years to 30 June
2018, absorbing the natural fluctuations in jackpots. This has been
underpinned by a growing customer database and a trend in consumer
behaviour towards mobile purchases.
To ensure sales are not on a declining trend, sales are analysed on a
like-for-like basis at specific jackpot levels over a number of years. This
analysis shows a steady increase in sales further confirming the general
growth trend.
Jumbo’s continued growth has
been underpinned by a growing
customer database and a trend
in consumer behaviour towards
mobile purchases.
Sales growth over the last 4 HY periods has been positive despite jackpot fluctuations.
FY 2017
FY 2018
Internet Lotteries Australia
TTV ($ million)
Large Jackpots
HY1
69.3
15
7 year Total Transaction Value - Group
Number of Jackpots $15 million or more
200
150
m
100$
50
0
101
22
HY2
75.2
16
128
HY1
88.7
18
HY2
93.6
14
183
153
145
110
107
38
36
34
45
31
32
FY 12
FY 13
FY 14
FY 15
FY 16
FY 17
FY 18
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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7 New
Millionaires!
It’s been an exciting year for Oz Lotteries customers, with 265,433
customers winning $126,415,572 in prizes – almost double the
$10 Million Oz Lotto!
Two Oz Lotteries customers won shares in the $40 million Oz Lotto
aggregate prize pool from FY17. With 7 new millionaires, including a
jackpot in January, receiving $10,000,000 each!
$50 million division 1 winner, Oz Lotteries customers have really hit
the jackpot this year.
$6.8 Million Lucky Lotteries!
A young man from Sydney’s inner-western suburbs was left “shocked
$50 Million Powerball!
Oz Lotteries sold its biggest winning ticket this year, an amazing $50
and speechless” after receiving a phone call at work informing him
that his Lucky Lotteries Super Jackpot ticket had scored the entire
million prize! The entire Division 1 prize for the Powerball draw went
$6.8m jackpot in the Lucky Lotteries draw on the 15th of January.
to a lucky man from the ACT, who took home $50,000,000 from a
Quickpick 7 ticket. When CEO Mike Veverka called the Powerball
“Are you serious? Wow, wow, wow!” he exclaimed. “You’ve made my
winner, he said he was “dumbfounded” and “hadn’t slept a wink”
day, you’ve made my life!”
knowing his entire life was about to change.
Jumbo facilitates the payment of prizes to the customer from Tatts.
7/6/2018
$50,000,000.00
0
0 .0
0
0 ,0
0
$ 1 0 ,0
$10,0
0
0,0
0
0
.0
0
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Getting the
Lotto Party
started!
Jumbo has successfully
combined social media and
lottery syndicate play on a
digital platform.
Eliminating the need for cumbersome syndicate
administration, Lotto Party enables a group of friends
to easily create their own group syndicate right in
the app. An organiser sets up a group and creates a
ticket in an upcoming draw, then they set the price
each friend will need to contribute to join the Lotto
Party. The invitation is sent through social media to
friends via a unique link, then after the draw takes
place, Oz Lotteries automatically calculates any
winnings and pays each friend directly back into
their Oz Lotteries account based on the number
of shares they purchased.
Lotto Party supports the social nature of
playing the lottery, and in doing so, invites
new customers to join Oz Lotteries.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
What were the results for last weeks Powerball?
Powerball draw 1159 was drawn on Thursday 2nd
August. The main numbers were 32, 34, 1, 9, 17, 22, 3
and the Powerball was 19.
Oz Lotteries
Voice App
Continually pushing the boundaries, Jumbo launched a voice-
activated feature for the Google System Platform and Amazon’s
Alexa product this year.
Voice enables customers to discover the lottery results, prize pools
and upcoming draws simply by asking Alexa or Google Home,
offering different ways for customers to interact with Jumbo.
Improved Customer
Engagement
A strong focus on the user experience and customer
service is credited for Jumbo’s record year.
THE APP TO HAVE
by Dab1955
19 Jul
The implementation of an integrated customer support
platform has enabled our customer support team to
provide stellar, consistent service, showing over 90%
satisfaction rating. Feedback such as “Quick to respond
to my request and all fixed in no time at all. Great
customer service.”, “So easy dealing with your company,
if only it was like with all the other service providers!”
and “The quality of service provided by this company is
awesome.” are testament to our customers’ satisfaction.
The Oz Lotteries app proudly maintains a 5-Star rating
on the app store, with rave reviews.
Great app that provides everything I need in a lotto
purchasing app. The email notifications and paypal payment
make it far superior to other apps on offer.
LOVE THIS
by Majaanli
2 Aug
This is such a user friendly app. It makes purchasing so easy
and I don’t think I’ll go back to going in store.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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Key Performance
Indicators
CPL—
Cost Per Lead
$17.28
Up from $17.09 due to customer acquisition
marketing mix.
Average Spend per
Online Customer
$371.13
Up from $348.40 due to improved customer
activity and higher jackpot activity as well as
a positive contribution from charity games.
New Online
Accounts
Active Online
Customers
215k
Up from 161k due to marketing initiatives and higher
jackpot activity.
438k
Up from 354K due to improved customer
activity and higher jackpot activity.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Leadership
Team
Jumbo has a
stable leadership
team that has
amassed unique
digital experience
in the world
lottery industry.
Mike Veverka
David Barwick
Chief Executive Officer & Executive
Chairman and Non-Executive Director
Director (BEng (Hons))
David Barwick has over 40 years experience
Mike Veverka is CEO and founder of Jumbo
in the management and administration
Interactive. He has a proven track record
of publicly listed companies in Australia
in business and computing, establishing
and North America. During this period
several successful startups to meet new
David has held the positions of Chairman,
consumer demands for online products.
Managing Director or President of over 30
His entrepreneurial flair and ambition for
public companies with strengths in strategic
innovation were displayed at the age of
planning, restructuring and financing
fifteen when he created and sold his first
entities.
software package to Hewlett Packard. Mike
worked as a design engineer and computer
programmer before founding ‘Squirrel
Software Technologies’ that provided
some of Australia’s first internet services
and e-commerce software. As founder
and leader, Mike plays a pivotal role in the
growth strategy, innovation and promotion
of Jumbo.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
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an Associate Diploma in Banking, and
remaining secure for customer transactions.
a Graduate Diploma of Advanced
He is responsible for the adaptation of the
Corporate Governance. He is a Fellow
successful Australian OzLotteries.com
of the Governance Institute of Australia
website to other markets and ensuring
and a Fellow of the Institute of Chartered
capabilities for customer purchases on any
Secretaries and Administrators (UK). David
device demands that websites continually
brings a wealth of commercial expertise to
evolve as new mobile and computer
Jumbo Interactive as Chief Financial Officer.
products are released to market with
unprecedented frequency.
Bill Lyne
Non-Executive Director and Company
Secretary (BCom, CA, FCIS, FGIA, FAICD,
FFIN)
Bill Lyne is the Principal of Australian
Company Secretary Service that provides
secretarial, corporate compliance and
governance services to public company
clients in a wide range of industries. Prior to
this, Bill was Company Secretary and CFO
Brad Board
Brian J. Roberts
of First Australian Building Society, having
Chief Operating Officer
previously spent many years in credit and
lending positions in merchant banking.
Having joined Jumbo in 2001 Brad has
Bill holds a Bachelor of Commerce and
been actively involved in Jumbo’s evolution
is a Chartered Accountant. He is a Fellow
and growth into the leading digital lottery
of the Institute of Chartered Secretaries &
business it is today. Brad has significant
Administrators (UK), Governance Institute
lottery and e-commerce experience and
of Australia, and the Australian Institute of
ensures that the brand, digital experiences
Company Directors. He is also a fellow of
and service offerings provided by Jumbo
and has life membership with the Financial
effectively engage and satisfy it’s
Services Institute of Australasia.
2,000,000+ customers in Australia and
Internationally. In addition to responsibility
for Jumbo’s marketing and product strategy
he ensures various departments and
subsidiaries are interacting efficiently with
each other and in accordance with Jumbo’s
overall strategic goals.
President, North America (DipEC Cert(OM))
Brian has extensive experience in lotteries
and gaming, software development and
production and is a recognised creative
innovator. His experience in the lottery and
gaming industry spans over 40 years with
senior roles including Director of Creative
Content Development at GTECH, COO
and Senior Vice President of Marketing at
On-Point Technology Systems, President
of LotoMark and Vice President of Lottery
Operations at International Totalizator
and Lottery Systems. Brian has developed,
implemented and managed gaming
systems across many international
jurisdictions. He holds over twenty issued
and pending gaming industry USA patents.
David Todd
Chief Financial Officer (MBA, Grad
DipACG, CAIB(SA), BCom, FGIA, FCIS)
David has extensive capabilities in business
administration with strengths in credit risk
management and international business.
His experience in financial management
Xavier Bergade
spans 25 years in the banking industries of
Chief Technology Officer
South Africa, New Zealand and Australia,
and small cap and SME environments.
David holds a Bachelor of Commerce,
a Master of Business Administration,
As Chief Technology Officer, Xavier ensures
that Jumbo’s technology services are
continually improving and innovating while
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2017
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Financial
Report
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
23
FY 2018 in Review
Financial Headlines
$’000
Continuing operations
TTV
Revenue
Revenue margin
NPBT
NPAT
Discontinued operations
NPAT – overall operations
EBITDA
EBIT
Cash at bank
Net assets
Net tangible assets
Share price at year end (cps)
Dividends paid per share (cps)
Total shareholder return (%)
Earnings Per Share (cps)
Return on capital employed (%)–overall operations
Shares on issue (million)
Market capitalisation (million)
EBIT margin (%)
FY2018
183,146
39,775
21.7%
17,101
11,753
374
12,127
19,415
16,241
47,919
47,211
33,124
500.0
35.5
101.3%
23.4
25.7%
54.4
271.9
40.8%
FY2017
145,322
32,429
22.3%
11,068
7,597
(1,957)
5,640
14,094
10,463
43,320
42,900
30,484
266.0
8.5
111.2%
12.6
13.1%
50.7
134.8
32.3%
Variance %
26.0%
22.7%
(0.6ppt)
54.5%
54.7%
119.1%
115.0%
37.8%
55.2%
10.6%
10.0%
8.7%
88.0%
317.6%
(9.9ppt)
85.7%
12.6ppt
7.3%
101.7%
8.5ppt
Highlights
Large jackpot activity was only one more in number, but an increase
— Dividends paid 35.50 cents (fully franked) – 318% increase
— Share Price $5.00 – 88% increase
in the aggregate large jackpot value and improved customer
— Total Shareholder Return 101% - 9.9ppt decrease
engagement has seen an increase in Total Transaction Value (TTV)
and Revenue, together with a continued focus on costs, has resulted
in an increase in Net Profit After Tax from Continuing operations.
FY2019 outlook
— With a strong start to the year from 11 large jackpots in July and
August, including a record $100 million for Powerball, TTV growth
5 year Total Transaction Value and average large jackpots
of about 20 to 25% vs FY2018 is expected with higher TTV in
200
150
100
s
n
o
i
l
l
i
m
$
50
0
183
traditional draw lotteries and growth from the emerging charity
130
107
153.3
145.3
25.7
25.3
28.8
24.2
28.4
FY14
FY15
FY16
FY17
FY18
lotteries
— Revenue margin is expected to be slightly lower vs FY2018 of
approximately 20.0 to 21.0% due to the effects of product mix
— EBIT margin target 44.0 to 46.0% driven by operating leverage
with continued improvement in efficiencies and focus on cost
management
The discontinued operation in Germany contributed to the increase
in Net Profit After Tax of Overall operations.
— Revenue $39.775 million – 23% increase
— Net Profit After Tax – Continuing operations $11.753 million – 55%
increase
— Net Profit After Tax – Overall operations $12.127 million – 115%
increase
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Directors’ Report
The Directors of Jumbo Interactive Limited (Company), present
Australian Listed Company Directorships held in the past three
years: None.
their report on the consolidated entity (Group), consisting of Jumbo
Interactive Limited and the entities it controlled at the end of, and
Interest in shares and options: 9,851,027 ordinary shares and
1,950,000 options over ordinary shares in Jumbo Interactive Limited.
during, the financial year ended 30 June 2018.
Board of Directors
The following persons were Directors of the Company during the
Bill Lyne
Experience: Appointed as a board member on 30 October 2009.
Bill Lyne is the principal of Australian Company Secretary Service,
whole of the financial year and up to the date of this report, unless
providing company secretarial, compliance and governance
otherwise stated:
David K Barwick
Chairman, Independent Non-Executive Director
Mike Veverka
Managing Director and Chief Executive Officer
Bill Lyne
Independent Non-Executive Director
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 Governance Institute Australia and has been a
presenter at GIA courses in company secretarial practice.
Qualifications: Bachelor of Commerce; Chartered Accountant.
Details of the experience, qualifications and special responsibilities,
Special responsibilities: Chair of the Audit and Risk Management
Committee; member of the Nomination and Remuneration
and other Directorships of listed companies, in respect of each of
Committee; and Company Secretary.
the Directors as at the date of this Directors’ Report are set out in the
pages as follows:
David K Barwick
Experience: Appointed as a Board member on 30 August 2006 and
Chairman on 7 November 2007. David Barwick is an accountant
by profession with over 40 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.
Australian Listed Company Directorships held in the past three
years: None.
Interest in shares and options: None.
Company Secretary
Mr Bill Lyne was appointed Company Secretary 19 October 2007.
Refer to the information on Directors for details of experience and
qualifications.
Special responsibilities: Chairman (Non-Executive); Chair of the
Nomination and Remuneration Committee; and member of the
Principal Activities
The principal activity of the Group during the financial year was the
Audit and Risk Management Committee.
retail of lottery tickets through the internet and mobile devices sold
Australian Listed Company Directorships held in the past three
years: Metallica Minerals Limited – Non-Executive Director and
Chairman (from 11 March 2004 to 30 June 2015),
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.
Interest in shares and options: None.
Mike Veverka
Experience: Mike Veverka has been Chief Executive Officer and
Director of Jumbo Interactive Limited since the restructuring of
the Company 8 September 1999. Mike was instrumental in the
development of the e-commerce software that is the foundation
of 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.
Qualifications: Bachelor of Engineering (Hons).
Special responsibilities: Chief Executive Officer.
Review of operations
A review of the Group’s operations for the financial year and the
results of those operations, is contained in the Operating and
Financial Review as set out on pages 28 to 30 of this report.
Dividends
A fully franked final dividend of 5.0 cents per fully paid ordinary
share for the year ended 30 June 2017 was paid on 22 September
2017, and a fully franked interim dividend of 7.5 cents per fully paid
ordinary share for the year ended 30 June 2018 was paid on 23
March 2018.
A fully franked special dividend of 15.0 cents per fully paid ordinary
share was paid on 8 August 2017 and a fully franked special
dividend of 8.0 cents per fully paid ordinary share was paid on 29
June 2018.
On 23 August 2018, the Directors have declared to pay a fully franked
final dividend for the financial year ended 30 June 2018 of 11.0 cents
per fully paid ordinary share (2017: 5.0 cents per fully paid ordinary
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
25
share), to be paid on 21 September 2018.
thereafter with termination by either party giving 12 months
Further details of dividends provided for or paid are set out in note 14
written notice; and
to the Consolidated Financial Statements on page 65.
— Victoria (Fiji) - five years to 1 May 2022 and continuing thereafter
State of Affairs
Changes in the state of affairs are set out on page 30 and form part
of the Directors’ Report for the financial year ended 30 June 2018.
Events after the reporting date
Apart from (i) the exercise of 3,474.492 Tatts options ($8,235,000)
and of 330,000 staff options ($1,320,000), and (ii) the final dividend
declared, as at the date of this Directors’ Report, the directors are
not aware of any matter or circumstance that has arisen that has
significantly affected, or may significantly affect, the operations of
the Company in the financial years subsequent to 30 June 2018.
The above items are not recognised in the financial statements 30
June 2018.
Likely developments, key business strategies and future
prospects
Following the renewal of the lottery agreements with Tatts
and the investment by Tatts in the Company in May 2017, and
discontinuation of the Germany operation in March 2017, the
Company is well placed to concentrate on and grow its core
domestic lottery market in Australia while respecting responsible
gaming commitments and the needs of all industry stakeholders,
including other lottery channels.
The following lottery agreements are held with the Tatts Group:
— Victoria - five years to 1 May 2022 and continuing thereafter with
termination by either party giving 12 months written notice;
— New South Wales - five years to 1 May 2022 and continuing
thereafter with termination by either party giving 12 months
written notice;
with termination by either party giving 12 months written notice
The Company’s long, strong relationship with Tatts has been
strengthened with the investment by Tatts in the Company, currently
holding a 12.5% strategically important stake. The Company can
confidently continue with its medium to long term plans to grow
the business in Australia. The domestic internet lottery market is
estimated to be approximately 18% 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 shares are estimated to have reached
approximately 21% and 48% respectively. Based on this, there is still
good growth potential in the domestic market.
Changes to the Powerball game in April 2018 is expected to increase
the number of large jackpots in FY2019, although this is no certainty.
The long awaited Set for Life product is expected to be available for
sale from the beginning of H2FY2019.
The Company started selling Charity lottery tickets in July 2015
and has maintained the number of charities at five during the
financial year, increasing sales by 60%. At least one further charity is
expected to be added in FY2019 with expected good growth.
Investment in the Company’s core intellectual property will continue
for FY2019 with continuing benefits expected in future years. These
new products and technologies are designed to take advantage
of the trend towards social media and interactive gaming which is
expected to have the Company well placed in the lottery market.
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.
— South Australia - five years to 1 May 2022 and continuing
thereafter with termination by either party giving 12 months
Directors’ meetings
The number of meetings of the Board of Directors (including board
written notice;
committees) held during the year ended 30 June 2018 and the
number of meetings attended by each Director is set out in the table
— Northern Territory - five years to 1 May 2022 and continuing
below:
Meetings table
Board *
Audit and Risk Management Committee
Nomination and Remuneration Committee
Director
Eligible to attend
Attended
Eligible to attend
Attended
Eligible to attend
Attended
David Barwick
Mike Veverka
Bill Lyne
16
16
16
16
16
16
8
-
8
8
-
8
2
-
2
2
-
2
* Board meetings include Circulating Directors’ Resolutions
26
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Share options
premium.
Unissued ordinary shares of the Company under options at the date
The Company has not otherwise, during or since the end of the
of this report are as follows:
Date options
granted
Exercise price
Number
Expiry date
of shares
under option
3 September 2013
3 September 2018
6 November 2013
6 November 2018
18 November 2015
18 November 2020
2 February 2017
2 February 2022
$4.00
$4.00
$1.75
$2.25
70,000
150,000
300,000
50,000
15 November 2017
15 November 2022
$3.50
4,450,000
5,020,000
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 or since the financial year ended 30 June 2018, the following
ordinary shares of Jumbo Interactive Limited were issued on the
exercise of options granted.
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.
Non-audit services
During the financial year, the Company’s auditor BDO Audit Pty Ltd,
or their related practices (herein also referred to BDO), performed
other services in addition to its audit responsibilities.
On the advice of the Audit and Risk Management 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 and Risk Management Committee,
the Directors are satisfied that the provision of non-audit services
Date options granted
Issue price of share
shares issued
independence requirements of the Corporations Act 2001 for the
Number of
by the auditor, as set out above, did not compromise the auditor
13 September 2013
6 November 2013
18 November 2015
14 January 2016
13 July 2017
15 November 2017
$4.00
$4.00
$1.75
$1.75
$2.37
$3.50
1,480,000
following reasons:
250,000
1,300,000
500,000
3,474,492
650,000
7,654,492
— all non-audit services have been reviewed by the Audit and Risk
Management 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.
Details of the amounts paid to BDO for non-audit services
throughout the year are set out below:
No amounts are unpaid on these shares.
During or since the financial year ended 30 June 2018, the following
options were granted by Jumbo Interactive Limited to Directors
and key management personnel, including the five most highly
remunerated officers, of the Group as part of their remuneration.
Taxation services
Consolidated
2018
$
2017
$
Name
Directors
Mike Veverka
Other key manage-
ment personnel
Xavier Bergade
Brad Board
David Todd
Number of options
Number of ordinary
granted
shares under option
Transfer pricing
Other tax advice
15,000
7,000
-
-
Tax compliance services - tax returns
42,000
40,000
1,800,000
1,800,000
Total taxation services
64,000
40,000
900,000
900,000
900,000
900,000
900,000
900,000
4,500,000
4,500,000
Other services
Accounting advice
Accounting services
Total other services
-
4,500
4,500
2,800
6,000
8,800
Total fees for non-audit services
68,500
48,800
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
CEO and CFO declaration
The Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
have provided a written declaration to the Board in accordance with
section 295A of the Corporations Act 2001.
With regards to the financial records and systems of risk
management and internal compliance in this written declaration,
the Board received assurance from the CEO and CFO that the
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
27
declaration was founded on a sound system of risk management
and internal control, and that the system was operating effectively in
all material respects in relation to the reporting of financial risks.
Proceedings against 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.
Remuneration Report
The Remuneration Report is set out on pages 31 to 37, and forms
part of the Directors’ Report for the financial year ended 30 June
2018.
Rounding of amounts
The company satisfies the requirements of ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191
issued by the Australian Securities and Investments Commission
in relation to rounding of amounts in the directors’ report and the
financial statements to the nearest thousand dollars. Amounts have
been rounded off in the directors’ report and financial statements in
accordance with that Legislative Instrument.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration, as required under
section 307C of the Corporations Act 2001, is set out on page 38.
This Directors’ Report is made in accordance with a resolution of the
Directors of the Company.
David K Barwick
Chairman
Brisbane
23 August 2018
28
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Operating and Financial Review
Consolidated results of continuing operations
The Company reports revenue on a net revenue inflow basis where it considers that it acts more as an Agent than as a Principal such as with
the sale of lottery tickets. The gross amount received for the sale of goods and rendering of services is advised as Total Transaction Value
(TTV) for information purposes. Refer to note 2 for details.
Continuing operations
TTV
Revenue
Cost of sales
Gross profit
Other income
Expenses
NPBT
Income tax Expense
NPAT continuing operations
Discontinued operations
NPAT overall operations
EBITDA
EBIT
FY2018
183,146
39,775
(2,038)
37,737
1,203
(21,839)
17,101
(5,348)
11,753
374
12,127
19,415
16,241
FY2017
145,322
32,429
(2,465)
29,964
1,064
(19,960)
11,068
(3,471)
7,597
(1,957)
5,640
14,094
10,463
Variance %
26.0%
22.7%
(17.3%)
25.9%
13.1%
9.4%
54.5%
54.1%
54.7%
119.1%
115.0%
37.8%
55.2%
The Company achieved a strong increase in TTV and Revenue
— $7,311,000 or 23.1% increase to $38,897,000 in Australia Lotteries
due mainly to improved customer activity (both new customers
as a result of the increased TTV. The revenue margin is affected
and re-engagement of existing customer) together with improved
by product mix and was an edge lower at 21.7% (2017: 22.3%).
large jackpot activity. Large jackpot activity is an important driver
of sales and can randomly fluctuate over time. During the financial
Cost of sales decreased by $427,000 or 17.3% to $2,038,000 mainly
year, the number of large jackpots was 32 (2017: 31) and aggregate
due to:
value $910 million (2017: $750 million). This is 3% higher in number
and 21% higher in aggregate value compared to the previous period.
The voluntary administration of the business in Germany which was
discontinued in March 2017, is expected to be finalised in FY2019,
and had a reclassification of $374,000 foreign exchange translation
gains from Other Comprehensive Income to Profit or Loss (see note
6 for details). No further Profit or Loss from Discontinued operations
is expected in FY2019. The overall increase in Net profit after tax
resulted from (i) an increase in TTV and Revenue with continued
management of costs and (ii) the effect of the discontinued
operation in Germany.
The Company continues to invest in the three main pillars that
support the ongoing growth of the Company with $4,567,000 (2017:
$4,330,000) on its proprietary software platform (intangible assets),
$4,637,000 (2017: $3,566,000) in marketing activities primarily to
acquire new and retain existing customers, and $8,119,000 (2017:
$7,292,000) on employees who provide the software development
and marketing skills, customer support services, and management.
Comparative analysis
Compared to FY2017:
— a higher proportion of the TTV for Australia Lotteries being due
to its own marketing activities and a lower proportion through
affiliates - the margin decreased by 0.6ppt to 1.1% from 1.7%.
Other income, being mainly interest on cash and cash equivalents,
increased by $139,000 or 13.1% to $1,203,000 largely as a result of:
— $255,000 or 42.1% increase in interest on cash and cash
equivalents for Australia Lotteries and Corporate through higher
average interest rates and balances (see note 17 (ii) for details);
— $73,000 or 85.9% decrease in other income/revenue; and
— $41,000 or 28.9% decrease in the Export Market Development
Grant
Expenses increased by $1,879,000 or 9.4% to $21,839,000 mainly in
relation to the increase TTV and Revenue and strong improvement
in Company finance performance and increase in shareholder
wealth:
— $1,191,000 or 6.8% increase in Australia Lotteries largely from an
increase in marketing costs of $1,069,000;
— $34,000 or 7.8% decrease in All Other segments mainly from a
decrease in administrative expenses of $41,000; and
— $722,000 or 38.3% increase in Corporate principally from an
increase of employee benefits in administrative expenses of
TTV increased $37,824,000 or 26.0% to $183,146,000, principally due
$713,000
to:
— $37,789,000 or 26.2% increase to $182,268,000 in Australia
Lotteries mainly as a result of improved customer activity and
average large jackpot value.
NPBT of continuing operations increased $6,033,000 or 54.5% to
$17,101,000, principally due to:
— $6,608,000 or 53.5% increase in Australia Lotteries profits due
to increased TTV and Revenue and managing costs which
Revenue increased $7,346,000 or 22.7% to $39,776,000 due mainly
increased by 6.8%;
to:
— an increase of $69,000 or 17.0% in All Other Segment profits from
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
29
increased TTV/Revenue and decreased expenses; and
interest rates and balances. Net profit before tax increased by 53.5%
— $644,000 or 38.4% increase in Corporate losses mainly as
to $18,948,000 (2017: $12,340,000) due to the higher jackpot activity
a result of increased Other revenue $78,000 and increased
notwithstanding an increase in expenses of 6.8% or $1,191,000.
expenses $722,000.
Australia Lotteries NPBT increased 53.5% or $6,608,000 due to:
$144,479,000), which includes charity lottery sales of $6,092,000
— increased TTV by 26.2% or $37,789,000 and Revenue and other
(2017: $3,804,000), 3.3% ofTTV (2017: 2.6%).
TTV for the financial year increased by 26.2% to $182,268,000 (2017:
income by 22.7% or $7,372,000 largely from improved customer
activity and increased large jackpot average value;
— reduced cost of sales by 17.3% or $427,000; and
— increased costs by 6.8% or $1,191,000 largely due to higher
marketing expenses $1,069,000 and merchant fees $458,000
associated with increased TTV, and lower depreciation and
amortisation of $424,000 due mainly to a change in the useful
life of website development costs from 3 years to 5 years from 1
July 2015.
With no meaningful opportunities foreseeable in Mexico, activity
was minimal during the financial year and the NLBT of $37,000 for
FY2018 (2017: NLBT $32,000) is included in the Australia Lotteries
segment.
All Other Segments NPBT increased 17.0% or $69,000 due to:
— increased revenue of 4.2% or $35,000; and reduced costs by 7.8%
or $34,000
The number of large jackpots is a significant driver of sales. The
sales trend over the last three financial year periods in the context of
such jackpots in Australia is summarised in the following table:
Jumbo invests extensively in online marketing to grow and activate
the customer database whom transact via its website (www.
ozlotteries.com) and associated mobile apps (iOS & Android).
The following key performance indicators (KPIs) are used to track the
effectiveness of these campaigns:
1. CPL: Cost per Lead (new online accounts) defined as total cost
to acquire these new accounts divided by the number of new
accounts in a given period. New accounts potentially become
active customers after the account has been established.
2. Number of Active Online Customers defined as customers who
have spent money on tickets in a given period.
3. Average spend per active online customer defined as the total
spent by active online customers divided by the number of active
online customers in a given period.
The following table summarizes the Marketing KPI’s:
www.ozlotteries.com and mobile apps
FY 2018
FY 2017
Number of new online accounts
214,908
160,698
CPL
$17.28
$17.09
Large jackpot activity
FY 2018
FY 2017
FY 2016
Number of active online customers
437,540
354,113
TTV - Internet Lotteries
Australia
Reported Revenue - Internet
Lotteries Australia
OzLotto/Powerball
Number of jackpots1
$183.0 m
$145.3 m
$153.3 m
$39.8 m
$32.4 m
$34.1 m
Average spend per active online customer
$371.13
$348.40
The 33.7% increase in new online accounts and 23.6% increase
in active online customers are due mainly to the increase in large
jackpot activity (3% higher in number and 21% higher in aggregate
32
31
45
value) and re-engagement of existing customers. The 6.5% increase
Average Div 1 jackpot1
$28.4 m
$24.2 m
$28.8 m
in average spend is largely due to marketing initiatives and an
Peak Div 1 jackpot2
$55 m
$55 m
$70 m
Aggregate Div 1 jackpots2
$910 m
$750 m
$1,295 m
1Ozlotto/Powerball Division 1 jackpots of $15 million or more
2during the financial year period
The higher level of average large jackpot value in the current
financial year has contributed to higher TTV and revenue. Costs
continue to be closely managed with an increase in expenses
of 9.4%. The higher TTV and revenue is the main reason for an
increase in profits.
Segment review
(a) Online Lottery Segment
With the operation in Germany discontinued March 2017, this
segment now consists of Australia and Mexico, and Mexico’s results
increase in charity lottery sales. The 1.1% increase in CPL is mostly
due to the marketing mix and trying other marketing channels to
acquire customers.
With no meaningful opportunities in the foreseeable future
in Mexico, activity is minimal and this segment ceased being
reportable during the 2016 financial year. The net loss before tax
for Mexico was $37,000 (2017: loss $32,000) and is included in the
Australia segment.
(b) All Other Segments
This segment consists of the sale of non-lottery products and
services. TTV and Revenue and other income increased to $878,000
(2017: $843,000) and net profit before tax increased to $476,000
(2017: $407,000), due to increased revenue and lower expenses.
are included in those of Australia due to the minimal activity and no
(c) Corporate
meaningful opportunities in the foreseeable future.
Australia
Improvements continue to be made to online marketing and player
experience, and together with the higher level of large jackpot
activity, contributed significantly to a 23.1% increase in revenue to
$38,897,000 (2017: $31,586,000). Other income increased by $61,000
or 7.1% mainly due to increased interest revenue with higher average
The net loss increased by 38.4% or $644,000 to NLBT $2,323,000
mainly due to (i) increased interest revenue of 37.7% or $78,000
from higher average interest rates and balances and (ii) increased
administration expenses $716,000 or 38.6% largely from increased
employee benefits in salaries and share-based payments from the
exercise of staff options during the financial year mainly due to the
strong Company financial performance and increased shareholders
wealth.
30
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Summary of results
The annual comparison of results of the Company for the past five years is summarised below:
Revenue/profits ($’000)
TTV – continuing operations
Revenue – continuing operations
NPAT – overall operations
NPAT – continuing operations
NPAT – discontinued operations
EBITDA – continuing operations
EBIT – continuing operations
Assets
Cash at bank1 ($’000)
Net assets ($’000)
Net tangible assets ($’000)
Return on capital employed (%) – overall operations
Return on capital employed (%) – continuing operations
Return on capital employed (%) – discontinued opera-
tions
FY2018
183,146
39,775
12,127
11,753
374
19,415
16,241
FY2018
47,919
47,211
33,124
25.7
24.9
0.8
FY2017
145,322
32,429
5,640
7,597
(1,957)
14,094
10,463
FY2017
43,320
42,900
30,484
13.1
17.7
(4.6)
FY2016
153,302
34,083
4,670
7,323
(2,653)
13,717
10,073
FY2016
25,306
24,696
12,949
18.9
29.6
(10.7)
FY2015
128,464
29,076
663
4,274
(3,611)
8,314
5,433
FY2015
23,778
21,681
11,639
3.1
19.7
(16.6)
FY2014
106,872
24,792
3,251
4,366
(1,115)
7,720
5,498
FY2014
25,366
22,107
14,107
14.7
19.7
(5.0)
1includes cash held under term deposit and customer account balances payable (refer note 7: Cash and Cash Equivalents and Note 11: Trade and Other Payables
for details)
Share price
Earnings per share (cps)
Dividends paid per share (cps)
Share price at financial year end (cps)
Total shareholder return (%)
Shares on issue (million)
Market capitalisation ($’million)
FY2018
FY2017
FY2016
FY2015
FY2014
23.4
35.5
500.0
101.3
54.4
271.9
12.6
8.5
266.0
111.2
50.7
134.8
10.6
3.5
130.0
57.1
44.1
57.3
1.5
3.0
85.0
(32.3)
44.2
37.6
7.4
3.0
130.0
(11.3)
43.9
57.1
Financial position
The net assets of the Group have increased by $4,311,000 from 30
June 2017 to $47,211,000.
The Group’s working capital, being current assets less current
liabilities, has increased from $30,444,000 in 2017 to $33,236,000 in
2018 mainly as a result of increased cash and cash equivalents of
(a) Increase in contributed equity of $10,425,000 resulting from:
– Issue of 3,700,000 shares as a result of an exercise of
options (see note 15 for details)
$4,599,000. $10,425,000 of this increase came from share issues.
(b) Increase in cash of $4,599,000 resulting from:
Non-current assets increased by $1,616,000 to $14,439,000 due
mainly to the investment in the software code of www.ozlotteries.
– Cash raised from the issue of contributed equity in (a)
above
– Other activities (see Cash Flow Statement for details)
$’000
10,425
10,425
$’000
10,425
(5,826)
4,599
com.
The Directors believe the Group is in a sound financial position to
expand and grow its current operations.
Significant changes in State of Affairs
Significant changes in the state of affairs of the Group for the
financial year were as follows:
(c) Increase in non-current assets of $1,616,000 resulting from:
– investment in website development costs net of amor-
tisation (see note 10 for details)
– Changes in other non-current assets (see notes 4, 9
and 10 for details)
$’000
1,539
77
1,616
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
31
Remuneration Report – audited
policy is designed to attract the highest calibre of KMP and reward
them for performance that results in long term growth in shareholder
wealth.
Page
Refer below for further details of performance based remuneration.
Contents
Section Contents
1
2
3
4
5
6
7
8
9
10
11
12
Remuneration Report Introduction
Remuneration Framework
Directors and Executives
Cash bonuses
Options and rights
Equity instruments issued to KMP
Options granted
Value of options
Equity instruments held by KMP
Loans to KMP
Other transactions and balances
Employment contracts
31
31
32
34
34
35
35
35
36
36
37
37
1. Remuneration Report Introduction
This report details the nature and amount of remuneration for each
Key Management Person (KMP), including each director of Jumbo
Interactive Limited.
The Remuneration Report for the year ended 30 June 2018 is set out
per the above Contents. The information in the Report has been
audited.
2. Policy Framework
The Remuneration Policy of Jumbo has been designed to align
director and 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 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, and
drives and reflects the creation of shareholder value.
The Board’s policy for determining the nature and amount of
remuneration for Board members and KMP of the Group is as
follows:
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 9.50%
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.
The mix of total potential remuneration for FY2018 for KMP is as
follows:
Fixed remuneration - 100%
Short term incentive cash bonuses - 75% to 80% of fixed
remuneration.
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. Refer to Note 12: Executive Service Agreements of this Report
for details of KMP fixed remuneration.
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
— The Remuneration Policy, setting the terms and conditions for
shareholding of the Company which could become further
the directors and KMP, was developed by the Nomination and
concentrated under such a scheme, and the desire of the Board to
Remuneration Committee and approved by the Board.
limit shareholding dilution to as low a level as possible. The Board
— All KMP receive a base salary (which is based on factors such as
did not exercise any discretion on the payment of bonuses.
individual performance skills, level of responsibilities, experience
and length of service), superannuation, options (by invitation) and
performance incentives.
Non-Executive Directors
The Board policy is to remunerate non-executive Directors at
— Performance incentives are generally only paid once
market rates for comparable companies for time, commitment
predetermined key performance measures have been met.
and responsibilities. The Board determines payments to the non-
— The Board reviews KMP packages annually by reference to the
executive Directors and reviews their remuneration annually based
Group’s performance, executive performance and comparable
on market practice, duties and accountability. Independent external
information from industry sectors and other listed companies in
advice is sought when required. The maximum aggregate amount
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
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
be justified by reference to measurable performance criteria. The
linked to the performance of the Group.
32
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Fees are paid as follows and comprise cash and statutory
In determining whether or not a financial KPI has been achieved, the
superannuation:
Company bases the assessment on audited figures.
Chairman of the Board
Non-Executive Directors
Membership of Audit and Risk Manage-
ment Committee and Nomination and
Remuneration Committee
Chairman of Audit and Risk Management
Committee and Nomination and Remuner-
ation Committee
$96,360
$68,985
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
No additional fees
“at risk” cash bonus reward schemes.
No additional fees
Short term incentive bonus
Incentive payments are based on the achievement of financial
targets of profit, return on equity and total shareholder return and
non-financial targets of strategic benefit such as signing of lottery
Performance Based Remuneration
As part of the KMP remuneration package there is a performance
agreements both domestically and internationally. Payments of
incentives for the 2018 financial year result were based on the
based component, consisting of key performance indicators (KPI).
Group’s overall financial performance (with some KPIs being
The intention of this program is to facilitate goal congruence
achieved).
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
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
goals. The level set for each KPI is based on a combination of an
between KMP, directors and shareholders.
improvement on the previous year results, increased shareholder
value and market sector standards (Consumer Discretionary Sector
– ASX code: XDJ). Performance in relation to the KPI is assessed
annually by the Board, with bonuses being awarded depending
on the level of achievement compared to the KPI target. Following
the assessment, the KPIs are reviewed by the Board in light of the
Company Performance, Shareholder Wealth, and Directors’ and
KMP Remuneration
The following table shows the total transaction value and profit/
(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
desired and actual outcomes, and their efficacy is assessed in
figures show:
relation to the Group’s goals and shareholder wealth before the KPI
are set for the following year.
$’000
TTV continuing operations
Net profit after tax – continuing operations
Net profit after tax – overall operations
Share price at year end (cps)
Dividends paid per share (cps)
Total shareholder return (%)
Earnings per share (cps)
Return of capital employed (%)
Market capitalisation ($‘000s)
FY 2018
FY 2017
FY 2016
FY 2015
FY 2014
$183,146
$145,322
$153,302
$128,404
$106,872
$11,753
$12,127
500.0
35.5
101.3%
23.4
25.7%
$7,597
$5,640
266.0
8.5
111.2%
12.6
13.1%
$7,323
$4,670
130.0
3.5
57.1%
10.6
18.9%
$5,433
$663
85.0
3.0
(32.3%)
1.5
3.1%
$5,498
$3,250
130.0
3.0
(11.3%)
7.4
14.7%
$271,871
$134,793
$57,284
$37,572
$57,073
3. Directors and Executives
Directors and executives
The KMP of the Group (being those whose remuneration must be
Name
Position held
disclosed in the Report) includes the Non-Executive Directors and
those Executives who have the authority and responsibility for
planning, directly and controlling the activities of Jumbo.
Non-Executive Directors
David K Barwick
The Non-Executive Directors and Executives that were the KMP of
the Group during the financial year are identified as follows:
Bill Lyne
Executive KMP
Mike Veverka
David Todd
Chairman, Independent Non-Executive
Director
Independent Non-Executive Director
Director and Chief Executive Officer
Chief Financial Officer
Xavier Bergade
Chief Technical Officer
Brad Board
Chief Operating Officer
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
33
Details of Remuneration
Details of compensation of KMP of Jumbo are set out below:
2018
Post
employment
Equity-set-
tled share
based
Short term employee benefits
benefits
Long term benefits
payments
Cash salary,
fees and an-
Non-mone-
Superannu-
Long service
Termination
Proportion
of remuner-
ation that is
performance
nual leave Cash bonus
tary benefits
ation
leave
benefits
Options1
Total
based
Directors
David Barwick
Mike Veverka
Bill Lyne
Bill Lyne – as Company
Secretary
Other KMP
David Todd
$
88,000
$
-
521,354
257,520
63,000
29,432
-
-
265,462
135,975
Xavier Bergade
265,349
135,975
Brad Board
265,549
135,975
Total KMP remuneration
1,498,146
665,445
$
$
$
-
8,360
25,000
18,829
5,985
-
36,193
42,978
35,476
-
-
8,132
4,887
6,136
153,992
37,984
$
-
-
-
-
-
-
-
-
$
-
$
96,360
%
-
150,145
972,848
26.5
-
-
68,895
29,432
82,164
79,863
527,926
529,052
225,880
669,016
538,052
2,893,619
-
-
25.8
25.7
20.3
1 includes share based payments over the remaining term on those options exercised, if any, during the financial year
2017
Post
employment
Equity-set-
tled share
based
Short term employee benefits
benefits
Long term benefits
payments
Cash salary,
fees and an-
Non-mone-
Superannu-
Long service
Termination
Proportion
of remuner-
ation that is
performance
nual leave Cash bonus
tary benefits
ation
leave
benefits
Options1
Total
based
Directors
David Barwick
Mike Veverka
Bill Lyne
Bill Lyne – as Company
Secretary
Other KMP
David Todd
Xavier Bergade
Brad Board
Kate Waters2
$
77,000
$
-
488,069
173,580
55,000
24,100
237,507
237,507
237,507
21,382
-
-
86,790
86,790
73,920
-
Total KMP remuneration
1,378,072
421,080
$
$
7,315
25,000
5,225
-
29,949
29,949
28,726
9,706
$
-
6,835
-
-
3,795
3,795
3,795
$
-
-
-
-
-
-
-
$
-
44,277
-
-
$
84,315
737,761
60,225
24,100
20,421
20,421
20,421
378,462
378,462
364,369
233
174,538
756
206,615
%
-
23.5
-
-
22.9
22.9
20.3
-
135,870
18,453
174,538
106,296
2,234,309
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 includes share based payments over the remaining term on those options exercised, if any, during the financial year
2 Kate Waters ceased being a member of KMP 1 August 2016
34
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
4. Cash bonuses
No cash bonuses were paid at the discretion of the Nomination and
Remuneration Committee.
Performance measures apply to all participants with slightly
difference individual weightings. Details of these short-term
incentives recognised as remuneration, forfeited or available for
Key management personnel are entitled to a short-term cash
vesting in later years is outlined below:
incentive as ‘at risk’ remuneration based on performance criteria
described in section (a) to this Remuneration Report. These were
paid out on 23 August 2018.
Name
Maximum Potential
Awarded and included in remuneration
Forfeited in year
Financial Non-financial
Total
Financial Non-financial
Total
Financial Non-financial
$
$
$
$
Mike Veverka
David Todd
278,400
147,000
Xavier Bergade
147,000
Brad Board
147,000
69,600
348,000
257,520
36,750
36,750
36,750
183,750
183,750
183,750
135,975
135,975
135,975
$
-
-
-
-
$
257,520
135,975
135,975
135,975
$
20,880
11,025
11,025
11,025
$
69,600
36,750
36,750
36,750
Total
$
90,480
47,775
47,775
47,775
5. Options and rights granted as remuneration
Options are issued to key management personnel as part of their
the event of retirement or retrenchment, the options will lapse one
remuneration at the discretion of the Board. The options are not
month after the event and if deceased, the options will lapse three
necessarily issued based upon performance criteria, but are
months after the event.
issued to selected executives of the Company and its subsidiaries
to increase goal congruence between executives, directors and
shareholders.
Options will vest in key management personnel when the share
price equals the exercise price, as measured by the five trading
day moving volume weighted average 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
Details of the terms and conditions of options and rights granted to
key management personnel as compensation during the reporting
period are as follows:
No. options/
No. options/
option/right at
Amount paid
Date
rights granted
rights vested
grant date
Exercise price
or payable
Expiry date
exercisable
Fair value per
2018
Directors
Mike Veverka
1,800,000
1,800,000
$0.334
$3.50
Other key management personnel
1,800,000
1,800,000
David Todd
Xavier Bergade
Brad Board
900,000
900,000
900,000
900,000
900,000
900,000
2,700,000
2,700,000
$0.334
$0.334
$0.334
$3.50
$3.50
$3.50
-
-
-
-
15 Nov 2022
15 Nov 2017
15 Nov 2022
15 Nov 2017
15 Nov 2022
15 Nov 2017
15 Nov 2022
15 Nov 2017
Options will vest to key management personnel when the share price equals $4.00 as measured by the five business day volume weighted average price and
on condition they are employedby the Group at the time of vesting. If the key management person leaves before the options vest, then the optiosn 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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
35
6. 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:
Number of shares issued
Number of options
Amount unpaid per
on exercise of options
exercised
Amount paid per share
share
2018
Directors
Mike Veverka
Other key management personnel
David Todd
Xavier Bergade
Brad Board
750,000
750,000
750,000
250,000
1,300,000
2,300,000
750,000
750,000
750,000
250,000
1,300,000
2,300,000
$2.500
$2.800
$1.750
$3.096
-
-
-
-
7. Options granted as part of remuneration that lapsed
during the period
No options previously granted to key management personnel as
8. Value of options to key management personnel
Details of the value of options granted and exercised during the year
to key management personnel as part of their remuneration are
part of remuneration lapsed during the period.
summarised below:
Name
Directors
Mike Veverka
Other key management and personnel
David Todd
Xavier Bergade
Brad Board
Value of options at grant date 1
Value of options exercised at exercise date 2
$
602,060
301,030
301,030
301,030
$
755,000
959,000
649,500
1,451,000
1 The value of options granted during the period differs to the expense recognised as part of each key management persons’ remuneration in 3. above because
the value is the grant date fair value calculated in accordance with AASB 2 Share-based Payment. The total value of the rights granted in the table above is
allocated to remuneration in 3. above over the vesting period.
2 The value of options exercised has been determined as the intrinsic value of the options at exercise date i.e. the market price of shares of the Company as at
close of trading on the date the options were exercised after deducting the price paid to exercise the options.
36
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
9. Equity instruments held by key management personnel
Options and rights holdings
On exercise, each option and right will result in the issue of one ordinary share in Jumbo Interactive Limited.
Key management personnel include close family members and entities over which the key management person or their close family
members have direct or indirect control, joint control or significant influence.
Details of options and rights over ordinary shares of Jumbo Interactive Limited, held indirectly or beneficially by key management personnel
are as follows:
Balance at 1
Granted as
Exercised
Other
Balance
Vested at 30
Total vested
Total vested
July 2017
remunera-
during the
changes
at 30 June
June 2018
and exercis-
and unexer-
tion during
the year
year
during the
2018
able at 30
cisable at 30
June 2018
June 2018
Mike Veverka
900,000
1,800,000
(750,000)
David Todd
750,000
900,000
(750,000)
Xavier Bergade
750,000
900,000
(250,000)
Brad Board
750,000
900,000
(1,300,000)
3,150,000
4,500,000
(3,050,000)
year
-
-
-
-
-
1,950,000
1,950,000
1,950,000
900,000
900,000
900,000
1,400,000
1,400,000
1,400,000
350,000
350,000
350,000
4,600,000
4,600,000
4,600,000
-
-
-
-
-
Shareholdings
Details of ordinary shares in Jumbo Interactive Limited held directly, indirectly or beneficially by key management personnel and their related
parties are as follows:
FY2018
Mike Veverka
David Todd
Xavier Bergade
Brad Board
Granted as
Issued on exercise
Balance at
1 July 2017
remuneration
during the year
of options
during the year
Other changes
during the year1
Balance at
30 June 2018
9,101,027
20,000
150,000
-
9,271,027
-
-
-
-
-
750,000
750,000
250,000
1,300,000
3,050,000
-
(750,000)
(100,000)
(1,290,000)
(2,140,000)
9,851,027
20,000
300,000
10,000
10,181,027
1these were on-market sale of the shares that were issued on exercise of options during the year
10. Loans to key management personnel
Aggregate loans to key management persons and their related parties are as follows:
Balance at 1 July
Loans repaid
Interest charged
Interest received
Balance at 30
Number in group
2017
$
$
Total
100,000
(100,000)
June 2018
at end of year
$
613
$
(613)
$
-
1
On 7 March 2016, Jumbo Interactive Ltd made a loan to KMP Brad
The loan was repaid on 2 September 2017.
Board for an amount of $100,000. The loan bears interest at the
Commonwealth Bank of Australia’s Home Loan Standard Variable
Rate, 5.22% p.a. as at the end of the reporting period, plus a margin
of 2.00% p.a., payable monthly in arrears. The capital balance is
Key management personnel include close family members and
entities over which the key management person or their close family
members have direct or indirect control, joint control or significant
repayable by 7 March 2018.
influence.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
37
11. Other transactions and balances
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.
i. Mr Mike Rosch, the father of Mr Mike Veverka, the CEO and executive director of the Company.
rented an office from the Group.
- office rent received
- amounts owing to Group at year end
ii. 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.
Consolidated Group
2018
$
2017
$
8,580
2,145
7,211
1,573
Salary and superannuation
82,462
82,441
12. 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. These contracts do not fix the amount of remuneration
KMP
Mike Veverka
increases from year to year. Remuneration levels are reviewed
David Todd
generally each year by the Nomination and Remuneration
Committee to align with job responsibilities and market salary
expectations. The Company may terminate an employment
Xavier Bergade
Brad Board
Duration of
service
agreement
Ongoing
Ongoing
Ongoing
Ongoing
Fixed
remuneration at
end of FY20181
Notice
period2
$435,000
12 months
$245,000
6 months
$245,000
6 months
$245,000
6 months
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.
1fixed remuneration excludes a superannuation component, currently 9.5%
2any termination payment (notice and severance) will be subject to compliance
with all relevant legislation and will not exceed 12 months
END OF AUDITED REMUNERATION REPORT
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.
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
38
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY K L COLYER TO THE DIRECTORS OF JUMBO INTERACTIVE
DECLARATION OF INDEPENDENCE BY K L COLYER TO THE DIRECTORS OF JUMBO INTERACTIVE
LIMITED
LIMITED
As lead auditor of Jumbo Interactive Limited for the year ended 30 June 2018, I declare that, to the
As lead auditor of Jumbo Interactive Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
relation to the audit; and
DECLARATION OF INDEPENDENCE BY K L COLYER TO THE DIRECTORS OF JUMBO INTERACTIVE
2. No contraventions of any applicable code of professional conduct in relation to the audit.
2. No contraventions of any applicable code of professional conduct in relation to the audit.
LIMITED
This declaration is in respect of Jumbo Interactive Limited and the entities it controlled during the
This declaration is in respect of Jumbo Interactive Limited and the entities it controlled during the
period.
period.
As lead auditor of Jumbo Interactive Limited for the year ended 30 June 2018, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
K L Colyer
This declaration is in respect of Jumbo Interactive Limited and the entities it controlled during the
K L Colyer
Director
period.
Director
BDO Audit Pty Ltd
BDO Audit Pty Ltd
Brisbane, 23 August 2018
Brisbane, 24 August 2017
K L Colyer
Director
BDO Audit Pty Ltd
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
Brisbane, 23 August 2018
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.
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.
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
39
Corporate Governance Statement
Introduction
This statement summarises the corporate governance practices
that have generally applied in Jumbo Interactive Limited (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 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
1. Lay solid foundations for management and oversight
The Council’s first Principle states that companies should “establish
and disclose the respective roles and responsibilities of its board
and management and how their performance is monitored and
evaluated.” Jumbo has adopted a formal Board Charter that sets
out the functions reserved to the Board and those delegated to the
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 developed the following objectives in 2017
regarding gender diversity and aims to achieve these objectives
over the next five years to 2022 as director and senior positions
become vacant and appropriately qualified and experienced
candidates become available:
Group
Diversity
2018 Actual
2022 Objective
No.
-
1
40
112
%
-
20.0
35.7
100.0
To have at least one
woman on the Board
Maintain at least the
current number (one) of
women
Achieve the percentage
of woman in excess of 45%
Women in senior
executive positions
Women employees
in the Group
Total employees in the
Group
readers are welcome to refer to them. The Board will keep its
Women on the board
corporate governance practices under review.
Senior executive positions are defined as those reporting directly to
Chief Executive Officer (CEO). This enables the Board to provide
the CEO (i.e. CEO – 1).
strategic guidance for the Company and effective oversight of
management.
A Workplace Gender Equality Report 2016-17 has been lodged with
the Workplace Gender Equality Agency and is accessible on the
Jumbo ensures that appropriate checks are undertaken before it
Company’s website.
appoints a person, or puts forward to shareholders a new candidate
for election, as a director. Information about a candidate standing
The Board is also responsible for the performance of the Company’s
for election or re-election as a director is provided to shareholders
executives, which is reviewed against appropriate measures and the
to enable them to make an informed decision on whether or not to
performance of the Company as a whole, and through an annual
elect or re-elect the candidate.
appraisal process.
Jumbo provides new Directors with a letter on appointment which
Performance of the Board, its committees and individual directors
details the terms and conditions of their appointment, provides clear
is on an annual self-assessment and peer-assessment basis which
guidance on what input is required by them, and includes materials
is reviewed against appropriate measures and performance of the
to assist with induction into the Company. Directors are also
Company as a whole.
encouraged to undertake appropriate training and refresher courses
which the Company facilitates as this assists in the performance of
their roles.
The Board, its committees, individual directors and its senior
executives’ performance evaluations have been carried out
during the relevant reporting period in accordance with the
The Company has a similar approach for all senior executives
abovementioned processes.
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 Company Secretary is accountable directly to the Board,
through the Chair, on all matters to do with the proper functioning of
the Board.
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 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.
2. Structure the Board to add value
In its second Principle the Council states that companies should
“have a board of an appropriate size, composition, skills and
commitment to enable it to discharge its duties effectively.” Jumbo’s
Board is so structured, and its Directors effectively discharge their
responsibilities and duties for the benefit of shareholders.
The Board presently comprises only two Non-Executive Directors
(David Barwick, Chairman, having served 12 years since being
appointed a Director 30 August 2006 and Bill Lyne, also the
Company Secretary, having served eight years since being
appointed 30 October 2009) 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
40
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
diverse range of skills and backgrounds. Additionally, Mr Veverka
of the Company. Consequently, the current structure meets the
has had a very long involvement in key sections of the Company and
Council’s recommendation that the majority of the Board should be
brings considerable relevant expertise and knowledge to the Board.
independent, and the Board also considers the current composition
A matrix of skills and diversity that the Board currently has or is
looking to achieve in its membership is detailed in Table 1 below.
is appropriate given the Company’s and the Directors’ backgrounds
and the current and foreseeable structure and size of the Company.
The rating scale used for level of importance and recruitment
The Jumbo Board has established a Nomination and Remuneration
priority is High (3), Medium (2) and Low (1).
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. The
Board considers that David Barwick, notwithstanding that he has
now served in the position of director for more than 10 years, and
Bill Lyne all meet this criterion. On the other hand, Mike Veverka
is considered to not be independent because he is a substantial
shareholder in Jumbo (i.e. holds more than 5% as defined in
Section 9 of the Corporations Act) and is an executive officer
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 this 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.
Table 1 – Skills Matrix
Skills and Experience
Corporate governance
Strategic planning
International
Gaming/ lotteries industry
Risk management
Financial management
Technology/IT
Digital or social media
Leadership
Legal
Stakeholder relationships
Demographic background
Gender
Male
Female
Age
25-40
41-55
56-75
Ethnicity
Aboriginal or Torres Strait Islander
Asian
White/Caucasian
Level of Importance
Current Board Representation
Recruitment Priority
3
3
2
3
3
2
2
2
3
2
2
2
2
1
2
3
2
2
2
3
3
2
3
3
3
2
2
3
2
3
3
0
0
1
2
0
0
3
1
1
2
1
1
1
2
2
1
1
1
1
2
1
2
1
2
2
1
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
41
The Company also complies with the Recommendations for
financial condition and operational results of the Company, are
Directors in relation to independent professional advice, information
in accordance with relevant accounting standards, and that their
access and contact with the Company Secretary.
opinion has been formed on the basis of a sound system of risk
management and internal control which is operating effectively.
The Directors may seek external professional advice at the expense
of the Company on matters relating to their role as Directors
The Committee’s Charter includes information on procedures for
of Jumbo. However, they must first request approval from the
the selection and appointment of the external auditor and rotation
Chairman, which must not be unreasonably withheld. If withheld
of the engagement audit partner. The external auditor is required to
then it becomes a matter for the whole Board.
attend the Company’s annual general meeting and be available to
The Company Secretary attends all Board and committee
meetings, is responsible for monitoring adherence to Board policy
answer shareholder questions about the conduct of the audit and
the preparation and content of the audit report.
and procedures, and is accountable on governance matters.
In accordance with the Council’s Recommendations the Audit
3. Act ethically and responsibly
In Principle 3 the Council states that companies should “act ethically
and responsibly”. To this end, Jumbo has formally adopted a
Code of Conduct covering its Directors, officers and employees.
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.
and Risk Management 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 “make
The Board has also approved a Whistleblower Policy pursuant to
which employees who have genuine suspicions about improper
timely and balanced disclosure of material matters concerning the
company that a reasonable person would expect to have a material
conduct feel safe to report it without fear of reprisal.
effect on the price or value of its securities.” Jumbo is committed to
In addition, Directors recognise the legal obligations relevant to
their role and the reasonable expectations of shareholders, other
stakeholders and the wider financial community.
Jumbo also has a documented Share Trading Policy for Directors,
key management personnel and other staff and consultants. 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.
4. Safeguard integrity in corporate reporting
The Council states that companies should “have formal and
rigorous processes that independently verify and safeguard the
integrity of their corporate reporting.” Jumbo has an established
Audit and Risk Management Committee which operates under an
Audit and Risk Management 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 (CFO) must declare to the Board in writing
that, in their opinion, the Company’s financial reports are complete
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.
6. Respect the rights of shareholders
In Principle 6 the Council states that companies should “respect
the rights of shareholders by providing them with appropriate
information and facilities to allow them to exercise those rights
effectively”. 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.
and present a true and fair view, in all material respects, of the
Company general meetings also present a good opportunity for
42
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
shareholders to meet with, and ask questions of, the Board of Jumbo
The Board considers that the Committee members are sufficiently
and all shareholders are notified of such meetings and encouraged
qualified to consider and decide on remuneration matters. However,
to attend.
external professional advice may be sought from experienced
consultants where appropriate to assist in their deliberations.
As part of the Company’s management of investor relations the
CEO does, at times, also undertake briefings with investors and
Non-executive Directors’ remuneration is reviewed periodically with
analysts to assist their understanding of the Company and its
reference to comparable businesses and the trend in Directors’
operations, and provide explanatory background and technical
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 the past, shareholders have
at times approved share option incentives for the non-executive
Directors. The current non-executive Directors do not hold shares
or options in the Company as they believe that this maintains their
independence.
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
from time to time granted options to deserving staff as a reward
for performance. However, the Board prohibits transactions by
executives which might limit the economic risk of participating
in unvested entitlements under any equity-based remuneration
scheme.
Further information about the Jumbo remuneration policy, along
with details of all emoluments of Directors and key management
personnel can be found in the Remuneration Report section of the
Directors’ Report in the Company’s Annual Report. There are no
separate retirement benefits for non-executive Directors, other than
statutory superannuation.
Approved by the Board – 23 August 2018
information.
7. Recognise and manage risk
In this Principle the Council states that companies should
“establish a sound risk management framework and periodically
review the effectiveness of that framework”. Jumbo maintains
documented policies for identifying, assessing and monitoring risk,
summarised in a Risk Management Policy. Through the Audit and
Risk Management Committee, as noted under Principle 4 above,
the Company monitors key business and financial risks, taking
into consideration their likelihood and impact, and reviews and
appraises risk control measures.
The Company does not have a separate internal audit function
due to its relatively small size and less complex financial and
organisational structures. 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. Periodic reviews evaluate
and continually improve the effectiveness of risk management and
internal control processes.
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.
The Board considers that the Company does not have any material
exposure to economic, environmental and social sustainability
risks which require active management. However, as the Company
operates in an environment where some sectors of the community
are not necessarily in favour of lotteries, the Board is aware of the
potential risks and responsibilities of ensuring that new players
are properly identified, there are adequate safeguards against
minors buying tickets and all personal details are maintained as
required under privacy legislation. The Company also provides
appropriate responsible gaming warnings on its website to try and
prevent compulsive gambling problems which can adversely affect
individuals and their families.
8. Remunerate fairly and responsibly
The Council’s final Principle states that companies should “pay
director remuneration sufficient to attract and retain high quality
directors and design executive remuneration to attract, retain and
motivate high quality senior executives and align their interests
with the creation of value for shareholders”. To this end the Board
has established during the year a Nomination and Remuneration
Committee, as noted above under Principle 2.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
43
Financial Report
For the year ended 30 June 2018
Financial Statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
About this report
Key events and transactions for the reporting period
Page 44
Page 45
Page 46
Page 48
Page 49
Page 49
Results for the year
Operating assets and
Capital and financial
Group structure
Other information
Unrecognised items
Page 50
liabilities
Page 57
risk management
Page 64
Page 69
Page 72
Page 78
Note 1: Segment infor-
mation
Note 7: Cash and cash
equivalents
Note 13: Capital risk
management
Note 18: Controlled
subsidiaries
Note 2: Revenue and
other income
Note 8: Trade and other
receivables
Note 14: Dividends
Note 19: Parent disclo-
sures
Note 3: Expenses
Note 9: Property, plant
and equipment
Note 15: Equity and
reserves
Note 4: Income tax
Note 10: Intangible
assets
Note 16: Borrowings
Note 5: Earnings per
share
Note 11: Trade and other
payables
Note 17: Financial risk
management
Note 6: Discontinued
operations
Note 12: Employee ben-
efits obligations
Note 20: Investments
accounted for using the
Equity Method
Note 21: Availa-
ble-for-sale financial
assets (non-current)
Note 27: Contingencies
Note 28: Commitments
Note 22: Related party
transactions
Note 29: Events after the
reporting date
Note 23: Key Man-
agement Personnel
compensation
Note 24: Share-based
payments
Note 25: Remuneration
of auditors
Note 26: Summary of
other significant ac-
counting policies
Signed reports
Directors’ declaration
Independent auditor’s report
ASX information
Shareholder information
Company Information
Page 80
Page 81
Page 84
Page 86
44
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Profit Or Loss And Other
Comprehensive Income
For the year ended 30 June 2018
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 from continuing operations
Profit/(loss) from discontinued operations
Profit/(loss) after income tax expense for the year attributable to the owners of Jumbo Interactive
Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Reclassification of foreign exchange differences on loss of control of subsidiary
Other comprehensive income for the year, net of tax
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 per share (cents per share)
Diluted earnings per share (cents per share)
Note
2
3
2
3
4
6
5
5
5
5
5
5
2018
$’000
39,775
(2,038)
37,737
1,203
(28)
(4,637)
(887)
2017
$’000
32,429
(2,465)
29,964
1,064
(24)
(3,566)
(959)
(16,280)
(15,405)
(7)
17,101
(5,348)
11,753
374
(6)
11,068
(3,471)
7,597
(1,957)
12,127
5,640
(3)
(374)
(377)
11,750
¢
23.4
22.6
22.7
21.9
0.7
0.7
(68)
563
495
6,135
¢
12.6
12.3
16.9
16.5
(4.3)
(4.2)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
45
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Financial Position
As at 30 June 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
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
Current tax liabilities
Employee benefit obligations
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Employee benefit obligations
Make good provision
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Profits Appropriation Reserve
Reserves
TOTAL EQUITY
Note
2018
$’000
2017
$’000
7
8
9
10
4
11
4
12
12
4
15
47,919
43,320
509
57
548
62
48,485
43,930
280
13,113
1,046
14,439
62,924
341
11,574
908
12,823
56,753
14,346
13,009
594
309
184
293
15,249
13,486
368
24
72
464
15,713
47,211
55,917
(17,399)
9,364
(671)
47,211
277
24
66
367
13,853
42,900
45,492
(17,399)
15,745
(938)
42,900
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
46
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Changes In Equity
For the year ended 30 June 2018
Contributed equity
CONSOLIDATED GROUP
Balance at 1 July 2016
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Issue of shares
Dividends paid
Share-based payments
Total transactions with owners in their capacity as owners
Balance at 30 June 2017
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Issue of shares
Dividends paid
Share-based payments
Total transactions with owners in their capacity as owners
Balance at 30 June 2018
$’000
29,827
-
-
-
15,665
-
-
15,665
45,492
-
-
-
10,425
-
-
10,425
55,917
Accumulated
Profits appropriation
losses
$’000
(17,399)
-
-
-
-
-
-
-
(17,399)
-
-
-
-
-
-
-
(17,399)
reserve
$’000
13,850
5,640
-
5,640
-
(3,745)
-
(3,745)
15,745
12,127
-
12,127
-
(18,508)
-
(18,508)
9,364
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
Share-based
payments reserve
Foreign currency
translation reserve
Total equity
$’000
911
-
-
-
-
-
-
-
-
-
-
149
149
1,060
644
644
1,704
Available-for-sale
financial asset
reserve
$’000
(2,302)
(2,302)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$’000
(191)
495
495
304
(377)
(377)
-
-
-
-
-
-
-
-
-
-
(73)
(2,302)
$’000
24,696
5,640
495
6,135
15,665
(3,745)
149
12,069
42,900
12,127
(377)
11,750
10,425
(18,508)
644
(7,439)
47,211
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
47
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Changes In Equity
For the year ended 30 June 2018
CONSOLIDATED GROUP
Balance at 1 July 2016
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Issue of shares
Dividends paid
Share-based payments
Balance at 30 June 2017
Total transactions with owners in their capacity as owners
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Issue of shares
Dividends paid
Share-based payments
Balance at 30 June 2018
Total transactions with owners in their capacity as owners
$’000
29,827
15,665
15,665
45,492
10,425
10,425
55,917
-
-
-
-
-
-
-
-
-
-
losses
$’000
(17,399)
(17,399)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(17,399)
reserve
$’000
13,850
5,640
5,640
(3,745)
(3,745)
15,745
12,127
12,127
-
-
-
-
-
-
(18,508)
(18,508)
9,364
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
Contributed equity
Accumulated
Profits appropriation
Share-based
payments reserve
Foreign currency
translation reserve
$’000
911
-
-
-
-
-
149
149
1,060
-
-
-
-
-
644
644
1,704
$’000
(191)
-
495
495
-
-
-
-
304
-
(377)
(377)
-
-
-
-
(73)
Available-for-sale
financial asset
reserve
$’000
(2,302)
-
-
-
-
-
-
-
(2,302)
-
-
-
-
-
-
-
(2,302)
Total equity
$’000
24,696
5,640
495
6,135
15,665
(3,745)
149
12,069
42,900
12,127
(377)
11,750
10,425
(18,508)
644
(7,439)
47,211
48
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Cash Flows
For the year ended 30 June 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Income tax received
Income tax paid
Net cash inflows/(outflows) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from repayment of loan to related party
Payments for property, plant and equipment
Payments for intangibles
Payment on loss of control of foreign subsidiary
Proceeds from sale of property, plant and equipment
Net cash inflows/(outflows) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
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
Cash and cash equivalents at end of year
Note
7(b)
6
15
14
7(a)
2018
$’000
43,666
(22,200)
860
(7)
242
(5,312)
17,249
100
(96)
2017
$’000
35,888
(21,781)
564
(6)
-
(3,799)
10,866
-
(162)
(4,571)
(4,448)
-
1
(159)
-
(4,566)
(4,769)
10,425
(18,508)
(8,083)
4,600
(1)
43,320
47,919
15,665
(3,745)
11,920
18,017
(3)
25,306
43,320
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
49
Jumbo Interactive Limited and its
Subsidiaries
Notes To The Consolidated
Financial Statements
For the year ended 30 June 2018
About this report
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), and is a for-
profit entity for the purposes of preparing the financial statements.
The consolidated financial statements are for the consolidated
entity consisting of Jumbo Interactive Limited (the Company) and its
subsidiaries and together are referred to as the Group or Jumbo.
The consolidated financial statements were approved for issue
in accordance with a resolution by the Directors on 23 August
2018. The Directors have the power to amend and reissue the
consolidated financial statements.
The consolidated financial statements are general purpose
financial statements which:
Significant and other accounting policies that summarise the
measurement basis used and are relevant to an understanding of
the financial statements are provided throughout the notes of the
financial statements.
SIGNIFICANT JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies,
management has made a number of judgements and applied
estimates of future events. Judgements and estimates which
are material to the consolidated financial statements include:
Estimated useful life of website development
costs
Goodwill and other intangible assets
Note Page
10
10
60
60
In addition, in preparing the financial statements, the notes
to the financial statements were ordered such that the most
relevant information was presented earlier in the notes and that
the disclosures that management deemed to be immaterial
were excluded from the notes to the financial statements. The
determination of the relevance and materiality of disclosures
— Have been prepared in accordance with the Corporations Act
involved significant judgement.
2001, Australian Accountings Standards and Interpretations
issued by the Australian Accounting Standards Board (AASB)
and International Financial reporting Standards (IFRS) issued by
the International Financial Standards Board
Key events and transactions for reporting period
The financial position and performance of the Group was
— Have been prepared under the historical cost convention
particularly affected by the following events and transactions during
— Are presented in Australian dollars (A$), with all amounts in
the reporting period:
the financial report being rounded off in accordance with the
requirements of ASIC Corporations (Rounding in Financial/
1. Higher levels of customer and large jackpot activity (see
Directors’ Reports) Instrument 2016/191 issued by the Australian
Directors’ Report for details);
Securities and Investments Commission to the nearest thousand
2. Exercise of staff options and resultant increase in cash (see note
dollars, unless otherwise indicated
15 for details); and
— Where necessary, comparative information has been restated to
3. Payment of two special dividends (see Directors’ Report and
conform with changes in presentation, in the current year
note 14 for details).
— Adopts all new and amended Accounting Standards and
Interpretations issued by the AASB that are relevant to the
operations of the Group effective for reporting periods beginning
on or after 1 July 2017
— Adopts AASB15 Revenue from Contracts with Customers in the
year beginning 1 July 2017
The notes to the financial statements
The notes include financial information which is required to
understand the consolidated financial statements and is material
and relevant to the operations, financial position and performance
of the Group. Information is considered material and relevant if, for
example:
— The amount in question is significant because of its size or nature
— It is important for understanding the results of the Group
— It helps explain the impact of significant changes in the Group’s
business – for example, acquisitions and impairment write downs
— It relates to an aspect of the Group’s operations that is important
to its future performance
50
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Results for the year
IN THIS SECTION
Results for the year provides segment information and a breakdown of individual line items in the consolidated statement of profit or loss
and other comprehensive income that the Directors consider most relevant, including a summary of the accounting policies, relevant to
understanding these line items.
Note 1: Segment information
Note 2: Revenue and other income
Note 3: Expenses
Note 4: Income tax
Note 5: Earnings per share
Note 6: Discontinued operations
Page 51
Page 52
Page 53
Page 53
Page 54
Page 55
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
51
Note 1: Segment information
Jumbo determines and presents operating segments on a product
and a geographic basis as this is how the results are reported
internally to the Board (chief operating decision maker) and how the
business is managed. The Board assesses the performance of the
Group based on the net profit before tax (NPBT). Comparatives for
2017 are stated on this basis.
During the 2017 financial year, the Internet Lotteries Germany
segment was reclassified as a discontinued operation – refer note 6
for details.
(a) Description of segments
The following summary describes the operations in each of the
Group’s reportable segments:
Internet Lotteries Australia
Retail of Australian lottery tickets sold in Australia and eligible
international jurisdictions, and internet database management/
marketing. The dormant Mexico Internet Lotteries business is also
included due to its similar characteristics.
Other
Business activities which are not reportable in terms of AASB
8, which are currently the online sale of an internally developed
proprietary payroll software system.
Corporate
Corporate costs include costs in respect of the Directors, CEO,
CFO, corporate advertising, promotion and marketing, corporate
investment and finance, tax, audit, risk, governance, and strategic
projects.
(b) Segment information
The segment information provided to the Board is as follows:
2018
External revenue
Internal revenue
Total revenue
Cost of Sales
Gross Profit
Other revenue/income from external customers
Distribution expenses
Marketing costs
Occupancy expenses
Administrative expenses
Finance costs
NPBT continuing operations
Income tax expense
NPAT continuing operations
Discontinued operations
NPAT overall operations (per P&L)
Interest revenue
Depreciation and amortisation
Impairment of assets
Foreign exchange gain
Internet
Lotteries
Australia
$’000
38,897
-
38,897
(2,038)
36,859
918
(28)
(4,527)
(856)
(13,417)
(1)
18,948
575
(3,089)
(10)
261
Other
$’000
878
-
878
-
878
-
-
(81)
(31)
(290)
-
476
-
(85)
-
-
Corporate
Eliminations
operations
Total
continuing
$’000
$’000
-
-
-
-
-
285
-
(29)
-
(2,573)
(6)
(2,323)
285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$’000
39,775
-
39,775
(2,038)
37,737
1,203
(28)
(4,637)
(887)
(16,280)
(7)
17,101
(5,348)
11,753
374
12,127
860
(3,174)
(10)
261
52
2017
External revenue
Internal revenue
Total revenue
Cost of Sales
Gross Profit
Other revenue/income from external customers
Distribution expenses
Marketing costs
Occupancy expenses
Administrative expenses
Finance costs
NPBT continuing operations
Income tax expense
NPAT continuing operations
Discontinued operations
NPAT overall operations (per P&L)
Interest revenue
Depreciation and amortisation
Impairment of assets
Foreign exchange gain
Internet Lotteries
Australia
$’000
31,586
-
31,586
(2,465)
29,121
857
(24)
(3,458)
(939)
(13,217)
-
12,340
470
(3,513)
(62)
263
Other
$’000
843
-
843
-
843
-
-
(85)
(20)
(331)
-
407
-
(118)
-
-
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Corporate
Eliminations
operations
Total continuing
$’000
$’000
-
-
-
-
-
207
-
(23)
-
(1,857)
(6)
(1,679)
135
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$’000
32,429
-
32,429
(2,465)
29,964
1,064
(24)
(3,566)
(959)
(15,405)
(6)
11,068
(3,471)
7,597
(1,957)
5,640
605
(3,631)
(62)
263
(c) Other segment information
Geographical information
The entity is domiciled in Australia. The amount of its revenue from
external customers in Australia is $36,399,000 (2017: $28,965,000),
and the total revenue from external customers in other countries
is $4,579,000 (2017: $4,528,000). Revenues of $1,543,000 (2017:
$1,834,000) are from external customers in Fiji. Segment revenues
From continuing operations
Sales revenue
– Revenue from sale of goods
are allocated based on the country in which the customer is located.
– Revenue from rendering of services
Non-current assets in Australia are $13,376,000 (2017: $11,890,000).
Non-current assets in other countries are (i) Fiji $17,000 (2017:
$24,000).
The geographical non-current assets above are exclusive of,
where applicable, financial instruments, deferred tax assets, post-
employment benefits assets, and rights under insurance contracts.
No single external customer derives more than 10% of total revenues.
Other revenue/income
– Interest
– Other income
– Foreign exchange gains
– Export market development grants
– Other
Consolidated Group
2018
$’000
2,293
37,482
39,775
2017
$’000
2,510
29,919
32,429
860
605
261
70
12
263
111
85
1,203
1,064
40,978
33,493
Note 2: Revenue and other income
The Company reports revenue from the sale of lottery tickets and
related services on a net revenue inflow basis where it considers that
it acts more as an Agent than as a Principal such as with the sale of
lottery tickets. The gross amount received for the sale of goods and
rendering of services is advised as Total Transaction Value (“TTV”)
for information purposes.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
53
From discontinued operations (note 6)
Sales revenue
– Revenue from rendering of services
Other revenue/income
– Other income
– Other
Consolidated Group
2018
$’000
2017
$’000
-
-
-
-
-
138
138
177
177
315
Cost of sales
– Sale of goods
– Rendering of services
Administration expenses
Consolidated
2018
$’000
2017
$’000
889
1,149
1,152
1,313
Depreciation of non-current assets
– Plant and equipment
116
149
Amortisation of non-current assets
– Leasehold improvements
– Intangibles
Other expenses
40
3,018
41
3,441
Recognition and measurement
Revenue is recognised at the fair value of consideration received or
receivable. Amounts disclosed as revenue are net of returns, trade
allowances and duties and taxes paid.
The following specific recognition criteria must also be met before
revenue is recognised:
– Employee benefit expense
7,268
6,468
– Defined contribution superannuation
expense
Occupancy expenses
– Operating lease rentals minimum lease
payments
Impairment of assets – domain names
851
824
887
10
959
62
Sale of Goods and/or Rendering of Services
Revenue from sale of goods and/or rendering of services is
recognised when control of the goods or services is transferred to
the buyer in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for these goods and/or
services. Control is the ability of the customer to direct the use of,
and obtain substantially all of the remaining benefits from, an asset.
Note 4: Income tax
Current tax
Indicators that control has passed includes that the customer has
CURRENT
(i) a present obligation to pay, (ii) physical possession of the asset(s),
(iii) legal title, (iv) risk and rewards of ownership, and (v) accepted the
Income tax expense liability
asset(s).
Interest
Revenue is recognised as interest accrues using the effective
interest method. The effective interest method uses the effective
interest rate which is the rate that exactly discounts the estimated
future cash receipts over the expected life of the financial asset.
Dividends
Dividends are recognised as revenue when the Group’s right to
receive payment is established. Dividends received in the entity’s
separate financial statements that are paid out of pre-acquisition
profits of a subsidiary, associate or joint venture are recognised as
revenue when the entity’s right to receive payment is established.
(a) Income tax expense
The components of tax expense comprise:
– Current tax
– Deferred tax
– Current tax overseas operations
Consolidated
2018
2017
Note
$’000
$’000
594
184
Consolidated
2018
2017
Note
$’000
$’000
5,472
3,284
4(b)
(132)
8
186
1
Total income tax expense/(benefit) in profit
and loss
5,348
3,471
Reconciliation
Profit before income tax expense
17,475
9,111
Government grants
The export market development grant from the government is
recognised at its fair value when there is reasonable assurance
– Tax at the Australian tax rate 30%
(2017:30%)
– Income tax effect of overseas tax rates
that the grant will be received and the Group will comply with any
– Share options expensed during year
attached conditions.
Note 3: Expenses
– Other
Total income tax expense in profit or loss
attributable to continuing operations
5,243
2,733
(96)
193
8
338
44
356
5,348
3,471
Profit from continuing operations before income tax includes the
following specific expenses:
54
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
(b) Deferred tax
Deferred tax liabilities
Opening
Charged to
Closing
balance
Profit or Loss
Balance
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
$000
$000
$000
an asset or a liability if they arose in a transaction, other than a
Deferred tax liabilities comprise
temporary difference recog-
nised in the profit and loss as
follows:
Property, plant and equipment
– Depreciation
Accruals
Other
Balance at 30 June 2017
Property, plant and equipment
– Depreciation
Accruals
Other
Balance as at 30 June 2018
1
24
23
48
-
66
-
66
(1)
42
(23)
18
-
6
-
6
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 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 and associates 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.
-
66
-
66
-
72
-
72
Deferred tax assets
Opening
Charged to
Closing
Tax consolidation
Jumbo Interactive Limited and its wholly owned Australian
balance
Profit or Loss
Balance
controlled subsidiaries are part of a tax consolidated group under
$000
$000
$000
Australian taxation law since 1 July 2006. Jumbo Interactive Limited
Deferred tax assets comprise
temporary difference recog-
nised in the profit and loss as
follows:
Property, plant and equipment
– Depreciation
– Amortisation
Accruals
Provisions
Other
124
370
179
387
16
(5)
(211)
23
29
(4)
Balance at 30 June 2017
1,076
(168)
Property, plant and equipment
– Depreciation
– Amortisation
Accruals
Provisions
Other
Balance as at 30 June 2018
119
159
202
416
12
908
(4)
7
109
28
(2)
138
is the head entity in the tax consolidated group. Entities within the
tax consolidation group have entered into a tax funding agreement
‘(TFA’) and tax sharing deed (‘TSD’) with the head entity. Under the
terms of the TFA, Jumbo Interactive Limited and each of the entities
in the tax consolidation group have agreed to pay (or receive) a tax
equivalent payment to (or from) the head entity, based on the current
tax liability or current tax asset of the entity.
Note 5: Earnings per share (EPS)
(a) Basic earnings per share
Basic EPS is calculated by dividing the profit attributable to owners
of the Company by the weighted average number of ordinary shares
outstanding.
(b) Diluted earnings per share
Diluted EPS is calculated by dividing the profit attributable to
owners of the Company by the weighted average number of
ordinary shares outstanding after adjusted for the effects of dilutive
119
159
202
416
12
908
115
166
311
444
10
1,046
potential ordinary shares
(c) Profit after tax attributable to owners of the Company used as
Recognition and measurement
numerator
Current taxes
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
consolidated financial statements.
Deferred taxes
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
Profit from continuing operations
Profit from discontinued operation
Profit attributable to the owners of the
Company
Consolidated
2018
$’000
11,753
374
2017
$’000
7,597
(1,957)
12,127
5,640
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
55
(d) Weighted average number of shares used as denominator
Consolidated
2018
2017
Number
Number
Revenue
Expenses
Weighted average number of ordinary
shares used as the denominator in calculat-
ing basic EPS
51,851,806 44,954,344
Adjustments for calculation of diluted EPS:
— options
1,819,000
980,179
Weighted average number of ordinary
shares used as the denominator in calculat-
ing diluted EPS
53,670,806 45,934,523
1,800,000 options were not included in the number of weighted
Loss before income tax
Income tax (expense)/benefit
Loss after income tax
Loss on loss of control of subsidiary in volun-
tary administration
Reclassification of foreign currency translation
reserves to the income statement1
Loss on loss of control before income tax
average number of ordinary shares used to calculate diluted
Income tax (expense)/benefit
earnings per share because they are currently out-of-the-money.
Loss on loss of control after income tax
2018
2017
$’000
$’000
-
-
-
-
-
-
374
-
-
-
315
(1,467)
(1,152)
-
(1,152)
(242)
(563)
(805)
-
(805)
Note 6: Discontinued operations
On 3 November 2016, Jumbo Interactive Limited announced its
intention to scale down Jumbo Interactive GmbH, its Internet
lotteries German business segment, due to adverse market
conditions and, as disclosed in the 2016 Half Year Report, on 5th
December 2016 the sale of lottery tickets ceased. The business was
subsequently placed into voluntary administration (VA) on 31 March
2017 and is reported as a discontinued operation as Jumbo no
longer has control. The purpose of the VA is to facilitate the orderly
closure and wind-up of the business in compliance with German
Legal requirements.
Profit/(loss) for the year from discontinued
operation
374
(1,957)
Profit attributable to owners of the parent
entity relates to:
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
11,753
374
12,127
7,597
(1,957)
5,640
1Foreign currency loss relates to the historical foreign currency
translation reserve in respect of Jumbo’s investment in Germany,
reclassified to the income statement on loss of control through
Financial information relating to the discontinued operation for the
voluntary administration.
nine month period to the date of voluntary administration is set out
below.
Net cash inflow/(outflow) from operating activ-
ities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activ-
ities
Net cash increase/(decrease) in cash generated
from discontinued operations
2018
2017
$’000
$’000
-
-
-
-
(1,353)
(88)
-
(1,441)
Details of the voluntary administration of Jumbo Interactive GmbH
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 on loss of control of subsidiary after income
tax
2018
2017
$’000
$’000
-
-
-
-
-
-
159
159
83
242
-
242
56
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Note 6: Discontinued operations (cont)
The carrying amounts of the assets and liabilities as at the date of
voluntary administration (31 March 2017) were:
Property, plant and equipment
Intangible assets
Trade and other receivables
Total assets
Trade and other payables
Total liabilities
Net assets
31 March 2017
$’000
19
64
87
170
(87)
(87)
83
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
57
Operating assets and liabilities
IN THIS SECTION
Operating assets and liabilities provides information about the working capital of the Group and major balance sheet items, including the
accounting policies, judgements and estimates relevant to understanding these items.
Note 7: Cash and cash equivalents
Note 8: Trade and other receivables
Note 9: Property, plant and equipment
Note 10: Intangible assets
Note 11: Trade and other payables
Note 12: Employee benefit obligations
Page 58
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Page 62
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58
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Note 7: Cash and cash equivalents
Consolidated
2018
2017
Note
$’000
$’000
Consolidated
2018
2017
$’000
$’000
(b) Reconciliation of Cash Flow from Operations
with Profit after Income Tax
Profit/(loss) for the year after income tax
12,127
5,640
(a) Cash and cash equivalents
Total cash and cash equivalents
47,919
43,320
Included in the above balance:
General account balances
40,085
35,825
Online lottery customer account bal-
ances
11
7,834
7,495
47,919
43,320
Non-cash flows
Amortisation
Depreciation
Derecognition of subsidiary
Capitalised other revenue from associate com-
pany
Impairment losses on assets
Share option expense
Online lottery customer account balances are deposits and prize
Other
winnings earmarked for payment to customers on demand.
Recognition and measurement
Cash and cash equivalents includes cash on hand, and deposits
held ‘at call’ and with original maturities of three months or less, with
financial institutions.
Changes in operating assets and liabilities, net of
the effects of purchase and disposal of subsidi-
aries
Decrease/(increase) in trade receivables
Decrease/(increase) in other receivables
Decrease/(increase) in inventories
Decrease/(increase) in DTA
Decrease/(increase) in foreign exchange reserve
Increase/(decrease) in trade payables
Increase/(decrease) in other payables
Increase/(decrease) in other provisions
Increase/(decrease) in DTL
Increase/(decrease) in provision for income tax
3,058
3,504
116
-
-
10
644
5
43
(104)
5
(138)
(377)
205
1,143
96
6
410
160
242
(114)
-
149
186
26
94
-
168
495
9
708
95
18
(514)
Cash flow from operations
17,249
10,866
(c) Non-Cash Financing and Investing Activities
Capitalised interest at 7.00% p.a. on Promissory
Note issued by associate company (note 20)
Capitalised dividend on Series A Preferred Stock
issued by associate company (note 21)
-
-
41
73
Note 8: Trade and other receivables
Consolidated
2018
$’000
2017
$’000
Note
CURRENT
Trade receivables
Allowance for doubtful debts
Loans to key management personnel
22
Other receivables
Prepayments
52
-
52
-
228
229
509
95
-
95
100
170
183
548
All receivables that are neither past due nor impaired are with long
standing clients who have a good credit history with the Group.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Past due but not impaired
These trade receivables relate to a few customers for whom there is
no recent history of default. The aging of past due but not impaired
trade receivables are as follows:
Movements in Carrying Amounts
Plant and
Leasehold Im-
equipment
provements
Consolidated Group
$’000
$’000
Consolidated
2017
Up to one month
One month to two months
Two months to three months
Over three months
2018
2017
$’000
$’000
-
1
12
-
13
-
-
17
-
17
As at 30 June 2018 the Group had current trade receivables of $0
(2017: $0) that were impaired
Recognition and measurement
Trade receivables are recognised at original invoice amounts
less an allowance for uncollectible amounts, and generally have
repayment terms ranging from seven to 31 days.
The Group applies the simplified approach to providing for
expected credit losses prescribed by AASB 9, which requires the use
of the lifetime expected loss provision for all trade receivables. Trade
receivables had not had a significant increase in credit risk since
they were originated.
Note 9: Property, plant and equipment
Plant and equipment–at cost
Accumulated depreciation
Leasehold improvements–at cost
Accumulated amortisation
Total property, plant and equipment
Consolidated
2018
2017
$’000
$’000
1,511
1,416
(1,292)
(1,176)
219
542
(481)
61
280
240
542
(441)
101
341
59
Total
$’000
401
162
(20)
(201)
(1)
341
341
96
(1)
80
62
-
(41)
-
101
101
-
-
(40)
(156)
-
61
-
280
Balance at the beginning
of year
Additions
Disposals
Depreciation/amortisation
expense
Effects of movements in
foreign exchange
Carrying amount at the end
of year
2018
Balance at the beginning
of year
Additions
Disposals
Depreciation/amortisation
expense
Effects of movements in
foreign exchange
Carrying amount at the end
of year
321
100
(20)
(160)
(1)
240
240
96
(1)
(116)
-
219
Recognition and measurement
(i) Initial recognition and measurement
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.
(ii) Subsequent costs
Improvements to leasehold property are recognised as a separate
asset.
All repairs and maintenance are charged to the profit or loss during
the reporting period in which they occur.
(iii) Depreciation and amortisation
Property, plant and equipment are depreciated or amortised from
the date of acquisition, or, in respect of internally generated assets,
from the time an asset is held ready for use.
Plant and equipment are depreciated using the straight-line
method to allocate their costs, net of their residual values, over their
estimated useful lives.
Leasehold improvements are amortised over the shorter of either
the unexpired term of the lease or the estimated useful life of the
improvements.
The depreciation and amortisation rates used during the year were
based on the following range of useful lives:
60
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Plant and equipment
Leasehold improvements
Two to five years
Up to six years
The depreciation and amortisation rates are reviewed annually and
adjusted if appropriate. An asset’s carrying amount is written down
to its recoverable amount if the asset’s carrying value is greater than
its estimated recoverable amount.
(iv) Derecognition
An item of property, plant or equipment is derecognised when it is
disposed of or no future economic benefits are expected from its
use or disposal.
Gains and losses on disposal are calculated as the difference
between the net disposal proceeds and the asset’s carrying
value, and are included in profit or loss in the year that the item is
derecognised.
Note 10: Intangible assets
Goodwill
Accumulated impairment losses
Net carrying value
Intellectual property
Accumulated impairments loss
Net carrying value
Website development costs
Accumulated amortisation
Net carrying value
Software costs
Accumulated amortisation
Net carrying value
Domain names – cost
Accumulated impairment losses
Net carrying value
Other
Accumulated amortisation
Net carrying value
Total intangibles
Consolidated
2018
2017
$’000
$’000
3,687
(855)
2,832
53
(23)
30
3,687
(855)
2,832
53
(23)
30
27,524
22,957
(18,128)
(15,114)
9,396
7,843
133
(133)
-
914
(72)
842
63
(50)
13
133
(133)
-
910
(62)
848
63
(42)
21
13,113
11,574
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Impairment assessment of goodwill and domain names
A key judgement by management with regards to the
Internet Lotteries Australia segment CGU is that the reseller
agreements with the Tatts Group will continue. The key
assumptions used for value-in-use calculations are discussed
further in note 10(b). Goodwill is tested for impairment half
yearly.
Impairments assessment of other intangible assets
The Group considers half yearly whether there have been any
indicators of impairment and then tests whether non-current
assets have incurred any impairment in accordance with the
accounting policy.
Estimated useful life of website development costs
Management estimates the useful of intangible assets-
website development costs based on the expected period of
time over which economic benefits from the use of the asset
will be derived. Management reviews useful life assumptions
on an annual basis having given consideration to variables
including historical and forecast usage rates, technological
advancements and changes in legal and economic conditions.
The amortisation period relating to the website developments
costs is five years from 1 July 2015 and three years prior to that.
Domain names
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
61
(a) Movements in carrying values
Consolidated Group
Goodwill
property
costs
Software
names
$’000
$’000
$’000
$’000
$’000
Intellectual
development
Domain
Website
2017
Balance at the beginning of the year
2,832
30
Additions acquired
Additions internally developed
Disposals on derecognition of subsidiary
Impairments
Amortisation charge
Effects of movements in foreign exchange
Amortisation of derecognition of subsidiary
Closing value at 30 June 2017
2018
Balance at the beginning of the year
Additions acquired
Additions internally developed
Impairments
Amortisation charge
Effects of movements in foreign exchange
-
-
-
-
-
-
-
2,832
2,832
-
-
-
-
-
-
-
-
-
-
-
-
30
30
-
-
-
-
-
Closing value at 30 June 2018
2,832
30
6,951
-
4,330
-
-
(3,430)
(8)
-
7,843
7,843
-
4,567
-
(3,010)
(4)
9,396
4
-
-
(9)
-
(1)
-
6
-
-
-
-
-
-
-
-
902
8
-
-
(62)
-
-
-
848
848
4
-
(10)
-
-
842
Other
$’000
Total
$’000
-
110
-
(85)
-
(24)
-
20
21
10,719
118
4,330
(94)
(62)
(3,455)
(8)
26
11,574
21
11,574
-
-
-
(8)
-
13
4
4,567
(10)
(3,018)
(4)
13,113
(b) Impairment testing of Cash-Generating Units containing
goodwill or intangible assets with indefinite useful lives
Goodwill and domain names have been allocated to the
Australian Internet Lottery cash-generating unit which is an
operating segment.
the recoverable amount of goodwill, domain names and other
intangible assets would still exceed the carrying amount. Should
the lottery reseller agreements be cancelled or not be extended
for further periods when they expire, an impairment loss would be
recognised up to the maximum carrying value of $13,113,000.
The recoverable amount of the cash-generating unit is based on
Recognition and measurement
a value-in-use calculation using a discounted cash flow model
Goodwill
based on a one year projection approved by management and
Goodwill represents the excess of the cost of the business
extrapolated over a five year period using a steady rate, together
combination over the Group’s share of the net fair value of
with a terminal value. The growth rate used in these projections
the identifiable assets, liabilities and contingent liabilities acquired.
does not exceed the historical growth rate of the relative cash-
Goodwill is not amortised but is measured at cost less any
generating unit.
Key assumptions used for value-in-use calculation of the CGU are
as follows:
— Annual growth rate of 3% (2017: 3%);
— Terminal growth rate of 3% (2017: 3%);
— Discount rate of 17% being the calculated weighted average cost
of capital based on the capital asset pricing model (2017: 17%);
and
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
— Reseller agreements will be renewed as and when they expire.
goodwill cannot be reversed.
Management determined projections 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 the relevant segment in which the
unit operates.
Internet Lotteries Australia CGU is estimated to be $110,752,000
which exceeds the carrying amount of goodwill, domain names and
other intangible assets by $97,639,000. If a discount rate of 20%
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.
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
and growth rate of 0% was used instead of 17% and 3% respectively,
intellectual property is recognised in profit or loss.
62
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Website Developments Costs
Expenditure during the research phase of a project is recognised as
Recognition and measurement
Trade and other payables represent liabilities for goods and
an expense when incurred. Development costs are capitalised only
services provided to the Group prior to the year end and which are
when technical feasibility studies identify that the project will deliver
unpaid. These amounts are unsecured and have seven to 31 day
future economic benefits and these benefits can be measured
payment terms.
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 up to 30 June 2015 and five
years from 1 July 2015.
Domain Names
Acquired domain names are stated at cost and are considered to
have indefinite useful lives and are not amortised. 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.
Impairment of assets
Assets are tested for impairment at the end of each reporting period
or whenever events or changes in circumstances indicate that the
carrying amount may not be recovered.
An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows which
are largely independent of the cash flows from other assets or
groups of assets (CGUs).
The recoverable amount is the greater of the asset’s fair value
less costs to sell and value-in-use. In assessing value-in-use, the
estimated cash flows are discounted to their present value using a
pre-tax discount rate that reflects market assessments of the time
value of money and the specific risks of the asset.
Impairment losses are recognised in the profit or loss. Non-financial
assets other than goodwill that incur impairment are reviewed for
possible reversal of impairment at each reporting period
(i) Employee benefits
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 other liabilities 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.
(ii) Superannuation
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.
(iii) Termination benefits
Termination benefits are payable when employment is terminated
before the retirement date, or when an employee accepts voluntary
redundancy in exchange for these benefits. The Group recognises
termination benefits as an expense and a liability on the earlier of
when the Group:
— Can no longer withdraw the offer and the benefits; and
— Recognises costs for restructuring under AASB 137 Provisions,
Contingent Liabilities and Contingent Assets and which involves
the payment of termination benefits.
Benefits falling due more than 12 months after the end of the
reporting period are discounted to present value.
Note 12: Employee benefit obligations
Note 11: Trade and other payables
Consolidated
2018
2017
Note
$’000
$’000
CURRENT
Long service leave
NON-CURRENT
Long service leave
Total trade and other payables
14,346
13,009
Included in the above:
Trade creditors
GST payable
Sundry creditors and accrued expenses
Employee benefits
Customer funds payable
7(a)
1,234
523
3,971
784
6,512
7,834
1,029
378
3,312
795
5,514
7,495
14,346
13,009
Consolidated
2018
2017
$’000
$’000
309
293
368
677
277
570
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
63
Recognition and measurement
(i) Long service leave
Liabilities for long service leave are not expected to be settled
wholly within 12 months after the end of the reporting period. They
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
corporate 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.
64
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Capital and financial risk management
IN THIS SECTION
Capital and financial risk management provides information about the capital management practices of the Group and shareholder
returns for the year, discusses the Group’s exposure to various financial risks, explains how these affect the Group’s financial position and
performance and what the Group does to manage these risks.
Note 13: Capital risk management
Note 14: Dividends
Note 15: Equity and reserves
Note 16: Borrowings
Note 17: Financial risk management
Page 65
Page 65
Page 66
Page 66
Page 67
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
65
Note 13: Capital risk management
(b) Dividends not recognised at the end of the reporting period
Total borrowings
Consolidated
2018
Note
$’000
16
-
20167
$000
-
Less: cash and cash equivalents
7(a)
(40,085)
(35,825)
Consolidated
2018
2017
$’000
$’000
No special fully franked dividend (2017:15.0)
cent per share franked at the tax rate of 27.5%
(2017: 30%) was declared by the directors
-
7,691
Net debt
Total equity
Total capital
Gearing ratio
-
-
15
55,917
45,492
In addition to the above dividends, since year
end the Directors have recommended the
55,917
45,492
payment of a final 2018 fully franked ordi-
0%
0%
nary dividend of 11.0 (2017: 5.0) cent per share
The Group’s objective is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and sustain future
franked at the rate of 27.5% (2017: 30%). The
aggregate amount of the proposed dividend
expected to be paid on 21 September 2018
(2017: 22 September 2017), but not recognised
development of the business.
as a liability at year end, is:
6,382
2,564
The Group monitors its capital structure by reference to its gearing
ratio. This ratio is calculated as total net debt divided by total
(c) Franked dividends
capital. Net debt is calculated by as total borrowings less cash and
cash equivalents (up to a minimum of zero). Total capital is net debt
plus total equity. There were no changes in the Group’s approach to
capital management during the year.
Consolidated
2018
2017
$’000
$’000
Note 14: Dividends
(a) Ordinary shares
The franked portions of dividends paid and
recommended after 30 June 2018 will be franked
out of existing franking credits or out of franking
credits arising from the payment of income tax in
Consolidated
the year ending 30 June 2018.
2018
2017
Franking credits available for subsequent finan-
$’000
$’000
cial years based on a tax rate of 30% (2017: 30%):
9,303
12,173
Special fully franked ordinary dividend of 15.0
(2017: nil) cent per share franked at the tax rate
of 30% (2017: nil)
Final fully franked ordinary dividend of 5.0
(2017: 5.0) cent per share franked at the tax rate
7,691
-
as at the reporting date adjusted for:
The above amounts represent the balance of the franking account
(i) Franking credits that will arise from the payment of the amount of
of 30% (2017: 30%)
2,564
2,203
the provision for income tax, and
Interim fully franked ordinary dividend of 7.5
(2017: 3.5) cent per share franked at the tax rate
of 30% (2017: 30%)
3,917
1,542
(ii) Franking debits that will arise from the payment of dividends
recognised as a liability at the reporting date.
Special fully franked ordinary dividend of 8.0
(2017: nil) cent per share franked at the tax rate
The impact on the franking account of the dividends paid and
recommended by the directors since the end of the reporting period,
of 30% (2017: nil)
Total dividends paid or provided for
4,336
18,508
-
but not recognised as a liability at the reporting date, will be a
3,745
reduction in the franking account of $2,421,000 (2017: $4,395,000).
Dividends paid in cash or satisfied by the issue
of shares under the dividend reinvestment plan
during the years ended 30 June 2018 and 30
June 2017 were as follows:
Paid in cash
Satisfied by issue of shares
18,508
3,745
-
-
18,508
3,745
66
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Note 15: Equity and reserves
(a) Contributed equity
Issued shares
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.
Consolidated
Consolidated
(c) Options
2018
2018
2017
2017
Shares
$’000
Shares
$’000
(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 24:
Ordinary shares –
fully paid
54,374,265
55,917
50,674,265
45,492
Movements in ordinary share capital
Share-Based Payments.
(ii) For information relating to share options issued to third parties
during the financial year, refer to note 24: Share-Based Payments.
Details
Opening balance 1 July 2016
Shares issued during the year
12 May 2017-Off-market share issue
to Tatts
Balance 30 June 2017
Opening balance 1 July 2017
Shares issued during the year
14 Jul 2017-Exercise of options
18 Jul 2017-Exercise of options
20 Jul 2017-Exercise of options
30 Oct 2017-Exercise of options
7 Mar 2018-Exercise of options
16 Mar 2018-Exercise of options
23 Apr 2018-Exercise of options
9 May 2018-Exercise of options
15 May 2018-Exercise of options
21 May 2018-Exercise of options
8 Jun 2018-Exercise of options
11 Jun 2018-Exercise of options
13 Jun 2018-Exercise of options
18 Jun 2018-Exercise of options
21 Jun 2018-Exercise of options
Consolidated
Shares
44,064,579
$’000
29,827
(d) Reserves
Nature and purpose of reserves
Profits appropriation reserve
The profits appropriation reserve records accumulated profits
available for distribution at the Directors’ discretion. In June 2010,
6,609,686
15,665
there was a change in the test for payment of dividends from a ‘profit
50,674,265
50,674,265
45,492
45,492
appropriation reserve was established to ensure the accumulated
losses up until then were ‘ring-fenced’ and that future profits were
test’ to ‘solvency test’ (s254T Corporations Act 2001), and the profits
available for distribution, in particular for dividend payments.
50,000
500,000
50,000
50,000
900,000
50,000
1,150,000
25,000
100,000
50,000
50,000
400,000
150,000
150,000
25,000
87
875
87
87
1,575
88
4,375
88
350
88
175
1,262
600
600
88
Share-based payments reserve
The share-based payments reserve records items recognised as
expenses on the fair value of share-based remuneration provided to
employees. This reserve can be reclassified as retained earnings if
options lapse.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign
exchange differences arising on translation of investments in foreign
controlled subsidiaries. Amounts are reclassified to profit or loss
when an entity is disposed of.
Available-for-sale financial asset reserve
The available-for-sale financial asset reserve comprises changes in
the fair value of available-for-sale investments which are recognised
in other comprehensive income including when investments are sold
or reclassified.
Note 16: Borrowings
Balance 30 June 2018
54,374,265
55,917
Issued capital represents the amount of consideration received for
(a) Facilities with Banks
securities issued or paid for securities bought back by Jumbo.
Costs directly attributable to the issue of new shares or options are
deducted from the consideration received, net of income taxes.
(b) Ordinary shares
Ordinary shares have no par value and the company does not have
a limited amount of authorised share capital.
Credit facility
Bank guarantees
Commercial card
Ordinary shareholders are entitled to participate in dividends and
the proceeds on winding up of the Company in proportion to the
Facilities utilised
Bank guarantees
Commercial credit card
Amount available
Consolidated
2018
2017
Note
$’000
$’000
550
300
550
300
27
(478)
(295)
77
(426)
(295)
129
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
67
The facilities are provided by Australia and New Zealand Banking
At the reporting date, the Group has exposure to the following
Group Limited subject to general and specific terms and conditions
interest rates:
being set and met periodically.
There were no outstanding interest bearing liabilities for the
financial year ended 30 June 2018 (2017: nil).
(b) Assets pledged as security
The bank facilities are secured by a fixed and floating charge over
all the assets of the Group.
(c) Defaults and breaches
Deposits
Net exposure to
interest rate risk
There have been no defaults or breaches during the financial year
ended 30 June 2018.
1weighted average interest rate
Consolidated
Rate1
%
2.31
2018
$’000
47,919
47,919
2017
Rate1
%
$’000
1.93
43,320
43,320
Note 17: Financial risk management
The Group has exposure to a variety of financial risks including
market risk (foreign exchange risk and interest rate risk), credit
risk and liquidity risk. Risk management is performed by a central
Treasury function on behalf of the Group under Treasury Policies
approved by the Board annually. Speculative activities are strictly
prohibited. Compliance with the Treasury Policies is monitored on
Risk management
The Group manages cash flow interest rate risk by using term
deposits with banks for various periods. The weighted average
maturity of outstanding term deposits is approximately 41 days
(2017: 20 days). Term deposits currently in place cover approximately
82% (2017: 84%) of the total cash and cash equivalent balances.
Sensitivity on market risks
an ongoing basis through regular reporting to the Board.
The following table summarises the gain/(loss) impact of a 200
(a) Market risk
Market risk is the risk that adverse movements in foreign exchange
and interest rates will affect the Group’s financial performance
or the value of its holdings of financial instruments. The Group
measures market risk using cash flow at risk. The objective of risk
management is to manage the market risks inherent in the business
to protect profitability and return on assets.
(i) Foreign exchange risk
Exposure to foreign exchange risk
Foreign exchange risk arises from commercial transactions
(transactional risks) and recognised assets and liabilities
(translational risks) that are denominated in or related to a currency
that is not in the Group’s functional currency. The Group’s foreign
exchange risk relates largely to the Fiji Dollar (FJ$). The foreign
exchange risk to the Euro (€) has ceased with the discontinued
operation in Germany (see note 6 for details).
Risk management
Treasury monitor the Group’s exposure regularly and utilise the spot
basis points (bps) interest rate change on net profit and equity
before tax, with all other variables remaining constant, as at 30 June
2018:
Consolidated
Effect on profit
Effect on equity
(before tax)
(before tax)
2018
2017
2018
2017
958
866
958
866
(958)
(866)
(958)
(866)
200 bps movement in
interest rates
200 bps increase in
interest rates
200 bps decrease in
interest rates
(b) 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. Credit risk arises principally from cash and cash
equivalents and trade and other receivables.
market to buy and sell specified amounts of foreign currency to
The maximum exposure to credit risk, excluding the value of any
manage this risk. Transactional risks are managed predominantly
collateral or other security, at the end of the reporting period
within the Group’s pricing policies through the regular review of
to recognised financial assets, is the carrying amount, net of
prices in foreign currency.
Sensitivity on foreign exchange risk
Any movement in foreign exchange rates would not be significant to
the Group.
(ii) Interest rate risk
Exposure to interest rate risk
The Group’s has interest bearing assets and therefore its income
any provisions for impairment of those assets, as disclosed in
the statement of financial position and notes to the financial
statements. Assets are pledged as security as detailed in note 16(b).
Credit risk is managed on a Group basis through the Board
approved Treasury Policies and is reviewed regularly by the Board.
The Board monitors credit risk by actively assessing the rating
quality and liquidity of counter parties:
and operating cash flows are subject to changes in market interest
— Surplus funds are only invested with banks and financial
rates.
institutions with a Standard and Poor’s rating of no less than A
68
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
and to a limited amount at any one financial institution:
(d) Fair value hierarchy
— All potential customers are rated for credit worthiness taking into
The fair value of cash, cash equivalents and non-interest bearing
account their size, market position and financial standing, and
financial assets and liabilities approximates their carrying value due
the risk is measured using debtor aging analysis; and
to their short term maturity.
— Customers that do not meet the Group’s strict credit policies may
only purchase in cash or using recognised credit cards.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in
meeting the obligations associated with its financial liabilities. The
Group manages liquidity risk by monitoring forecast cash flows and
ensuring that adequate cash balances are maintained to meet its
liabilities when due.
The fair value of financial instruments that are not traded in an
active market (for example, unlisted investments) are determined
using valuation techniques. The valuation techniques maximise the
use of observable market data where possible and rely as little as
possible on entity specific estimates.
The Group measures and recognises the following assets and
liabilities at Fair Value through Other Comprehensive Income on a
recurring basis:
The following table summarises the contractual timing of
undiscounted cash flows of financial instruments:
— Available-for-sale financial assets
The fair value of unlisted equity securities is estimated by
discounting the estimated future cash flows at the estimated
weighted average cost of capital.
AASB 13 Fair Value Measurement requires disclosure of fair value
measurements by level in the fair value measurement hierarchy as
follows:
— Level 1 - the instrument has quoted prices (unadjusted) in active
markets for identical assets or liabilities
— Level 2 - a valuation technique is used using inputs other than
quoted prices within Level 1 that are observable for the financial
instrument, either directly (i.e. as prices), or indirectly (i.e. derived
from prices)
— Level 3 - a valuation technique is used using inputs that are not
observable based on observable market data (unobservable
inputs).
The carry values of loans to key management personnel at variable
interest rate approximates its fair value.
Between 6
Total
Less than
months and
Between 1
Over 5
carrying
6 months
1 year
and 5 years
years
amount
$’000
$’000
$’000
$’000
$’000
47,919
509
48,428
14,346
14,346
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,919
509
48,428
14,346
14,346
Between 6
Total
Less than
months and
Between 1
Over 5
carrying
6 months
1 year
and 5 years
years
amount
$’000
$’000
$’000
$’000
$’000
43,320
-
448
43,768
100
100
13,009
13,009
-
-
-
-
-
-
-
-
-
-
-
-
43,320
548
43,868
13,009
13,009
2018
Financial
assets
Cash and
cash equiva-
lents
Trade and
other receiv-
ables
Financial
liabilities
Trade and
other paya-
bles
2017
Financial
assets
Cash and
cash equiva-
lents
Trade and
other receiv-
ables
Financial
liabilities
Trade and
other paya-
bles
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
69
Group structure
IN THIS SECTION
Group structure provides information about particular subsidiaries and associates and how changes have affected the financial position
and performance of the Group.
Note 18: Controlled subsidiaries
Note 19: Parent disclosures
Page 70
Page 70
70
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Note 18: Controlled subsidiaries
The Group’s subsidiaries that were controlled during the year and
had directly disposed of the relative assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
prior years are set out below:
income are reclassified to profit or loss.
Percentage
Ownership
Country of Incor-
2018
2017
poration
%
%
If the ownership interest in an associate or a joint venture is reduced,
but significant influence or control is retained, only a proportionate
share of the amounts previously recognised in other comprehensive
income are reclassified to profit or loss, where appropriate.
Direct subsidiaries of the ultimate
parent entity Jumbo Interactive
Limited:
Benon Technologies Pty Ltd
TMS Global Services Pty Ltd
Intellitron Pty Ltd
Jumbo Lotteries Pty Ltd
Jumbo Interactive Asia Pty Ltd
Australia
Australia
Australia
Australia
Australia
Cook Islands Tattslotto Pty Ltd
Cook Islands
Jumbo Interactivo de Mexico SA
de CV
Jumbo Interactive GmbH1
Mexico
Germany
100
100
100
100
100
1
100
-
1the company was placed in voluntary administration 31 March 2017
Subsidiaries of TMS Global Ser-
vices Pty Ltd:
TMS Global Services (NSW) Pty
Ltd
Australia
TMS Global Services (VIC) Pty Ltd
Australia
TMS Fiji Limited
TMS Fiji On-Line Limited
Fiji
Fiji
TMS Global Services (PNG)
Limited
Papua New
Guinea
Cook Islands Tattslotto Pty Ltd
Cook Islands
100
100
100
100
100
99
100
100
100
100
100
1
100
-
100
100
100
100
100
99
Note 19: Parent disclosures
The parent and ultimate parent entity within the Group is Jumbo
Interactive Limited.
(a) Summary financial information
The individual financial statements for the parent entity show the
following aggregated amounts as follows:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
2018
$’000
13,684
28,031
41,715
1,243
778
2,021
39,694
55,917
2017
$’000
17,471
24,164
41,635
641
7,046
7,687
33,948
45,492
Retained earnings/(accumulated losses)
(26,037)
(26,037)
Profits appropriation reserve
Other reserves
Total shareholders’ equity
10,413
(599)
15,736
(1,243)
39,694
33,948
13,184
13,184
19,317
19,317
Jumbo Lotteries North America,
Inc.
United States of
America
100
100
Profit for the year
Total comprehensive income for the year
Principles of consolidation
The consolidated financial statements comprise the financial
statements of Jumbo Interactive Limited and its subsidiaries at 30
(b) Guarantees
June each year (‘the Group’). Subsidiaries are entities over which
the Group has control. The Group has control over an entity when
the Group is exposed to, or has rights to, variable returns from its
involvement with the entity, and has the ability to use its power to
affect those returns. Subsidiaries are consolidated from the date on
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
16: Borrowings, and are ongoing.
which control is transferred to the Group and are deconsolidated
The parent entity has also provided a guarantee in favour of
from the date on which control ceases.
Tattersalls in respect of payment obligations of a subsidiary
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.
Changes in ownership interests
When the Group ceases to have control, joint control or significant
influence, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in the profit
or loss. This fair value becomes the initial carrying value for the
purposes of subsequently accounting for the retained interest as
an associate, joint venture or available-for-sale financial asset. In
addition, any amount previously recognised in other comprehensive
income in respect of that entity, are accounted for as if the Group
company in terms of the Agent reseller agreements, between its
subsidiary and the favouree.
(c) Contractual commitments
There were no contractual commitments for the acquisition of
property, plant and equipment entered into by the parent entity at
30 June 2018 (2017: $Nil).
(d) Contingent liabilities
The parent entity has no contingent liabilities other than the
guarantees referred to above.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
71
Recognition and measurement
The financial information for the parent entity, Jumbo Interactive
Limited, has been prepared on the same basis as the consolidated
financial statements, except as set out below:
(i) Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for
at cost in the financial statements of Jumbo Interactive Limited.
Dividends received from associates are recognised in the parent
entity’s income statement, rather than being deducted from the
carrying amount of these investments.
(ii) Tax consolidation
Jumbo Interactive Limited and its wholly owned subsidiaries have
implemented the tax consolidation legislation for the whole of the
financial year. Refer to note 4 for details.
72
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Other information
IN THIS SECTION
Other information provides information on other items which require disclosure to comply with Australian Accounting Standards and other
regulatory pronouncements however are not consider critical in understanding the financial performance or position of the Group.
Note 20: Investments accounted for using the Equity Method
Note 21: Available-for-sale financial assets (non-current)
Note 22: Related party transactions
Note 23: Key Management Personnel compensation
Note 24: Share-based payments
Note 25: Remuneration of auditors
Note 26: Summary of other significant accounting policies
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
73
Note 20: Investments accounted for using the Equity
Method
Interest in
Associate –
Lotto Points
Place of busi-
Plus Inc.,
ness/ Country of
SIGNIFICANT JUDGEMENTS
A key judgement by management is the uncertainty of future
economic benefits of both Sorteo Games Inc and Lottery
Rewards Inc
Recognition and measurement
USA
Incorporation
2018
2017
2018
2017
%
%
$’000
$’000
Unlisted shares
Non-current assets are classified as held-for-sale if their carrying
amount will be recovered principally through a sale transaction,
rather than through continuing use. After initial recognition at cost,
Lotto Points
Plus Inc
New York, USA
30.9
30.9
Net investment in associate company
-
-
-
-
they are measured at fair value with gains and losses recognised
in other comprehensive income (available-for-sale investments
reserve), until the investment is disposed of, at which time the
cumulative gain or loss previously recognised in the available-for-
sale reserve may be transferred within equity.
Lotto Plus Inc is an investment company, with its only investment
being a 16.9% (2017: 21.9%) shareholding (non-voting) in Lottery
Rewards Inc., USA (see note 21(b) for details).
Recognition and measurement
Associates are entities over which the Group has significant
influence but not control or joint control. Associates are accounted
for in the parent entity financial statements at cost and the
consolidated financial statements using the equity method
of accounting. Under the equity method of accounting, the
Group’s share of post-acquisition profits or losses of associates
Note 22: Related party transactions
Parent entity
Jumbo Interactive Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 18.
Key management personnel
Disclosures relating to key management personnel are set out in
is recognised in consolidated profit or loss and the Group’s share
note 23 and the remuneration report in the directors’ report.
of post-acquisition other comprehensive income of associates
is recognised in consolidated other comprehensive income. The
cumulative post-acquisition movements are adjusted against
Transactions with related parties
All transactions between related parties are on normal commercial
the carrying amount of the investment. Dividends received from
terms and conditions at market rates and no more favourable than
associates are recognised in the parent entity’s profit or loss,
those available to other parties unless otherwise stated.
while they reduce the carrying amount of the investment in the
consolidated financial statements.
The following transactions occurred with related parties:
When the Group’s share of post-acquisition losses in an associate
exceeds its interest in the associate (including any long-term
interests that form part of the Group’s net investment in the
associates), the Group does not recognise further losses unless
Consolidated
2018
$
2017
$
it has obligations to, or has made payments, on behalf of the
Mr Mike Rosch, the father of Mr Mike Veverka,
associate.
The financial statements of the associates are used to apply the
equity method. The end of the reporting period of the associates
and the parent are identical and both use consistent accounting
policies.
Note 21: Available-for-sale financial assets (non-current)
Unlisted securities comprise investments in:
(a) Sorteo Games Inc., USA. The Company owns 7% of the issued
share capital of Sorteo Games Inc. Shares in Sorteo Games Inc
are carried at fair value of $nil (2017: $nil).
(b) Lottery Rewards Inc., USA. The Company owns 5.4% of the issued
share capital of Lottery Rewards Inc – 0.2% directly and 5.2%
indirectly (through Lotto Points Plus Inc – see note 20 for details).
Shares in Lottery Rewards Inc are carried at fair value of $nil
(2017: $nil).
the CEO and executive director of the Compa-
ny, rented an office from the Group
- office rent received
8,580
7,211
Consolidated
2018
$
2017
$
Mrs Julie Rosch, the mother of Mr Mike Vever-
ka, the CEO and Executive Director of the
Company, is engaged as a full time employee
within the Group.
Salary and superannuation
82,462
82,441
74
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Receivables from related parties
The following balances are outstanding at the reporting date in
Employee option plan
The Jumbo Interactive Limited Employee Option Plan was ratified
relation to transactions with related parties:
at the annual general meeting held on 28 October 2008. Employees
are invited to participate in the scheme from time to time. Options
Consolidated
vest when the volume weighted average share price over five
2018
$
2017
$
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.
Trade receivables from Mr Mike Rosch (direc-
tor-related party of Mike Veverka)
2,145
1,573
Options granted carry no dividend or voting rights.
Loans to/from related parties
Advances to – key management
personnel
Consolidated
2018
2017
$
$
Third party options
Options have been issued to an Australian based contractor as
part of the remuneration for their services to incentivise them
to procure a commercially acceptable transaction in Australia.
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
-
100,000
terms and conditions acceptable to the Company by 31 December
2017 failing which the options will lapse. This was subsequently
extended to 30 June 2018, and finally to 30 June 2019 with 150,000
On 7 March 2016, Jumbo Interactive Ltd made a loan to KMP Brad
options being lapsed, unexercised, with no effect on the fair value.
Board for an amount of $100,000. The loan bears interest at the
Commonwealth Bank of Australia’s Home Loan Standard Variable
Fair value of options granted
Rate, 5.22% p.a. as at the end of the reporting period, plus a margin
of 2.00% p.a., payable monthly in arrears. The capital balance is
repayable by 7 March 2018.
The loan was repaid on 2 September 2017.
Interest charged and received during the year was $613 (2017:
$7,236).
Employees
The weighted average fair value of options granted during the
financial year was 33.4 cents (2017: nil). 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
Note 23: Key Management Personnel compensation
during the year ended 30 June 2018 were as follows:
Consolidated
2018
$
2017
$
Short term employee benefits
2,163,591
1,799,152
Post employment benefits
Other long term benefits
Termination benefits
Share based payments
153,992
135,870
37,984
18,453
-
174,538
538,052
106,296
2,893,619
2,234,309
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.
Note 24: Share-based payments
Share-based payment expenses
recognised during the financial year
Consolidated
2018
$
2017
$
Options issued under employee option plan
622,093
130,989
Options issued to third parties for services
received
22,207
17,863
644,300
148,852
Options are granted for no consideration, have a five year life, and are
exercisable when the five day volume weighted average price equals a
share market price of $4.00
Grant date
Share price at grant date
Exercise price
Expected volatility
Expected dividend yield
Risk free rate
26 Oct 2017
$2.840
$3.500
50.660%
2.99%
2.30%
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.
Third parties
3,474,492 options were granted to Tattersalls Online Pty Ltd
(Tatts) on 13 July 2017 at an exercise price of $2.37 per share for 12
months to 13 July 2018 pursuant to approval by shareholders at an
Extraordinary General Meeting held 12 July 2018, and formed part
of the securities subscription agreement dated 12 May 2017 which
provided for the issue of 6,609,686 fully paid ordinary shares in the
Company at $2.37 per share. The issue price and exercise price
of $2.37 per share was set at the closing price of the Company’s
shares on 28 April 2017. The options were issued to Tatts for $10.00.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
75
(The weighted average fair value of options granted during the 2017
financial year was 2.0 cents).
Details of options outstanding during the financial year are as
follows:
2018
Grant date
price
Expiry date
year
ing the year
year
ing the year
year
end of year
end of year
Exercise
beginning of
Granted dur-
ed during the
Exercised dur-
during the
Balance at
Exercisable at
Balance at
Lapsed/ Forfeit-
Expired
KMP and staff options
3 Sep 2013
6 Nov 2013
18 Nov 2015
14 Jan 2016
26 Oct 2017
Third party options
2 Feb 2017
13 Jul 2017
Total
$4.00
$4.00
$1.75
$1.75
3 Sep 2018
1,400,000
6 Nov 2018
400,000
18 Nov 2020
1,600,000
14 Jan 2021
500,000
-
-
-
-
$3.50
15 Nov 2022
-
5,100,000
$2.25
$2.37
2 Feb 2022
200,000
-
13 Jul 2018
-
3,474,492
4,100,000
8,574,492
Weighted average exercise price
$2.76
$3.04
-
-
-
-
-
-
-
-
-
(1,000,000)
(250,000)
(1,300,000)
(500,000)
(650,000)
-
-
(3,700,000)
$2.82
-
-
-
-
-
-
-
-
-
400,000
400,000
150,000
150,000
300,000
300,000
-
-
4,450,000
4,450,000
200,000
-
3,474,492
3,474,492
8,974,492
8,774,492
$3.01
$3.02
2017
Grant date
price
Expiry date
year
ing the year
year
ing the year
year
end of year
end of year
Exercise
beginning of
Granted dur-
ed during the
Exercised dur-
during the
Balance at
Exercisable at
Balance at
Lapsed/ Forfeit-
Expired
KMP and staff options
3 Sep 2013
6 Nov 2013
18 Nov 2015
14 Jan 2016
$4.00
$4.00
$1.75
$1.75
3 Sep 2018
1,800,000
6 Nov 2018
400,000
18 Nov 2020
1,700,000
14 Jan 2021
500,000
Third party options
-
-
-
-
2 Feb 2017
$2.25
2 Feb 2022
-
200,000
(400,000)
-
(100,000)
-
-
Total
4,400,000
200,000
(500,000)
Weighted average exercise price
$2.88
$2.25
$3.55
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,400,000
400,000
1,600,000
500,000
200,000
4,100,000
$2.76
-
-
-
-
-
-
Options were exercised regularly throughout the year and the weighted average share price at date of exercise for the year ended 30 June
2018 was $4.05 (2017: nil).
The weighted average exercise price for the year ended 30 June 2018 was $2.94 (2017: $2.78).
The weighted average remaining contractual life of share options outstanding at 30 June 2018 was 2 years 4 months (2017: 2 year 6 months).
76
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Recognition and measurement
The fair value of options granted to Directors, employees and
Note 25: Remuneration of auditor
consultants is recognised as an expense with a corresponding
During the year the following fees were paid or payable for services
increase in equity (share based payments reserve). The fair value
provided by the auditor of the parent entity and its related practices:
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
Audit services
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.
Consolidated
2018
$
2017
$
114,438
132,408
114,438
132,408
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 BDO for taxation
services for the entity or any entity in the
Group:
Review of income tax return
42,000
40,000
Where the terms of options are modified, the expense continues to
Transfer pricing consulting
be recognised from grant date to vesting date as if the terms had
Other taxation advice
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.
Other services
Where options are cancelled, they are treated as if vesting occurred
on cancellation and any unrecognised expenses are taken
Amounts paid/payable to BDO for other ser-
vices for the entity or any entity in the Group:
immediately to profit or loss. However, if new options are substituted
Accounting advice
for the cancelled options and designated as a replacement on grant
Export grant services
date, the combined impact of the cancellation and replacement
options are treated as if they were a modification.
15,000
7,000
-
-
64,000
40,000
-
4,500
4,500
2,800
6,000
8,800
182,938
181,208
Note 26: Summary of other significant accounting policies
Other significant accounting policies adopted in the preparation
of these consolidated financial statements are set out in relevant
sections of the notes below. These policies have been consistently
applied to all the years presented, unless otherwise stated. Where
necessary, comparative information has been restated to conform
with changes in presentation in the current year.
(a) Basis of preparation
(i) New, revised or amended Accounting Standards and
Interpretations adopted
None of the new standards and amendments to standards that are
mandatory for the first time for the financial year beginning 1 July
2017 materially affect the amounts recognised in the current period
or any other prior period and are not likely to affect future periods.
The Group early adopted AASB 15 Revenue from Contracts with
Customers in the year beginning 1 July 2017.
As a result of adopting AASB15, the Group’s accounting policy has
changed, however this change has not resulted in any material
change to recognising revenue.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
77
(ii) New Accounting Standards and Interpretations not yet
the instrument. Financial assets are derecognised when the rights
adopted
AASB 16 Leases
to receive cash flows from the financial assets have expired or have
been transferred and the Group has transferred substantially all the
risks and rewards of ownership.
This standard and its consequential amendments are currently
applicable to annual reporting periods beginning on or after 1
Financial assets are initially recognised at fair value. If the financial
January 2019. This standard requires lessees to capitalise all leases
asset is not subsequently accounted for at fair value through profit
on the balance sheet (subject to limited exception) and there is
or loss, then the initial measurement includes transaction costs that
no longer a requirement to classify leases as either operating or
are directly attributable to the asset’s acquisition or origination.
financial leases. This means that on commencement date of the
On initial recognition, the Group classifies its financial assets as
lease, lessees need to measure a right-of-use asset and a lease
subsequently measured at either amortised cost or fair value,
liability. The initial adoption of this standard will impact on the
depending on its business model for managing the financial assets
financial statements at 30 June 2020. The Group’s management has
and the contractual cash flow characteristics of the financial assets.
yet to assess the impact of this amendment.
(b) Foreign currency transactions
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency).
The consolidated financial statements are presented in Australian
dollars, which is the Company’s functional and presentation
currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates ruling at the dates of the
Refer to notes 20 and 21 for further details.
(ii) Financial assets measured at amortisation cost
A financial asset is subsequently measured at amortised cost, using
effective interest method and net of any impairment, if:
— The asset is held within the business model whose objective is to
hold assets in order to collect contractual cash flows
— The contractual terms of the financial asset give rise, on
specified dates, to cash flows that are solely payments of
principal and interest
The Group assesses at each reporting date whether there is
objective evidence that a financial asset (or group of financial
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
assets) is impaired.
end exchange rates of monetary assets and liabilities denominated
Refer to notes 7 and 8 for further details.
in foreign currencies are recognised in profit or loss, except when
attributable to part of the net investment in a foreign operation.
(iii) Non-derivative liabilities
Foreign exchange gains and losses are presented in profit or loss on
originated. Other financial liabilities are initially recognised on the
a net basis within other income or other expenses, unless they relate
trade date. The Group derecognises a financial liability when its
to borrowings, in which case they are presented as a part of finance
contractual obligations are discharged or cancelled or expire.
The Group initially recognises loans on the date when they
costs.
Non-monetary items measured at fair value in a foreign currency are
value less any directly attributable transaction costs. Subsequent to
translated using the exchange rates at the date when fair value was
initial recognition, these liabilities are measured at amortised cost
measured.
using the effective interest rate method.
Non-derivative financial liabilities are initially recognised at fair
The functional currency of the overseas subsidiaries is measured
Refer to note 11 for further detail
using the currency of the primary economic environment in which
that entity operates. At the end of the reporting period, the assets
(d) Goods and Services Tax (GST)
and liabilities of these overseas subsidiaries are translated into the
Revenues, expenses and assets are recognised net of GST, unless
presentation currency of the Company at the closing rate at the end
the amount of GST incurred is not recoverable from the Australian
of the reporting period and income and expenses are translated
Taxation Office (ATO), in which case the GST is recognised as part
at the average exchange rates for the year. All resulting exchange
of the cost of acquisition of the asset or as part of the expense item.
differences are recognised in other comprehensive income as a
separate component of equity (foreign currency translation reserve).
Receivables and payables are stated with the amount of GST
On disposal of a foreign entity, the cumulative exchange differences
receivable or payable included. The net amount of GST recoverable
recognised in foreign currency translation reserves relating to that
from, or payable to, the ATO is included as part of receivables or
particular foreign operation is recognised in profit or loss.
payables in the consolidated statement of financial position.
Goodwill and fair value adjustments arising on the acquisition of a
Cash flows are included in the consolidated statement of cash
foreign entity are treated as assets and liabilities of the foreign entity
flows on a gross basis and the GST component of cash flows arising
and translated at the closing rate.
(c) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises financial assets on the trade date at
which the Group becomes a party to the contractual provisions of
from investing and financing activities, which is recoverable from, or
payable to, the ATO, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the ATO.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Unrecognised items
IN THIS SECTION
Unrecognised items provide information about items that are not recognised in the consolidated financial statements but could potentially
have a significant impact on the Group’s financial position and performance.
Note 27: Contingencies
Note 28: Commitments
Note 29: Events after the reporting date
Page 79
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
79
Note 27: Contingencies
the cost of leasehold improvements and are amortised over the
shorter of the term of the lease or the useful life of the assets.
Contingencies relate to the outcome of future events and may result
in an asset or liability, however due to current uncertainty do not
qualify for recognition.
Note 29: Events after the reporting date
Estimates of the potential financial effect of contingent
and exercise of 330,000 staff options ($1,320,000), and (ii) the
liabilities that may become payable:
final dividend declared, as at the date of this Directors’ Report, the
Apart from the (i) exercise of 3,474.492 Tatts options ($8,235,000)
Consolidated
directors are not aware of any matter or circumstance that has
arisen that has significantly affected, or may significantly affect, the
operations of the Company in the financial years subsequent to 30
June 2018.
The above items are not recognised in the financial statements 30
June 2018.
Guarantees provided by the Group’s bankers
478
426
2018
2017
$’000
$’000
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.
Note 28: Commitments
Operating lease commitments
Consolidated
2018
2017
$’000
$’000
Non-cancellable operating leases contracted
for but not capitalised in the consolidated
financial statements
Payable
Not later than one year
784
914
Later than one year but not later than five
years
Later than five years
3,663
628
5,075
1,803
-
2,717
The property leases are non-cancellable leases for occupied
premises at various locations ranging from month-to-month to
seven year terms, with rent payable monthly in advance. Options to
renew leases at the end of the term range from terms of none to five
years. Rent and outgoings are paid on a monthly basis with periodic
pricing reviews. The main lease runs for seven years with the ability
to cancel for no penalty from June 2022 with 12 months written
notice, in line with the Tabcorp lottery reseller agreements.
Recognition and measurement
Leased property
Leases in which a significant portion of the risks and rewards of
ownership are not transferred to the Group as lessee are classified
as operating leases and payments (net of incentives received from
the lessor) are charged to profit or loss on a straight-line basis over
the period of the lease.
Make good
The Group is required under 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
80
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Directors’ Declaration
The Directors of the Company declare that:
1. The consolidated financial statements, comprising the Consolidated Statement of Profit or Loss and Other 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 Australian 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 2018 and of its performance for the year ended on that
date.
2. The Company has included in the notes to the consolidated financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards.
3. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
4. The remuneration disclosures included in pages 31 to 37 of the Directors’ report (as part of the audited Remuneration Report), for the year
ended 30 June 2018, 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
23 August 2018
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
81
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITOR'S REPORT
To the members of Jumbo Interactive Limited
To the members of Jumbo Interactive Limited
Report on the Audit of the Financial Report
Opinion
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of Jumbo Interactive Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
We have audited the financial report of Jumbo Interactive Limited (the Company) and its subsidiaries
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
(the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
to the financial report, including a summary of significant accounting policies and the directors’
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
declaration.
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
(i)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
Basis for opinion
(ii)
Basis for opinion
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
Report section of our report. We are independent of the Group in accordance with the Corporations
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
with the Code.
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
given to the directors of the Company, would be in the same terms if given to the directors as at the
for our opinion.
time of this auditor’s report.
Key audit matters
Key audit matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
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.
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.
82
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Impairment assessment of Goodwill and Other Intangible Assets
Key audit matter
Key audit matters
How the matter was addressed in our audit
The Group’s disclosures in respect to intangible assets,
including the impairment assessments of goodwill and
other intangible assets are included in Note 10.
Key audit matters are those matters that, in our professional judgement, were of most significance in
Evaluating management’s determination of the
our audit of the financial report of the current period. These matters were addressed in the context of
Group’s Cash Generating Units ("CGU's") to
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
ensure they are appropriate, including being at a
level no higher than the operating segments of
a separate opinion on these matters.
the entity
The carrying value of intangible assets represent a
significant asset of the Group.
Our procedures included, amongst others:
•
Impairment assessment of Goodwill and Other Intangible Assets
Key audit matter
The Group is required to annually test the amount of
goodwill and indefinite useful life intangible assets for
impairment and assess other intangible assets for
impairment indicators. This annual impairment test
was significant to our audit because the goodwill and
intangible assets balance is material to the financial
statements and because management’s assessment
process is complex, highly judgmental and includes
estimates and assumptions relating to expected future
market or economic conditions.
goodwill and other intangible assets are included in
assets, including the impairment assessments of
The Group’s disclosures in respect to intangible
Note 10.
The Group carries intangible assets of $11.574
million as at 30 June 2017. The carrying value of
intangible assets represent a significant asset of the
Group.
The Group is required to annually test the amount of
goodwill and indefinite useful life intangible assets
for impairment and assess other intangible assets for
impairment indicators. This annual impairment test
Other information
was significant to our audit because the goodwill and
•
•
•
•
•
•
•
Evaluating management’s process regarding the
valuation of the Group’s goodwill and other
intangible assets
How the matter was addressed in our audit
Our procedures included, amongst others:
Assessing the Group’s assumptions and estimates
relating to forecast revenue, costs, capital
expenditure, discount rates and the life of
Evaluating management’s determination of the
reseller agreements used to determine the
recoverable value of its assets
Group’s Cash Generating Units ("CGU's") to
ensure they are appropriate, including being at a
Assessing the historical accuracy of forecasting
of the Group by comparing the current year
level no higher than the operating segments of
actual results with FY18 figures included in prior
the entity
year forecasts to consider whether any forecasts
Evaluating management’s process regarding the
included assumptions, that with hindsight, had
been optimistic
valuation of the Group’s goodwill and other
intangible assets
Challenging key assumptions by performing
sensitivity analysis on the growth rates and
Assessing the Group’s assumptions and estimates
discount rate assumptions used.
relating to forecast revenue, costs, capital
expenditure, discount rates and the life of
reseller agreements used to determine the
intangible assets balance is material to the financial
The directors are responsible for the other information. The other information comprises the
Assessing the historical accuracy of forecasting
statements and because management’s assessment
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
process is complex, highly judgmental and includes
financial report and the auditor’s report thereon.
estimates and assumptions relating to expected
Our opinion on the financial report does not cover the other information and we do not express any
future market or economic conditions.
included assumptions, that with hindsight, had
form of assurance conclusion thereon.
of the Group by comparing the current year
actual results with FY16 figures included in prior
year forecasts to consider whether any forecasts
•
recoverable value of its assets
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
sensitivity analysis on the growth rates and
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Challenging key assumptions by performing
•
discount rate assumptions used.
been optimistic
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Other information
Responsibilities of the directors for the Financial Report
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
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.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
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.
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
83
Key audit matters
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Auditor’s responsibilities for the audit of the Financial Report
Impairment assessment of Goodwill and Other Intangible Assets
How the matter was addressed in our audit
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
Key audit matter
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
The Group’s disclosures in respect to intangible
if, individually or in the aggregate, they could reasonably be expected to influence the economic
assets, including the impairment assessments of
decisions of users taken on the basis of this financial report.
goodwill and other intangible assets are included in
Group’s Cash Generating Units ("CGU's") to
A further description of our responsibilities for the audit of the financial report is located at the
Note 10.
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
The Group carries intangible assets of $11.574
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
million as at 30 June 2017. The carrying value of
This description forms part of our auditor’s report.
intangible assets represent a significant asset of the
ensure they are appropriate, including being at a
Evaluating management’s process regarding the
Evaluating management’s determination of the
level no higher than the operating segments of
Our procedures included, amongst others:
the entity
•
•
Group.
Report on the Remuneration Report
The Group is required to annually test the amount of
Opinion on the Remuneration Report
goodwill and indefinite useful life intangible assets
We have audited the Remuneration Report included on pages 31 to 37 of the directors’ report for the
for impairment and assess other intangible assets for
year ended 30 June 2018.
impairment indicators. This annual impairment test
Assessing the Group’s assumptions and estimates
relating to forecast revenue, costs, capital
expenditure, discount rates and the life of
valuation of the Group’s goodwill and other
intangible assets
•
reseller agreements used to determine the
was significant to our audit because the goodwill and
In our opinion, the Remuneration Report of Jumbo Interactive Limited, for the year ended 30 June
intangible assets balance is material to the financial
2018, complies with section 300A of the Corporations Act 2001.
statements and because management’s assessment
Responsibilities
process is complex, highly judgmental and includes
of the Group by comparing the current year
Assessing the historical accuracy of forecasting
recoverable value of its assets
•
estimates and assumptions relating to expected
The directors of the Company are responsible for the preparation and presentation of the
future market or economic conditions.
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.
year forecasts to consider whether any forecasts
included assumptions, that with hindsight, had
been optimistic
actual results with FY16 figures included in prior
•
Challenging key assumptions by performing
BDO Audit Pty Ltd
Other information
sensitivity analysis on the growth rates and
discount rate assumptions used.
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
Brisbane, 23 August 2018
K L Colyer
Director
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.
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.
84
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Shareholder Information
The Company has 58,013,757 ordinary shares on issue, each fully paid. There are 2,786 holders of these ordinary shares as at 31 July 2018.
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 5,185,000 options over ordinary shares on issue but not quoted on the Australian Securities
Exchange.
(a) The range of fully paid ordinary shares as at 31 July 2018
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Rounding
Total
(b) Unmarketable parcels
Total Holders
Units
% of issued capital
806
1,247
374
321
38
414,417
3,383,552
2,896,496
7,872,948
43,446,344
0.71
5.83
4.99
13.57
74.89
0.01
2,786
58,013,757
100.00
Minimum $500.00 parcel at $4.05 per unit
Minimum parcel size
124
Holders
92
Units
2,079
The number of shareholders holding less than the marketable parcel of shares is 92 (shares 2,079)
(c) Substantial holders of 5% or more fully paid ordinary shares as at 31 July 20181:
Name
Vesteon Pty Ltd and associates
Tatts Online Pty Ltd
Notice date
Ordinary Shares
Percentage Held
12 May 2017
5 July 2018
9,101,027
7,234,178
17.8
12.5
1 as disclosed in substantial shareholder notices received by the Company
(d) Voting rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
— Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on
a show of hands.
Options
— Optionholders have no voting rights until their options are exercised.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
85
(e) Top 20 holders of fully paid ordinary shares as at 31 July 2018
Name
Units
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
VESTEON PTY LTD
TATTS ONLINE PTY LTD
JP MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
MR BARNABY COLMAN CADDICK
BNP PARIBAS NOMINEES PTY LTD
ECAPITAL NOMINEES PTY LIMITED
MR MIKE VEVERKA
WARAWONG PTY LTD
MR CRAIG KUHN
UBS NOMINEES PTY LTD
MR JOHN WILDE + MRS ELIZABETH WILDE
BNP PARIBAS NOMINEES PTY LTD
MR JOHN ROSAIA
DOG FUNDS PTY LTD
ROUND ETERNAL INVESTMENTS PTY LTD
20.
INVIA CUSTODIAN PTY LIMITED
Total Top 20 shareholders of ordinary fully paid shares
Total remaining holders balance
9,162,915
7,234,178
7,030,443
3,861,612
2,826,321
2,748,045
1,488,562
1,125,000
1,089,121
900,436
688,112
550,000
390,000
285,213
247,996
246,429
221,000
220,000
210,000
202,408
40,727,791
17,285,966
15.79
12.47
12.12
6.66
4.87
4.74
2.57
1.94
1.88
1.55
1.19
0.95
0.67
0.49
0.43
0.42
0.38
0.38
0.36
0.35
70.20
29.80
(f) Unquoted securities as at 31 July 2018
Options over Unissued Shares
A total of 5,185,000 options are on issue to employees and a third party for services rendered.
Exercise price
Expiry date
Number on issue
Number of holders
$4.00
$4.00
$1.75
$2.25
$3.50
3 September 2018
6 November 2018
18 November 2020
2 February 2022
15 November 2022
235,000
150,000
300,000
50,000
4,450,000
2
1
3
1
15
(g) On-market buy-back
There is no current on-market buy-back in effect.
86
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Company Information
Jumbo Interactive Limited
ABN 66 009 189 128
www.jumbointeractive.com
Directors
David K Barwick (Non-Executive Chairman)
Bill Lyne (Non-Executive Director)
Mike Veverka (Executive Director and Chief Executive Officer)
Chief Financial Officer
David Todd
Company Secretary
Bill Lyne
Registered Office
Level 1
601 Coronation Drive
Toowong, QLD 4066
Telephone: 07 3831 3705
Facsimile: 07 3369 7844
Auditor
BDO Audit Pty Ltd
Level 10
12 Creek Street
Brisbane, QLD 4000
Share Registrar
Computershare Investor Services Pty Ltd
Level 1, 200 Mary Street
Brisbane, QLD 4000
Telephone: 07 3237 5999
Facsimile: 07 3221 9227
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
87
88
JUMBO INTERACTIVE LTD ANNUAL REPORT 2018
Jumbo Interactive Limited
Level 1, 601 Coronation Drive
PO Box 824
Toowong, Queensland, 4066
Australia
+61 7 3831 3705
www.jumbointeractive.com