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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
“Jumbo’s own stellar
performance is our best
selling point with prospective
new SaaS customers”
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
3
Table of
Contents
4
Introduction
32 Financial Report
6 Highlights
34 Directors’ Report
9 Letter from the Chairman
53 Auditor’s Independence Declaration
11 Letter from the CEO
12 Review of Operations
54 Corporate Governance Statement
60 Consolidated Statement of Profit or Loss
13 Key Performance Indicators
and Other Comprehensive Income
14 Like-for-Like Analysis
15 Demographics
61
Consolidated Statement of Financial
Position
16 Powered by Jumbo Software as a Service
62
Consolidated Statement of Changes in
18 Data, AI and Lotteries
20 Lotto Party
21 A Jumbo donation
22 Customer Support
Equity
64 Consolidated Statement of Cash Flows
65
Notes to the Consolidated Financial
Statements
24 Winners are Grinners!
95 Directors’ Declaration
26 Leadership Team
28 People of Jumbo
30 Corporate Responsibility
96 Independent Auditor’s Report
100 Shareholder Information
102 Company Information
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Introduction
$1 Billion in ticket
sales on the Jumbo
platform by FY22
2019 was a breakout year for Jumbo, with the
constraints of the old software platform a thing
of the past. Two important benefits stem from
the new software platform. First, the Jumbo team
were able to make the most of a strong run of
jackpots including two $100 million Powerball
jackpots. Second, a new SaaS (Software as a
Service) business division was launched called
“Powered by Jumbo”. This new division has few
geographic boundaries, and addresses the need
for a proven and robust software system for
lottery operators with which to drive future growth.
Two agreements have been signed building
momentum in this exciting business. Only 7% of
the world’s lottery tickets are sold online pointing
to a sustained rise over the next decade.
This has led to Jumbo’s new “$1 Billion Vision” -
$1 Billion in ticket sales on the Jumbo platform
by FY22. This includes both the ticket reselling
business (OzLotteries.com) and the new SaaS
(Powered by Jumbo) business. Certainly an
ambitious target, but with Jumbo’s strong
track record and world class software, it is also
achievable.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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6
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Highlights
The share price has increased
303% over 12 months to $20.15
at 30 June 2019.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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Total Transaction
Value
12 MONTHS TO 30 JUNE 2019
$321m
75% increase
over the previous year
Revenue
(continuing operations)
12 MONTHS TO 30 JUNE 2019
$65.2m
64% increase
over the previous year
Net Profit After Tax
(continuing operations)
12 MONTHS TO 30 JUNE 2019
$26.4m
124% increase
over 12 months
Number of
Large Jackpots
OZ LOTTO / POWERBALL JACKPOTS OF
$15 MILLION OR MORE, 12 MONTHS TO 30 JUNE 2019
4953% increase
over 12 months
Dividends Declared for
the Financial Year
FULLY FRANKED ORDINARY DIVIDENDS
(EXCLUDING SPECIAL) RELATING TO THE
FINANCIAL YEAR ENDED 30 JUNE 2019
36.5c
97% increase
over the previous year
Share Price
AS AT 30 JUNE 2019
$20.15
303% increase
over 12 months
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Without the
diversified skills of
our team we could
not have achieved
these results or the
significant increase
in share price.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
9
Letter from the
Chairman
Dear Shareholder
result of a 106% increase in new accounts to 444,004
and a 74% increase in active customers to 761,863.
With the performance of the 2018/19 financial year being
such a success, it gives me great pleasure to write to you
In January 2019 we were pleased to announce the
as a Shareholder of Jumbo Interactive Limited (Jumbo).
appointment of Mr. Giovanni Rizzo to the board.
This year, we have seen our FY2019 year-end share
price increase to $20.15 from $5.00 in FY2018. There
have been a number of reasons for this growth which
I will briefly cover in my letter. However, I must first
acknowledge the continued loyalty and performance of
our staff headed up by our major shareholder and CEO
Giovanni is a specialist in the gaming industry with
over 20 years’ experience in various management
roles of large listed businesses. The Company remains
committed in the compliance of board diversification
and hopes to be in a position to make further
announcements on this issue in the near future.
Mr. Mike Veverka. Without the diversified skills of our
In conclusion I would like to thank the board of directors
team we could not have achieved these results and or
and Management for their continued support and
the significant increase in share price.
reiterate the efforts of our CEO and our loyal staff for
The skills of our team have been seen by the new Jumbo
software platform which has not only benefited sales on
I look forward to seeing you at our Annual General
OzLotteries.com but has also laid the foundation for a
Meeting at which time our Management team can
Software as a Service business with enormous potential.
answer any questions you may have regarding the
their continued efforts in the growth of the Company.
Essentially the new SaaS business, branded “Powered
Company.
by Jumbo”, provides software to other lottery operators
wishing to emulate the success of OzLotteries.com. The
Yours faithfully
first customer (Mater Lotteries) has gone live after a 6
month setup process. Early signs are positive however a
few more months will need to pass before reliable data
can be obtained on the success of the project. Efforts
have been directed towards a pipeline of other lottery
operators evaluating the system and confidence is high
that more will sign up in the near future in both Australia
and the United Kingdom.
In summary, the performance of the Company can be
identified by a Total Transaction Value (TTV) increase
of 75% to $321 million and Net profit after tax (NPAT)
increase of 125% to $26.4 million. This has allowed us
to continue in the increase of our dividend distribution
throughout the year. The financial performance was a
David K Barwick
Chairman
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
No longer is Jumbo
just a ticket reseller,
but also a software
platform partner
to other lotteries
around the world.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
11
Letter from
the CEO
2019 was a breakout year for Jumbo. The constraints of
The new Software as a Service business is not
the old software platform became a thing of the past
constrained by geographic boundaries and work has
when after 4 years, the new software platform went
begun to establish operations in key overseas markets.
live in April 2018. The benefits were felt immediately.
The momentum in Australia will be used to open up
The improved customer experience attracted new
these new markets and establish a base for future
customers, and higher capacity delivered faster
growth.
response times even during higher draws. The system
was thoroughly tested in August 2018 when the new
Powerball format jackpotted to $100 million and it came
through with flying colours.
The Jumbo staff deserve enormous credit for their
tireless work on the software platform making all this
possible. There is a strong sense of purpose within the
Jumbo offices to make a difference in our society and
This built a base to what would become a record year.
it is rewarding to see the money raised by all the causes
The number of new signups soared 106% to 444,004
we work with as a result of our efforts. Personally I admit
customers in 12 months and the number of Active
to a great sense of pride to see Jumbo reach the $1
customers grew 74% to 761,863. The scalable nature
billion market cap level and be included in the ASX300.
of the business meant the flow-on effect to financial
This fills me with motivation to build on what has been
results would be strong. TTV grew 75% to $320.7 million
achieved and take Jumbo even further in the years
and Revenue up 64% to $75.2 million resulting in a 124%
ahead.
increase in Net Profit after Tax to $26.4 million. This has
allowed the board to reward shareholders with a total
FY dividend of 36.5 cents plus a special dividend of 8.0
cents.
However the real benefit from the new software platform
is an entirely new business division - Software as a
Service. No longer is Jumbo just a ticket reseller, but also
Mike Veverka
CEO and Founder
a software platform partner to other lotteries around
the world. Jumbo’s own performance is our number
one selling point to prospective new lotteries. Our first
partner, the Mater Lottery, was signed in November
2018 and went live in June 2019. Our second partner, the
Endeavour Foundation, was recently signed in August
2019 with a live date scheduled for December 2019.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Reviewof Operations
Financial Performance
The new software platform had an immediate effect on financial performance as customers
were able to sign up in greater numbers and became more active throughout the year. TTV
(Total Transactional Value) and Revenue grew 75% to $321 million and 64% to $65.2 million
respectively. The scalability of the business then delivered a 107% increase in EBITDA (Earnings
Before Interest Tax Depreciation and Amortisation) to $40.2 million and a 124% increase in NPAT
(Net Profit After Tax) to $26.4 million.
For the 12 month period to 30 June 2019, the number of new online accounts increased 106%
to 444,004 and the number of active online customers increased 74% to 761,863. During the
financial year, there were 49 (2018: 32) large jackpots with an average value of $38.4 million
(2018: $28.4 million). This is 53.1% higher in number and 35.2% higher in average value compared
to the previous period.
Customer engagement
is well up with 761,863
active customers
compared to 437,540
the previous year.
OzLotteries.com Performance
The established ticket reseller business (OzLotteries.
com) continued its growth as the dominant part of the
Jumbo group. The new Powerball format has proven
to be a success with two $100 million jackpots in FY19.
This has grown the customer database, which underpins
future performance. Technical improvements were made
to the OzLotteries.com app and the Lotto Party service
to engage customers especially during periods of low
jackpots.
A third Powerball jackpot reached $110 million in July 2019
giving this division a good start to the 2020 financial year.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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Key Performance
Indicators
New Online
Accounts
Active Online
Customers
444k
Up from 215k due to an improved software
762k
Up from 438K due to an improved software
platform, marketing initiatives and higher large
platform, marketing initiatives and higher large
jackpot activity.
jackpot activity.
CPL—
Cost Per Lead
Average Spend per
Online Customer
$13.81
Down from $17.28 due to an improved software
$385.44
Up from $371.13 due to an improved software platform
platform and more efficient acquisition
and higher large jackpot activity.
marketing.
When comparing with prior periods, the timing of large jackpots
has a material impact on average spend. Large jackpots at the
beginning of the 12 month period will have the effect of increasing
the average while jackpots at the end will have the effect of
decreasing it (new customers have not had the time to spend).
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Like-for
-Like
Analysis
Overall ticket sales (TTV) are greatly
influenced by the timing and size of large draws.
Often making it difficult to gain insights into the performance of the OzLotteries.com business.
One method is to compare ticket sales for regular smaller draws and look for growth trends.
OzLotto $15 million
The following graph indicates OzLotto ticket sales at the $15 million prize level.
The decline in 2018 Jul - Dec was due to the simultaneous Powerball draw
reaching very high levels temporarily attracting customers away from OzLotto.
)
$
(
w
a
r
d
r
e
p
s
e
a
s
t
e
k
c
T
l
i
2017
Jan - Jun
2017
Jul - Dec
2018
Jan - Jun
2018
Jul - Dec
2019
Jan - Jun
2019
Jul - Present
Time period (half yearly)
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
15
)
$
(
w
a
r
d
r
e
p
s
e
a
s
t
e
k
c
T
l
i
Powerball $20 million
The following graph indicates Powerball
ticket sales at the $20 million prize level.
Following the changes to Powerball in
April 2018, there is no longer a $15 million
sequence to compare.
2018
Jul - Dec
2019
Jan - Jun
2019
Jul - Present
Time period (half yearly)
Demographics
In a market traditionally appealing to a more mature demographic, Jumbo has
always been regarded for its ability to reach a younger audience. An audience
Recent data highlights
considered to be elusive by the worldwide lottery industry.
Recent data highlights Jumbo’s continued success with appealing to the younger
demographic.
Jumbo now has a higher percentage of customers in the under 35 category, which
clearly demonstrates a trend towards younger demographics, offering greater
customer longevity.
Jumbo’s continued
success with appealing
to the younger
demographic.
t
n
u
o
m
A
40%
30%
20%
10%
0%
18 - 25
25 - 35
35 - 50
50 - 65
65+
Age Group
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Powered by
JUMBO
Software as a Service
The Powered by
Jumbo business
model
The new “Powered by Jumbo” business model is similar to most SaaS
(Software as a Service) models where a large enterprise-wide software
system is licensed to a lottery operator to assist with managing their
business. The software licence is typically multi-year (5 years is common)
with a fee based on a percentage of ticket sales. This percentage is
dependant on turnover and is typically around 10% for low turnover
operations (under $20 million pa), to 3% for high turnover (over $100
million p.a.).
A full explanation of the Powered by Jumbo solution is available at
poweredbyjumbo.com
Powered by Jumbo Services
Moving online
(website and app)
Customer relationship
management
Ticket sales collection
and management
Marketing tools
Management
reporting
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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93%Seeking to
move online
7%Already
online
Large Global TAM
The total addressable market (TAM) for the SaaS business is
significant. Approximately 7% of the world’s lottery tickets are sold
online, indicating 93% of a US$303 billion (A$445 billion) (1) global
market has yet to make the transition. The largest individual market
– the USA – is of particular interest, as less than 5% of that US$80
billion (A$117 billion) market is online. Recent changes have allowed
some early movers to begin selling online and Jumbo is watching the
developments with interest.
Initial target –
Charity Lotteries
The global lottery market consists of traditional national
lotteries with large prizes (Powerball and OzLotto for
example) as well as smaller charity-style lotteries with
smaller prizes (typically under $5 million). This charity
lottery segment is underserved with digital solutions and
is therefore the initial target for “Powered by Jumbo”.
The charity lottery market is particularly active in
Australia, UK and Canada and has a total addressable
market size of approximately A$3.5 billion (2).
Mater Lotteries and the Endeavour Foundation
The first two customers for “Powered by Jumbo” are
Mater Lotteries (signed November 2018) and the
Endeavour Foundation (signed August 2019). Both are
high quality charities with a strong track record and a
bright future. The agreements provide a full software
platform capable of operating both online and offline
ticket sales for a period of 5 years.
The Mater Lotteries website is now live and work
is progressing to move offline ticket sales onto
the “Powered by Jumbo” platform. The Endeavour
Foundation project is expected to follow a similar
release timeframe to the Mater over the next 12 months.
(1) Sources: The WLA Global Lottery Data Compendium 2018; Jumbo Research;
(2) Sources: Jumbo Research; lotteriescouncil.org.uk; charityintelligence.ca
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Data, AI
& Lotteries
For over a decade Jumbo has been
at the technological forefront of the
lottery industry.
From the very early adoption of the digital sales channel back in 2000, to the
early adoption of mobile and the world’s first lottery app for the apple watch,
Jumbo has vigorously embraced technology while others took a wait and see
approach.
This trend is accelerating with important breakthroughs in the fields of Data
Analytics and Artificial Intelligence. Lotteries are unique in the sense that a
large amount of data must be collected around consumer behaviour to ensure
regulatory compliance. However the benefits of data go far beyond regulatory
compliance and into being able to deliver ever increasing levels of customer
experience.
The new Jumbo software platform collects significantly more data than
prior years with the database size growing from 500GB in 2009 to 2TB in 2019.
Managing this data and delivering insights is now the challenge, and an area
that Jumbo has expanded significantly.
Data value
& Security
Jumbo takes a “security first, benefits second” approach to data
collection. First and foremost consumer privacy must always be
maintained and never compromised. With the number of active
customers approaching 1 million and a total customer numbers
well over 2 million, it is clear a lot of people trust Jumbo with their
personal details. This trust must never be taken for granted and
efforts continue to safeguard this trust.
With total customer
numbers well over 2
million, it is clear a lot of
people trust Jumbo with
their personal details
The benefits of Data Analytics all point to a better customer experience. Giving
each and every customer relevant information based on prior habits is a time
saving feature that is a high priority for our customers. Every click is counted and
minimised from the moment a customer decides to buy a ticket to the moment
their ticket has been safely lodged. Convenience continues to rank in the top 3
reasons why players keep coming back to Jumbo.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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Artificial Intelligence
Managing big data can only be done efficiently with the proper use of Artificial
Intelligence. The time when AI was just science fiction has long passed and
many industries now employ partially aware machine learning to gain insights.
Lotteries are no different. To be a world leader in lottery software, Jumbo must
build systems able to learn by themselves with only minor input from staff.
One unique aspect about consumer behaviour in the lottery industry is the
dramatic difference in sales between normal and large jackpots. In the past 15
months Jumbo has traded through three jackpots over $100 million. Sales during
the last few hours of the draw escalate dramatically and would greatly exceed
the capacity of staff to provide that one-on-one customer experience. This is
where artificial intelligence and on-the-fly data analytics take over and allow the
business to scale without compromising customer experience.
Artificial Intelligence comes in a variety of forms beyond data analysis. Speech
recognition advancements have now made it possible for customers to simply
talk to devices and receive accurate responses. Responses to questions like
“What are last night’s Powerball numbers?” and “What is the OzLotto jackpot this
week?” are already functioning on the major platforms. The next advancements
will bring the security required to be able to deliver responses to commands like
“Please put my usual entry into this week’s Powerball draw”.
Speech recognition
advancements
have now made
it possible for
customers to simply
talk to devices and
receive accurate
responses.
What were the results for last week’s Powerball?
Powerball draw 1159 was drawn on Thursday 15th
August. The main numbers were 24, 35, 27, 30, 21, 7, 14
and the Powerball was 13.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
LottoParty
An idea borne from customer
experience optimization,
Lotto Party demonstrates
Jumbo’s innovation process.
Lotto Party is Jumbo’s digital solution for lottery syndicate play.
Lotto Party enables a group of friends to easily create their own
group syndicate through the app.
Lotto Party has grown from 17% to 31% of syndicate sales from 2018
to 2019 (calendar year). Customers are organising Lotto Parties in
all sorts of ways; with friends, colleagues, and even through Internet
forums. The ability for organisers to create unique names for their
groups makes lottery play fun, creative, and engaging.
One in five new customers acquired through Lotto Party invitations
were not existing customers. Since its launch, 13,000 new Oz
Lotteries customers have been acquired through Lotto Party
organisers sending out invitations to non-Oz Lotteries customers.
The average lifetime value of these new customers is 27% higher
than the average lifetime value of a regular Oz Lotteries player.
Additionally, 9% of these acquired customers have since created
their own Lotto Parties, enabling Jumbo to acquire more customers
organically.
Exciting developments in progress include enabling web-based
joiners to Lotto Parties, and web-based organiser functionality.
Additionally, co-organiser functionality is in development, which
will facilitate the likelihood that a group will organise another
Lotto Party, and the development of Avatars legitimizes the game,
encouraging more invitees to join.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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A Jumbo
donation
As a father of two daughters,
I often wonder about the
opportunities all women will
encounter in the future.
Mike Veverka
CEO and Founder
During the 2018 World Lottery Association’s World
Summit in Buenos Aires, Mike Veverka announced a
US$50,000 founding donation to kick start the Women
in Lottery Leadership program (WILL). The creation of
WILL by Ms Rebecca Hargrove, President of the World
Lottery Association (WLA), and several other global
lottery women CEO’s; the mission is to drive high-
performance business growth through supporting the
advancement of women into top positions of lottery
management, leadership and responsibility.
“As a father of two daughters, I often wonder about the
opportunities all women will encounter in the future”,
said Mr Mike Veverka during the presentation.
“I think we can all make a difference in the future by
taking action today”, he said.
Find out more about ‘WILL’ at
womeninlotteryleadership.com
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Customer
Support
Written by Brenda Melville
Head of Lottery Operations (Australia)
Customer Support is the face of Jumbo Interactive to
We offer our customers multiple ways to contact us, and
all our customers and partners, handling a variety of
by allowing our customers the opportunity to seek help
customer queries, a source of product feature requests
through a medium they prefer, be this via the phone, on
and usability suggestions. They work very closely with
our website chat, or an email, we see positive reactions
all teams across development, marketing, and design to
and customer engagement. We also offer our customers
ensure a seamless customer experience.
a comprehensive knowledge base to allow them, if they
Jumbo Interactive Customer Support is a dynamic
prefer, to self-service.
and agile team of experienced professionals with an
The latest changes to the Powerball game meant that
empathetic and human touch, who continue to deliver
we saw the jackpot reach $100 million twice throughout
outstanding outcomes for our loyal customer base.
the year. This increase saw at least 1 in 3 Australians
Quality and First Point Resolution continue to the be the
purchase a lotto ticket, and to handle this increase,
driving focus for the team with our customer satisfaction
a number of system performance changes were
ratings consistently over 90% for both phone and chats,
implemented, and internal processes overhauled, to
with 53% of our email received answered in under an
ensure better scalability during these periods of peak
hour. During a big jackpot period, it is paramount that
demand.
our customers are assisted in a timely manner to ensure
they can complete their purchase with as little hassle as
possible.
The team is also involved with assisting our Powered by
Jumbo customers to ensure they are using the system
to its full potential, offering training and troubleshooting
86% of all calls received throughout the year have been
common questions.
answered within 15 seconds.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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Responsible Play
As a responsible business, Oz Lotteries always wishes to
remain a fun and enjoyable place to manage your online
lottery purchases. Our Customer Support team is trained
to assist and spot warning signs of problem play.
Our team is able to offer practical solutions to assist the
customers who require professional help in this area, as
well as facilitating various restrictions on their accounts.
Jumbo Interactive
Customer Support is
a dynamic and agile
team of experienced
professionals with
an empathetic and
human touch.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
are Winners
Grinners!
Charity Lottery Winners
This year Oz lotteries has continued its strong relationship with some of Australia’s major
charities, including signing a new agreement with RSPCA. Our customers continue to
support these charities with strong sales, and this year three of our customers have seen the
Aussie dream of owning their own home come true, with two properties being won on the
Gold Coast and one on the stunning Sunshine Coast. Last month also saw one lucky Act
for Kids supporter take first prize in Draw 79, winning himself a luxurious Mercedes E-Class
Saloon.
Draw 417 Nov 2018
Sunshine Coast Home Prize
valued at $1,194,870
Draw 188 Aug 2018
Sanctuary Cove Home
Prize valued at $1,294,572
Draw 823 Dec 2018
Southport Apartment
valued at $575,278
Draw 79 Jun 2019
Mercedes E Class Saloon
valued at $97,376 + $2,500
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
25
Commercial Lottery Winners
This year 11 customers have had the dream of winning the jackpot
come true; 5 of these customers winning over a million dollars. Oz
$40 Million Powerball!
A foster father from South Australia was the sole winner of February’s
Lotteries paid a total of $194,473,643 in prizes this year; an increase
$40 Million Powerball jackpot.
of over $68 million in prizes compared to last year - that’s a lot of
lucky Oz Lotteries customers!
He explained that he checked the winning Powerball numbers
following the draw, but couldn’t quite believe it when they matched.
The Customer Support team contacts all of our large prize winners,
So he woke his wife and daughter and asked them to check the
to help them with the process of withdrawal. Vikki says, “It’s such
numbers.
an awesome call to make, I get to change someone’s life, they can
finally pay off that mortgage or go on that dream holiday. We all
get so excited to make these calls” - Vikki Brown, Customer Support
Team Leader
Over the last year, the interest in the raffle game Lucky Lotteries
Mega has continued to increase as the draw has jackpotted to over
$90 million (at 16 August 2019). This year 15 Oz Lotteries customers
have walked away with first prize amount of $200,000.`
$50 Million Powerball!
As the Powerball Jackpot reached $100 million for the first time
in August 2018, customers came to play. One lucky Oz Lotteries
customer was fortunate to take away a share in the prize pool
winning himself $50 million dollars. The young Melbourne man kept
his cool as we explained to him that he had won $50 million. The
young winner said he knew he had become a multi-millionaire when
he checked his ticket last night before bed.
“I’m trying to remain as calm as possible! I only bought this entry last
night on the Oz Lotteries app before the draw closed.”
“I’m going to do the right thing. This win is life-changing! I’m going to
look after my whole family – invest money in property and shares. It
will make a massive difference to a lot of people.”
“They thought I was pulling their chain! We still can’t believe it.”
Happily enough, we told him he was definitely the winner, to which he
replied”You’ve made our day. Actually, you’ve made our whole life!”
Oz Lotto $7.5 million
A regular Oz Lotteries customer “had a feeling” he was going to
win the lottery while washing up, which prompted him to log in
and purchase a ticket just before the draw closed. He purchased a
System 11 ticket, choosing his children’s birthdays for numbers, rather
than his usual numbers.
Because he wasn’t playing his usual numbers when he saw the Oz
Lotteries results he didn’t immediately realise he’d won!
Saturday Lotto $2 million
A man in his 60’s from Cronulla took home a share in the $20 million
Saturday Superdraw. He thought the news was a joke after receiving
the confirmation call on April Fools Day. When asked if he thought
it would be possible to win, he said “No, not at all. I’ve never won
anything like this in my life. I’m in a bit of a shock.”
It’s such an awesome
call to make, I get to
change someone’s life,
they can finally pay off
that mortgage or go
on that dream holiday.
We all get so excited to
make these calls.
Vikki Brown,
Customer Support Team Leader
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Leadership
Team
has amassed unique digital experience in
the world lottery industry.
Jumbo has a stable leadership team that
Mike Veverka
David Barwick
Bill Lyne
Chief Executive Officer & Executive
Chairman and Non-Executive Director
Non-Executive Director and Company
Director (BEng (Hons))
Secretary (BCom, CA, FCIS, FGIA, FAICD,
Mike Veverka is CEO and founder of Jumbo
in the management and administration
David Barwick has over 40 years experience
FFIN)
Interactive. He has a proven track record
of publicly listed companies in Australia
Bill Lyne is the Principal of Australian
in business and computing, establishing
and North America. During this period
Company Secretary Service that provides
several successful startups to meet new
David has held the positions of Chairman,
secretarial, corporate compliance and
consumer demands for online products.
Managing Director or President of over 30
governance services to public company
His entrepreneurial flair and ambition for
public companies with strengths in strategic
clients in a wide range of industries. Prior to
innovation were displayed at the age of
planning, restructuring and financing
this, Bill was Company Secretary and CFO
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.
of First Australian Building Society, having
previously spent many years in credit and
lending positions in merchant banking.
Bill holds a Bachelor of Commerce and
is a Chartered Accountant. He is a Fellow
of the Institute of Chartered Secretaries &
Administrators (UK), Governance Institute
of Australia, and the Australian Institute of
Company Directors. He is also a fellow of
and has life membership with the Financial
Services Institute of Australasia.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
27
Giovanni Rizzo
Non- Executive Director
Giovanni Rizzo is a specialist in the gaming
industry with over 20 years’ experience in
various management roles of large listed
lottery, casino and electronic gaming
machine businesses in South Africa,
Canada and Australia. Most recently,
Giovanni was Head of Investor Relations at
Tatts Group Limited, Australia’s exclusive
operator of licenced lotteries. Giovanni
holds a Bachelor of Commerce (Honours)
in Finance and Audit and is a Chartered
Accountant in Australia, New Zealand and
South Africa.
Corporate Governance. He is a Fellow
remaining secure for customer transactions.
of the Governance Institute of Australia
He is responsible for the adaptation of the
and a Fellow of the Institute of Chartered
successful Australian OzLotteries.com
Secretaries and Administrators (UK). David
website to other markets and ensuring
brings a wealth of commercial expertise to
capabilities for customer purchases on any
Jumbo Interactive as Chief Financial Officer.
device demands that websites continually
evolve as new mobile and computer
products are released to market with
unprecedented frequency.
Brad Board
Chief Operating Officer
Brian J. Roberts
Having joined Jumbo in 2001 Brad has
been actively involved in Jumbo’s evolution
and growth into the leading digital lottery
business it is today. Brad has significant
lottery and e-commerce experience and
ensures that the brand, digital experiences
and service offerings provided by Jumbo
effectively engage and satisfy it’s
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
spans 25 years in the banking industries of
South Africa, New Zealand and Australia,
and small cap and SME environments.
David holds a Bachelor of Commerce,
a Master of Business Administration,
an Associate Diploma in Banking, and
a Graduate Diploma of Advanced
Xavier Bergade
Chief Technology Officer
As Chief Technology Officer, Xavier ensures
that Jumbo’s technology services are
continually improving and innovating while
28
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
People of
Jumbo
and friendly environment.
through our quarterly recognition program, further building on our fun
Written by Abby Perry
Head of Human Resources
Workplace Culture
Jumbo is committed to providing a supportive and collaborative
environment that fosters a positive and strong culture for our people to
thrive. The Jumbo team comprises of individuals with a diverse range
of cultural backgrounds and professional experience. Our culture
enables us to attract and retain the best people by ensuring they feel
important and valued. Our employee pulse surveys offer an avenue
for continuous feedback, enabling us to focus our efforts on improving
areas that are important to our people. The use of online feedback
tools has supported our people and leaders with new and efficient
ways of communicating, elevating engagement and performance.
We acknowledge and show appreciation to individuals and teams
Employee Wellbeing
Jumbo has taken a holistic view of wellbeing, supporting employees
in their health and careers. We have implemented strategies and
activities to improve wellbeing, including exercise, diet and mental
health. These initiatives include free breakfast and lunch, subsidised
wellness activities, company sponsored participation in sporting and
charity events, and a variety of social activities. Our resident Guide
Dog in training has worked wonders with our people, making them
happier, reducing stress levels and creating a comfortable and flexible
environment. We offer support services for employees that may be
experiencing difficulties, whether at home or at work, by providing
company funded professional counselling services. All employees are
encouraged to take ownership for their health and wellbeing, backed
up by Jumbo’s safe and healthy work environment.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
29
8%Sales /
Marketing
65%Product /
Development
Employees by
Function
74%
Male
Employees by
Gender
Employees by
Age Diversity
18%Corporate /
Operations
9%Customer
Support
26%
Female
0%
25%
50%
75%
100%
Nurturing Our People
Our people are pivotal to our success and we encourage and nurture
the development of employees through our professional learning
pathways, building our organisational capability and enhancing
productivity and engagement. Employees are encouraged to
participate in Jumbo’s development program, supported by various
training possibilities including professional certification, conference
attendance, internal and external workshops, and an abundance of
online training course options. Our established graduate and mentor
programs provide a platform for people to realise their potential,
achieve their goals and deliver greater performance. We invest in the
latest technology and tools, encouraging employees to be creative
and continuously learning in an effort to drive innovation and to
support our people’s career aspirations.
Our culture enables us
to attract and retain the
best people by ensuring
they feel important and
valued.
Employees byYears of Service30%Under 2 years35%2 - 4 years35%5 years & over29%Under 30 years42%30 - 39 years29%40 years & over 30
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Corporate
Responsibility
Business sustainability through environmental,
social and governance responsibility
Jumbo is committed to developing and operating the world’s best
digital lottery experience in a sustainable and responsible manner,
whilst creating lasting value for all of our stakeholders.
their financial means. As part of our commitment to responsible
gambling, we comply with each State and Territory’s Responsible
Gambling Code of Practice. This is underpinned by our Responsible
Gambling Policy which is available on the website
ozlotteries.com/about/responsible-gaming.
Our responsibilities extend to our customers, staff, shareholders,
suppliers, government, communities, and the environment in which
Jumbo had no reported instances of problem gambling by its
customers in FY19.
we operate.
Environment
Jumbo is a leading developer and operator of a world-class digital
lottery experience.
Being an almost exclusively digital operation, Jumbo’s
environmental impacts are far less significant compared to more
tangible products, which require manufacturing and transportation.
Accordingly, Jumbo is a non-carbon intensive office and technology
based business.
Our relatively small environmental footprint arises from the energy
used by our few offices, and from consumables.
— Our Brisbane head office has a 4.5 star NABERS energy rating
We are also committed to the protection of the Personal Information
of individuals and are bound by the Australian Privacy Principles
(APPs) under the Privacy Act 1988. To ensure that Jumbo protects its
customers’ privacy in accordance with the APPs, we are committed
to ensuring the collection, accuracy, storage, security, use, disclosure
and destruction of Personal Information is compliant with the APPs.
We ensure our employees received training in the proper handling of
Personal Information, and access to information held by us is limited
to authorised people on a strict need-to-know basis relevant to
their roles and responsibilities. Our Privacy Policy is available on the
website ozlotteries.com/about/privacy.
Jumbo did not have any eligible data breaches to report under the
Data Breach Notification Scheme, which falls under Part IIIC of the
Privacy Act 1988, in FY19.
Providing digital tickets to our customers, rather than paper, assists
Workplace
them in reducing their own environmental footprints.
Community and Customers
Our people are the key to our success. They reflect our culture
and values and their diverse capabilities enable us to achieve
exceptional performance. We recognise that having a diverse
and inclusive workplace leads to better business outcomes and is
The lottery industry is an essential contributor to the community.
essential for our long term sustainability.
There is a strong social responsibility aspect to lotteries, particularly
in the charity lottery space.
Workplace Giving
A snapshot of our charity partners include the Mater Foundation,
which raises funds for to revolutionise the community through
investment in care, education, and world-class medical research.
The Endeavour Foundation supports people with an intellectual
disability to live their best life. Jumbo supports these charities by
casting a wider net for their fund raising activities, and giving them
access to customers they may not otherwise reach.
The sense of charity and community is instilled into Jumbo and our
people. There is a plethora of fund-raising activities and charities
Jumbo provides contributions to, both financial and time. Our
people have established an internal charity fund, ‘Just Giving’, which
receives voluntary donations from both our people and Jumbo, and
our people decide on which charities to support for the benefit of the
local communities in which we live, work and play.
In contrast to more aggressive forms of gaming, lotteries are
not associated with problem gambling issues. Additionally, the
In FY 2019, the following charities were supported:
— RSPCA – fundraising through their RSPCA Cupcake Day
substantial tax revenue from lotteries contributes to a host of social
— Movember Foundation – fundraising
services.
Jumbo also provides services to our regional neighbours in Fiji,
Samoa and the Cook Islands, enabling these countries to raise funds
— Cancer Council – donation from Just Giving
— Fiver for a Farmer – donation from the Just Giving
for their local communities.
— Share the Dignity – donation from the Just Giving
Jumbo is committed to providing a safe environment for lottery
players to buy and manage their lottery entries online, and does
— National Breast Cancer Research Centre – donation from Just
Giving
not encourage excessive gambling or extending customers beyond
— Alzheimers Australia – donation Just Giving
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
31
— Big Aussie BBW – donation from Just Giving
compliance with the third edition of the ASX Corporate Governance
— Aunties and Uncles QLD (Brisbane) - donation from Just Giving
— Mia Wilkinson Trust (Brisbane) - donation from Just Giving
Council’s Corporate Governance Principles and Recommendations.
The CGS is also available on our website jumbointeractive.com/
governance/corporate_governance_statement.pdf.
— Children’s Hospital Foundation (Brisbane) - donation from Just
We have established a to support our business and help us deliver
Giving
on our strategy.
A selection of FY19 sponsorships include:
— Platinum sponsor of the World Lottery Association
— Gold sponsor of the Asia Pacific Lottery Association conferences
— Sponsor of the UK Lottery Council’s – sponsor and presenter at
their annual conference in March 2019
— Sponsor of Kedron Wavell Services Hockey – support of the
Masters hockey division
— 24 Hours of Lemons
— World Youth
— Climb for Cancer
— Fiji Open Tennis tournament
— Fiji Sports Awards - annual
Women in Lottery Leadership
In addition to the above, Jumbo has provided an inaugural
scholarship grant of US$50,000 over five years to the Women’s
Initiative in Lottery Leadership (WILL)
womeninlotteryleadership.com.
Our relationship with our people is under pinned by our Code of
Conduct which defines our workplace principles.
Workplace Culture
Governance Framework
Shareholders
Jumbo Interactive Limited Board of Directors
Oversees management on behalf of shareholders
Audit & Risk
Management
Committee
Oversees financial
reporting and risk
management
Nomination and
Remuneration
Committee
Considers Board
composition and succession
planning, and oversees the
remuneration an incentive
framework for all our people
Chief Executive Officer
Responsible for the day-to-day management of Jumbo and the
implementation of our strategy
Key Management Personnel
Responsible for running the business and delivering on our
strategic objectives
Jumbo is committed to providing a supportive and collaborative
environment that fosters a positive and strong culture for our people
to thrive. Our people are pivotal to our success and we encourage
and nurture the development of employees through our professional
Our Board
learning pathways, and we have implemented strategies and
activities to improve wellbeing. These initiatives include free
breakfast and lunch, subsidised wellness activities, company
As at the date of this report, our Board comprises four Directors
– three independent non-executive Directors and one executive
Director being Jumbos’ founder and CEO, Mike Veverka. Details
sponsored participation in sporting and charity events, and a variety
of the Directors’ qualifications and experience are in the Board of
of social activities.
Directors section of the Directors’ Report.
Our Gender Diversity Policy has an objective of 40% female
employees by 2023. We continue our policy to source the best
possible candidate for the position as and when it becomes
available.
Jumbo has experienced rapid growth over the recent financial year.
To meet the increasing demands of being a significantly larger
company, we expanded the Board with the appointment of Giovanni
Rizzo as an independent non-executive Director on 1 January 2019.
We have a good mix of youth, experience and ‘grey hair’ to ensure
innovation, practicality and temperament.
We are actively considering candidates to expand the Board
by an additional independent non-executive Director, with an
A monthly Company Pulse measures the level of happiness of staff
between 1 and 5, with 5 being Very Happy, and the average for FY19
is 4.15 (2018: 4.15).
Further information can be found under the section “People of
Jumbo”.
Governance
Our Corporate Governance Statement in this Annual Report
describes in full our approach to corporate governance and
appointment expected in FY20.
The Board has two standing committees – the Audit and Risk
Management committee and the Nominations and Remuneration
Committee. The committees assist the Board by focusing in
more detail on specific areas of our operations and governance
framework.
32
32
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Financial
Report
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
33
FY 2019 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)
EBITDA margin (%)
EBIT margin (%)
FY2019
320,659
65,212
20.3%
38,219
26,420
-
26,420
40,188
36,755
84,583
77,378
61,780
2015.0
34.0
309.8%
43.9
34.1%
62.1
1,251.8
61.6%
56.4%
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
48.8%
40.8%
Variance %
75.1%
64.0%
(1.4ppt)
123.5%
124.8%
n/a
117.9%
107.0%
126.3%
76.5%
63.9%
86.5%
303.0%
(4.2%)
208.5ppt
87.6%
8.4ppt
14.1%
360.4%
12.8ppt
15.6ppt
Highlights
A significant increase in both customer activity and engagement
— Dividends paid 34.0 cents (fully franked) – 4% decrease
(new and active numbers) as well as large jackpot activity (number
— Share Price $20.15 – 303% increase
and average value) has seen a substantial increase in Total
— Total Shareholder Return 310% - 209ppt increase
Transaction Value (TTV) and Revenue, together with a continued
focus on costs, has resulted in a considerable increase in Net Profit
After Tax.
5 year Total Transaction Value and average large jackpots
FY2020 outlook
— There has been a strong start to the year from 5 large jackpots in
July, including a record $110 million for Powerball, and the sale of
the Set-for-Life product commencing on 15 August.
s
n
o
i
l
l
i
m
$
350
300
250
200
150
100
50
0
320.7
— The burgeoning SaaS business segment has received a boost
by Endeavour Foundation signing an agreement on 16 August to
130.0
25.3
FY15
153.3
28.8
FY16
145.3
24.2
FY17
183.0
28.4
FY18
38.4
FY19
licence the PBJ software
— Revenue $65.212 million – 64% increase
— Net Profit After Tax – Continuing operations $26.420 million –
125% increase
— Net Profit After Tax – Overall operations $26.420 million – 118%
increase
34
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Directors’ Report
The Directors of Jumbo Interactive Limited (Company), present
their report on the consolidated entity (Group), consisting of Jumbo
Interactive Limited and the entities it controlled at the end of, and
during, the financial year ended 30 June 2019.
Special responsibilities: Chief Executive Officer.
Australian Listed Company Directorships held in the past three
years: None.
Interest in shares and options: 9,656,848 ordinary shares and nil
options over ordinary shares in Jumbo Interactive Limited.
Board of Directors
The following persons were Directors of the Company during the
whole of the financial year and up to the date of this report, unless
otherwise stated:
David K Barwick
Chairman, Independent Non-Executive Director
Mike Veverka
Managing Director and Chief Executive Officer
Bill Lyne
Independent Non-Executive Director
Giovanni Rizzo
Independent Non-Executive Director (appointed 1 January 2019)
Bill Lyne
Experience: Appointed as a board member on 30 October 2009.
Bill Lyne is the principal of Australian Company Secretary Service,
providing company secretarial, compliance and governance
services to public companies. He is currently company secretary of
three other publicly listed companies, is a former secretary and/or
director of a number of other listed companies, and has a wealth of
experience in corporate governance principles and practices.
Bill is a fellow of Governance Institute Australia and has been a
presenter at GIA courses in company secretarial practice.
Qualifications: Bachelor of Commerce; Chartered Accountant.
Special responsibilities: Chair of the Audit and Risk Management
Committee; member of the Nomination and Remuneration
Details of the experience, qualifications and special responsibilities,
Committee; and Company Secretary.
and other Directorships of listed companies, in respect of each of
the Directors as at the date of this Directors’ Report are set out in the
pages as follows:
Australian Listed Company Directorships held in the past three
years: None.
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.
Special responsibilities: Chairman (Non-Executive); member of
the Nomination and Remuneration Committee; and member of the
Audit and Risk Management Committee.
Australian Listed Company Directorships held in the past three
years: None,
Interest in shares and options: None.
Interest in shares and options: None.
Giovanni Rizzo
Experience: Appointed as a board member on 1 January 2019.
Giovanni Rizzo is a specialist in the gaming industry with over 20
years’ experience in various management roles of large listed lottery,
casino and electronic gaming machine businesses in South Africa,
Canada and Australia. Most recently, Giovanni was Head of Investor
relations at Tatts Group Limited, Australia’s exclusive operator of
licenced lotteries.
Qualifications: Bachelor of Commerce (Honours) in Finance and
Audit; Chartered Accountant in Australia, New Zealand an South
Africa.
Special responsibilities: Chair of the Nomination and Remuneration
Committee; member of the Audit and Risk Management
Committee.
Mike Veverka
Experience: Mike Veverka has been Chief Executive Officer and
Director of Jumbo Interactive Limited since the restructuring of
Australian Listed Company Directorships held in the past three
years: None.
the Company 8 September 1999. Mike was instrumental in the
Interest in shares and options: None.
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.
Company Secretary
Mr Bill Lyne was appointed Company Secretary 19 October 2007.
Refer to the information on Directors for details of experience and
qualifications.
Principal Activities
The principal activity of the Group during the financial year was the
retail of lottery tickets through the internet and mobile devices sold
Qualifications: Bachelor of Engineering (Hons).
both in Australia and eligible overseas jurisdictions.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
35
There were no significant changes in the nature of the Group’s
- South Australia - five years to 1 May 2022 and continuing thereafter
principal activities that occurred during the financial year.
with termination by either party giving 12 months written notice;
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 38 to 41 of this report.
Dividends
A fully franked final dividend of 11.0 cents per fully paid ordinary
share for the year ended 30 June 2018 was paid on 21 September
2018, and a fully franked interim dividend of 15.0 cents per fully paid
ordinary share for the year ended 30 June 2018 was paid on 22
March 2019.
A fully franked special dividend of 8.0 cents per fully paid ordinary
share was paid on 22 May 2019.
- Northern Territory - five years to 1 May 2022 and continuing
thereafter with termination by either party giving 12 months written
notice; and
- Victoria (Fiji) - five years to 1 May 2022 and continuing thereafter
with termination by either party giving 12 months written notice.
The changes to Powerball in April 2018 had the expected effect of
increased large jackpot activity with 27 large Powerball jackpots
and a peak of $100 million compared to FY2018 of 15 and $55
million respectively. In FY2019, we have already seen three and a
record $110 million. The addition of Set-for-Life to the product range
occurred on 15 August 2019.
The domestic internet market is currently estimated to be ~23%
of the total domestic lottery market, and increasing at ~3% to ~4%
On 16 August 2019, the Directors have declared to pay a fully franked
p.a. (the five year CAGR to FY2019 is 21.5%). This compares to more
final dividend for the financial year ended 30 June 2019 of 21.5 cents
mature overseas markets such as UK and Finland where the internet
per fully paid ordinary share (2018: 11.0 cents per fully paid ordinary
market is estimated to have reached ~21% and ~48% respectively.
share), to be paid on 20 September 2019.
Further details of dividends provided for or paid are set out in note 14
and added one charity during the financial year for a current total
to the Consolidated Financial Statements on page 79.
of six charities, and increased sales by 27% in FY2019. At least one
The Company started selling Charity lottery tickets in July 2015
State of Affairs
Changes in the state of affairs are set out on page 41 and form part
of the Directors’ Report for the financial year ended 30 June 2019.
further charity is expected to be added in FY2020, and good growth
expected to continue.
The Company is well placed to continue with its medium to long
term plans with confidence to grow the internet lottery business
segment in Australia.
Events after the reporting date
Apart from (i) the licencing agreement signed with Endeavour
In November 2018, the Company signed its first customer for the new
Foundation, and (ii) the final dividend declared, as at the date of
established Software-as-a-Service (SaaS) business segment to
this Directors’ Report, the directors are not aware of any matter or
licence its lottery platform and services (PBJ - PoweredByJumbo),
circumstance that has arisen that has significantly affected, or may
which went live in June 2019. A further customer was signed on 16
significantly affect, the operations of the Company in the financial
August 2019, and the company expects to sign at least one further
years subsequent to 30 June 2019.
customer during FY2020. The Company sees opportunities in both
the national lottery and charity lottery markets and in both Australia
The above items are not recognised in the financial statements 30
and overseas, for the SaaS business segment.
June 2019.
Likely developments, key business strategies and future
prospects
The Company’s historical long, strong relationship with Tatts
continues with Tabcorp following the merger of the companies in
The SaaS business segment is also well placed for expected strong
growth over the medium to long term.
Environmental regulation
The Group’s operations are not regulated by any significant
December 2017. Tabcorp maintain their strategically important,
environmental regulation under a law of the Commonwealth or of a
substantial stake in the Company which is currently at 11.6%.
State or Territory.
The following lottery agreements are held with Tabcorp:
- 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;
36
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Directors’ meetings
The number of meetings of the Board of Directors (including board
committees) held during the year ended 30 June 2019 and the
number of meetings attended by each Director is set out in the table
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
Giovanni Rizzo
16
16
16
8
16
16
15
8
* Board meetings include Circulating Directors’ Resolutions
5
-
5
-
5
-
5
-
7
-
7
-
7
-
7
-
Share options
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
18 November 2015
18 November 2020
15 November 2017
15 November 2022
$1.75
$3.50
250,000
775,000
1,025,000
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 2019, the following
ordinary shares of Jumbo Interactive Limited were issued on the
exercise of options granted.
Number of
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.
Date options granted
Issue price of share
shares issued
On the advice of the Audit and Risk Management Committee,
the Directors are satisfied that the provision of non-audit services
by the auditor, as set out above, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the
following reasons:
— all non-audit services have been reviewed by the Audit 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.
13 September 2013
6 November 2013
18 November 2015
13 July 2017
15 November 2017
$4.00
$4.00
$1.75
$2.37
$3.50
400,000
150,000
50,000
3,474,492
3,675,000
7,749,492
No amounts are unpaid on these shares.
During or since the financial year ended 30 June 2019, there were no
options 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.
Indemnifying officers or auditor
During the financial year, the Company paid a premium in respect
of a contract insuring directors, secretaries and executive officers of
the Company and its controlled entities against a liability incurred
as director, secretary or executive officer to the extent permitted
by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the
premium.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
37
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 53.
This Directors’ Report is made in accordance with a resolution of the
Directors of the Company.
David K Barwick
Chairman
Brisbane
22 August 2019
Details of the amounts paid to BDO for non-audit services
throughout the year are set out below:
Consolidated
2019
$
2018
$
Taxation services
Tax compliance services - tax returns
43,000
42,000
Transfer pricing
Other tax advice
Total taxation services
Other services
Accounting advice
Accounting services
Total other services
Total fees for non-audit services
-
15,000
6,000
7,000
49,000
64,000
5,250
5,000
10,250
59,250
-
4,500
4,500
68,500
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
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 46 to 52, and forms
part of the Directors’ Report for the financial year ended 30 June
2019.
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.
38
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
FY2019
320,659
65,212
(2,079)
63,133
1,936
(26,850)
38,219
(11,799)
26,420
-
26,420
40,188
36,755
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
Variance %
75.1%
64.0%
2.0%
67.3%
60.9%
22.9%
123.5%
120.6%
124.8%
(>100.0%)
117.9%
107.0%
126.3%
The Company achieved a substantial increase in TTV and Revenue
Lotteries as a result of the increased TTV. The revenue margin is
due mainly to increased customer activity stemming from the
affected by product mix,driven by large jackpot activity, and was
release of the new software platform together with increased
lower at 20.3% (2018: 21.7%).
large jackpot activity (both number and average value). During
the financial year, the number of new online accounts increased
Cost of sales increased by $41,000 or 2.0% to $2,079,000 mainly due
by 106.6% to 444,004 (2018: 214,908) and number of active online
to:
customers increased by 74.1% to 761,863 (2018: 437,540), while
the number of large jackpots increased by 53.1% to 49 (2018: 32)
and average value increased by 35.2% to $38.4 million (2018:
$28.4million). The increase in expenses is largely related directly to
the increase in TTV and Revenue such as customer acquisitions,
electronic ID verification, and merchant fees which accounted for
~$3,767,000 of the increase. The overall increase in Net profit after
tax resulted from an increase in TTV and Revenue with continued
management of costs.
The Company continues to invest in the three main pillars that
support the ongoing growth of the Company with $4,839,000 (2018:
$4,567,000) on its proprietary software platform (intangible assets),
$6,956,000 (2018: $4,637,000) in marketing activities primarily to
— 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 0.5ppt to 0.6% from 1.1%.
Other income, being mainly interest on cash and cash equivalents,
increased by $733,000 or 60.9% to $1,936,000 largely as a result of:
— $604,000 or 70.1% increase in interest on cash and cash
equivalents for Australia Lotteries and Corporate through higher
average balances which outweighed the lower average interest
rates (see note 17 (ii) for details); and
— $136,000 or 52.4% increase in foreign currency gains
Expenses increased by $5,011,000 or 22.9% to $26,850,000 mainly in
relation to the (i) increase TTV and Revenue and (ii) increase in share
acquire new and retain existing customers, and $8,731,000 (2018:
activity:
$8,119,000) on employees who provide the software development
and marketing skills, customer support services, and management.
Comparative analysis
Compared to FY2018:
TTV increased $137,513,000 or 75.1% to $320,659,000, principally due
to:
— $137,462,000 or 75.4% increase to $319,730,000 in Australia
Lotteries mainly as a result of both increased customer activity
and large jackpot activity.
— $4,421,000 or 23.5% increase in Australia Lotteries largely from
an increase in marketing costs of $2,340,000 and merchant fees
$1,321,000 in administrative expenses;
— $33,000 or 8.3% increase in All Other segments mainly from a
decrease in administrative expenses of $36,000; and
— $597,000 or 22.9% increase in Corporate principally from an
increase in employee benefits of $362,000 and an increase in
share registry expenses of $125,000 included in administrative
expenses
NPBT of continuing operations increased $21,118,000 or 123.5% to
$38,219,000, principally due to:
Revenue increased $25,436,000 or 64.0% to $65,212,000 due mainly
— $21,455,000 or 113.2% increase in Australia Lotteries profits due
to:
to increased TTV and Revenue and costs which increased by
— $25,385,000 or 65.3% increase to $64,282,000 in Australia
23.5%;
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
39
— an increase of $18,000 or 3.7% in All Other Segment profits from
level of large jackpot activity combined to significantly increase
increased TTV/Revenue and increased expenses; and
revenue by 65.3% to $64,283,000 (2018: $38,897,000). Other income
— $355,000 or 15.3% increase in Corporate losses mainly as a result
increased by $491,000 or 53.5% mainly due to increased interest
of increased Other revenue $242,000 and increased expenses
revenue with higher average balances that outweighed lower
$597,000.
Australia Lotteries NPBT increased 113.2% or $21,455,000 due to:
— increased TTV by 75.4% or $137,462,000 and Revenue and other
income by 65.0% or $25,877,000 largely from improved customer
activity and increased large jackpot activity;
average interest rates, and foreign exchange gains. Net profit before
tax increased by 113.2% to $40,403,000 (2018: $18,948,000) due to
the higher customer activity and jackpot activity notwithstanding
an increase in expenses of 23.3% or $4,381,000, which mainly relate
directly to the increase in TTV and revenue.
— increased cost of sales by 2.0% or $41,000; and
TTV for the financial year increased by 75.4% to $319,730,000 (2018:
— increased costs by 23.3% or $4,381,000 largely due to higher
$182,268,000), which includes a 27.5% increase in charity lottery
marketing expenses $2,340,000, merchant fees $1,321,000 and
sales to $7,770,000 (2018: $6,092,000), 2.4% of TTV (2018: 3.3%).
electronic ID verification $128,000 associated with increased
TTV, and higher depreciation and amortisation of $253,000 due
mainly to increased investment in the software platform.
All Other Segments NPBT increased 3.8% or $18,000 due to:
— increased revenue of 5.8% or $51,000; and increased costs by
8.2% or $33,000.
The level of customer activity, together with large jackpot activity,
are an important driver of sales. The level over the last three
financial year periods 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 (KPI’s) are used to track
the effectiveness of these campaigns:
1. Number of new online accounts defined by new customers
creating an account in a given period.
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
Large jackpot activity
FY 2019
FY 2018
FY 2017
spent by active online customers divided by the number of active
TTV - Internet Lotteries
Australia
Reported Revenue - Internet
Lotteries Australia
Customer Activity
Number of new online
accounts
Number of active online
customers
OzLotto/Powerball
Number of jackpots1
online customers in a given period.
$319.7 m
$183.0 m
$145.3 m
4. Cost per Lead (new online accounts) defined as total cost to
$64.3 m
$39.8 m
$32.4 m
accounts in a given period. New accounts potentially become
acquire these new accounts divided by the number of new
active customers after the account has been established.
444,004
214,908
161,698
761,863
437,540
354,113
The following table summarizes the Marketing KPI’s:
49
32
31
Number of new online accounts
444,004
214,908
www.ozlotteries.com and mobile apps
FY 2019
FY 2018
Average Div 1 jackpot1
$38.4 m
$28.4 m
$24.2 m
Number of active online customers
761,863
437,540
Peak Div 1 jackpot2
$100 m
$55 m
$55 m
Average spend per active online customer
$385.44
$371.13
Aggregate Div 1 jackpots2
$1,880 m
$910 m
$750 m
Cost per lead
$13.81
$17.28
1Ozlotto/Powerball Division 1 jackpots of $15 million or more
2during the financial year period
The increased level of large jackpot activity (number and average
value) in the current financial year has contributed to higher TTV
and revenue. Although costs increased by 22.9%, this was largely
related to the increased TTV and Revenue - costs continue to be
closely managed. The higher TTV and revenue is the main reason
for an increase in profits.
Segment review
(a) Online Lottery Segment
The 106.6% increase in new online accounts and 74.1% increase in
active online customers are due mainly to the release of the new
software platform. This enabled increased marketing activity on the
back of a substantial increase in large jackpot activity (53.1% higher
in number and 35.2% higher in average value) and re-engagement
of existing customers. The 3.9% increase in average spend is largely
due to the increase in large jackpot activity charity lottery sales
growth. The 20.1% decrease in CPL is mostly due to the marketing
mix and increased interest generated by the higher large jackpot
activity.
With the operation in Germany discontinued March 2017, this
(b) All Other Segments
segment now consists of Australia and Mexico, and Mexico’s results
are included in those of Australia due to the minimal activity and no
meaningful opportunities in the foreseeable future.
This segment consists of the sale of non-lottery products and
services. TTV and Revenue and other income increased to $929,000
(2018: $878,000) and net profit before tax increased to $494,000
(2018: $476,000), due to increased revenue and lower expenses.
Australia
Improved customer activity (increased new customers and
engagement with existing customers) together with the higher
(c) Corporate
The net loss increased by 15.3% or $355,000 to NLBT $2,678,000
(2018: NLBT $2,323,000) mainly due to increased administration
40
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
expenses $626,000 or 24.4% largely from increased employee
benefits in salaries and share-based payments from the exercise
of staff options during the financial year, increased share registry
related expenses from increased share register activity and market
capitalisation, and increased directors’ remuneration with the
appointment of a further director on 1 January 2019, partly offset
by increased revenue of 84.7% or $242,000 from higher average
balances that outweighed lower average interest rates.
Summary of results
The annual comparison of results of the Company for the past five years is summarised below:
Revenue/profits ($’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 ($’000)
Return on capital employed (%) – overall operations
Return on capital employed (%) – continuing operations
Return on capital employed (%) – discontinued opera-
tions
FY2019
320,659
65,212
26,420
26,420
-
40,188
36,755
FY2019
84,583
77,378
61,780
34.1
34.1
-
FY2018
183,146
39,775
12,127
11,753
374
19,415
16,241
FY2018
47,919
47,211
33,124
25.7
24.9
0.8
FY2017
145,322
32,429
5,640
7,597
(1,957)
14,094
10,463
FY2017
43,320
42,900
30,484
13.1
17.7
(4.6)
FY2016
153,302
34,083
4,670
7,323
(2,653)
13,717
10,073
FY2016
25,306
24,696
12,949
18.9
29.6
(10.7)
FY2015
128,464
29,076
663
4,274
(3,611)
8,314
5,433
FY2015
23,778
21,681
11,639
3.1
19.7
(16.6)
1includes cash held under term deposit and customer account balances
payable (refer note 7: Cash and Cash Equivalents and Note 11: Trade and Other
Payables for details)
Share price
Earnings per share (cps)
Dividends paid per share (cps)
Share price at financial year end (cps)
Total shareholder return (%)
Shares on issue (million)
Market capitalisation ($’million)
FY2019
FY2018
FY2017
FY2016
FY2015
43.9
34.0
2015.0
309.8
62.1
1,251.8
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
Financial position
The net assets of the Group have increased by $30,167,000 from 30
Non-current assets increased by $1,687,000 to $16,126,000 due
mainly to the investment in the software platform.
June 2018 to $77,378,000.
The Group’s working capital, being current assets less current
expand and grow its current operations.
The Directors believe the Group is in a sound financial position to
liabilities, has increased from $33,236,000 in 2018 to $61,870,000 in
2019 mainly as a result of increased cash and cash equivalents of
$36,664,000. $23,385,000 of this increase came from share issues
on exercise of options.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
41
Significant changes in State of Affairs
Significant changes in the state of affairs of the Group for the
financial year were as follows:
(a) Increase in contributed equity of $23,385,000 resulting from:
– Issue of 7,749,492 shares as a result of an exercise of
options (see note 15 for details)
(b) Increase in cash of $36,664,000 resulting from:
– Cash raised from the issue of contributed equity in (a)
above
– Other activities (see Cash Flow Statement for details)
$’000
23,385
23,385
$’000
23,385
13,279
36,664
(c) Increase in non-current assets of $1,687,000 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
1,570
117
1,687
42
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Remuneration Report
Letter from the Chairman of the Nomination and
Remuneration Committee
Dear Shareholder,
On behalf of the Board of Directors and the Nomination
and Remuneration Committee, I am pleased to present our
Remuneration Report for the year ended 30 June 2019.
A: FY2019 executive remuneration outcomes
Fixed remuneration for Executives did not change during the
financial year.
Short term cash incentives of $773,355 became payable to
Executives based on the achievement of financial and non-
financial KPIs set at the start of the financial year by the Nomination
and Remuneration Committee which represents an average
achievement of 86% of target for the year.
Jumbo has enjoyed a phenomenal year of growth in FY2019 with
The Nomination and Remuneration Committee did not award any
our market capitalisation growing to $1.2 billion at year end resulting
discretionary options to Executives as the Executives are being
in our admittance to the ASX300 index for the first time. We have
moved on to the new remuneration framework.
successfully entered into a new business segment of offering
software as a service (SaaS) to licenced lottery operators which will
assist in delivering one of our strategic objectives of diversifying
our revenue stream into the future, and we continue to explore
opportunities in the USA, UK and Canada, all the while ensuring that
our core business in Australia continues to deliver record growth.
This growth together with our admittance to the ASX300 index
As at 30 June 2019, 800,000 options remain vested and exercisable
to Executives as part of discretionary awards issued in prior financial
years.
B: New Remuneration Framework
The new remuneration framework is made up of 4 key elements:
has resulted in the Board taking the decision to re-design our
— 50% of Executive remuneration is paid as a Base Salary and
remuneration approach for FY2020 and beyond. The objectives of
Superannuation. The base salary is benchmarked at the 25th
our new remuneration approach are:
percentile of a group of peer companies based on market
capitalisation which is reviewed annually;
— to make the remuneration approach and outcomes easier to
— 25% of Executive remuneration is payable as a Short-Term
understand and more transparent to shareholders;
Incentive (STI) made up of 50% cash and 50% restricted equity
— to strengthen alignment of remuneration with our strategic vision,
with a formal clawback mechanism;
with its unique challenges and opportunities, to create long-term
— 25% of Executive remuneration is payable as a Long-Term
shareholder value;
Incentive (LTI) made up of 100% restricted equity with a formal
— to attract, motivate and retain the talent that we require to
clawback mechanism;
succeed in the long-term; and,
— to create a maximum remuneration opportunity for senior
Executives that rewards them with both cash and locked-in
— Implementation of a formal minimum shareholding requirement
for Executives based on 100% of the Total Potential Executive
Remuneration Opportunity which reinforces the alignment
equity that ensures strategic decisions are focused on delivering
between the Executive team and shareholders.
long-term value rather than short-term outcomes.
One of the key outcomes of this new remuneration framework is
the abolition of discretionary options and the implementation
of short-term and long-term awards directly linked to financial
and operational performance of the business and the delivery
of increased shareholder wealth over the medium to long-term.
A further key outcome is the introduction of a formal clawback
mechanism which enables the Board to make a determination
to claw back equity issued to Executives in the event of material
misstatement of financial information, fraud, misconduct or breach
of duties.
We believe that our new remuneration approach will improve the
alignment between strategic business objectives, shareholder
returns and senior Executive remuneration. We are however acutely
aware that this new remuneration approach may need to evolve as
the business continues to grow and as such we will actively engage
with shareholders, proxy advisors and remuneration consultants
and consider their valued feedback.
Before providing a comprehensive overview of the new
remuneration framework to be applied to Executives from 1 July 2019,
below is a summary of the FY2019 remuneration outcomes for the
Jumbo Executive team.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
43
Total Remuneration Opportunity (TRO)
Fixed remuneration
(50% of TRO)
Short-term Incentive
(25% of TRO and subject to
financial/operational
hurdles)
50% of STI deferred into restricted rights/shares
(1-year time-based restriction + 1 year lock-up period)
Grant of Rights
Payment of 50%
cash STI
Vesting of Rights
One-year performance period
Two-year restriction period
Long-term Incentive
(25% of TRO and subject to
long term share price
growth)
Performance Hurdle
100% of LTI held as restricted rights
(Qualification price performance hurdle - 100% weighting = Cliff Vesting)
Exercise period to exercise
vested perfomance rights
Three-year performance period
1 Jul
2019
30 Jun
2020
30 Jun
2021
30 Jun
2022
30 Jun
2023
a. Benchmark Peer Group
The starting point of the remuneration review into Executives
knowledge, experience and skills, the magnitude of the
responsibilities and complexities associated with the role and peer
consisted of identifying a peer group of companies against which
benchmarks. Benchmarking will be set at the 25th percentile of the
Jumbo could be benchmarked to set an applicable level of Total
Jumbo benchmark peer group.
Remuneration Opportunity for Executives going forward.
The Nomination and Remuneration Committee’s objective in
total remuneration package payable to an Executive to ensure that
remuneration is to support the delivery of business outcomes that
the entire remuneration package is fair and competitive.
grow shareholder value through protecting the core Australian
national lottery business while continuing to explore value accretive
business opportunities both domestically and internationally that
c. Short-Term Incentive (STI)
Short-term awards made to Executives will comprise 25% of the
will successfully diversify our revenue stream. To fulfil this objective,
Total Remuneration Opportunity and represents two elements:
Fixed remuneration will always be considered in the context of the
we need to ensure that we can attract and retain Executives who
can execute on this strategy.
— 50% of the total STI will be payable as a cash incentive payable
as per the normal incentive payment cycle
A peer group of 56 companies within the ASX300 index was
— The remaining 50% of the total STI will be payable as restricted
selected as the benchmark group. This group is based on a
rights to shares payable on the achievement of a 2-year time-
12-month average market capitalisation within 50% to 200% of
based hurdle and subject to formal claw back provisions
Jumbo’s market capitalisation of $960 million at 31 December 2018.
At a market capitalisation of $960 million Jumbo falls in the 25th
percentile of the peer group while at a market capitalisation at 30
June 2019 of $1.2 billion Jumbo falls at the median of the peer group.
Based on the data from this benchmark peer group together with
referencing data from our independent remuneration consultants,
role complexity, and scope and availability of similar qualified
executives in the domestic market, the Total Remuneration
Opportunity for each Executive will be targeted at the 25th
percentile of executive remuneration of this benchmark group.
b. Guaranteed Base Salary and Superannuation
The fixed remuneration of Executives will consist of the cash salary,
statutory superannuation contributions and other employee-elected
salary sacrificed benefits.
Fixed remuneration will be set with reference to the Executive’s
44
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Short-term Incentive
(25% of TRO and subject to
financial/operational hurdles)
50% of STI deferred into restricted rights/shares
(1-year time-based restriction + 1 year lock-up period)
One-year performance period
Two-year restriction period
Grant of Rights
Payment of 50%
cash STI
Vesting of Rights
1 Jul
2019
30 Jun
2020
30 Jun
2021
30 Jun
2022
Two hurdle groups will be used to determine the achievement of the
— For every 1% of NPAT growth between 5.0% to 10.0% NPAT growth
total STI opportunity. The first hurdle (which represents 50% of the
over the prior financial year, 0.5% of NPAT will be allocated to the
total STI opportunity) will be tied to Jumbo’s financial performance
STI pool;
based on achievement of the STI Incentive Pool (refer below). This
— For every 1% of NPAT growth between 10.0% to 20.0% NPAT
incentive is referred to as the Financial STI. The second hurdle
(representing the remaining 50% of the total STI opportunity)
growth over the prior financial year, 0.25% of NPAT will be
allocated to the STI pool;
will be based on the achievement of annually defined KPIs for
— Total organisational pool size will be capped at 5% of annual
the Executive. These KPIs will focus on areas such as business
NPAT.
acquisitions, non-organic revenue growth and other critical business
measures. This incentive is referred to as the Operational STI.
In terms of the STI awarded as rights, the Executive’s rights vest
on a calculation schedule of receiving between 0% to 100% of their
and convert into shares after a 12-month time based qualifying
maximum potential Financial STI opportunity depending on the
period. The sale of these shares is restricted for a further 12 months,
level of NPAT profit growth achieved between 6% to 20%. As an
resulting in a total two-year lock-up period. Executives will have
example, if the total NPAT growth for a financial year comes in at
full entitlement to dividends and voting rights during the 12-month
12%, then the Executive will receive 60% of their maximum Financial
lock-up period.
STI potential.
Each Executive’s share of the total STI pool created will be based
The number of rights to be issued will be based on the 10-day VWAP
of the Jumbo share price for the period up to 30 June of each year.
Setting the annual STI Pool:
The Nomination and Remuneration Committee will set an
d. Long-Term Incentive (LTI)
Long-term equity awards made to Executives will comprise 25% of
total remuneration opportunity and represents the at-risk, long-term
equity component of the Executives remuneration package.
organisational total financial STI pool before the start of the
Equity awards will take the form of rights granted at face value
financial year based on growth from the prior financial year. This
rather than options at fair value. This ensures that shareholders
financial STI pool will be formed as follows:
clearly understand the actual cost of remuneration of Executives on
an annual basis rather than the opaque nature that options present.
Grant of Rights
Vesting of Rights
Long-term Incentive
(25% of TRO and subject to
long term share price
growth)
Performance Hurdle
100% of LTI held as restricted rights
(Qualification price performance hurdle - 100% weighting = Cliff Vesting)
Exercise period to exercise
vested perfomance rights
Three-year performance period
1 Jul
2019
30 Jun
2020
30 Jun
2021
30 Jun
2022
30 Jun
2023
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
45
Allocation of rights:
Each Executive will receive an annual grant of rights to a dollar
Our independent remuneration consultants (E&Y) provided the
Nomination and Remuneration Committee with a comparative
value equal to 25% of their Total Remuneration Opportunity with the
benchmarking analysis on non-executive director fees.
number of rights based on the 10-day VWAP period up to 30 June of
each year.
Based on this analysis using a peer group of 56 ASX listed
companies with a 12-month average market capitalisation within
The rights are exercisable into shares three years after grant and
50% to 200% of Jumbo’s market capitalisation of $960 million at
achievement of the price performance hurdle.
31 December 2018, Non-Executive Director fees currently paid to
Director’s were found to be significantly below the peer group.
At a market capitalisation of $960 million Jumbo falls in the 25th
percentile of the peer group while at a market capitalisation at 30
June 2019 of $1.2 billion Jumbo falls at the median of the peer group.
The Nomination and Remuneration Committee recommended an
increase in fees based on this benchmarking analysis together with
the increased complexity and time required to fulfil director roles.
The new fees will be benchmarked at the 25th percentile of the peer
group and be subject to shareholder approval at the Annual General
Meeting.
Due to the proposed increase in fees, and to allow for an increase in
the size of the Board, the Nomination and Remuneration Committee
has also recommended an increase in the aggregate Non-Executive
Director pool fee limit to $750,000 per annum.
Qualification price performance hurdle:
To qualify for the LTI equity award, the Jumbo share price must
outperform the historical growth rate of the ASX ‘total return’
All Ordinaries index (XAOA:ASX) in order for the rights award
to vest. If the JIN share price does not outperform the ASX All
Ordinaries growth hurdle set, no vesting occurs even if Jumbo has
outperformed its peers. By avoiding relative hurdles, which often
deliver returns to traditional LTI plan participants simply when poor
performance exceeds even poorer performance within a peer group,
wealth is created for both shareholders and Executives as a result of
the increase in Jumbo’s value as a company.
Using this methodology, Jumbo’s share price performance hurdle
will be determined in three steps:
— First, the ‘total return’ will be based on the 15-year average return
of the ASX All Ordinaries Total Return Index (XAOA:ASX);
— Second, the ‘return’ will be multiplied over a 3-year performance
period on a compound basis and applied to Jumbo’s 90-day
VWAP at the effective date to create the qualification price
performance hurdle;
— Dividends declared by Jumbo over the three-year performance
period will be added to the closing performance price to
Board Fees
— Chairman
— Member
determine if the qualification price performance hurdle is
Audit and Risk Committee Fees:
achieved.
— Chairman
— Member
Using this LTI methodology, Jumbo’s share price (inclusive of
dividends paid or declared) must outperform the historical growth
rate of the Australian share market, on a total return basis, in order
for rights to vest. As such, Executives are rewarded for the creation
of long-term wealth for Shareholders that exceeds the performance
of both peer companies and the broader share market.
Furthermore, the concept of cliff-vesting, i.e. Executives receiving
all or nothing relating to LTI awards, creates an environment where
Executives are only rewarded if Shareholders experience capital
growth and therefore wealth creation and aligns with the objective
of ensuring that our remuneration framework is transparent and
easy to understand which is not always evident in existing LTI
schemes.
e. Minimum shareholding requirement (MSR)
Executives will also be required to maintain an MSR. This will further
Nomination and Remuneration Committee:
— Chairman
— Member
We look forward to engaging with Shareholders and Proxy Advisors
in the next few months prior to our Annual General Meeting and
will consider all valued feedback regarding the changes made to
our Remuneration Framework. However, we remain confident that
Shareholders and Proxy Advisors will recognise the benefits of our
Remuneration Framework and understand the objectives we are
aiming to achieve.
Giovanni Rizzo
Chair of the Nomination and Remuneration Committee
$
188,000
100,000
15,000
10,000
15,000
10,000
align Executives to shareholders and focus Executives decision
22 August 2019
making on creating long-term shareholder value.
The MSR will be set at 100% of total annual remuneration and
Executives will be given a 5-year period to achieve this level if not
already reached.
C: Non-Executive Director Remuneration
The final part of the review into the Jumbo remuneration framework
related to the remuneration payable to Non-Executive Directors.
46
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Remuneration Report – audited
them for performance that results in long term growth in shareholder
wealth.
Contents
Section Contents
1
2
3
4
5
6
7
8
9
10
11
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
Other transactions and balances
Employment contracts
Page
46
46
47
49
49
50
50
50
51
52
52
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 2019 is set out
Refer below for further details of performance based remuneration.
KMP are also entitled to participate in the employee share option
arrangements.
The directors and KMP receive a superannuation guarantee
contribution required by the government, which is currently 9.50%
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 FY2019 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
per the above Contents. The information in the Report has been
audited.
contributions to superannuation funds. Compensation levels are
reviewed annually by the Board through a process that considers
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:
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 11: 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.
— Performance incentives are generally only paid once
Non-Executive Directors
The Board policy is to remunerate non-executive Directors at
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
be justified by reference to measurable performance criteria. The
policy is designed to attract the highest calibre of KMP and reward
of fees that can be paid to non-executive directors is subject to
approval by shareholders at the Annual General Meeting. The
total compensation for all non-executive Directors, last voted upon
by shareholders at the 2009 AGM, is not to exceed $250,000 per
annum and is set with reference to other non-executive Directors of
comparable companies. Fees for non-executive Directors are not
linked to the performance of the Group.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
47
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
Chair of Audit and Risk Management Committee
Chair of Nomination and Remuneration
Committee
Membership of Audit and Risk Management
Committee
Membership of Nomination and Remuneration
Committee
$96,360
$68,985
$15,000
$12,500
$10,000
Performance conditions linked to remuneration
The Group seeks to emphasise reward incentives for results and
continued commitment to the Group through the provision of various
“at risk” cash bonus reward schemes.
Short term incentive bonus
Incentive payments are based on the achievement of financial
targets of profit, return on equity and total shareholder return and
$7,500
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
based component, consisting of key performance indicators (KPI).
The intention of this program is to facilitate goal congruence
between executives with that of the business and shareholders.
These KPI are set annually, with a certain level of consultation with
KMP to ensure buy-in. The KPI target areas the Board believes
hold greater potential for group expansion and profit, covering
both financial and non-financial as well as short and long-term
goals. The level set for each KPI is based on a combination of an
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
desired and actual outcomes, and their efficacy is assessed in
relation to the Group’s goals and shareholder wealth before the KPI
are set for the following year.
agreements both domestically and internationally. Payments
of incentives for the 2019 financial year result were based on the
Group’s overall financial performance (with some KPIs being
achieved).
Long term incentive bonus
Options are issued to KMP as part of their remuneration at the
discretion of the Board. These options are not issued based upon
performance criteria, but are issued to increase goal congruence
between KMP, directors and shareholders.
Company Performance, Shareholder Wealth, and Directors’ and
KMP Remuneration
The 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
figures show:
TTV continuing operations ($’000s)
$320,659
$183,146
$145,322
$153,302
$128,404
FY 2019
FY 2018
FY 2017
FY 2016
FY 2015
Net profit after tax – continuing operations ($’000s)
Net profit after tax – overall operations ($’000s)
Share price at year end (cps)
Dividends paid per share (cps)
Total shareholder return (%)
Earnings per share (cps)
Return of capital employed (%)
Market capitalisation ($‘000s)
$26,420
$26,420
2015
34.0
309.8%
43.9
34.1%
$11,753
$12,127
500
35.5
101.3%
23.4
25.7%
$7,597
$5,640
266
8.5
111.2%
12.6
13.1%
$7,323
$4,670
130
3.5
57.1%
10.6
18.9%
$5,433
$663
85
3.0
(32.3%)
1.5
3.1%
$1,251,794
$271,871
$134,793
$57,284
$37,572
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
Giovanni Rizzo
Executive KMP
Mike Veverka
David Todd
Chairman, Independent Non-Executive
Director
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
48
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Details of Remuneration
Details of compensation of KMP of Jumbo are set out below:
2019
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
Giovanni Rizzo2
Other KMP
David Todd
$
110,500
$
-
489,122
299,280
83,625
26,353
26,250
-
-
-
263,846
158,025
Xavier Bergade
260,075
158,025
Brad Board
262,976
158,025
Total KMP remuneration
1,522,747
773,355
$
$
-
-
-
-
-
-
-
-
-
10,497
49,095
7,944
-
2,494
38,287
38,287
37,213
183,817
$
-
7,251
-
-
-
4,084
4,084
3,896
19,315
$
-
-
-
-
-
-
-
-
-
$
-
$
120,977
%
-
470,343
1,315,091
22.8
-
-
-
91,569
26,353
28,744
231,342
695,584
145,572
606,043
87,626
549,736
934,883
3,434,117
-
-
-
22.7
26.1
28.7
1 includes share based payments over the remaining term on those options exercised, if any, during the financial year
2appointed a non-executuve director on 1 January 2019
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
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
49
4. Cash bonuses
No cash bonuses were paid at the discretion of the Nomination and
Performace measures apply to all participants with slightly differenc
Remuneration Committee.
individual weightings. Details of these short-term incentives
Key management personnel are entitled to a short-term cash
incentive as ‘at risk’ remuneration based on performance criteria
described in section (a) to this Remuneration Report. These were
paid out on 22 August 2019.
recognised as remuneration, forfeited or available for vesting in later
years is outlined below:
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
271,440
36,750
36,750
36,750
183,750
183,750
183,750
143,325
143,325
143,325
$
27,840
14,700
14,700
14,700
$
299,280
158,025
158,025
158,025
$
6,960
3,675
3,675
3,675
$
41,760
22,050
22,050
22,050
Total
$
48,720
25,725
25,725
25,725
5. Options and rights granted as remuneration
Options are issued to key management personnel as part of their
remuneration at the discretion of the Board. The options are not
necessarily issued based upon performance criteria, but are
issued to selected executives of the Company and its subsidiaries
to increase goal congruence between executives, directors and
shareholders.
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
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.
There were no options and rights granted to key management
personnel as compensation during the reporting period.
50
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
2019
Directors
Mike Veverka
Other key management personnel
David Todd
Xavier Bergade
Brad Board
1,950,000
1,950,000
875,000
650,000
325,000
1,850,000
1,950,000
1,950,000
875,000
650,000
325,000
1,850,000
$3.538
$3.50
$3.769
$3.50
-
-
-
-
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
$
652,142
292,668
159,764
108,705
$
13,964,500
3,710,250
2,673,400
1,180,000
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
51
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:
FY2019
Balance at 1
Granted as
Exercised
Other
Balance
Vested at 30
Total vested
Total vested
July 2018
remunera-
during the
changes
at 30 June
June 2019
and exercis-
and unexer-
tion during
the year
year
during the
2019
able at 30
cisable at 30
June 2019
June 2019
Mike Veverka
1,950,000
David Todd
900,000
Xavier Bergade
1,400,000
Brad Board
350,000
4,600,000
-
-
-
-
-
(1,950,000)
(875,000)
(650,000)
(325,000)
(3,800,000)
year
-
-
-
-
-
-
-
-
25,000
25,000
25,000
750,000
750,000
750,000
25,000
25,000
25,000
800,000
800,000
800,000
-
-
-
-
-
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:
FY2019
Mike Veverka
David Todd
Xavier Bergade
Brad Board
Balance at
1 July 2018
9,851,027
20,000
300,000
10,000
10,181,027
Granted as
Issued on exercise
remuneration
during the year
of options
during the year
Other changes
during the year1
-
-
-
-
-
1,950,000
875,000
650,000
325,000
3,800,000
(2,144,179)
(845,000)
(800,000)
(325,000)
(4,114,179)
Balance at
30 June 2019
9,656,848
50,000
150,000
10,000
9,866,848
1these were mainly on-market sale of the shares that were issued on exercise of options during the year
52
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
10. 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
2019
$
2018
$
7,865
715
8,580
2,145
Salary and superannuation
84,315
82,462
11. 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 FY20191
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.
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
LIMITED
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:
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.
This declaration is in respect of Jumbo Interactive Limited and the entities it controlled during the
period.
K L Colyer
Director
BDO Audit Pty Ltd
Brisbane, 24 August 2017
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.
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 2019
53
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
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.
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.
K L Colyer
Director
K L Colyer
Director
BDO Audit Pty Ltd
BDO Audit Pty Ltd
Brisbane, 24 August 2017
Brisbane, 23 August 2018
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.
54
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
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
Governance Council’s Principles and Recommendations 3rd Edition
candidates become available:
(2014), 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
Group
Diversity
readers are welcome to refer to them. The Board will keep its
Women on the board
corporate governance practices under review.
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
2019 Actual
2022 Objective
No.
-
1
41
%
-
20
31
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
133
100
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 2017-18 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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
55
2. Structure the Board to add value
In its second Principle the Council states that companies should
The qualifications, experience and relevant expertise of each Board
member and their terms in office are set out in the Directors’ Report
“have a board of an appropriate size, composition, skills and
section of the Company’s Annual Report. All Directors, apart from
commitment to enable it to discharge its duties effectively.” Jumbo’s
the CEO, are subject to re-election by rotation at least every three
Board is so structured, and its Directors effectively discharge their
years at the Company’s annual general meeting.
responsibilities and duties for the benefit of shareholders.
The Board’s view is that an independent Director is a non-executive
The Board presently comprises three Non-Executive Directors
Director who does not have a relationship affecting independence
(David Barwick, Chairman, having served 12 years since being
on the basis set out in the Council’s guidelines and meets materiality
appointed a Director 30 August 2006, Bill Lyne, also the Company
thresholds agreed by the Board as equating to payments to them
Secretary, having served eight years since being appointed 30
or related parties of 5% of the Company’s annual revenue. The
October 2009), and Giovanni Rizzo, appointed 1 January 2019
Board considers that David Barwick, notwithstanding that he has
and the Chief Executive Officer (Mike Veverka). Fundamental
now served in the position of director for more than 10 years, Bill
requirements for Jumbo Directors are a deep understanding of
Lyne, and Giovanni Rizzo all meet this criterion. On the other hand,
business management and financial markets and such experience,
Mike Veverka is considered to not be independent because he is a
complemented where possible with industry knowledge, are
substantial shareholder in Jumbo (i.e. holds more than 5% as defined
desirable attributes for Board membership. All Board members
in Section 9 of the Corporations Act) and is an executive officer
meet the fundamental requirements, and bring a diverse range
of the Company. Consequently, the current structure meets the
of skills and backgrounds. Additionally, Mr Veverka has had a
Council’s recommendation that the majority of the Board should be
very long involvement in key sections of the Company and brings
independent, and the Board also considers the current composition
considerable relevant expertise and knowledge to the Board.
is appropriate given the Company’s and the Directors’ backgrounds
and the current and foreseeable structure and size of the Company.
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.
The Jumbo Board has established a Nomination and Remuneration
The rating scale used for level of importance and recruitment
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.
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. At the present time it
has three members, being the Non-Executive Directors, Giovanni
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
4
0
0
2
2
0
0
4
1
1
2
1
1
1
2
2
1
2
1
1
2
1
2
1
2
2
1
56
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Rizzo (as the Chair), David Barwick and Bill Lyne, all of whom
The Board will ensure that restrictions on dealings in securities are
are independent and have relevant experience and appropriate
strictly enforced.
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.
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
and present a true and fair view, in all material respects, of the
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
and Risk Management Committee’s Charter requires it to have
three non-executive Directors, with a majority being independent.
Currently, it has only three members, being the non-executive
Directors, Bill Lyne (as the Chair), David Barwick, and Giovanni
Rizzo, all of whom are independent and 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.
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.
The Board has also approved a Whistleblower Policy pursuant to
which employees who have genuine suspicions about improper
conduct feel safe to report it without fear of reprisal.
In addition, Directors recognise the legal obligations relevant to
their role and the reasonable expectations of shareholders, other
stakeholders and the wider financial community.
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 and Risk Management Committee).
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
57
5. Make timely and balanced disclosure
In this Principle the Council states that companies should “make
management through Board approved guidelines. Some of these
measures include formal authority limits for management to operate
timely and balanced disclosure of material matters concerning the
within, policies on treasury-related risk management, an information
company that a reasonable person would expect to have a material
technology plan and a business continuity plan. The CEO reports
effect on the price or value of its securities.” Jumbo is committed to
to the Board on any departures from policy or matters of concern
the promotion of investor confidence by ensuring that trading in the
that might be seen as or become material business risks. Periodic
Company’s securities takes place in an informed market. Also to
reviews evaluate and continually improve the effectiveness of risk
assist compliance with continuous disclosure requirements under
management and internal control processes.
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, 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
In addition, all changes in Directors’ interests in the Company’s
financial reporting risks.
securities are promptly reported to the ASX in compliance with
Section 205G of the Corporations Act and the ASX Listing Rules.
The Board considers that the Company does not have any material
exposure to economic, environmental and social sustainability
The Company’s Annual Report is also used to keep investors
risks which require active management. However, as the Company
informed, particularly in its review of operations and activities.
operates in an environment where some sectors of the community
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.
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.
jumbointeractive.com, which provides access to all recent ASX
announcements, shareholder updates, boardroom broadcasts,
8. Remunerate fairly and responsibly
The Council’s final Principle states that companies should “pay
notices of meetings, explanatory memoranda, annual reports and
director remuneration sufficient to attract and retain high quality
key contact details, as well as comprehensive information about the
directors and design executive remuneration to attract, retain and
Company and its products and operations. Shareholders and other
motivate high quality senior executives and align their interests
interested parties may sign up to receive email notification of all
ASX releases and other important announcements.
with the creation of value for shareholders”. To this end the Board
has established during the year a Nomination and Remuneration
Company general meetings also present a good opportunity for
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,
Committee, as noted above under Principle 2.
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
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.
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. A proposal to change the non-executive Directors’
remuneration will be submitted at the 2019 AGM.
The Company does not presently have a separate internal
audit function due to its relatively less complex financial and
organisational structures, but this is currently being reviewed. The
CEO and senior executives have operational responsibility for risk
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
58
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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,
including proposed changes to non-executive Director and KMP
remuneration for the 2020 financial year period. There are no
separate retirement benefits for non-executive Directors, other than
statutory superannuation.
Approved by the Board – 22 August 2019
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
59
Financial Report
For the year ended 30 June 2019
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 60
Page 61
Page 62
Page 64
Page 65
Page 65
Results for the year
Operating assets and
Capital and financial
Group structure
Other information
Unrecognised items
Page 66
liabilities
Page 72
risk management
Page 78
Page 84
Page 87
Page 93
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 95
Page 96
Page 100
Page 102
60
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Profit Or Loss And Other
Comprehensive Income
For the year ended 30 June 2019
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
Note
2
3
2
3
4
6
2019
$’000
65,212
(2,079)
63,133
1,936
(28)
(6,956)
(742)
(19,117)
(7)
38,219
(11,799)
26,420
-
2018
$’000
39,775
(2,038)
37,737
1,203
(28)
(4,637)
(887)
(16,280)
(7)
17,101
(5,348)
11,753
374
Profit/(loss) after income tax expense for the year attributable to the owners of Jumbo Interactive
Limited
26,420
12,127
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
(6)
-
(6)
(3)
(374)
(377)
Total comprehensive income for the year attributable to the owners of Jumbo Interactive Limited
26,414
11,750
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)
¢
43.9
42.5
43.9
42.5
-
-
¢
23.4
22.6
22.7
21.9
0.7
0.7
5
5
5
5
5
5
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 2019
61
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Financial Position
As at 30 June 2019
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
2019
$’000
2018
$’000
7
8
9
10
4
11
4
12
12
4
15
84,583
47,919
922
31
509
57
85,536
48,485
451
14,683
992
16,126
101,662
280
13,113
1,046
14,439
62,924
22,070
14,346
1,258
338
594
309
23,666
15,249
517
24
77
618
24,284
77,378
79,302
(17,399)
15,103
372
77,378
368
24
72
464
15,713
47,211
55,917
(17,399)
9,364
(671)
47,211
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
62
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Changes In Equity
For the year ended 30 June 2019
Contributed equity
CONSOLIDATED GROUP
Balance at 1 July 2017
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income, net of tax
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
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income, net of tax
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 2019
$’000
45,492
-
-
-
10,425
-
-
10,425
55,917
-
-
-
23,385
-
-
23,385
79,302
Accumulated
Profits appropriation
losses
$’000
(17,399)
-
-
-
-
-
-
-
(17,399)
-
-
-
-
-
-
-
(17,399)
reserve
$’000
15,745
12,127
-
12,127
-
(18,508)
-
(18,508)
9,364
26,420
-
26,420
-
(20,681)
-
(20,681)
15,103
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
Financial assets at
fair value through
other comprehen-
sive income reserve
$’000
(2,302)
(2,302)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$’000
304
(377)
(377)
-
-
-
-
-
-
-
-
-
(73)
-
(6)
(6)
(79)
(2,302)
$’000
1,060
-
-
-
-
-
-
-
-
-
-
644
644
1,704
1,049
1,049
2,753
$’000
42,900
12,127
(377)
11,750
10,425
(18,508)
644
(7,439)
47,211
26,420
(6)
26,414
23,385
(20,681)
1,049
3,753
77,378
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
63
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Changes In Equity
For the year ended 30 June 2019
CONSOLIDATED GROUP
Balance at 1 July 2017
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income, net of tax
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
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income, net of tax
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 2019
Total transactions with owners in their capacity as owners
losses
$’000
(17,399)
(17,399)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(17,399)
$’000
45,492
10,425
10,425
55,917
23,385
23,385
79,302
-
-
-
-
-
-
-
-
-
-
reserve
$’000
15,745
12,127
12,127
(18,508)
(18,508)
9,364
26,420
26,420
(20,681)
(20,681)
15,103
-
-
-
-
-
-
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
1,060
-
-
-
-
-
644
644
1,704
-
-
-
-
-
1,049
1,049
2,753
$’000
304
-
(377)
(377)
-
-
-
-
(73)
-
(6)
(6)
-
-
-
-
(79)
Financial assets at
fair value through
other comprehen-
sive income reserve
$’000
(2,302)
-
-
-
-
-
-
-
(2,302)
-
-
-
-
-
-
-
(2,302)
Total equity
$’000
42,900
12,127
(377)
11,750
10,425
(18,508)
644
(7,439)
47,211
26,420
(6)
26,414
23,385
(20,681)
1,049
3,753
77,378
64
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Cash Flows
For the year ended 30 June 2019
Note
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
7(b)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from repayment of loan to related party
Payments for property, plant and equipment
Payments for intangibles
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
15
14
7(a)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2019
$’000
71,556
(22,800)
1,463
(7)
85
(11,161)
39,136
-
(353)
(4,824)
3
(5,174)
23,385
(20,681)
2,704
36,666
(2)
47,919
84,583
2018
$’000
43,666
(22,200)
860
(7)
242
(5,312)
17,249
100
(96)
(4,571)
1
(4,566)
10,425
(18,508)
(8,083)
4,600
(1)
43,320
47,919
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
65
Jumbo Interactive Limited and its
Subsidiaries
Notes To The Consolidated
Financial Statements
For the year ended 30 June 2019
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 22 August 2019. 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
75
75
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
— Have been prepared under the historical cost convention
— Are presented in Australian dollars (A$), with all amounts in
the financial report being rounded off in accordance with the
Key events and transactions for reporting period
The financial position and performance of the Group was
particularly affected by the following events and transactions during
the reporting period:
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 options and resultant increase in cash (see note 15 for
dollars, unless otherwise indicated
details); and
— Where necessary, comparative information has been restated to
3. Payment of dividends (see Directors’ Report and note 14 for
conform with changes in presentation, in the current year
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 2018
— 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
66
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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 67
Page 68
Page 69
Page 69
Page 70
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
67
Note 1: Segment information
Jumbo determines and presents operating segments on a product
Other
Business activities which are not reportable in terms of AASB
8, which are currently the online sale of an internally developed
and a geographic basis as this is how the results are reported
proprietary payroll software system.
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
2018 are stated on this basis.
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
(a) Description of segments
projects.
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.
(b) Segment information
The segment information provided to the Board is as follows:
2019
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
Foreign exchange gain
Corporate
Eliminations
operations
Total
continuing
$’000
$’000
Internet
Lotteries
Australia
$’000
64,283
-
64,283
(2,079)
62,204
1,409
(28)
(6,867)
(711)
(15,597)
(7)
40,403
Other
$’000
929
-
929
-
929
-
-
(80)
(31)
(324)
-
494
-
-
-
-
-
527
-
(9)
-
(3,196)
-
(2,678)
936
(3,342)
398
-
(91)
-
527
-
-
$’000
65,212
-
65,212
(2,079)
63,133
1,936
(28)
(6,956)
(742)
(19,117)
(7)
38,219
(11,799)
26,420
-
26,420
1,463
(3,433)
398
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68
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)
-
-
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
(c) Other segment information
Geographical information
The entity is domiciled in Australia. The amount of its revenue from
external customers in Australia is $60,989,000 (2018: $36,399,000),
and the total revenue from external customers in other countries
is $6,159,000 (2018: $4,579,000). Revenues of $1,628,000 (2018:
$1,543,000) 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 $15,123,000 (2018: $13,376,000).
Non-current assets in other countries are (i) Fiji $11,000 (2018:
$17,000).
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
2019
$’000
2,324
62,888
65,212
2018
$’000
2,293
37,482
39,775
1,463
860
398
67
8
1,936
67,148
261
70
12
1,203
40,978
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.
– Employee benefit expense
7,842
7,268
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
69
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:
Sale of Goods and/or Rendering of Services
Cost of sales
– Sale of goods
– Rendering of services
Administration expenses
Revenue from sale of goods and/or rendering of services is
Depreciation of non-current assets
Consolidated
2019
$’000
870
1,209
2018
$’000
889
1,149
– Plant and equipment
139
116
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,
Amortisation of non-current assets
– Leasehold improvements
and obtain substantially all of the remaining benefits from, an asset.
– Intangibles
Indicators that control has passed includes that the customer has
Other administration expenses
(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
asset(s).
Interest
Revenue is recognised as interest accrues using the effective
interest method. The effective interest method uses the effective
– Defined contribution superannuation
expense
– Bank merchant fees and charges
– Other administration expenses
Occupancy expenses
interest rate which is the rate that exactly discounts the estimated
– Operating lease rentals minimum lease
future cash receipts over the expected life of the financial asset.
payments
Impairment of assets – domain names
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.
Note 4: Income tax
Current tax
Government grants
The export market development grant from the government is
CURRENT
recognised at its fair value when there is reasonable assurance
that the grant will be received and the Group will comply with any
Income tax liability
attached conditions.
Note 3: Expenses
Profit from continuing operations before income tax includes the
following specific expenses:
(a) Income tax expense
The components of tax expense comprise:
– Current tax
– Deferred tax
– Current tax overseas operations
Total income tax expense/(benefit) in profit
and loss
Reconciliation
40
3,254
40
3,018
889
2,987
3,966
742
-
851
1,667
3,310
887
10
Consolidated
2019
2018
Note
$’000
$’000
1,258
594
Consolidated
2019
2018
Note
$’000
$’000
4(b)
11,732
5,472
59
8
(132)
8
11,799
5,348
Profit before income tax expense
38,219
17,475
– Tax at the Australian tax rate 30%
(2018:30%)
– Income tax effect of overseas tax rates
– Share options expensed during year
– Other
Total income tax expense in profit or loss
attributable to continuing operations
11,466
5,243
30
314
(11)
(96)
193
8
11,799
5,348
70
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
(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 2018
Property, plant and equipment
– Depreciation
Accruals
Other
Balance as at 30 June 2019
-
66
-
66
-
72
-
72
-
6
-
6
-
5
-
5
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.
-
72
-
72
-
77
-
77
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
Balance at 30 June 2018
Property, plant and equipment
– Depreciation
– Amortisation
Accruals
Provisions
Other
119
159
202
416
12
908
115
166
311
444
10
Balance as at 30 June 2019
1,046
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
potential ordinary shares
(c) Profit after tax attributable to owners of the Company used as
(4)
7
109
28
(2)
138
(5)
(152)
29
58
16
(54)
115
166
311
444
10
1,046
110
14
340
502
26
992
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
2019
$’000
26,420
-
2018
$’000
11,753
374
26,420
12,127
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
71
(d) Weighted average number of shares used as denominator
1Foreign currency loss relates to the historical foreign currency translation
Consolidated
statement on loss of control through voluntary administration.
reserve in respect of Jumbo’s investment in Germany, reclassified to the income
2019
2018
Number
Number
Weighted average number of ordinary
shares used as the denominator in calculat-
ing basic EPS
60,231,699
51,851,806
Net cash inflow/(outflow) from operating activ-
ities
Adjustments for calculation of diluted EPS:
— options
1,981,119
1,819,000
Weighted average number of ordinary
shares used as the denominator in calculat-
ing diluted EPS
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activ-
ities
62,212,818 53,670,806
Net cash increase/(decrease) in cash generated
from discontinued operations
2019
2018
$’000
$’000
-
-
-
-
-
-
-
-
All outstanding options were included in the number of weighted
average number of ordinary shares used to calculate diluted
earnings per share because they are currently in-the-money.
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.
Financial information relating to the discontinued operation for the
nine month period to the date of voluntary administration is set out
below.
Revenue
Expenses
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
Income tax (expense)/benefit
Loss on loss of control after income tax
Profit/(loss) for the year from discontinued
operation
Profit attributable to owners of the parent
entity relates to:
2019
2018
$’000
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
374
-
-
-
374
Profit/(loss) from continuing operations
26,420
11,753
Profit/(loss) from discontinued operations
-
26,420
374
12,127
72
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Note 6: Discontinued operations (cont)
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 73
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
73
Note 7: Cash and cash equivalents
Note 8: Trade and other receivables
Consolidated
2019
2018
Note
$’000
$’000
(a) Cash and cash equivalents
Total cash and cash equivalents
84,583
47,919
Included in the above balance:
General account balances
73,799
40,085
Online lottery customer account bal-
ances
11
10,784
7,834
84,583
47,919
CURRENT
Trade receivables
Allowance for doubtful debts
Other receivables
Prepayments
Consolidated
2019
Note
$’000
2018
$’000
190
-
190
232
500
922
52
-
52
228
229
509
Online lottery customer account balances are deposits and prize
winnings earmarked for payment to customers on demand.
All receivables that are neither past due nor impaired are with long
standing clients who have a good credit history with the Group.
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.
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:
Consolidated
2019
2018
$’000
$’000
(b) Reconciliation of Cash Flow from Operations
with Profit after Income Tax
Profit/(loss) for the year after income tax
26,420
12,127
Non-cash flows
Amortisation
Depreciation
Impairment losses on assets
Share option expense
Other
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
139
-
1,049
2
(138)
(275)
26
54
(6)
6,026
1,698
178
5
664
116
10
644
5
43
(104)
5
(138)
(377)
205
1,143
96
6
410
Cash flow from operations
39,136
17,249
Up to one month
One month to two months
Two months to three months
3,294
3,058
Over three months
Consolidated
2019
2018
$’000
$’000
-
-
36
-
36
-
1
12
-
13
As at 30 June 2019 the Group had current trade receivables of $0
(2018: $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.
74
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Note 9: Property, plant and equipment
Plant and equipment are depreciated using the straight-line
method to allocate their costs, net of their residual values, over their
Consolidated
estimated useful lives.
Plant and equipment–at cost
Accumulated depreciation
Leasehold improvements–at cost
Accumulated amortisation
Total property, plant and equipment
2019
2018
$’000
$’000
1,741
1,511
(1,430)
(1,292)
311
661
(521)
140
451
219
542
(481)
61
280
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:
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.
Movements in Carrying Amounts
Plant and
Leasehold Im-
equipment
provements
Consolidated Group
$’000
$’000
2018
Balance at the beginning
of year
Additions
Disposals
Depreciation/amortisation
expense
Carrying amount at the end
of year
2019
Balance at the beginning
of year
Additions
Disposals
Depreciation/amortisation
expense
Carrying amount at the end
of year
240
96
(1)
(116)
219
219
234
(3)
(139)
311
101
-
-
(40)
61
61
119
-
(40)
140
Total
$’000
341
96
(1)
(156)
280
280
353
(3)
(179)
451
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
75
Note 10: Intangible assets
Goodwill
Accumulated impairment losses
Net carrying value
Intellectual property
Accumulated impairments loss
Net carrying value
Consolidated
2019
2018
$’000
$’000
3,687
(855)
2,832
53
(23)
30
3,687
(855)
2,832
53
(23)
30
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
Website development costs
32,364
27,524
indicators of impairment and then tests whether non-current
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
(21,390)
(18,128)
10,974
9,396
assets have incurred any impairment in accordance with the
accounting policy.
133
(133)
-
914
(72)
842
63
(58)
5
133
(133)
-
914
(72)
842
63
(50)
13
14,683
13,113
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.
76
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
(a) Movements in carrying values
Consolidated Group
Goodwill
property
costs
Software
names
$’000
$’000
$’000
$’000
$’000
Intellectual
development
Domain
Website
2018
Balance at the beginning of the year
2,832
30
Additions acquired
Additions internally developed
Impairments
Amortisation charge
Effects of movements in foreign exchange
Closing value at 30 June 2018
2019
Balance at the beginning of the year
Additions internally developed
Amortisation charge
Effects of movements in foreign exchange
-
-
-
-
-
2,832
2,832
-
-
-
Closing value at 30 June 2019
2,832
-
-
-
-
-
30
30
-
-
-
30
7,843
-
4,567
-
(3,010)
(4)
9,396
9,396
4,839
(3,246)
(15)
10,974
-
-
-
-
-
-
-
-
-
-
-
-
848
4
-
(10)
-
-
842
842
-
-
-
842
Other
$’000
Total
$’000
21
11,574
-
-
-
(8)
-
13
13
-
(8)
-
5
4
4,567
(10)
3(,018)
-
13,113
13,110
4,839
(3,254)
(15)
14,683
(b) Impairment testing of Cash-Generating Units containing
Recognition and measurement
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 the cash-generating unit is based on
a value-in-use calculation using a discounted cash flow model
based on a one year projection approved by management and
extrapolated over a five year period using a steady rate, together
with a terminal value. The growth rate used in these projections
does not exceed the historical growth rate of the relative cash-
generating unit.
Key assumptions used for value-in-use calculation of the CGU are
as follows:
— Annual growth rate of 3% (2018: 3%);
— Terminal growth rate of 3% (2018: 3%);
Goodwill
Goodwill represents the excess of the cost of the business
combination over the Group’s share of the net fair value of
the identifiable assets, liabilities and contingent liabilities acquired.
Goodwill is not amortised but is measured at cost less any
accumulated impairment losses. Goodwill is tested for impairment
annually, or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Gains and losses
on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill acquired is allocated to each of the cash-generating units
expected to benefit from the combination’s synergies. Impairment
is determined by assessing the recoverable amount of the cash-
generating unit to which the goodwill relates. Impairment losses on
goodwill cannot be reversed.
— Discount rate of 14% being the calculated weighted average cost
Intellectual Property
of capital based on the capital asset pricing model (2018: 17%);
and
— Reseller agreements will be renewed as and when they expire.
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
Management determined projections based on past performance
annually, or more frequently if events or changes in circumstances
and its expectations for the future. The growth rate used is
indicate that the carrying value may be impaired. Impairment losses
consistent with those used in industry reports. The discount rate
are recognised in profit or loss. Any reversal of impairment losses of
used is pre-tax and is specific to the relevant segment in which the
intellectual property is recognised in profit or loss.
unit operates.
Internet Lotteries Australia CGU is estimated to be $334,054,000
which exceeds the carrying amount of goodwill, domain names and
other intangible assets by $319,704,000. If a discount rate of 15%
and growth rate of 0% was used instead of 14% and 3% respectively,
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
Website Developments Costs
Expenditure during the research phase of a project is recognised
as an expense when incurred. Development costs are capitalised
only when technical and financial feasibility studies identify that we
have the resources to complete the development and the project
will deliver future economic benefits and these benefits can be
measured reliably.
for further periods when they expire, an impairment loss would be
Development costs have a finite life and are amortised on a
recognised up to the maximum carrying value of $14,350,000.
straight-line basis matched to the future economic benefits over the
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
77
useful life of the project of three years up to 30 June 2015 and five
to the end of the reporting period and are measured at amounts
years from 1 July 2015.
Domain Names
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.
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
(ii) Superannuation
Employees have defined contribution superannuation funds.
continue to support an indefinite useful life assessment. The
Contributions are recognised as expenses as they become payable.
carrying value of domain names is tested semi-annually at each
Prepaid contributions are recognised as an asset to the extent that a
reporting date for impairment.
cash refund or a reduction in future payments is available.
Impairment of assets
Assets are tested for impairment at the end of each reporting period
(iii) Termination benefits
Termination benefits are payable when employment is terminated
or whenever events or changes in circumstances indicate that the
before the retirement date, or when an employee accepts voluntary
carrying amount may not be recovered.
redundancy in exchange for these benefits. The Group recognises
termination benefits as an expense and a liability on the earlier of
An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. For the
when the Group:
purposes of assessing impairment, assets are grouped at the lowest
— Can no longer withdraw the offer and the benefits; and
levels for which there are separately identifiable cash flows which
— Recognises costs for restructuring under AASB 137 Provisions,
are largely independent of the cash flows from other assets or
Contingent Liabilities and Contingent Assets and which involves
groups of assets (CGUs).
the payment of termination benefits.
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
Note 11: Trade and other payables
Consolidated
2019
2018
Note
$’000
$’000
Benefits falling due more than 12 months after the end of the
reporting period are discounted to present value.
Note 12: Employee benefit obligations
CURRENT
Long service leave
NON-CURRENT
Long service leave
Consolidated
2019
2018
$’000
$’000
338
309
517
855
368
677
Total trade and other payables
22,070
14,346
Included in the above:
Trade creditors
GST payable
Sundry creditors and accrued expenses
Employee benefits
7,260
742
2,462
822
11,286
Customer funds payable
7(a)
10,784
Recognition and measurement
1,234
523
3,971
784
6,512
7,834
(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
22,070
14,346
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.
Recognition and measurement
Trade and other payables represent liabilities for goods and
services provided to the Group prior to the year end and which are
unpaid. These amounts are unsecured and have seven to 31 day
payment terms.
(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
78
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
79
Note 13: Capital risk management
(b) Dividends not recognised at the end of the reporting period
Total borrowings
Consolidated
2019
20168
Note
$’000
$000
16
-
-
Less: cash and cash equivalents
7(a)
(84,583)
(40,085)
Since year end, the Directors have recom-
mended the payment of a final 2019 fully
franked ordinary dividend of 21.5 (2018: 11.0)
Consolidated
2019
2018
$’000
$’000
Net debt
Total equity
Total capital
Gearing ratio
-
-
cents per share franked at the rate of 30% (2018:
15
79,302
55,917
30%). The aggregate amount of the proposed
79,302
55,917
dividend expected to be paid on 22 September
0%
0%
2019 (2018: 21 September 2018), but not recog-
nised as a liability at year end, is:
13,357
6,382
The Group’s objective is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and sustain future
(c) Franked dividends
development of the business.
The Group monitors its capital structure by reference to its gearing
ratio. This ratio is calculated as total net debt divided by total
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.
Note 14: Dividends
(a) Ordinary shares
Consolidated
2019
2018
$’000
$’000
The franked portions of dividends paid and
recommended after 30 June 2019 will be franked
out of existing franking credits or out of franking
credits arising from the payment of income tax in
the year ending 30 June 2019.
Franking credits available for subsequent finan-
cial years based on a tax rate of 30% (2018: 30%):
11,509
9,303
Consolidated
2019
2018
$’000
$’000
The above amounts represent the balance of the franking account
as at the reporting date adjusted for:
Final fully franked ordinary dividend of 11.0
(2018: 5.0) cents per share franked at the tax
(i) Franking credits that will arise from the payment of the amount of
the provision for income tax, and
rate of 30% (2018: 30%)
6,438
2,564
Interim fully franked ordinary dividend of 15.0
(2018: 7.5) cents per share franked at the tax rate
(ii) Franking debits that will arise from the payment of dividends
recognised as a liability at the reporting date.
of 30% (2018: 30%)
9,273
3,917
The impact on the franking account of the dividends paid and
Special fully franked ordinary dividend of 8.0
(2018: 8.0 and 15.0) cents per share franked at
recommended by the directors since the end of the reporting period,
but not recognised as a liability at the reporting date, will be a
the tax rate of 30% (2018: 30%)
4,970
12,027
reduction in the franking account of $5,724,000 (2018: $2,421,000).
Total dividends paid or provided for
20,681
18,508
Dividends paid in cash or satisfied by the issue
of shares under the dividend reinvestment plan
during the years ended 30 June 2019 and 30
June 2018 were as follows:
Paid in cash
Satisfied by issue of shares
20,681
18,508
-
-
20,681
18,508
80
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Note 15: Equity and reserves
(a) Contributed equity
Issued shares
Details
24 Sep 2018-Exercise of options
26 Sep 2018-Exercise of options
Consolidated
Consolidated
10 Oct 2018-Exercise of options
2019
2019
2018
2018
7 Dec 2018-Exercise of options
Shares
$’000
Shares
$’000
11 Dec 2018-Exercise of options
Ordinary shares –
fully paid
62,123,757
79,302
54,374,265
55,917
Movements in ordinary share capital
Details
Consolidated
Shares
$’000
Opening balance 1 July 2017
50,674,265
45,492
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
50,000
500,000
50,000
50,000
900,000
50,000
87
875
87
87
1,575
88
11 Jan 2019-Exercise of options
21 Jan 2019-Exercise of options
15 Feb 2019-Exercise of options
20 Feb 2019-Exercise of options
27 Feb 2019-Exercise of options
1 Mar 2019-Exercise of options
4 Mar 2019-Exercise of options
5 Mar 2019-Exercise of options
6 Mar 2019-Exercise of options
Consolidated
Shares
$’000
100,000
100,000
150,000
150,000
150,000
150,000
150,000
125,000
100,000
100,000
200,000
50,000
100,000
250,000
350
350
525
525
525
525
525
438
350
350
700
175
350
875
8 Mar 2019-Exerciee of options
500,000
1,750
11 Apr 2019-Exercise of options
30 Apr 2019-Exercise of options
Balance 20 June 2019
50,000
250,000
175
875
62,123,757
79,302
23 Apr 2018-Exercise of options
1,150,000
4,375
Issued capital represents the amount of consideration received for
securities issued or paid for securities bought back by Jumbo.
9 May 2018-Exercise of options
15 May 2018-Exercise of options
21 May 2018-Exercise of options
8 Jun 2018-Exercise of options
25,000
100,000
50,000
50,000
88
350
88
175
11 Jun 2018-Exercise of options
400,000
1,262
13 Jun 2018-Exercise of options
18 Jun 2018-Exercise of options
21 Jun 2018-Exercise of options
150,000
150,000
25,000
600
600
88
Balance 30 June 2018
54,374,265
55,917
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.
Ordinary shareholders are entitled to participate in dividends and
the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held. Every ordinary
Opening balance 1 July 2018
54,374,265
55,917
shareholder present at a meeting in person or by proxy is entitled to
2 Jul 2018-Exercise of options
3 Jul 2018-Exercise of options
5 Jul 2018-Exercise of options
9 July 2018-Exercise of options
13 Jul 2018-Exercise of options
16 Jul 2018-Exercise of options
18 Jul 2018-Exercise of options
20 Aug 2018-Exercise of options
22 Aug 2018-Exercise of options
24 Aug 2018-Exercise of options
28 Aug 2018-Exercise of options
29 Aug 2018-Exercise of options
13 Sep 2018-Exercise of options
17 Sep 2018-Exercise of options
18 Sep 2018-Exercise of options
19 Sep 2018-Exercise of options
20 Sep 2018-Exercise of options
24 Sep 2018-Exercise of options
50,000
200
3,474,492
8,234
30,000
15,000
20,000
25,000
25,000
115,000
50,000
170,000
25,000
150,000
125,000
250,000
150,000
25,000
225,000
150,000
120
60
80
100
100
460
200
630
87
600
437
788
525
87
788
525
one vote on a show of hands and upon a poll each share is entitled
to one vote.
(c) Options
(i) Details of the employee option plan, including details of options
issued, exercised and lapsed during the financial year and options
outstanding at the end of the financial year are set out in note 24:
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.
(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,
there was a change in the test for payment of dividends from a ‘profit
test’ to ‘solvency test’ (s254T Corporations Act 2001), and the profits
appropriation reserve was established to ensure the accumulated
losses up until then were ‘ring-fenced’ and that future profits were
available for distribution, in particular for dividend payments.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
81
Share-based payments reserve
The share-based payments reserve records items recognised as
(a) Market risk
Market risk is the risk that adverse movements in foreign exchange
expenses on the fair value of share-based remuneration provided to
and interest rates will affect the Group’s financial performance
employees. This reserve can be reclassified as retained earnings if
or the value of its holdings of financial instruments. The Group
options lapse.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign
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.
exchange differences arising on translation of investments in foreign
(i) Foreign exchange risk
controlled subsidiaries. Amounts are reclassified to profit or loss
when an entity is disposed of.
Financial assets at fair value through other comprehensive
income (FVOCI) reserve
The financial assets at fair value reserve comprises changes in
the fair value of FVOCI investments which are recognised in other
comprehensive income including when investments are sold or
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).
reclassified.
Note 16: Borrowings
(a) Facilities with Banks
Credit facility
Bank guarantees
Commercial card
Facilities utilised
Bank guarantees
Commercial credit card
Amount available
Risk management
Treasury monitor the Group’s exposure regularly and utilise the spot
market to buy and sell specified amounts of foreign currency to
manage this risk. Transactional risks are managed predominantly
within the Group’s pricing policies through the regular review of
Consolidated
prices in foreign currency.
2019
2018
Note
$’000
$’000
Sensitivity on foreign exchange risk
Any movement in foreign exchange rates would not be significant to
550
300
550
300
the Group.
(ii) Interest rate risk
27
(478)
(295)
77
(478)
(295)
77
Exposure to interest rate risk
The Group’s has interest bearing assets and therefore its income
and operating cash flows are subject to changes in market interest
rates.
At the reporting date, the Group has exposure to the following
interest rates:
The facilities are provided by Australia and New Zealand Banking
Group Limited subject to general and specific terms and conditions
being set and met periodically.
There were no outstanding interest bearing liabilities for the
financial year ended 30 June 2019 (2018: 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
There have been no defaults or breaches during the financial year
ended 30 June 2019.
Note 17: Financial risk management
Consolidated
2019
Rate1
%
$’000
1.64
84,583
84,583
Rate1
%
2.31
2018
$’000
47,919
47,919
Deposits
Net exposure to
interest rate risk
1weighted average interest rate
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 31 days
(2018: 41 days). Term deposits currently in place cover approximately
The Group has exposure to a variety of financial risks including
66% (2018: 82%) of the total cash and cash equivalent balances.
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
an ongoing basis through regular reporting to the Board.
82
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Sensitivity on market risks
The following table summarises the gain/(loss) impact of a 200
basis points (bps) interest rate change on net profit and equity
The following table summarises the contractual timing of
undiscounted cash flows of financial instruments:
before tax, with all other variables remaining constant, as at 30 June
Between 6
Total
2019:
200 bps movement in
interest rates
200 bps increase in
interest rates
200 bps decrease in
interest rates
Consolidated
Effect on profit
Effect on equity
(before tax)
(before tax)
2019
2018
2019
2018
1,692
958
1,692
958
(1,692)
(958)
(1,692)
(958)
(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.
The maximum exposure to credit risk, excluding the value of any
collateral or other security, at the end of the reporting period
to recognised financial assets, is the carrying amount, net of
any provisions for impairment of those assets, as disclosed in
the statement of financial position and notes to the financial
statements. 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:
— Surplus funds are only invested with banks and financial
institutions with a Standard and Poor’s rating of no less than A
and to a limited amount at any one financial institution:
— All potential customers are rated for credit worthiness taking into
account their size, market position and financial standing, and
the risk is measured using debtor aging analysis; and
— 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.
2019
Financial
assets
Cash and
cash equiva-
lents
Trade and
other receiv-
ables
Financial
liabilities
Trade and
other paya-
bles
2018
Financial
assets
Cash and
cash equiva-
lents
Trade and
other receiv-
ables
Financial
liabilities
Trade and
other paya-
bles
Less than
months and
Between 1
Over 5
carrying
6 months
1 year
and 5 years
years
amount
$’000
$’000
$’000
$’000
$’000
84,583
922
85,505
22,070
22,070
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
84,583
922
85,505
22,070
22,070
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
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
83
(d) Fair value hierarchy
The fair value of cash, cash equivalents and non-interest bearing
financial assets and liabilities approximates their carrying value due
to their short term maturity.
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:
— Financial assets at fair value
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.
84
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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 85
Page 85
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
85
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-
2019
2018
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
2019
$’000
32,946
34,043
66,989
1,986
198
2,184
64,805
79,302
2018
$’000
13,684
28,031
41,715
1,243
778
2,021
39,694
55,917
Retained earnings/(accumulated losses)
(26,037)
(26,037)
Profits appropriation reserve
Other reserves
Total shareholders’ equity
11,090
450
10,413
(599)
64,805
39,694
21,359
21,359
13,184
13,184
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 2019 (2018: $Nil).
(d) Contingent liabilities
The parent entity has no contingent liabilities other than the
guarantees referred to above.
Recognition and measurement
The financial information for the parent entity, Jumbo Interactive
Limited, has been prepared on the same basis as the consolidated
86
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
87
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: Financial assets at fair value through other comprehensive income
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
Page 88
Page 88
Page 88
Page 89
Page 89
Page 91
Page 91
88
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
USA
Incorporation
2019
2018
2019
2018
Recognition and measurement
%
%
$’000
$’000
Non-current assets are classified as held-for-sale if their carrying
Unlisted shares
Lotto Points
Plus Inc
New York, USA
30.9
30.9
Net investment in associate company
-
-
-
-
amount will be recovered principally through a sale transaction,
rather than through continuing use. After initial recognition at cost,
they are measured at fair value with gains and losses recognised in
other comprehensive income (FVOCI reserve), until the investment
is disposed of, at which time the cumulative gain or loss previously
recognised in the FVOCI reserve may be transferred within equity.
Lotto Plus Inc is an investment company, with its only investment
being a 16.9% (2018: 16.9%) 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
is recognised in consolidated profit or loss and the Group’s share
of post-acquisition other comprehensive income of associates
is recognised in consolidated other comprehensive income. The
cumulative post-acquisition movements are adjusted against
the carrying amount of the investment. Dividends received from
associates are recognised in the parent entity’s profit or loss,
while they reduce the carrying amount of the investment in the
consolidated financial statements.
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
it has obligations to, or has made payments, on behalf of the
associate.
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
note 23 and the remuneration report in the directors’ report.
Transactions with related parties
All transactions between related parties are on normal commercial
terms and conditions at market rates and no more favourable than
those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Consolidated
2019
$
2018
$
Mr Mike Rosch, the father of Mr Mike Veverka,
the CEO and executive director of the Compa-
ny, rented an office from the Group
The financial statements of the associates are used to apply the
- office rent received
7,865
8,580
equity method. The end of the reporting period of the associates
and the parent are identical and both use consistent accounting
policies.
Note 21: Financial assets at fair value through other
comprehensive income (FVOCI)
Unlisted securities comprise investments in:
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
Consolidated
2019
$
2018
$
(a) Sorteo Games Inc., USA. The Company owns 7% of the issued
within the Group.
share capital of Sorteo Games Inc. Shares in Sorteo Games Inc
Salary and superannuation
84,315
82,462
are carried at fair value of $nil (2018: $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
(2018: $nil).
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
89
Receivables from related parties
The following balances are outstanding at the reporting date in
five consecutive trading days equals the exercise price and provided
an acceptable transaction has been brought to the Company with
relation to transactions with related parties:
terms and conditions acceptable to the Company by 31 December
Consolidated
extended to 30 June 2018, and finally to 30 June 2019 with 150,000
2017 failing which the options will lapse. This was subsequently
Trade receivables from Mr Mike Rosch (direc-
tor-related party of Mike Veverka)
715
2,145
2019
$
2018
$
Note 23: Key Management Personnel compensation
Consolidated
2019
$
2018
$
options being lapsed, unexercised, with no effect on the fair value.
The remaining 50,000 options subsequently lapsed, unexercised, on
30 June 2019.
Fair value of options granted
Employees
There were no options granted during the 2019 financial year.
The weighted average fair value of options granted during the
2018 financial year was 33.4 cents). The fair value at grant date
was determined by an independent valuer using the Monte Carlo
Simulation option pricing model that takes into account the share
price at grant date, exercise price, expected volatility, option life,
expected dividends, and the risk free rate. The inputs used for the
Monte Carlo Simulation option pricing model for options granted
Short term employee benefits
2,296,102
2,163,591
during the year ended 30 June 2018 were as follows:
Post employment benefits
Other long term benefits
Termination benefits
Share based payments
183,817
153,992
19,315
37,984
-
-
934,883
538,052
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
2018
26 Oct 2017
$2.840
$3.500
50.660%
2.99%
2.30%
Further information regarding the identity of key management
Share price at grant date
Exercise price
personnel and their compensation can be found in the Audited
Expected volatility
3,434,117
2,893,619
Grant date
Remuneration Report contained in the Directors’ Report.
Expected dividend yield
Risk free rate
Note 24: Share-based payments
Share-based payment expenses
recognised during the financial year
Consolidated
2019
$
2018
$
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
Options issued under employee option plan
1,048,690
622,093
information.
Options issued to third parties for services
received
-
22,207
1,048,690
644,300
Third parties
There were no options granted during the 2019 financial year.
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.
Employee option plan
The Jumbo Interactive Limited Employee Option Plan was ratified
at the annual general meeting held on 28 October 2008. Employees
are invited to participate in the scheme from time to time. Options
vest when the volume weighted average share price over five
consecutive trading days equals the exercise price and provided
the staff member is still employed by the Group. When issued on
exercise of options, the shares carry full dividend and voting rights.
Options granted carry no dividend or voting rights.
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
90
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Details of options outstanding during the financial year are as follows:
2019
Grant date
Exercise Price
Expiry date
year
ing the year
year
ing the year
year
end of year
end of year
Balance at
Lapsed/ Forfeit-
Expired
beginning of
Granted dur-
ed during the
Exercised dur-
during the
Balance at
Exercisable at
KMP and staff options
3 Sep 2013
6 Nov 2013
18 Nov 2015
26 Oct 2017
Third party
options
2 Feb 2017
13 Jul 2017
Total
$4.00
$4.00
3 Sep 2018
400,000
6 Nov 2018
150,000
$1.75
18 Nov 2020
300,000
$3.50
15 Nov 2022
4,450,000
$2.25
$2.37
2 Feb 2022
200,000
13 Jul 2018
3,474,492
8,974,492
$3.01
Weighted average exercise price
2018
-
-
-
-
-
-
-
-
-
-
-
-
(400,000)
(150,000)
(50,000)
(3,675,000)
(200,000)
-
-
(3,474,492)
(200,000)
(7,749,492)
$2.25
$3.02
-
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
775,000
775,000
-
-
-
-
1,025,000
1,025,000
$3.01
$3.02
Grant date
Exercise Price
Expiry date
year
ing the year
year
ing the year
year
end of year
end of year
Balance at
Lapsed/ Forfeit-
Expired
beginning of
Granted dur-
ed during the
Exercised dur-
during the
Balance at
Exercisable at
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
Options were exercised regularly throughout the year and the weighted average share price at date of exercise for the year ended 30 June 2019 was $7.02 (2018:
$4.05).
The weighted average exercise price for the year ended 30 June 2019 was $3.33 (2018: $2.94).
The weighted average remaining contractual life of share options outstanding at 30 June 2019 was 2 years 11 months (2018: 2 years 4 months).
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
91
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.
Where the terms of options are modified, the expense continues to
be recognised from grant date to vesting date as if the terms had
never been changed. In addition, at the date of the modification,
a further expense is recognised for any increase in fair value of the
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
Transfer pricing consulting
Other taxation advice
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
immediately to profit or loss. However, if new options are substituted
for the cancelled options and designated as a replacement on grant
date, the combined impact of the cancellation and replacement
options are treated as if they were a modification.
Amounts paid/payable to BDO for other servic-
es for the entity or any entity in the Group:
Accounting advice
Export grant services
Consolidated
2019
2018
$
$
105,532
114,438
105,532
114,438
43,000
42,000
-
15,000
6,000
7,000
49,000
64,000
5,250
5,000
10,250
-
4,500
4,500
164,782
182,938
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
2018 materially affect the amounts recognised in the current period
or any other prior period and are not likely to affect future periods.
(ii) New Accounting Standards and Interpretations not yet
adopted
AASB 16 Leases
This standard and its consequential amendments are currently
applicable to annual reporting periods beginning on or after 1
January 2019. This standard requires lessees to capitalise all leases
on the balance sheet (subject to limited exception) and there is
no longer a requirement to classify leases as either operating or
financial leases. This means that on commencement date of the
lease, lessees need to measure a right-of-use asset and a lease
92
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
liability. The initial adoption of this standard will impact on the
asset is not subsequently accounted for at fair value through profit
financial statements at 30 June 2020. The Group’s management
or loss, then the initial measurement includes transaction costs that
has assessed the impact of this amendment had it been early
are directly attributable to the asset’s acquisition or origination.
adopted for the 30 June 2019 financial year; a right-of-use asset
On initial recognition, the Group classifies its financial assets as
and lease liability of $4,516,000 would be recognised and $826,000
subsequently measured at either amortised cost or fair value,
rent expense would be replaced by $208,000 interest expense and
depending on its business model for managing the financial assets
$618,000 amortisation expense. There would be no impact on NPBT
and the contractual cash flow characteristics of the financial assets.
but EBIT and EBITDA would increase accordingly..
(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
the instrument. Financial assets are derecognised when the rights
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.
Financial assets are initially recognised at fair value. If the financial
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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
93
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 94
Page 94
Page 94
94
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Note 27: Contingencies
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 liabilities
Foundation, and (ii) the final dividend declared of 21.5 cents
that may become payable:
per share, that have all been communicated to shareholders in
Apart from the (i) the licencing agreement signed with Endeavour
Consolidated
separate ASX announcements on 16 August 2019, as at the date of
Guarantees provided by the Group’s bankers
478
478
2019
2018
$’000
$’000
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 2019.
The above items are not recognised in the financial statements 30
The Group’s bankers have provided guarantees to third parties in
June 2019.
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
2019
2018
$’000
$’000
Non-cancellable operating leases contracted
for but not capitalised in the consolidated
financial statements
Payable
Not later than one year
1,096
784
Later than one year but not later than five
years
Later than five years
4,044
892
6,032
3,663
628
5,075
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 the cost
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
95
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 2019 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 46 to 52 of the Directors’ report (as part of the audited Remuneration Report), for the year
ended 30 June 2019, 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
22 August 2019
96
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
INDEPENDENT AUDITOR'S REPORT
To the members of Jumbo Interactive Limited
Report on the Audit of the Financial Report
Opinion
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
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)
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)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
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
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit 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.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
97
Key audit 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.
Impairment assessment of Goodwill and Other Intangible Assets
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures in respect to intangible
Our procedures included, amongst others:
assets, including the impairment assessments of
goodwill and other intangible assets are included in
Note 10.
•
Evaluating management’s determination of the
Group’s Cash Generating Units ("CGU's") to
ensure they are appropriate, including being at a
The Group carries intangible assets of $11.574
level no higher than the operating segments of
million as at 30 June 2017. The carrying value of
the entity
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
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.
•
•
Evaluating management’s process regarding the
valuation of the Group’s goodwill and other
intangible assets
Assessing the Group’s assumptions and estimates
relating to forecast revenue, costs, capital
expenditure, discount rates and the life of
reseller agreements used to determine the
recoverable value of its assets
•
Assessing the historical accuracy of forecasting
of the Group by comparing the current year
actual results with FY16 figures included in prior
year forecasts to consider whether any forecasts
included assumptions, that with hindsight, had
been optimistic
•
Challenging key assumptions by performing
sensitivity analysis on the growth rates and
discount rate assumptions used.
Other information
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.
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.
98
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Key audit 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.
Impairment assessment of Goodwill and Other Intangible Assets
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures in respect to intangible
Our procedures included, amongst others:
assets, including the impairment assessments of
goodwill and other intangible assets are included in
Note 10.
•
Evaluating management’s determination of the
Group’s Cash Generating Units ("CGU's") to
ensure they are appropriate, including being at a
The Group carries intangible assets of $11.574
level no higher than the operating segments of
million as at 30 June 2017. The carrying value of
the entity
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
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.
•
•
Evaluating management’s process regarding the
valuation of the Group’s goodwill and other
intangible assets
Assessing the Group’s assumptions and estimates
relating to forecast revenue, costs, capital
expenditure, discount rates and the life of
reseller agreements used to determine the
recoverable value of its assets
•
Assessing the historical accuracy of forecasting
of the Group by comparing the current year
actual results with FY16 figures included in prior
year forecasts to consider whether any forecasts
included assumptions, that with hindsight, had
been optimistic
•
Challenging key assumptions by performing
sensitivity analysis on the growth rates and
discount rate assumptions used.
Other information
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.
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 2019
99
In preparing the financial report, the directors are responsible for assessing the ability of the group to
Key audit matters
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
Key audit matters are those matters that, in our professional judgement, were of most significance in
operations, or has no realistic alternative but to do so.
our audit of the financial report of the current period. These matters were addressed in the context of
Auditor’s responsibilities for the audit of the Financial Report
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.
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
Impairment assessment of Goodwill and Other Intangible Assets
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
Key audit matter
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
The Group’s disclosures in respect to intangible
decisions of users taken on the basis of this financial report.
assets, including the impairment assessments of
•
A further description of our responsibilities for the audit of the financial report is located at the
goodwill and other intangible assets are included in
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
Note 10.
How the matter was addressed in our audit
Evaluating management’s determination of the
Group’s Cash Generating Units ("CGU's") to
Our procedures included, amongst others:
ensure they are appropriate, including being at a
level no higher than the operating segments of
the entity
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
The Group carries intangible assets of $11.574
This description forms part of our auditor’s report.
million as at 30 June 2017. The carrying value of
intangible assets represent a significant asset of the
Report on the Remuneration Report
Group.
Opinion on the Remuneration Report
The Group is required to annually test the amount of
We have audited the Remuneration Report included on pages 31 to 37 of the directors’ report for the
goodwill and indefinite useful life intangible assets
year ended 30 June 2018.
for impairment and assess other intangible assets for
In our opinion, the Remuneration Report of Jumbo Interactive Limited, for the year ended 30 June
impairment indicators. This annual impairment test
2018, complies with section 300A of the Corporations Act 2001.
was significant to our audit because the goodwill and
Responsibilities
intangible assets balance is material to the financial
recoverable value of its assets
intangible assets
•
•
expenditure, discount rates and the life of
relating to forecast revenue, costs, capital
reseller agreements used to determine the
valuation of the Group’s goodwill and other
Evaluating management’s process regarding the
Assessing the Group’s assumptions and estimates
statements and because management’s assessment
The directors of the Company are responsible for the preparation and presentation of the
process is complex, highly judgmental and includes
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
estimates and assumptions relating to expected
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
future market or economic conditions.
of the Group by comparing the current year
actual results with FY16 figures included in prior
year forecasts to consider whether any forecasts
•
Assessing the historical accuracy of forecasting
included assumptions, that with hindsight, had
BDO Audit Pty Ltd
been optimistic
•
Challenging key assumptions by performing
sensitivity analysis on the growth rates and
discount rate assumptions used.
Other information
K L Colyer
The directors are responsible for the other information. The other information comprises the
Director
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
Brisbane, 23 August 2018
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.
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.
100
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Shareholder Information
The Company has 62,123,757 ordinary shares on issue, each fully paid. There are 5,350 holders of these ordinary shares as at 31 July 2019.
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 1,025,000 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 2019
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
3,063
1,635
352
272
28
5,350
1,228,439
4,020,446
2,655,179
6,499,876
47,719,817
1.98
6.47
4.27
10.46
76.81
0.01
62,123,757
100.00
Minimum $500.00 parcel at $19.42 per unit
Minimum parcel size
26
Holders
112
Units
831
The number of shareholders holding less than the marketable parcel of shares is 112 (shares 831)
(c) Substantial holders of 5% or more fully paid ordinary shares as at 31 July 20191:
Name
Vesteon Pty Ltd and associates
Tatts Online Pty Ltd
Notice date
Ordinary Shares
Percentage Held
15 October 2018
5 July 2018
9,436,955
7,234,178
15.8
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 2019
101
(e) Top 20 holders of fully paid ordinary shares as at 31 July 2019
Name
Units
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
JP MORGAN NOMINEES AUSTRALIA PTY LTD
VESTEON PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
TATTS ONLINE PTY LTD
CITICORP NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
SEYMOUR GROUP PTY LTD
MR BARNABY COLMAN CADDICK
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR MIKE VEVERKA
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) PTY LTD
MR JOHN WILDE + MRS ELIZABETH WILDE
MR JOHN ROSAIA
ECAPITAL NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
BRIAN ROBERTS
BNP PARIBAS NOMINEES PTY LTD
20.
ICS FOURTH NOMINEES PTY LIMITED
Total Top 20 shareholders of ordinary fully paid shares
Total remaining holders balance
(f) Unquoted securities as at 31 July 2019
Options over Unissued Shares
A total of 1,025,000 options are on issue to employees and a third party for services rendered.
9,508,065
8,890,057
8,028,079
7,234,178
3,303,301
2,043,256
1,288,404
1,125,000
1,031,093
1,002,848
666,791
638,008
381,642
234,996
219,551
218,140
213,748
211,509
200,834
182,641
46,622,141
15,501,616
15.31
14.31
12.92
11.64
5.32
3.29
2.07
1.81
1.66
1.61
1.07
1.03
0.61
0.38
0.35
0.35
0.34
0.34
0.32
0.29
75.05
24.95
Exercise price
$1.75
$3.50
Expiry date
Number on issue
Number of holders
18 November 2020
15 November 2022
250,000
775,000
2
6
(g) On-market buy-back
There is no current on-market buy-back in effect.
102
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
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
104
JUMBO INTERACTIVE LTD ANNUAL REPORT 2019
Jumbo Interactive Limited
Level 1, 601 Coronation Drive
PO Box 824
Toowong, Queensland, 4066
Australia
+61 7 3831 3705
www.jumbointeractive.com