2020
ANNUAL
REPORT
JUMBO INTERACTIVE LIMITED
TABLE OF
CONTENTS
Covid-19 has shown the
importance of having
a robust Internet sales
channel. The Australian
lottery industry has
remained healthy while
many international lotteries
saw dramatic declines
in sales. Jumbo has the
mature solution to help
these lotteries in need."
4 Introduction
6 Highlights
8 Letter from the Chairman
11 Letter from the CEO
12 Review of Operations
13 Key Performance Indicators
14 Like-for-Like Analysis
16 Data, AI and Lotteries
20 Customer Support
22 Powered by Jumbo
23 $1 Billion Vision
24 Jumbo Goes International
26 Leadership Team
28 People of Jumbo
30 Jumbo Turns 25
32 Corporate Responsibility
34 Financial Report
38 Directors’ Report
56 Auditor’s Independence Declaration
58
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
59 Consolidated Statement of Financial Position
60 Consolidated Statement of Changes in Equity
62 Consolidated Statement of Cash Flows
63 Notes to the Consolidated Financial Statements
95 Directors’ Declaration
96 Independent Auditor’s Report
100 Shareholder Information
102 Company Information
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INTRODUCTION
CERTAINTY
TO 2030
The 10 year runway gives
management the ability to
continue the strong growth of
the Australian ticket selling
business and build the “Powered
by Jumbo” software business in
Australia and overseas."
Following on from a breakout year in 2019, Jumbo has
provided certainty for the next 10 years with a fresh
agreement with Tabcorp. This 10 year runway gives
Jumbo the ability to continue the strong growth of
the Australian ticket selling business and build the
“Powered by Jumbo” software business in Australia
and overseas.
Covid-19 has highlighted the benefits of online sales and the lottery industry
is no different. Around the world many lotteries suffered during home
confinement, however in Australia lotteries continued marching forward
due to the availability of a healthy internet sales channel. Jumbo responded
to the challenge by increasing capacity and customer support to address
the influx of a new older demographic. This trend was highlighted when
a 72 year old Jumbo customer won the $80 million Powerball during the
Covid-19 period. It’s nothing new for a Jumbo customer to win big, but in the
past the age was typically around 30. This new winner unwittingly heralded
in a new older demographic into Jumbo that has been dominated younger
tech-savvy players.
Covid-19 has also highlighted the importance of a modern lottery having
a vibrant online sales channel. Many lotteries that did not have an online
channel suffered badly due to retail sales channels coming under pressure.
Jumbo is in the business of selling software and services to lotteries
wishing to build their online channel. Jumbo has reached out to many of
these affected lotteries to provide a path forward.
Jumbo’s “$1 billion vision” continues to be an important focus and guiding
light over the next 2 years. The vision is to reach $1 billion in ticket sales on
the Jumbo platform by FY22. This includes both the ticket selling business
(OzLotteries.com) and the “Powered by Jumbo” SaaS business. While
ambitious it is also achievable with the trend still very much towards the
shift to online.
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HIGHLIGHTS
OZLOTTERIES.COM AUSTRALIAN
LOTTERY TICKET SELLING BUSINESS
JUMBO GROUP
$340m up 6%
TTV increased 6%from $320 mil in FY19 despite a 20% drop in the number of large Jackpots from 49 in FY19 to 39 in FY20.
827,411 up 9%
Active Customers increased 9% from 761,863 in FY19
"POWERED BY JUMBO"
GLOBAL SAAS BUSINESS
50%
Current contracts operationalised
£6.5m up 32%
(A$12.6m)
Gatherwell UK TTV up 32% on a 12-month basis to 30 June 2020
Revenue up 9% despite a 20% drop in the number of large jackpots from 49 in FY19 to 39 in FY20
$71.1m
UP 9%
$43.2m
UP 8%
$26.5m
STEADY
EBITDA-underlying up 8%
NPAT-underlying up 0.2%
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LETTER FROM THE CHAIRMAN
FURTHER
GROWTH
Dear Shareholder,
The 2019/20 year has not been an easy time for a lot of
businesses due to the Covid-19 pandemic, however Jumbo
Interactive Limited (Jumbo) still achieved an increase in ticket
sales by $28 million bringing the total sales for the year to
$349 million.
The online lottery industry has experienced further growth
and this is expected to continue, especially as we broaden
the charity lottery tickets we are now selling through our
Powered by Jumbo software, which we feel will not only
assist our profitability but also the deserving charities we
are focussing on. This, together with the 10 year agreement
recently announced with Tabcorp, will give both shareholders
and Jumbo the confidence it requires to continue to develop
online sales.
In my last year‘s letter to shareholders I stated that we
remained focussed on board diversification and, prior to our
Annual General Meeting, in September 2019 we announced
the appointment of Professor Sharon Christensen to our
board. Professor Christensen has over 29 years of legal and
regulatory experience and is a research leader in regulatory
responses to digital innovation and disruption. This now gives
Jumbo a five person board of which four are Non-Executive
directors. I should also note that after 14 years on the board, I
have announced my resignation, however I did undertake to
continue in the position until an experienced Chairman can be
appointed to take my place.
We have often been asked if the Covid-19 pandemic has had
an effect on our operation. With the experience of our major
shareholder and CEO Mr. Mike Veverka and his very skilled
staff we have been able to continue to work both within the
office and from the staffs‘ respective homes. This was a
platform put in place many years ago in the event of such a
situation where working from the office was not an option. It
would be remiss of me at this point not to acknowledge the
diversification and wealth of experience our staff have. This is
supported not only by our CEO but also our Key Management
Personnel. Despite the challenges of the Covid-19 pandemic,
we are proud and fortunate to still pay a full dividend and not
rely on JobKeeper support.
Whilst we continue to focus our growth within Australia,
during the financial year we did acquire Gatherwell Limited
which is located in the United Kingdom and operates as a
lottery manager to raise funds for good charitable and public
social causes. We also continue to look at other potential
opportunities, however this does not take our focus off our
Australian activities which has been the success of the
Company and its growth since its incorporation.
I have enjoyed being part of the evolution of Jumbo and would
like to conclude by thanking the board of directors, our CEO,
Key Management Personnel and all our staff for their on-going
support and their efforts and input into the continued growth
of our Company.
David K Barwick
Chairman
We remain focused on board
Diversification."
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
11
LETTER FROM THE CEO
CONTINUAL
INNOVATION
With Internet Sales of Lottery tickets at 28% of all tickets sold in Australia and under 10%
globally, the industry clearly has a lot of growth ahead.
Lotteries are perfect for the Internet and customers enjoy a
top quality experience whether they play on OzLottries.com
or another lottery using the Jumbo platform. Continual
innovation is driving the customer experience even higher and
is ensuring lotteries continue to remain popular into the future.
The recent 10 year agreement with Tabcorp is an important
milestone as it gives Jumbo certainty and the ability to plan
long term. The next 10 years will be exciting as the Internet
share of ticket sales race up as players, young and old, enjoy
the experience of playing online. New innovations such as
Advanced Data Analytics, Artificial Intelligence and Machine
Learning are making subtle but effective improvements to
our App. Improvements such as removing customer pain
points and irrelevant information are streamlining our App and
providing our customers with an unparalleled experience.
2020 was a year where the number of large Jackpots
reached only 39 compared to 49 for the previous year.
However we were able to increase ticket sales from $321
million to $349 million. This is clear evidence of the trend to
online that is being accelerated by Covid-19. 350,319 new
customers signed up to OzLotteries.com and the number of
active customers increase from 761,863 in FY19 to 827,411
in FY20.
2020 also saw the acquisition of Gatherwell Limited in the UK,
the largest external lotteries manager to local authorities in
the UK. This fast growing digital lottery company is a perfect
fit for Jumbo and provides a launch pad into the UK market.
Jumbo specialises in medium to large lotteries so the addition
of a company specialising in smaller lotteries completes
the picture.
The “Powered by Jumbo” Software as a Service business
got off to a great start with the signing of 5 clients with
combined ticket sales of ~$140 million. This gave our
team the opportunity to improve our offering and gain
experience in working with clients as partners. Covid-19 has
disproportionately impacted lotteries without an online sales
channel causing many to fast-track their internet strategies.
The Jumbo PBJ team is on the front foot with solutions to
assist those lotteries, wherever they may be in the world.
Jumbo also recently passed the 25 years in business
milestone. From humble beginnings with a single computer
in 1995, Jumbo has navigated many challenges and is ready
for the growth that lies ahead. Our staff and partners over the
years deserve enormous credit for this growth due to their
efforts and trust in the vision to grow through technology.
Mike Veverka
CEO
With the certainty of a 10 year
agreement with Tabcorp, we
can push forward with plans to
deliver further growth."
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REVIEW OF OPERATIONS
POSITIVE
PERFORMANCE
GROUP PERFORMANCE
2020 was a positive year for both Ozlotteries.com and the new “Powered by Jumbo”
SaaS business segments. Covid-19 is proving to be a driver for growth of Internet
lotteries due to the “play from home” focus and the absence of any supply chain issues
(nothing needs to be physically delivered). The group delivered an 8.7% increase in
ticket sales (TTV) to $349 million and a 9.1% increase in Revenue to $71 million for the 12
months to June 30, 2020. Underlying EBITDA grew 7.7% to $43.2 million and underlying
Net profit after tax remained steady at $26.5 million.
OZLOTTERIES.COM
PERFORMANCE
For a year that produced 10 fewer large jackpots that the previous year (39 in FY2020)
compared to 49 in FY2019), the OzLotteries.com business still managed to deliver
growth evident in the 6.3% increase in ticket sales (TTV) to $340 million. Active
customers (defined as a customer that made a purchase over the 12 months to June 30,
2020 also increased 9% to 827,411. This positive result for a year with fewer jackpots
was driven by better software tools that helped keep players engaged more frequently.
Delivering a premium service at a premium price has been the simple but effective
model for OzLotteries.com for over a decade. Customers enjoy the choice, features and
above all the experience. Our designers are continually thinking of ways to improve the
experience and new software tools are giving feedback so we know exactly where that
experience is appreciated the most.
POWERED BY JUMBO
PERFORMANCE
The inaugural year for the "Powered by Jumbo" SaaS business was devoted to
onboarding new lotteries and bringing them up to fully operational status. The first
lottery (Mater) was 100% operationalised in July 2020 and the remaining lotteries are
scheduled for completion by December 2020. During FY20, revenue from the portion
of sales that were operationalised reached ~$0.3 mil and this is expected to climb to
an annualised rate of ~$4.4 million pa once complete. The acquisition of Gatherwell
Limited on 29 November 2019 gave the "Powered by Jumbo" business a foothold in the
growing UK market. For the seven month period to 30 June 2020, TTV was $7,715,000,
Revenue $1,520,000 and underlying net profit before tax $414,000. On a full year basis,
Gatherwell ticket sales grew 32% to £6.55 million.
CUSTOMER COMMENTS
" Love playing and I can’t
wait to win. Awesome app
will rather the App then
[sic] going into the store"
" It’s great & easy to
purchase. Great design"
" Great way to play with more
chances to win a share. Will be
playing this way from now on"
" Such an easy option"
" Congratulations,
very easy to use"
" Very user friendly. Despite
rarely having any success,
it’s something I look
forward to each week"
" The app makes it super easy to
purchase tickets at the comfort
of your own home without
going out and whenever you
want to especially in times like
these. Also getting notified
as to when the super draws
are on and also knowing
what the week to week
jackpots are which is handy"
KEY PERFORMANCE INDICATORS
OZLOTTERIES.COM BUSINESS SEGMENT
Active customers (defined as a customer that made a purchase over the 12 months to June 30, 2020) also increased 9%
Number of new customers (FY19: 444,004)
350,319
827,411
$14.28
$383.12
25.6%
Avg spend per customer (FY19: $385.44)
Dormancy rate (FY19: 13.6%)
Cost per lead (FY19: $13.81)
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LIKE FOR LIKE ANALISYS
LIKE FOR LIKE
GROWTH
Sales are significantly affected by Jackpots with higher
jackpots attracting higher sales. Jackpots are often random
making it difficult to determine if sales growth is due to
jackpots or a steadily improving business. A like-for-like
analysis focuses on sales from specific jackpot sizes removing
the variation and allowing the true growth to be visible. The
following graphs demonstrate clear growth over a variety of
games and jackpot levels.
Innovation and Customer Experience are
growing sales, not just Jackpots."
Sales growth is strong even
in smaller Jackpots"
2
0
1
6
2
0
1
7
2
0
1
9
2
0
1
8
SALES FROM ALL JACKPOTS UNDER $15 MILLION
2
0
1
8
2
0
1
9
2
0
1
6
2
0
1
7
SALES FROM OZLOTTO $15 MIL JACKPOTS
S
e
p
2
0
1
9
M
a
r
2
0
2
0
J
u
l
y
2
0
2
0
2
0
1
7
2
0
1
8
2
0
1
9
SALES FROM POWERBALL $80 MILLION JACKPOTS
SALES FROM POWERBALL $20 MIL JACKPOTS
2
0
2
0
2
0
2
0
2
0
2
0
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DATA, AI & LOTTERIES
PEAK
LOADS
Lotteries are unique because of the very large spikes in sales just before
draw closure. The graphs below show hourly sales in the 48 hours leading
up to draw closure for the recent $80 mil Powerball. The first 24 hours
show the “day before” compared to the last 24 hours “last day” sales. The
peak load is over 7x higher than the same hour the day before – proof that
people love leaving it to the last minute!
Technically this poses a challenge to computer engineers that must still
maintain fast and very high standard transactional integrity during peak
loads. Not only does the number of simultaneous customers increase but
the computing power for each sale also increases as customer experience
features are added. Jumbo has spent years perfecting its solution and the
benefits are clear in the large jump in sales that OzLotteries.com produced
in 2019.
Our “Powered by Jumbo” partners are also eager to improve sales by
taking advantage of the last minute rush. Historically many charity lotteries
have been missing out on sales simply because their systems were not able
to handle peak loads reliably.
Hourly sales for the 2 last days of the recent
$80 million Powerball
JUL 8
8:00
16:00
JUL 9
8:00
16:00
Hourly sales for the “day before” and “day of”
the recent $80 million Powerball overlayed to
highlight comparative scale.
Hourly sales for the last day of the recent
$80 million Powerball
Hourly sales for the second last day of the
recent $80 million Powerball
COHORT
ANALYSIS
Different groups of people exhibit different behaviours and analysing those
trends to greater level of detail is providing new insights to Jumbo and our
partners.
0
5
10
15
Mobile App customers spend more than website customers
Months since initial purchase
Mobile App
Website
0
Older customers spend more
Months since initial purchase
0
5
5
10
15
Below 25
35-49
50-54
25-34
65+
10
15
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Customers that sign up during low jackpot weeks spend more over the long term
Months since initial purchase
Under 15m
50+
15-50m
Jack
pot!
Jackpot!
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$
DATA, AI & LOTTERIES
COVID-19
EFFECT
As a nimble, digital and 100% pure online company, Jumbo was able to
manage the Covid-19 period well. Online lotteries have no supply chain
issues with no importation, warehousing or physical deliveries. Social
restrictions drove players online as was highlighted in July 2020 when
63,800 new customer signed up - the highest since September 2019 when
the Powerball reached a record $150 million. During the Covid-19 months in
2020, a larger percentage of new signups appeared from the 65 years and
older category (peaking at 24% of all signups). This is obviously a result of
social distancing and home confinement measures affecting particularly
older demographics leaving their home. This trend is new to OzLotteries.
com which has historically attracted a younger tech-savvy demographic.
Subtle design changes have been made to enhance the experience for this
older demographic who tend to spend more as is evidenced in the Cohort
Analysis.
Covid-19 restrictions have driven players
online, especially the older demographic.
Sales in the recent $80 million Powerball
even exceeded the last $100 million Jackpot."
24%
A
P
R
REMOVING
PAIN POINTS
Not all features are visible. Many are subtle improvements removing pain
points and delivering a better overall experience. An over cluttered screen
with multiple options can annoy customers to the point of making them give
up.
One technique used by Jumbo designers is a “Rage Click” detector. This
is when software reports a barrage of mouse clicks with no result. The
customer has lost patience with finding the right button and has become
angry. This technique revealed up to $500,000 in lost sales over a 6 month
period resulting from 6,506 customers failing to check out their purchase
as a result of confusion around a simple button. Without data analytics this
might have continued for years without ever being detected.
Our “Powered by Jumbo” partners find this level of feedback especially
rewarding. Normally a charity lottery operator would not have the
resources to use these tools but once partnered with Jumbo they are
available to all partners.
M
A
R
J
A
N
F
E
B
M
A
Y
J
U
N
% of new signups in the 65+ age demographic
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89.4%
CUSTOMER
SATISFACTION
27,000
VIEWS OF SELF-SERVICE
ARTICLES PER MONTH
88.9%
CALLS ANSWERED
IN <15 SECONDS
CUSTOMER SERVICE
The Oz Lotteries
Support team
seamlessly made the
transition to working
fulltime from home in
March. Our customers
benefited from our
online advantage and
have continued to
be able to purchase
and liaise with us
without any change
to their previously
experienced level of
service.
by Brenda Melville,
Head of OzLotteries.com
The week following our transition to working from home we experienced
an $80 million draw (26th March). On the night of this draw, we answered
1,922 (calls, chats, emails) with a 92% customer satisfaction rating. We also
got to make the winning call to one of our very own customers. A lovely
gentleman who had gone into lockdown, so he did have to wait for a little
before celebrating with extended family. No overseas holidays for some
time has meant he can focus on home improvements
Customer satisfaction remains our key performance indicator, and we
survey across all our customer touchpoints throughout the year. We believe
that asking for feedback regularly from our customers allows us to act
quickly on unhappy experiences, and work on what we can do to improve
their experience with our site or service next time. This year overall, our
satisfaction rating was 89.4%.
88.9% of calls this year were answered in <15 seconds, ensuring that
customers receive the importance they deserve when they call us for
assistance.
During the year we saw sustained growth with our customers being more
engaged with our platform than ever before, customers are keen to self-
service, and to ensure they can, the Help Centre is actively maintained
and updated. The Help Centre contains a wide range of articles to help
with regular how-to requests, through to the more complex "why is ID
verification required'. Maintaining and tracking the usage and feedback on
these articles ensures we continuously improve these offerings, as some of
our customers prefer to engage with us through this method. Currently, we
average 27,000 views per month across our self-service articles.
Our customers make small regular purchases through our website and
comment on the ease of their play experience both via the website and app.
We have seen a drop in enquiries to our support centre this year due to our
stable technology platform through the more substantial draw periods and
our education of customers via our Help Centre offering.
We have continued to improve our prize withdrawal process, the ease
of playing your favourite numbers and ticket bundles making it easier for
customers to play the way they want to play the game.
We continue to manage several third-party Charity Lotteries on Oz
Lotteries. This year we also saw two of our customers take away the major
prize in the Mater Prize Home draw 289 at Biggera Waters on the Gold
Coast and the Mater Cars for Cancer draw 87 a Mustang GT Fastback.
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POWERED BY JUMBO
$1 BILLION VISION
ADVANCED
SOFTWARE
PLATFORM
LARGE GLOBAL TAM
The total addressable market (TAM) for the PBJ business is
significant. Under 10% of the world's lottery tickets are sold
online, indicating 90% of a US$303 billion (A$445 billion)
global market has yet to make the transition. Management
have identified three key markets - the UK, USA and Canada -
representing an initial TAM of A$25 billion to target.
For over 15 years, Jumbo has continually
developed a state-of-the-art software
platform with advanced data analytics, user
friendliness and capacity. All this power
is now available as SaaS (Software as a
Service) to lottery operators globally, many
of who have struggled during the Covid-19
restrictions.
5 charity lotteries have signed up to PBJ representing $140
million is tickets sales.
• Mater Prize Home Lottery
• Endeavour Foundation
• Deaf Services
• Multiple Sclerosis QLD
• Classics for a Cause
In addition, the OzLotteries.com business sells games to its
large customer database from these 5 lotteries plus a further
3 lotteries.
• RSPCA
• Surf Life Saving Lotteries
• ACT for Kids
Jumbo has a strong social purpose in helping these charitable
organisations to raise funds via online lotteries. Other forms
of fund raising such as fun runs and dinners are coming
under pressure due to Covid-19. Government funding and
philanthropic donations lack regularity and make planning
difficult. Lotteries provide the regular source of income these
charities need for long term planning.
In 2019, Jumbo
announced its
"$1 billion Vision" - to
reach $1 billion in ticket
sales per annum on the
Jumbo platform by FY22.
This is the total of both
the OzLotteries.com
business and the
"Powered by Jumbo"
businesses combined.
To date this vision is half complete. Ticket sales on
OzLotteries.com reached $340 million and the 5 "Powered by
Jumbo" clients represent a further $140 million in ticket sales.
Undeterred by the low jackpot run in FY20 slowing down
growth in OzLotteries.com, management remain optimistic
about reaching this goal over the next 2 years. The Covid-19
Pandemic has boosted sales and encouraged lottery
operators globally to move online faster, providing a tail wind
for the next 2 years. While the $1 billion vision is not a forecast
or target, it provides a guiding light and aspirational vision for
management and staff.
$1b
Target
14%
PBJ
Contracts
34%
OzLotteries.com
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JUMBO GOES
INTERNATIONAL
by Richard Bateson,
International Lottery Advisor
This past financial year has been a significant one for Jumbo’s international ambitions. In
November 2019, Jumbo completed the acquisition of Gatherwell Ltd, the largest external
lotteries manager to local authorities in the UK. The acquisition marks the first phase of
Jumbo’s entry into the UK market, and the first major international transaction to date.
With the Australian business going from strength-to-strength,
Jumbo’s Management has an opportunity to export its SaaS
business model and its lottery management proposition to
the international lottery market. Focusing on two sectors – the
government and charity lottery sectors.
Over the past 6 months Management has been reviewing
the different markets and overlaid our propositions for both
government and charity to identify a clear and precise go-to-
market strategy for Jumbo’s International business.
Management has identified three markets, in the UK, the US
and Canada, that have a collective value, or Total Addressable
Market (TAM), of over $25bn1. These markets are the
beginning of Jumbo’s expansion into the European and North
American markets. Management believes that focus is key
to success in the early days of expansion so it has defined an
approach that will focus on prioritising government or charity
sectors, market-by-market.
stakeholders alike. To date 11 out of the 48 jurisdictional
lotteries have an iLottery or digital platform, and a further half
dozen are likely to start preparations for iLottery within the
next 12 months.
Management has identified the need for distinct propositions
for the US market, these will be Jumbo iLottery® and Jumbo
iRetailer®. Both propositions are based on our PBJ platform
and marketing services. The iLottery proposition provides
lotteries with an integrated digital lottery channel that is more
efficient and effective than its industry competitors.
The iRetailer proposition provides lotteries with a standalone
digital channel that is self-sufficient and does not require
operating cost or marketing budget to be diverted from the
lottery’s main operations. The iRetailer model is focused on
smaller US states or those states that have constrained or
restrictive marketing budgets.
THE UK MARKET
Management’s priority is to gain further market share in the
society lottery2 sector (charity and local authority). The sector
is worth an estimated $1.6bn3 in TTV and is a fragmented,
yet lucrative market. Jumbo will utilise its acquisition of
Gatherwell and focus on further growth in its local authorities
and schools’ business, alongside gaining market share in the
charity sector.
THE US MARKET
The government lottery sector in the US is by far the most
lucrative to Jumbo with a TAM of $22bn4 . A market that has
had historic barriers to entry is starting to open, with state
legislation changing and requirements for digital lottery
and innovation being demanded by lottery directors and
1 Total TAM of $25bn equates to TAM by region of: UK $1.6bn; US $22bn; and Canada $1.3bn
2 Society Lotteries is the legal term in the UK for regulated charity and local authority lotteries.
3 UK TAM of $1.6bn: The UK Gambling Commission reports TTV for sector of £775m (Sept 2019) applying a 5-year
CAGR of +14% and/or PY rise of 8% gives a range of £837m to £884m in sector growth (to Sept’20). Using 6-month
average GBP £1 to AUD $1.89, this leaves forecast TTV between $1.67m and $1.58m (Reference UKGC Annual Report
18/19)
4 2018 US lottery sales were USD77bn. Draw games were USD28bn. With 50% iLottery penetration forecast in next
5 years (23 US lotteries). Management has modelled 25% of draw game sales likely to be converted to digital, this
coupled with a doubling of sales with the upsell of Instant Win Games, Management forecasts the iLottery market to be
worth $14.6bn (3% growth adjustment) USD $1 to AUD $1.50 equating to a TAM of $21.9bn
The international ambition is to
drive meaningful businesses in the
UK, the US and Canada that will
be used as a beachhead in each
region to grow into other markets
and sectors. International will
support roughly a third of the $1bn
TTV vision, set out by the CEO. In
the longer-term the ambition is
to have an International Business
that is equal to or bigger than the
Australian business by 2026.
THE CANADIAN MARKET
With a TTV of $1.3bn the charity lottery market in Canada
is significant. The market is well defined and consolidated
versus the US charity market leading to Jumbo being able to
partner or acquire to gain a meaningful presence and market
share in Canada. Once there is an established foothold in
Canada, Management believes the model can be exported to
other parts of the North American region, using the expertise
of the local market in adjacent markets.
AMBITION
The international ambition is to drive sustainable businesses
in the UK, the US and Canada that will be used as a
beachhead in each region to grow into other markets and
sectors. International will support roughly a third of the
$1bn TTV vision, set out by the CEO. In the longer-term the
ambition is to have an International Business that is equal to or
bigger than the Australian business by 2026.
$ 25 bn TAM
Total
addressable
market
UK $1.6 bn
Canada
$1.3 bn
USA
$22 bn
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27
LEADERSHIP TEAM
Jumbo has a
stable leadership
team that
has amassed
unique digital
experience in
the world lottery
industry.
Left to right, top to bottom: Mike Veverka, David
Barwick, Sharon Christensen, Giovanni Rizzo, Bill
Lyne, David Todd, Brad Board, Xavier Bergade,
Brian J. Roberts, Richard Bateson
MIKE VEVERKA
Chief Executive Officer & Executive Director (BEng (Hons))
Mike Veverka is CEO and founder of Jumbo Interactive. He has a proven
track record in business and computing, establishing several successful
startups to meet new consumer demands for online products. His
entrepreneurial flair and ambition for innovation were displayed at the age
of fifteen when he created and sold his first 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.
DAVID BARWICK
Chairman and Non-Executive Director
David Barwick has over 40 years experience in the management and
administration of publicly listed companies in Australia and North America.
During this period David has held the positions of Chairman, Managing
Director or President of over 30 public companies with strengths in
strategic planning, restructuring and financing entities
SHARON CHRISTENSEN
Non- Executive Director
Professor Sharon Christensen has 29 years of commercial, legal and
regulatory experience and is a research leader in regulatory responses
to digital innovation and disruption. Most recently, Sharon was a Non-
Executive Director of Property Exchange Australia Ltd, the operator of
the national online property exchange network. Sharon holds a Bachelor
of Laws (Honours) and Master of Laws and is a member of the Australian
Institute of Company Directors
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.
BILL LYNE
Non-Executive Director and Company Secretary (BCom, CA, FCIS,
FGIA, FAICD, FFIN)
Bill Lyne is the Principal of Australian Company Secretary Service that
provides secretarial, corporate compliance and governance services to
public company clients in a wide range of industries. Prior to this, Bill was
Company Secretary and CFO 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.
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
Corporate Governance. He is a Fellow of the Governance Institute of
Australia and a Fellow of the Institute of Chartered Secretaries and
Administrators (UK). David brings a wealth of commercial expertise to
Jumbo Interactive as Chief Financial Officer.
BRAD BOARD
Chief Operating Officer
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.
XAVIER BERGADE
Chief Technology Officer
As Chief Technology Officer, Xavier ensures that Jumbo’s technology
services are continually improving and innovating while remaining secure
for customer transactions. He is responsible for the adaptation of the
successful Australian OzLotteries.com website to other markets and
ensuring capabilities for customer purchases on any device demands that
websites continually evolve as new mobile and computer products are
released to market with unprecedented frequency.
BRIAN J. ROBERTS
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.
RICHARD BATESON
International Lottery Advisor
Richard has worked in the lottery industry for the past 18 years. A former
director of Camelot UK Lotteries Ltd (B2C) and Camelot Global Solutions
Ltd (B2B), Richard has been on both sides of the lottery fence working for
the UK National Lottery and vendor operations and sales with Camelot
Global. During his time at Camelot, Richard grew UK National Lottery
sales from £5.2bn to £6.9bn over a 4 year period – and grew the digital
customer base by 4m players. Richard was also President of EuroMillions
for 5 years, and a member of the Board for 13 years – creating a €7bn game
brand. Within the B2B business Richard set-up the commercial division
that supported the successful Irish National Lottery bid for Camelot’s
shareholder, won contracts with US states in New York, Kentucky and
Arkansas – alongside working in the States of Texas and California.
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29
PEOPLE OF JUMBO
GREAT
PEOPLE
by Abby Perry,
Head of Human Resources
DISTRIBUTED WORKPLACE
The COVID-19 pandemic resulted in Jumbo and the world dealing
with unforeseen challenges that have had unprecedented health and
economical impacts. During this period we have worked closely with
our employees to ensure the health and welfare of our people and their
families, and have supported our employees to adjust in a rapidly changing
environment. Jumbo was able to demonstrate agility in responding
quickly to the dangers of the COVID-19 outbreak, moving all employees
to work remotely with minimal interruption to their work cycles and their
ability to remain productive. Our transition to a distributed workplace has
strengthened the resilience of our operational framework and technology,
and our people have embraced remote-first processes and tools.
Employees remain highly productive and exceptionally engaged, having
adapted to the transition seamlessly. Jumbo provides a flexible work
environment where employees are empowered to choose a workplace
where they are most comfortable and productive. This flexibility enables
our people to manage their work and time to suit their needs, whilst
continuing to achieve their career and personal objectives.
CULTURE
Jumbo’s workplace culture remains strong despite the unforeseen
challenges; however we recognise that in transitioning to a distributed
workplace that a new culture will emerge. This is an opportunity for Jumbo
to recreate a culture that is strengthened by the values, attitudes and
behaviours of our employees, in alignment with our vision and strategy.
Our leaders will play an essential role in establishing culture at a team
level, by demonstrating compassion, promoting psychological safety, and
actively taking action to keep teams intact. By utilising Jumbo’s strong
communications technology, we are able to keep connected with our
employees and promote a sense of belonging. We also like to have fun, and
initiatives such as virtual social events and delivery of gifts to employees
help to boost employee morale and encourage colleagues to stay in
touch. When safe to do so, we will resume physical social gatherings for
employees to further interact in a safe environment with friends and family.
DIVERSITY
Over the last 12 months, female representation across our workforce has
increased by more than 5%. Whilst progress has been made, we recognise
more remains to be done to improve the gender balance. Diversity is a
business priority and our practices continue to evolve. Our EmpowHer
graduate program offers a safe learning environment to help women launch
their career in technology, providing invaluable on-the-job experience
to quickly advance the skills that will enable graduates to establish a
successful career. Jumbo’s strong company culture and core values
underpin our ability to attract and retain employees. We are committed
to building a high-performing workforce and take pride in the diversity of
our people and our inclusive workplace. All employees play a vital role in
creating a collaborative environment in which our people feel valued and
respected for their individuality and contributions.
CAREER DEVELOPMENT
Our people are fundamental to our success. We strive to continuously build
a culture where our employees are provided with learning opportunities to
develop and are encouraged to contribute towards making work easier, fun
and productive. Jumbo’s Career Pathways represent career development
opportunities within Jumbo and supports our people with the necessary
tools to set career goals. By creating opportunities through a range of
solutions including coaching and mentoring, on-the-job experience and
formal training, we reduce the risk of skills and knowledge shortages and
enhance performance. Development areas range across both technical
and personal skill sets, including leadership, innovation, collaboration and
more. Retaining high calibre people is integral to Jumbo’s ongoing success
and attracting talented individuals as new skills are required is a key priority.
The retention of our employees is a key indicator that our people feel
engaged and enabled and our employee engagement remains high in a
challenging environment.
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31
JUMBO TURNS 25
HAPPY
BIRTHDAY
2020 marks 25 years since Jumbo was
founded with a vision to develop software
and services for the burgeoning Internet.
1995 was also the year of the successful
Netscape IPO that launched an era of
Internet technology companies.
The early days of Jumbo saw a variety of software products
and services developed including an e-commerce platform,
online marketing services and web development tools.
Following a successful IPO in 1999, that company (Benon
Technologies Pty Ltd) became the main operating entity and
a wholly owned subsidiary of Jumbo Interactive Limited that
is still operating today. At that time the company was known
as Jumbomall.com, an online shopping mall concept that
provided virtual store fronts to businesses and marketed
them to a global audience. One of those businesses was the
RSL Art Union, a successful charity lottery that worked with
the team at Jumbo to explore the idea of selling lottery tickets
over the Internet.
Lotteries over the Internet proved to be a very successful
concept due to the vast improvement in customer
experience which in turn helped the lottery to grow. Continual
improvements to the software and a decision to focus
exclusively on lotteries helped propel the business to greater
heights. Additional lotteries were added via the acquisition
of TMS Global Services Pty Ltd in 2005 which gave Jumbo
the right to sell national games such as OzLotto and the
Powerball. This was accomplished via agreements with the
Tatts Group and a number of state run lottery organisations
that were the basis to the agreements Jumbo operates under
today.
Technological advances continued to come enabling many
of the features we take for granted today - Mobile Apps and
Social Media (Lotto Party) are perfect examples. The Internet
penetration of lottery ticket sales (percentage of tickets sold
over the Internet compared to overall sales) continued to rise
driven primarily by younger tech-savvy customers. However
the rapid rise led to the need for a complete rewrite of the
software platform in 2016. The project was completed in 2018
just in time for the new Powerball game which was relaunched
around the same time. This project also saw the launch of the
“Powered by Jumbo” software platform for lotteries which
is not only a return to the software development roots of
Jumbo, but an important driver of growth in domestic and
international markets.
25 years in business is in itself an achievement and thanks to
the efforts of many people Jumbo is well positioned for further
growth enabling lotteries around the world to grow through
technology.
MILESTONES
1995
Company founded as "Squirrel Software
Technologies Pty Ltd" which would later be
renamed to "Benon Technologies Pty Ltd".
1999
IPO on the Australian Stock Exchange as
"Jumbomall.com" providing e-commerce
software and services to small businesses
globally.
2000
Began selling lottery tickets online for the RSL
Charity Lottery.
2005
Acquired TMS Global Services Pty Ltd and
began selling the Australian Powerball and
OzLotto games online.
2011
Launched the OzLotteries App that would later
grow to 75% of all sales. Paid first dividend.
2017
The Tatts group invests $15 million and becomes
a substantial shareholder. Extends agreement a
further 5 years.
2019
Launched the "Powered by Jumbo" Saas
business.
2020
Agreement with Tabcorp extended a further 10
years.
Our Board
Modern Slavery
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33
CORPORATE
RESPONSIBILITY
by Nikki Searby,
Legal Counsel and Investor Relations
BUSINESS SUSTAINABILITY THROUGH
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE RESPONSIBILITY
Jumbo is committed to operational excellence in a sustainable and
responsible manner, whilst creating lasting value for all of our stakeholders.
As a leading developer and operator of world-class digital lottery
experiences, our responsibilities extend to our customers, staff,
shareholders, suppliers, government, communities, and the environment in
which we operate.
Jumbo’s aim is to use our experience and expertise to develop relationships
with clients and customers to improve lives.
ENVIRONMENT
Being a predominantly 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.
By providing digital tickets to our customers, rather than paper, assists our
customers in reducing their own environmental footprints.
Despite the minimal environmental impact of operations, Jumbo is aware of
the different types of pollution that the digital sector creates, such as
• Pollution from the production of IT hardware;
• Pollution from e-waste i.e. used electrical and electronic equipment;
• Pollution from daily digital use.
Procedures and initiatives to address this impact include cutting back our
digital environmental footprint via optimizing our equipment rate, and re-
purposing or recycling hardware.
Our relatively small environmental footprint arises largely from the energy
used by our few offices, and from consumables.
• Our Brisbane head office has a 5 star NABERS energy rating and a 3 star
NABERS water rating; and
• Our Melbourne office has a 5 star NABERS energy rating and a 3 star
NABERS water rating
Jumbo continually reviews the digital ecology with the goal of operating at
an impact-neutral level, including responsible purchasing initiatives, and
developing procedures to reduce digital carbon footprint in the office.
COMMUNITY, CUSTOMERS, AND
RESPONSIBLE GAMBLING
SOCIAL CONTRIBUTION
The lottery industry is an essential contributor to the community. Not only
does the substantial tax revenue from lotteries contribute to a host of social
services, but also, there is a strong social responsibility aspect to lotteries,
particularly in the charity lottery space.
The funds raised by our charity partners enable them to provide services
and support to the community, which improves the quality of the
community.
Their partnership with Jumbo not only improves their fund-raising abilities
in support of their services, but also offers a reduction of their carbon
footprint, and reducing their dependency on government assistance.
Jumbo also provides services to our regional neighbours in Fiji, Samoa and
the Cook Islands, enabling these countries to raise funds for their local
communities.
CUSTOMERS
Our products and services improve the quality of life for our customers, and
our clients’ customers, offering hope in uncertain times, and providing them
with the opportunity to dream.
Although lotteries are not associated with problem gambling issues,
Jumbo does not encourage excessive gambling, or extending customers
beyond their financial means. In addition to Jumbo’s OzLotteries having
robust in-house procedures for customer care, the PBJ platform has
numerous solutions built in to ensure Responsible Gambling principles are
implemented.
Customer accounts can be flagged on the PBJ platform, and facilities
offering protection for vulnerable customers, such as self-exclusion, setting
spend limits, and provision of Responsible Gambling Account Statements
to show spending and prize amounts, are enabled.
Oz Lotteries frontline staff is trained to spot the signs of problem gambling,
such as change in spending or frequency of play. Oz lotteries staff actively
monitors player behaviour, and is very proactive with reaching out to
customers to offer assistance.
OzLotteries complies with each State and Territory’s Responsible
Gambling Code of Practice, underpinned by our Responsible Gambling
Policy which is available on the website https://www.ozlotteries.com/
about/responsible-gaming.
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. Our Privacy Policy is available on the website
https://www.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 FY20.
CLIENTS
Jumbo provides its PBJ clients with not only the personalisation of the
product based on the client’s applicable Responsible Gambling and Codes
of Practice requirements, but also assistance with the development of
procedures, and assistance with staff training, to maximise the Responsible
Gambling solutions available on the PBJ platform.
Jumbo continues to improve on these solutions to improve efficiency and
efficacy of Responsible Gambling service delivery.
WORKPLACE
Our people reflect Jumbo’s culture and values, and their diverse capabilities
enable us to achieve exceptional performance.
Our relationship with our people is enshrined in our Code of Conduct which
defines our workplace principles.
WORKPLACE CULTURE
Jumbo recognises that our people are vital to our success, and continues
to provide a supportive and collaborative environment.
Our charity partners are the embodiment of social responsibility, having the
specific goal of helping the community.
Initiatives such as conducting a Workplace Respect Training Day, Info
Xchange programs, and the provision of a Learning and Development
Platform for all employees are testament to Jumbo’s commitment to
investing in the professional development of our staff.
The prevalence of Covid-19 in 2020 impacted on Jumbo’s ability to action
its wellbeing initiatives, which historically included free breakfast and
lunch, subsidised wellness activities, company sponsored participation in
sporting and charity events, and a variety of social activities. Undeterred,
Jumbo arranged care package deliveries for each employee, ensuring staff
were supported through Brisbane’s lock-down period.
WORKPLACE GIVING
Jumbo provides contributions to numerous charities and community
organisations through corporate sponsorships, and by encouraging
employees in their charitable initiatives.
Jumbo’s internal charity fund, ‘Just Giving’, 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 FY 2020, the following charities were supported:
• RSPCA – fundraising through their RSPCA CupcakeDay
• Movember Foundation – fundraising
• Heart Foundation - fundraising
• World’s Greatest Shave - fundraising
• Cancer Council – donation from Just Giving
• WIRES – fundraising
• Red Cross – fundraising
WOMEN IN LOTTERY LEADERSHIP
Jumbo continues its support of the Women In Lottery Leadership
(WILL), following the inaugural scholarship grant of US$50,000. Further
information can be found here:
http://womeninlotteryleadership.com/.
GENDER DIVERSITY
Our Gender Diversity Policy has an objective of 45% female employees by
2023.
As at 30 June 2020, females account for 42% of Jumbo employees. In
addition to the Gender Diversity Policy, Jumbo has taken a pragmatic
approach which focuses on female empowerment, and championing
programs offering opportunities for women, such as the EmpowHer
Program.
In addition to our Graduate Program, Jumbo provides an allocated position
for a female under the EmpowHer program. In 2021, Jumbo will increase
this allocation to two places under the EmpowHer Program.
Further information can be found under the section “Our People”.
GOVERNANCE
Our Corporate Governance Statement in this Annual Report describes
in full our approach to corporate governance and compliance with the
fourth edition of the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations. The CGS is also available
on our website https://www.jumbointeractive.com/governance/corporate_
governance_statement.pdf.
We have established a governance framework to support our business and
help us deliver on our strategy.
OUR BOARD
As at the date of this report, our Board comprises five Directors – four
independent non-executive Directors and one executive Director
being Jumbo’s founder and CEO, Mike Veverka. Details of the Directors’
qualifications and experience are in the Board of Directors section of the
Directors’ Report.
Jumbo has experienced rapid growth over the recent financial year. To
meet the increasing demands of being a significantly larger company, we
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
further expanded the Board with the appointment of Sharon Christensen
as an independent non-executive Director effective 1 September 2019.
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.
MODERN SLAVERY
The Modern Slavery Act 2018 (Cth) (‘Act’) requires reporting entities
subject to the Act to produce an annual modern slavery statement.
Whilst Jumbo is not a reporting entity subject to the Act, Jumbo is
committed to operating ethically, and in accordance with the highest
adherence to corporate social responsibility, environmental and workplace
safety protection, and staff inclusion and diversity. Accordingly, Jumbo
implemented a Modern Slavery Policy to guide its operations and
partnerships.
Jumbo has a relatively simple supply chain that includes the following
products and services:
•
lottery entries from official national and registered charity lotteries;
• purchase of products and services needed for the businesses day-to-
day operations including office supplies;
• employment and training of staff;
• external professional services including financial auditing and legal
advice;
leasing of office space;
IT infrastructure and support services; and
travel.
•
•
•
Jumbo endeavours to only work with suppliers that are aligned to our
values. We expect our business partners to operate in accordance with all
applicable modern slavery laws including those prohibiting human slavery
and slavery like practices, human trafficking and child labour.
We have a whistle-blower policy and an external hotline for staff and
business partners to use.
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35
FINANCIAL
REPORT
Cycling off a
comparative period of
high large jackpot
activity, an increase in
customer activity and
engagement with mixed
large jackpot activity
has seen an increase in
Total Transaction Value
(TTV) and Revenue.
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37
FY2019 has not been adjusted for comparative purposes to reflect changes from the effect of adopting accounting policy AASB 16 Leases from 1 July 2019,
but is provided in the following table for information purposes:
Statement of Profit or Loss and other comprehensive income
Previous policy
Adjustments
Revised policy
30 June 2019
Revenue
Occupancy expenses
Administrative expenses
• depreciation and amortisation
Finance costs
Profit before income tax
Income tax expense
Net profit after tax
EBIT
EBITDA
EBIT margin (%)
EBITDA margin (%)
$'000
65,212
(742)
(19,117)
(3,433)
(7)
38,219
(11,799)
26,420
36,755
40,188
56.4
61.6
$'000
-
772
(750)
(750)
(164)
(142)
43
(99)
20
753
-
1.2
$'000
65,212
30
(19,867)
(4,183)
(171)
38,077
(11,756)
26,321
36,775
40,941
56.4
62.8
FY 2020 IN REVIEW
Financial Headlines
$’000
TTV
Revenue
Revenue margin
EBITDA - underlying1
EBIT - underlying1
NPAT - underlying1
Adjustments - acquisition costs
- fair value revaluation
EBITDA - statutory
EBIT - statutory
NPAT - statutory
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 - underlying (cps)
Return on capital employed (%)
Shares on issue (million)
Market capitalisation (million)
EBITDA margin - underlying (%)
EBIT margin - underlying (%)
1 refer page 43 for the reconciliation to statutory earnings
Highlights
Cycling off a comparative period of high large jackpot activity, an increase in
customer activity and engagement (new and active customers) with mixed
large jackpot activity (number and average value) has seen an increase in
Total Transaction Value (TTV) and Revenue, and with a step-up in costs, has
resulted in a marginal increase in underlying Net Profit After Tax.
5 year Total Transaction Value and average large
jackpots (in $ millions)
400
350
300
250
200
150
100
50
348.6
320.7
183.1
38.4
40.1
153.3
145.3
28.8
28.4
42.2
FY16
FY17
FY18
FY19
FY20
80
70
60
50
40
30
20
10
FY2020
348,601
71,168
20.4%
43,223
37,236
26,465
(406)
(176)
42,641
36,654
25,883
72,259
78,919
53,174
958.0
40.0
(50.5%)
42.5
32.8%
62.4
598.0
60.7%
52.3%
FY2019
320,659
65,212
20.3%
40.188
36,755
26,420
-
-
40,188
36,755
26,420
84,583
77,378
61,780
2015.0
34.0
309.8%
43.9
34.1%
62.1
1,251.8
61.6%
56.6%
Variance %
8.7%
9.1%
0.1ppt
7.6%
1.3%
0.2%
-
-
6.1%
(0.3%)
(2.0%)
(14.6%)
2.0%
(20.7%)
(52.5%)
17.6%
(360.3ppt)
(3.2%)
(1.3ppt)
0.5%
(52.2%)
(0.9ppt)
(4.3ppt)
• Revenue $71.168 million – 9% increase
• Net Profit After Tax – underlying $26.465 million – 0.2% increase
• Dividends paid 40.0 cents (fully franked) – 18% increase
FY2021 outlook
• The signing of revised 10 year agreements with Tabcorp introduces new
expenses in Service fees in COSs but gives long-term certainty to the
Reseller business segment
• The burgeoning SaaS business segment is set to make a meaningful
contribution from existing agreements going fully live, and a full year con-
tribution from Gatherwell in the UK
38
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
39
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 2020.
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.
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.
Sharon Christensen: Independent Non-Executive Director (appointed 1
September 2019).
Details of the experience, qualifications and special responsibilities, 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:
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 profes-
sion 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: 3,000 ordinary shares only in Jumbo
Interactive Limited.
Mike Veverka
Experience: Mike Veverka has been Chief Executive Officer and Director
of Jumbo Interactive Limited since the restructuring of the Company 8
September 1999. Mike was instrumental in the development of the e-com-
merce 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 success-
ful internet endeavours to his name. Mike graduated with an Honours degree
in engineering in 1987.
Qualifications: Bachelor of Engineering (Hons).
Special responsibilities: Chief Executive Officer.
Australian Listed Company Directorships held in the past three years: None.
Interest in shares and options: 9,515,729 ordinary shares, nil options and
20,202 rights over ordinary shares in Jumbo Interactive Limited.
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 two other publicly listed companies, is
a former secretary and/or director of a number of other listed companies,
Qualifications: Bachelor of Commerce; Chartered Accountant.
Special responsibilities: Chair of the Audit and Risk Management Committee;
member of the Nomination and Remuneration Committee; and Company
Secretary.
Australian Listed Company Directorships held in the past three years: None.
Interest in shares and options: 2,000 ordinary shares only in Jumbo
Interactive Limited.
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 and South Africa.
Special responsibilities: Chair of the Nomination and Remuneration
Committee; member of the Audit and Risk Management Committee.
Australian Listed Company Directorships held in the past three years: None.
Interest in shares and options: 2,000 ordinary shares only in Jumbo
Interactive Limited.
Sharon Christensen
Experience: Appointed as a board member on 1 September 2019, Sharon
Christensen has 29 years of commercial, legal and regulatory experience
and is a research leader in regulatory responses to digital innovation and
disruption. Most recently, Sharon was a Non-Executive Director of Property
Exchange Australia Ltd, the operator of the national online property
exchange network, and is a member of the Australian Institute of Company
Directors.
Qualifications: Bachelor of Laws (Honours); Master of Laws.
Special responsibilities: Member of the Nomination and Remuneration
Committee.
Australian Listed Company Directorships held in the past three years: None.
Interest in shares and options: 2,050 ordinary shares only in Jumbo
Interactive Limited.
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 both in Australia
and eligible overseas jurisdictions.
There were no significant changes in the nature of the Group’s principal
activities that occurred during the financial year.
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 42 to 45 of this report.
Dividends
A fully franked final dividend of 21.5 cents per fully paid ordinary share for
the year ended 30 June 2019 was paid on 20 September 2019, and a fully
franked interim dividend of 18.5 cents per fully paid ordinary share for the
year ended 30 June 2020 was paid on 20 March 2020.
• Northern Territory - 10 years to 25 August 2030 with renewal negotiations
9 months prior to expiry, for sales to customers in the Northern Territory
and eligible overseas jurisdictions
Tabcorp have a strategically important substantial stake in the Company
which is currently 11.6%.
The domestic internet market is currently estimated to be ~28% of the total
domestic lottery market, and increasing at ~3 to ~4 percentage points p.a.
(the five year CAGR to FY2020 is 21.9%). This compares to more mature
overseas markets such as UK and Finland where the internet market is esti-
mated to have reached ~31% and ~48% respectively.
On 26 August 2020, the Directors have determined to pay a fully franked
final dividend for the financial year ended 30 June 2020 of 17.0 cents per
fully paid ordinary share (2019: 21.5 cents per fully paid ordinary share), to be
paid on 30 September 2020.
The Company started selling Charity lottery tickets in July 2015 and added
one charity during the financial year for a current total of seven chari-
ties, and increased sales by 14% in FY2020. At least one further charity is
expected to be added in FY2021, and sales growth is expected to continue.
Further details of dividends provided for or paid are set out in note 15:
Dividends to the Consolidated Financial Statements on page 78.
Charity lottery games are undertaken through the following lottery
agreements:
State of Affairs
Changes in the state of affairs are set out on page 45 and form part of the
Directors’ Report for the financial year ended 30 June 2020.
Corporate Governance Statement
The Corporate Governance Statement is available on the Company's
website at https://www.jumbointeractive.com/governance/corporate_gov-
ernance_statement.pdf.
Events after the reporting date
Apart from (i) the revised long-form reseller agreement signed with
Tabcorp as announced 25 August 2020 and consequent payment of the
$15,000,000 extension fee, and (ii) the final dividend declared, as at the
date of this Directors’ Report, the directors are not aware of any matter
or circumstance that has arisen that has significantly affected, or may
significantly affect, the operations of the Company in the financial years sub-
sequent to 30 June 2020.
The above items are not recognised in the financial statements 30 June
2020.
Likely developments, key business strategies and future
prospects
The Company is evolving from a single- to a dual-stream revenue business
with the burgeoning Software-as-a-Service (SaaS) business segment taking
shape and which will expand in FY2021.
Our business
The Group is a leading digital retailer of both national jackpot lotteries and
charity lotteries. We utilise the latest technology to craft an engaging and
entertaining purchase experience for our customers across a range of digi-
tal platforms.
Reseller business
This is a well established digital reseller business through its flagship ser-
vice www.ozlotteries.com, which activities include the sale of Australian
lotteries (national and charities) in eligible jurisdictions in both Australia and
internationally.
There is a long, strong relationship that started with Tattersall’s more than
15 years ago and continues today with Tabcorp following the merger of the
companies in December 2017. Sale of national lottery games are undertaken
through the following lottery agreements with Tabcorp:
• Victoria – 10 years to 25 August 2030 with renewal negotiations 9 months
prior to expiry, for sales to customers in Victoria
• New South Wales – 10 years to 25 August 2030 with renewal negotia-
tions 9 months prior to expiry, for sales to customers in New South Wales,
Tasmania and the Australia Capital Territory
• South Australia - 10 years to 25 August 2030 with renewal negotiations 9
months prior to expiry, for sales to customers in South Australia
Mater – 5 years from 19 April 2017
•
• Endeavour Foundation – 5 years from 12 June 2017
• Surf Life Saving Lotteries - 5 years from 31 May 2017
• RSPCA – 5 years from 24 April 2018
• The Deaf Lottery Association – 5 years from 21 November 2017
• ACT for kids – 5 years from 19 July 2017
• Classics For A Cause – 1 + 1 year from 1 June 2020
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.
Software-as-a-Service (SaaS) business
The burgeoning SaaS business is engaged in licensing its lottery platform
(PoweredByJumbo) (PBJ) which has been developed from experience
over the past 15 years and is used for the Company’s www.ozlotteries.
com business, as well as providing lottery services. The Company currently
has agreements signed with customers with TTV of ~$140 million that is
expected to generated incremental revenue of ~$4.5 million, incremental
profit of ~$3.4 million, and incremental EBITDA of ~$3.9 million, with ~75%
estimated in FY2021 and 100% in FY2022.
The Company currently has the following SaaS agreements:
• Mater – 5 + 5 years from 8 November 2018. Fully live July 2020
• Endeavour Foundation – 5 + 5 years from 15 August 2019. Digital live and
expected to be fully live by 31 October 2020
• Deaf Services – 5 + 5 from 5 December 2019. Expected to be fully live by
September 2020
• Multiple Sclerosis Queensland – 5 + 5 from 25 February 2020. Anticipated
to be fully live by 31 December 2020
• Classics For A Cause – signed 8 April 2020 - 1 + 1 year from live date
expected to be by 30 September 2020
The SaaS objective is to sign up customers with an aggregate TTV of $100
million each year whether this be two customers with TTV of $50 million
each or 10 customers with TTV of $10 million each.
The Company acquired Gatherwell Limited in the UK on 29 November 2019,
which is a licenced External Lottery Manager providing a turnkey digital lot-
tery solution to lotteries across the UK, that also has application in Australia
and elsewhere internationally. Gatherwell’s main customers are schools
through www.yourschoollottery.co.uk , local authorities/councils, and small
society lotteries through www.onelottery.co.uk and other individual brands.
There are good growth prospects with approximately 32,770 schools of
which ~1,300 are existing Gatherwell customers ~ 4% and about 408 princi-
pal councils of which ~67 are existing Gatherwell customers ~16%.
The SaaS business segment is also well placed for expected strong growth
over the medium to long term.
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
41
40
Group
The new 10 year extension to the Tabcorp agreements and strategy to
accelerate the growth of the SaaS business will result in an uplift of oper-
ating expenses for FY2021. These increased operating expenses will
underpin the planned continued growth of Jumbo over the next three to five
years with the principal uplift relating to increased marketing expenses and
marketing software capabilities to drive TTV growth. There will also be an
uplift in employee costs and consulting/contracting costs to give Jumbo the
bench strength to accelerate the growth of the SaaS business.
Coronavirus (COVID-19) pandemic
There has been a positive financial impact of COVID-19 up to 30 June 2020
for the Group. With people working from home and social distancing being
in effect there has been an increase in digital lottery sales but increased
levels of unemployment and uncertainty of reduced spend of disposable
income. Tracking low level jackpots has seen an increase in ticket sales on
a like-for-like basis. Gatherwell’s core subscription business has held up well
and signing up of new customers has had to be deferred due to lock-down
restrictions in the UK which in turn will defer expected future growth.
We remain committed to keeping our employees and their families safe and
ensuring their ongoing health and wellbeing during this unprecedented time.
A work from home (WFH) policy has been introduced and staff can work
between home and the office as required. The Company has a COVID-safe
plan that it operates to.
Environmental regulation
The Group’s operations are not regulated by any significant environmental
regulation under a law of the Commonwealth or of a State or Territory.
Directors’ meetings
The number of meetings of the Board of Directors (including board committees) held during the year ended 30 June 2020 and the number of meetings
attended by each Director is set out in the table below:
Meetings table1
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
Sharon Christensen
Giovanni Rizzo
1 Meetings include Circulating Resolutions
20
20
20
17
20
20
20
19
17
20
9
-
9
-
9
9
-
8
-
9
3
-
3
2
3
3
-
3
2
3
Share options
Unissued ordinary shares of the Company under options at the date of this
report are as follows:
Name
Directors
Mike Veverka
Number of
rights granted
Number of ordinary
shares under right
70,453
70,453
Date options
granted
Expiry date
18 November 2015
18 November 2020
15 November 2017
15 November 2022
Exercise
price
of shares
$1.75
$3.50
Number
under option
Other key management
personnel
100,000
600,000
700,000
Xavier Bergade
Brad Board
David Todd
30,823
30,823
30,823
162,922
30,823
30,823
30,823
162,922
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.
Indemnifying officers or auditor
During or since the financial year ended 30 June 2020, the following ordi-
nary shares of Jumbo Interactive Limited were issued on the exercise of
options granted.
Date options granted
Issue price of share
Number of shares issued
During the financial year, the Company paid a premium in respect of a con-
tract 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.
18 November 2015
15 November 2017
$1.75
$3.50
150,000
150,000
300,000
The Company has not otherwise, during or since the end of the financial
year, except to the extent permitted by law, indemnified or agreed to indem-
nify 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.
No amounts are unpaid on these shares.
During or since the financial year ended 30 June 2020, the following rights
were granted by Jumbo Interactive Limited to Directors and key manage-
ment personnel, including the five most highly remunerated officers, of the
Group as part of their remuneration.
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 com-
patible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
This Directors’ Report is made in accordance with a resolution of the
Directors of the Company.
David K Barwick
Chairman Brisbane
26 August 2020
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 relat-
ing to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Details of the amounts paid to BDO for non-audit services throughout the
year are set out below:
Taxation services
Consolidated
2020
$
2019
$
Tax compliance services - tax returns
52,500
43,000
Other tax advice
Total taxation services
Other services
Accounting advice
Whistleblower services
Due diligence
Total other services
Total fees for non-audit services
9,300
6,000
61,800
49,000
-
6,500
84,423
90,923
152,723
5,250
5,000
-
10,250
59,250
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 operat-
ing 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 pur-
pose 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 47 to 55, and forms part of the
Directors’ Report for the financial year ended 30 June 2020.
Rounding of amounts
The company satisfies the requirements of ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 issued by the Australian
Securities and Investments Commission in relation to rounding of amounts
in the directors’ report and the financial statements to the nearest thousand
dollars. Amounts have been rounded off in the directors’ report and financial
statements in accordance with that Legislative Instrument.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration, as required under section
307C of the Corporations Act 2001, is set out on page 56.
42
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
43
OPERATING AND
FINANCIAL REVIEW
Consolidated results of 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 lot-
tery 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: Revenue and other income for details.
Continuing operations
TTV
Revenue
Cost of sales
Gross profit
Other income
Expenses
NPBT
Income tax Expense
NPAT
EBITDA
EBIT
FY2020
348,601
71,168
(5,326)
65,842
1,318
(29,735)
37,425
(11,542)
25,883
42,641
36,654
FY2019
320,659
65,212
(5,068)
60,144
1,936
(23,861)
38,219
(11,799)
26,420
40,188
36,755
Variance
%
8.7%
9.1%
5.1%
9.5%
(31.9%)
24.6%
(2.1%)
(2.2%)
(2.0%)
6.1%
(0.3%)
Cycling off a comparative period of relatively high large jackpot activity, the
Company achieved a reasonable increase in TTV and Revenue due mainly
to increased customer activity together with the acquisition of Gatherwell
Ltd in the UK on 29 November 2019. During the financial year, the number
of new online accounts increased by 21.1% to 350,319 (2019: 444,004) and
number of active online customers increased by 8.6% to 827,411 (2019:
761,863), while the number of large jackpots decreased by 20.4% to 39
(2019: 49) and average value increased by 4.4% to $40.1 million (2019:
$38.4million). The increase in expenses is largely related to (i) increased
depreciation and amortisation with increased investment in the software
platform and the introduction of accounting standard AASB 16 Leases, (ii)
increased employee benefits with an increase in staff headcount to underpin
the planned growth in the burgeoning Software-as-a-Service (SaaS) busi-
ness segment, and (iii) being a larger company in the ASX300 Index with
increased associated costs such as share registry activity, remuneration
for an expanded Board. The overall decrease in Net profit after tax resulted
from an increase in TTV and Revenue and a step-up in costs to position the
Company for SaaS growth.
The Company continues to invest in the three main pillars that support the
ongoing growth of the Company with $6,432,000 (2019: $4,839,000) on
its proprietary software platform (intangible assets), $5,577,000 (2019:
$6,956,000) in marketing activities primarily to acquire new and retain
existing customers, and $11,613,000 (2019: $8,731,000) on employees who
provide the software development and marketing skills, customer support
services, and management.
Comparative analysis
Compared to FY2019:
TTV increased $27,942,000 or 8.7% to $348,601,000, principally due to:
• $20,253,000 or 6.3% increase to $339,983,000 in Australia Lotteries
mainly as a result of increased customer activity; and
burgeoning Software-as-a-Service business. The revenue margin is
affected by product mix, driven by large jackpot activity, and was an edge
higher at 20.4% (2019: 20.3%); and
• $1,520,000 from Gatherwell Ltd for the seven months since being
acquired 29 November 2019.
Cost of sales increased by $258,000 or 5.1% to $5,326,000 with a change
in presentation of bank merchant fees and service fees for FY2019 from
Expenses to COSs (see note 3: Expenses for details).
•
the margin to TTV is a slightly lower at 1.5% (2019: 1.6%).
Other income, being mainly interest on cash and cash equivalents,
decreased by $618,000 or 31.9% to $1,318,000 largely as a result of:
• $487,000 or 33.3% decrease in interest on cash and cash equivalents for
Australia Lotteries and Corporate through lower average balances mainly
with the acquisition of Gatherwell Ltd for ~$10,000,000 cash and lower
average interest rates (see note 19 (ii): Business combinations for details);
and $107,000 or 26.9% decrease in foreign currency gains
Expenses increased by $5,874,000 or 24.6% to $29,735,000 with a change
in presentation of bank merchant fees and service fees for FY2019 from
Expenses to COSs (see note 3: Expenses for details). The increase is mainly
due to:
• $1,378,000 or 19.8% decrease in marketing costs to $5,578,000 largely in
Australia Lotteries due to the lower number of large jackpots;
• $2,553,000 or 74.4% increase in depreciation and amortisation to
$5,986,000 mainly due to (i) a change in accounting standards AASB 16
Leases (see note 13: Lease liabilities for details) and (ii) increased intangi-
bles generated internally and through the Gatherwell Ltd acquisition (see
notes 9: Intangible assets and 10: Right-of-use assets and details);
• $2,757,000 or 31.6% increase in employee costs to $11,488,000 due
largely to increased staff numbers to support the expanding business
• $2,180,000 or 55.8% increase in other administrative expenses mainly as
• $7,715,000 from Gatherwell Ltd for seven months since being acquired 29
a result of an expanded business.
November 2019.
Revenue increased $5,956,000 or 9.1% to $71,168,000 due mainly to:
• $4,463,000 or 6.9% increase to $68,746,000 in Australia Lotteries as
a result of the increased TTV and the inclusion of $260,000 from the
NPBT of operations decreased $794,000 or 2.1% to $37,425,000, principally
due to:
The acquisition costs relate to the acquisition of Gatherwell Limited in the
UK on 29 November 2019.
• $211,000 or 0.5% increase in Australia Lotteries profits due to increased
TTV and Revenue and costs which increased by 18.2%;
• a decrease of $44,000 or 8.9% in All Other Segment profits from
decreased TTV/Revenue and increased expenses;
• $151,000 contribution from Gatherwell Ltd acquired 29 November 2019;
and
• $1,112,000 or 41.5% increase in Corporate losses mainly as a result of
decreased other revenue $156,000 and increased expenses $956,000
Australia Lotteries NPBT increased by 0.5% or $211,000 due to:
•
•
•
increased TTV by 6.3% or $20,253,000 and Revenue and other income
by 6.0% or $3,958,000 largely from improved customer activity;
increased cost of sales by 1.4% or $70,000; and
increased costs by 18.2% or $3,677,000 largely due to lower market-
ing expenses $1,406,000, increased depreciation and amortisation
$2,264,000, increased employee benefits $2,444,000
All Other Segments NPBT decreased 8.9% or $44,000 due to:
• decreased revenue of 2.9% or $27,000; and increased costs by 3.9% or
$17,000.
Software-as-a-Service UK NPBT contribution $151,000 with the acquisition
of Gatherwell Ltd on 29 November 2019.
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:
Large jackpot activity
FY 2020
FY 2019
FY 2018
TTV - Internet Lotteries
Australia
Reported Revenue - Internet
Lotteries Australia
Customer Activity
$340.0 m
$319.7 m
$183.0 m
$68.7 m
$64.3 m
$39.8 m
Number of new online accounts
350,319
444,004
214,908
Number of active online
customers
OzLotto/Powerball
Number of jackpots1
827,411
761,863
437,540
39
49
32
Average Div 1 jackpot1
$40.1 m
$38.4 m
$28.4 m
Peak Div 1 jackpot2
$150 m
$100 m
$55 m
Aggregate Div 1 jackpots2
$1,565 m
$1,880 m
$910 m
1 Ozlotto/Powerball Division 1 jackpots of $15 million or more
2 during the financial year period
Reconciliation to Statutory Earnings
Underlying earnings is a non-statutory measure and is the primary reporting
measure used by management and the Group’s chief operating decision
maker for the purposes of managing and assessing the financial perfor-
mance of the business. Underlying earnings is derived by adjusting the
statutory earnings for significant non-recurring, non-operating items as
follows:
Underlying EBITDA
Underlying EBIT
Underlying NPAT
Add/(deduct) significant items
• Acquisition costs
• Fair value of financial liability
Statutory EBITDA
Statutory EBIT
Taxation benefit/(expense)
FY2020
$’000
43,223
37,236
26,465
(406)
(176)
42,641
36,654
-
FY2019
$’000
40,188
36,919
26,420
-
-
40,188
36,919
-
Statutory NPAT
25,883
26,420
The revaluation of fair value is an increase in the fair value of the deferred
contingent compensation liability payable for the Gatherwell acquisition
based on an higher probability of this being paid when it is due after 30 June
2021.
Segment review
(a) Online Lottery Segment
This segment consists of reseller activities with the sale of the Australian
lottery games (national and charities) in Australia and other eligible
jurisdictions.
Improved customer activity (new customers and engagement with existing
customers) together with the mixed level of large jackpot activity combined
to increase revenue by 6.9% to $68,746,000 (2019: $64,283,000) despite
cycling off a comparative period of high large jackpot activity. Other income
decreased by $505,000 or 35.8% mainly due to decreased interest rev-
enue with lower average balances and lower average interest rates, and
reduced foreign exchange gains. Net profit before tax increased by 0.5%
to $40,614,000 (2019: $40,403,000) due to the higher customer activity
and mixed large jackpot activity notwithstanding an increase in expenses
of 18.2% or $3,677,000, which mainly relate to a decrease in market-
ing $1,406,000 from lower large jackpot activity, decreased occupancy
expenses $607,000 and increased finance costs $209,000 due to the
adoption of AASB 16 Leases, and an increase in administrative expenses
$5,479,000.
The $5,479,000 increased administrative expenses is mainly due to an
increase in depreciation and amortisation $2,264,000 with an increased
investment in the software platform and a change in accounting standards
AASB 16 Leases, an increase in employee benefits $2,444,000 and payroll
tax $163,000 to support the burgeoning SaaS business segment, and an
increase in software licensing $564,000 to provide enhanced marketing
capabilities to SaaS customers which will also benefit the Company’s own
reseller business.
TTV for the financial year increased by 6.3% to $339,983,000 (2019:
$319,730,000), which includes a 14.1% increase in charity lottery sales to
$8,864,000 (2019: $7,770,000), 2.6% of TTV (2019: 2.4%).
Included in the TTV, Revenue and NPBT is $260,000 (2019: $nil) from the
emerging SaaS business segment which will be reported separately in
FY2021.
Jumbo invests extensively in online marketing to grow and activate the cus-
tomer 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 effec-
tiveness 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 spent by
active online customers divided by the number of active online customers
in a given period.
4. Cost per Lead (new online accounts) defined as total cost to acquire
these new accounts divided by the number of new accounts in a given
period. New accounts potentially become active customers after the
account has been established.
The following table summarizes the Marketing KPI’s:
www.ozlotteries.com and mobile apps
FY 2020
FY 2019
Number of new online accounts
350,319
444,004
Number of active online customers
827,411
761,863
Average spend per active online customer
$383.12
$385.44
Cost per lead
$14.28
$13.81
44
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
45
The 21.1% decrease in new online accounts is largely due to a reduction
in marketing on customer acquisitions due to lower large jackpot activ-
ity (20.4% lower in number and 4.4% higher in average value). The 8.6%
increase in active online customers is due mainly to customer engage-
ment activities. The 0.6% decrease in average spend is largely due to the
decrease in large jackpot activity and the 3.4% increase in CPL is mostly due
to the marketing mix and decrease in large jackpot activity.
(b) All Other Segments
This segment consists of the sale of non-lottery products and services. TTV
and Revenue and other income increased to $902,000 (2019: $929,000)
and net profit before tax increased to $450,000 (2019: $494,000), due to
decreased revenue and increased expenses.
(c) Software-as-a-Service (SaaS) UK
This segment consists of the provision of lottery software services in the UK
with the acquisition of Gatherwell Limited on 29 November 2019. Gatherwell
provides a turnkey digital lottery solution to charities in the UK and has appli-
cation in Australia and elsewhere internationally. For the seven month period
to 30 June 2020, TTV was $7,715,000, Revenue $1,520,000 and net profit
before tax $151,000.
The NPBT of $151,000 is after the Consolidation expense of $263,000
(2019: $nil) amortisation of developed software and customer contracts
and relations that arose on consolidation with the acquisition of Gatherwell
Limited in the UK on 29 November 2019. Before this expense, the underlying
NPBT of Gatherwell is $414,000.
(d) Corporate
The net loss increased by 41.5% or $1,112,000 to NLBT $3,790,000 (2019:
NLBT $2,678,000) mainly due to increased expenses $956,000 or 29.8%
largely from (i) non-recurring costs $406,000 relating to the acquisition of
Gatherwell Limited, (ii) decreased employee benefits in salaries and share-
based payments $466,000 with a reduction in the exercise of staff options
during the financial year, (iii) increased expenses associated with being
a larger company in the ASX300 Index - increased share registry related
expenses $234,000 from increased share register activity and market
capitalisation, and increased directors’ remuneration $299,000 with the
appointment of additional directors on 1 January 2019 and 1 September
2019, and increased insurance expenses $224,000. With an increased
probability of paying the earnout milestone following 30 June 2021 year end
(deferred contingent consideration) for the Gatherwell acquisition, increase
in the fair value of this consideration amount payable has been expensed
$176,000. Other revenue decreased 29.6% or $156,000 from lower average
balances and lower average interest rates.
Summary of results
The annual comparison of results of the Company for the past five years is summarised below:
Revenue/profits ($’000)
TTV
Revenue
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 ($’000)
Return on capital employed (%) – overall operations
Return on capital employed (%) – continuing operations
Return on capital employed (%) – discontinued operations
FY2020
FY2019
FY2018
FY2017
FY2016
348,601
320,659
183,146
145,322
153,302
71,168
65,212
39,775
32,429
34,083
25,883
26,420
12,127
25,883
26,420
11,753
5,640
7,597
4,670
7,323
-
-
374
(1,957)
(2,653)
42,641
40,188
19,415
14,094
13,717
36,654
36,755
16,241
10,463
10,073
FY2020
FY2019
FY2018
FY2017
FY2016
72,259
84,583
47,919
43,320
25,306
78,919
77,378
47,211
42,900
24,696
53,174
61,780
33,124
30,484
12,949
32.8
32.8
-
34.1
34.1
-
25.7
24.9
0.8
13.1
17.7
(4.6)
18.9
29.6
(10.7)
1 includes cash held under term deposit and customer account balances payable (refer note 7: Cash and Cash Equivalents and Note 11: Trade and Other Payables for details)
Share price
Earnings per share (cps)
Dividends paid per share (cps)
Share price at financial year end (cps)
Total shareholder return (%)
Shares on issue (million)
Market capitalisation ($’million)
FY2020
FY2019
FY2018
FY2017
FY2016
42.5
40.0
43.9
34.0
958.0
2015.0
(50.5)
309.8
62.4
62.1
23.4
35.5
500.0
101.3
54.4
12.6
8.5
266.0
111.2
50.7
598.0
1,251.8
271.9
134.8
10.6
3.5
130.0
57.1
44.1
57.3
Financial position
The net assets of the Group have increased by $1,541,000 from 30 June
2019 to $78,919,000.
The Group’s working capital, being current assets less current liabilities, has
decreased from $61,870,000 in 2019 to $52,434,000 in 2020 mainly as a
result of decreased cash and cash equivalents of $12,324,000. $8,789,000
of this decrease was the purchase of Gatherwell Limited in the UK for cash
(see note 19: Business combinations for details)
Non-current assets increased by $17,394,000 to $33,520,000 due mainly
to (i) the investment in the software platform, (ii) goodwill, intangible assets
and deferred consideration on the acquisition of Gatherwell Limited, and (iii)
right-of-use assets on the adoption of new accounting standard AASB 16
Leases.
The Directors believe the Group is in a sound financial position to expand
and grow its current operations.
Significant changes in State of Affairs
Significant changes in the state of affairs of the Group for the financial year
were as follows:
Decrease in cash of $12,324,000 resulting from:
Purchase of Gatherwell Limited including contingent consideration
and net of cash acquired (see note 19: Business combinations for
details)
Other activities (see Statement of Cash Flows for details)
Increase in non-current assets of $17,394,000 resulting from:
investment in website development costs net of amortisation (see
note 9: Intangible assets for details)
Goodwill, software and customer relationships and contracts on
acquisition of Gatherwell Limited (see note 9: Intangibles assets
and note 19: Business combinations for details)
Right-of-use assets with adopting AASB 16 Leases (see note 10:
Right-of-use assets for details)
Other non-current assets (see note 19: Business combinations for
details)
Changes in other non-current assets (see notes 4, 8, and 9 for
details)
Increase in non-current liabilities of $6,417,000 from:
Lease liabilities with adopting AASB 16 Leases (see note 13: Lease
liabilities for details)
Contingent consideration at fair value for Gatherwell acquisition
(see note 19: Business combinations for details)
Changes in other non-current liabilities
$’000
8,789
3,535
12,324
$’000
2,038
8,090
5,185
1,761
320
17,394
$’000s
4,395
1,581
441
6,417
46
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
47
REMUNERATION
REPORT – AUDITED
Content
Page
47
1. Remuneration Report Introduction
47
2. Directors and Executives
47
3. Remuneration policy and link to performance
48
4. Elements of remuneration
5. Details of Remuneration
51
6. Performanced base remuneration granted and forfeited during the year 52
52
7. Employment contracts of directors and KMP
52
8. Options and rights granted as remuneration
54
9. Equity instruments issued on exercise of remuneration options
54
10. Value of options and rights to key management personnel
55
11. Other transactions and balances
deferred for 2 years into restricted equity with a formal clawback
mechanism.
• 25% is payable as a long term incentive (LTI) ‘at risk’ component awarded
on the achievement of a performance condition over a three-year period
that comprises a 100% restricted equity component with a formal claw-
back mechanism.
• minimum shareholding requirement (MSR) comprising holding fully paid
ordinary shares in the Company to the value of 100% of the TRO within
five years of falling under the remuneration framework.
In establishing the TRO for FY2020, the Company considered data from
peer groups and benchmarked this against the 25th percentile of executive
remuneration of a peer group of companies, adjusted for role complexity,
and scope and availability of similar qualified executives in the domestic
market. The Company engaged an independent remuneration consultant in
providing this information and the peer benchmark group selected was 56
companies within the ASX300 index based on a 12-month average market
capitalisation within 50% to 200% of Jumbo's market capitalisation of $960
million at 31 December 2018.
Balancing short-term and long-term performance
Annual incentives are set at a maximum of 50% of fixed remuneration,
in order to drive performance without encouraginng undue risk-taking.
Sustainability of results is also ensured by the deferral of 50% of the short-
term incentives for 2 years. This also encourages talent retention. Long-term
incentives are assessed over a three year period and are designed to pro-
mote long-term stability in shareholder returns.
The target remuneration mix for FY2020 is shown in figures below. It
reflects the STI opportunity for the current year that will be available if the
performance conditions are satisfied at target, and the value of the LTI rights
granted at the beginning of the year, as determined at the grant date.
1. Remuneration Report Introduction
The directors present the Jumbo Interactive Limited Remuneration Report
for the year ended 30 June 2020, outlining key aspects of our remuneration
policy and framework, and remuneration awarded this financial year.
The remuneration framework has been re-designed and new remuneration
approach adopted FY2020 and beyond.
The information in this Report has been audited.
2. Directors and Executives
The Key Management Personnel (KMP) of the Group (being those whose
remuneration must be disclosed in this Report) includes the Non-Executive
Directors and those Executives who have the authority and responsibility for
planning, directling and controlling the activities of Jumbo.
The Non-Executive Directors and Executives that were the KMP of the
Group during the financial year are identified as follows:
Directors and executives
Name
Position held
Non-Executive Directors
David K Barwick
Chairman, Independent Non-Executive
Director
Sharon Christensen
Independent Non-Executive Director
Bill Lyne
Giovanni Rizzo
Executive KMP
Mike Veverka
David Todd
Xavier Bergade
Brad Board
Independent Non-Executive Director
Independent Non-Executive Director
Director and Chief Executive Officer
Chief Financial Officer
Chief Technical Officer
Chief Operating Officer
There have been no changes since the end of the reporting period.
3. Remuneration and link to performance
Our Nomination and Remuneration committee is made up of independ-
ent non-executive directors. The committee reviews and determines our
remuneration policy and structure annually to ensure it remains aligned to
business requirements, and meets our remuneration principles. From time
to time, the committee also engages external remuneration consultants
to assist with this review (see later in this section for further information).
In particular the board aims to ensure that remuneration framework is
structured:
•
•
•
•
to make the remuneration approach and outcomes easier to understand
and more transparent to shareholders;
to strengthen alignment of remuneration with our strategic vision, with
its unique challenges and opportunities, to create long-term shareholder
value;
to attract, motivate and retain the talent that we require to succeed in the
long-term; and,
to create a maximum remuneration opportunity for senior Executives that
rewards them with both cash and locked-in equity that ensures strategic
decisions are focused on delivering long-term value rather than short-
term outcomes.
Total Remuneration Opportunity (TRO) comprises fixed remuneration and
incentives.
The remuneration framework for Executive KMP comprises four
components:
• 50% is paid as a fixed remuneration (FR) not ‘at risk’ that comprises a
base salary and superannuation. The base salary is benchmarked at the
25th percentile of a group of peer companies in the ASX300 based on
market capitalisation which is reviewed annually.
• 25% is payable as a short term incentive (STI) ‘at risk’ component
awarded on the achievement of performance conditions over a 12-month
period that comprises a 50% cash component and a 50% component
48
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
49
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
(ii) Short term incentives
Feature
Maximum opportunity
CEO and other executives - 25% of FR
Description
Performance metrics
The STI metrics align with our strategic priorities of market competitiveness, operational excellence, shareholder value and fostering tal-
ented and engaged people 50% of the STI is allocated to financial targets and 50% to non-financial targets
Metric
Target
Weighting
Reason for selection
One-year performance period
Two-year restriction period
Financial
Underlying NPAT 1
Sliding scale from 6% increase
(10% of STI) to 20% and above
increase (100% of STI)
1 Jul
2019
30 Jun
2020
30 Jun
2021
30 Jun
2022
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
4. Elements of remuneration
(i) Fixed annual remuneration (FR)
The FR of Executives will consist of the cash salary, statutory superannua-
tion contributions and other employee-elected salary sacrificed benefits.
FR will be set with reference to the Executive’s knowledge, experience and
skills, the magnitude of the responsibilities and complexities associated with
the role and peer benchmarks. Benchmarking will be set at the 25th percen-
tile of the Jumbo benchmark peer group. The peer group are comparable
companies within the ASX300.
In light of the significant challenges that COVID-19 is posing to the Australian
economy and in recognition of the hardship that many of our customers
may be facing, the Nomination and Remuneration Committee has decided
to freeze any fixed remuneration increases for KMP for FY2021. The level of
fixed remuneration for KMP will be reviewed for the FY2022 financial year.
FR will always be considered in the context of the total remuneration pack-
age payable to an Executive to ensure that the entire remuneration package
is fair and competitive.
Setting the annual STI pool
The Nomination and Remuneration Committee will set an organisational total
financial STI pool before the start of the financial year based on growth from
the prior financial year. This financial STI pool will be formed as follows:
•
•
•
for every 1% of underlying NPAT growth between 5.0% to 10.0% under-
lying NPAT growth over the prior financial year, 0.5% of NPAT will be
allocated to the STI pool
for every 1% of underlying NPAT growth between 10.0% to 20.0% under-
lying NPAT growth over the prior financial year, 0.25% of NPAT will be
allocated to the STI pool
total organisational pool size will be capped at 5% of annual NPAT
Each executive’s share of the total STI pool created will be based on a calcu-
lation schedule of receiving between 0% to 100% of their maximum potential
Financial STI opportunity depending on the level of underlying NPAT growth
achieved between 6% to 20%. As an example, if the underlying NPAT growth
for a financial year comes in at 12%, then the executive will receive 60% of
their maximum Financial STI potential.
Assessing performance and claw-back of remuneration
The Nomination and Remuneration committee is responsible for assessing
performance against KPIs and determining the STI and LTI to be paid. To
assist in this assessment, the committee receives detailed reports on the
performance from management which are based on independently verifiable
data such as financial measures, market share, signed agreements and data
available from independent providers.
In the event of serious misconduct or a material misstatement in the
Company’s financial statements, the committee can cancel or defer perfor-
mance-based remuneration and may also claw back performance-based
remuneration paid in previous financial years.
EPS accretive business acquisition
At least one
New SaaS agreements
At least two
New ticket Reseller agreement
At least one
Product use satisfaction as measured
through product feedback, customer sur-
veys and app store/IOS rating
Index of more than 75
Data protection and customer privacy
No reportable breaches
Compliance with regulations
No reportable breaches
Reflects improvements in both
revenue and cost control
Focus of the Group’s growth
strategy for the next 2 to 5
years
Focus of the Group’s growth
strategy for the next 2 to 5
years
Maintaining competitive advan-
tage and market share
50.0%
12.5%
10.0%
7.5%
5.0%
5.0%
2.5%
New customer accounts
345,745
2.5% Maintaining market share
Delivery of new agreements within stated
timeframes
Actual
Non-financial
Staff morale
50% of the STI award is paid in cash
Financial year end staff survey of
no less than 4/5
2.5%
2.5%
Reducing staff turnover will
reduce costs and hence
improve NPAT
Delivery of STI
Board discretion
50% of the STI is deferred for two years into shares and is subject to forfeiture on resignation. This encourages retention and share-
holder alignment
The Board has the discretion to adjust remuneration outcomes up or down to prevent any inappropriate reward outcomes, including
reducing (down to zero, if appropriate) any deferred STI award
1 statutory NPAT before non-recurring/operating revenue/expenses and KMP/staff incentives
(iii) Long-term incentives
Executive KMP participate in an LTI award comprising annual grants of rights over fully paid ordinary shares which are subject to a three-year relative to Total
Return growth rate condition. Further detail is shown in the table below:
Feature
Description
Maximum allocation
Performance hurdle
Hurdle price
Each Executive will receive an annual grant of rights to a dollar value equal to 25% of their FR with the number of rights based on
the 10-day VWAP period up to 30 June of each year. The rights are exercisable into shares three years after grant and achieve-
ment of the price performance hurdle. The allocation is divided by the hurdle price of the shares to determine the number of
instruments.
The JIN 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 JIN has outperformed its peers. This is designed to focus executives on delivering sustainable long-term shareholder
returns.
JIN’s share price performance hurdle will be determined in three steps: (i) first, the ‘total return’ will be based on the 15-year
average return of the ASX All Ordinaries Total Return Index (XAOA:ASX); (ii) second, the ‘return’ will be multiplied over a 3-year per-
formance period on a compound basis and applied to JIN’s 90-day VWAP at the effective date to create the qualification price
performance hurdle; and (iii) dividends earned will be included in the 3-year targeted CAGR share price over the qualifying perfor-
mance period.
Forfeiture and termination
Rights will lapse if the performance hurdle price is not met. Rights will be forfeited on cessation of employment unless the Board
determines otherwise as a ‘good leaver’, e.g. retirement due to injury, disability, death or redundancy.
(d) Link between remuneration and performance
FY2020 performance and impact on remuneration
The Group’s performance in FY2020 was reasonable given it was cycling off high jackpot levels in FY2019, and the step-up expenses for the financial year.
Management delivered an underlying operating NPAT growth result of 1% which is at the low end of the range, while achieving non-financial targets that will
underpin future growth. For more information on strategic priorities and FY2020 results, see pages 42 to 45 of the Operating and Financial Review.
As a result of the performance, the Board awarded Executives 50% of their respective maximum short-term incentives. Half of this incentive is payable as
cash with the remaining portion paid in the form of restricted rights. The rights granted under the long-term incentive scheme will be tested in FY2022 subject
to satisfying performance conditions.
50
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
51
Performance against key measures and impact on variable remuneration
Metric
STI
NPAT
Target
Performance
50% of maximum STI awarded
6% to 20% and above increase
1% increase
EPS business acquisition
New SaaS agreements
New ticket reseller agreements
At least one
At least two
At least one
Product use satisfaction
80 or more index
One
Two
One
80.5
Data protection and customer privacy
No reportable breaches
No reportable breaches
Compliance with regulations
No reportable breaches
No reportable breaches
New customer accounts
Delivery of new agreements in time
345,745
Actual
350,319
Extended at customer request
Staff morale
LTI
3 year share price hurdle
No less then 4/5 survey result
4.3/5
No vesting from prior grant
Outperform historic growth rate of ASX
All Ordinaries Index (XAOA)
FY2020 - 90-day VWAP $24.98 at 30 June 2022
Impact on
incentive award
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
n/a
Statutory performance indicators
We aim to align our executive remuneration to our strategic and business objectives and the creation of shareholder wealth. The table below shows measures
of the Group’s financial performance over the last five years as required by the Corporations Act 2001. However, these are not necessarily consistent with the
measures used in determining the variable amounts of remuneration to be awarded to KMPs (see the table above). As a consequence, there may not always
be a direct correlation between the statutory key performance measures and the variable component awarded.
Statutory key performance indicators of the Group over the last five years
TTV continuing operations ($’000s)
$348,601
$320,659
$183,146
$145,322
$153,302
FY 2020
FY 2019
FY 2018
FY 2017
FY 2016
Net profit after tax – continuing operations ($’000s)
$25,883
$26,420
$11,753
Net profit after tax – overall operations ($’000s)
$25,883
$26,420
$12,127
958
40.0
2015
34.0
500
35.5
(50.5%)
309.8%
101.3%
111.2%
41.5
32.8%
43.9
34.1%
23.4
25.7%
12.6
13.1%
$7,597
$5,640
266
8.5
$7,323
$4,670
130
3.5
57.1%
10.6
18.9%
$598,020
$1,251,794
$271,871
$134,793
$57,284
Share price at year end (cps)
Dividends paid per share (cps)
Total shareholder return (%)
Earnings per share (cps)
Return of capital employed (%)
Market capitalisation ($‘000s)
5. Details of Remuneration
Details of compensation of KMP of Jumbo are set out below:
2020
Short term employee benefits
Post
employment
benefits
Long term benefits
Equity-set-
tled share
based
payments
Cash salary,
fees and
annual leave
$
Cash
bonus
$
Non-mon-
etary
benefits
$
Superan-
nuation $
Long ser-
vice leave
$
Termination
benefits
$
Options and
Rights1
$
Proportion of remu-
neration that is
performance based
%
Total
$
Directors
David Barwick
Mike Veverka
Sharon Christensen2
Bill Lyne
Bill Lyne – as Company
Secretary
Giovanni Rizzo
Other KMP
David Todd
189,954
-
843,254
100,000
82,192
114,115
30,412
114,115
-
-
-
-
360,456
43,750
Xavier Bergade
354,666
43,750
Brad Board
Total KMP
remuneration
347,644
43,750
2,436,888
231,250
-
-
-
-
-
-
-
-
-
-
18,046
-
69,406
109,781
7,808
10,845
-
10,845
30,365
30,365
-
-
-
-
7,836
5,755
30,365
13,840
208,045
137,212
-
-
-
-
-
-
-
-
-
-
-
208,000
179,522 1,301,963
-
-
-
-
90,000
125,000
30,412
125,000
82,368
524,775
143,598
578,134
82,368
517,967
487,856 3,501,251
-
21.5
-
-
-
-
24.0
32.4
24.3
1includes share based payments over the remaining term on those options exercised, if any, during the financial year
2appointed a non-executive director on 1 September 2019
2019
Short term employee benefits
Post
employment
benefits
Long term benefits
Equity-set-
tled share
based pay-
ments
Cash salary,
fees and
annual leave
$
Cash
bonus
$
Non-mon-
etary
benefits
$
Superan-
nuation $
Long ser-
vice leave
$
Termination
benefits
$
Options1
$
Total
$
Proportion of remu-
neration that is
performance 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
Total KMP
remuneration
262,976
158,025
1,522,747
773,355
-
-
-
-
-
-
-
-
-
10,497
49,095
7,944
-
2,494
38,287
38,287
37,213
-
7,251
-
-
-
4,084
4,084
3,896
183,817
19,315
-
-
-
-
-
-
-
-
-
-
120,977
470,343 1,315,091
-
-
-
91,569
26,353
28,744
231,342
695,584
145,572
606,043
87,626
549,736
934,883 3,434,117
-
22.8
-
-
-
22.7
26.1
28.7
1includes 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
52
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
53
6. Performanced base remuneration granted and forfeited during the year
Rights granted over deferred shares
The table below shows for each KMP how much of their STI was awarded and how much was forfeited. It also shows the value of rights that were granted,
exercised and forfeited during FY2020. The number of rights and deferred shares and percentages vested/forfeited for each grant are disclosed in section 8
below.
Performance based remuneration granted and forfeited during the year
2020
Mike Veverka
David Todd
Xavier Bergade
Brad Board
Total STI bonus (cash and rights)
LTI rights
Total opportunity
$
Awarded
%
Forfeited
%
Value granted 1
$
Value exercised
$
400,000
175,000
175,000
175,000
50
50
50
50
50
50
50
50
400,000
175,000
175,000
175,000
-
-
-
-
1 The value at grant date calculated in accordance with AASB 2 Share-based Payment of rights granted during the year as part of remuneration
7. Employment contracts of directors and KMP
The employment conditions of non-executive directors are formalised by let-
ters of appointment and KMP are formalised in contracts of employment.
The maximum annual aggregate directors’ fee pool limit is $750,000
and was approved by shareholders at the Annual General Meeting on 24
October 2019.
The employment contracts stipulate a range of terms and conditions. These
contracts do not fix the amount of remuneration increases from year to year,
with remuneration levels reviewed generally each year by the Nomination
and Remuneration Committee.
The Company may terminate an employment contract without cause by
providing generally four weeks written notice or making payment in lieu of
notice, based on the individual’s annual salary component. The employee
is entitled to pro-rata STI for the year, and unvested LTI will remain on foot
subject to achievement of the performance hurdles. The Board has the dis-
cretion to award a greater or lower amount.
The Company or the individual may terminate an employment contract with
cause, by providing generally four weeks written notice or making payment
in lieu of notice, based on the individual’s annual salary component. The STI
is not awarded and all unvested LTI will lapse. Vested and unexercised LTI
can be exercised within a period of 30 days from termination.
The policy of the Company is that service contracts are generally unlimited
in term.
KMP
KMP
Mike Veverka
David Todd
Xavier Bergade
Brad Board
Duration of
service
agreement
Fixed
remuneration at
end of FY20201
Notice period2
Ongoing
Ongoing
Ongoing
Ongoing
$800,000
12 months
$350,000
$350,000
$350,000
6 months
6 months
6 months
1 fixed remuneration includes a superannuation component, currently 9.5%
2 any termination payment (notice and severance) will be subject to compliance with all rele-
vant legislation and will not exceed 12 months
Base fees
Chair
Other nonexecutive directors
Additional fees
Sub-committee chair
Sub-committee member
FY2021
FY2020
$188,000
$100,000
$15,000
$10,000
$188,000
$100,000
$15,000
$10,000
A minimum shareholding requirement (MSR) applies to non-executive direc-
tors comprising holding fully paid ordinary shares in the Company to the
value of 100% of TRO within five years of of falling under the remuneration
framework or appointment.
8. Options and rights granted as remuneration
Terms and conditions of the share-based payment arrangements
Options
Options are issued to key management personnel as part of their remuner-
ation 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 is no change to the base salaries including superannuation for the
financial year ending 30 June 2021.
There were no options granted to key management personnel as compensa-
tion during the reporting period.
Non-Executive Directors
Non-executive directors receive a board fee and fees for chairing or par-
ticipating on board committees per the table below. They do not receive
performance-based pay or retirement allowances. The fees are inclusive of
superannuation.
Fees are reviewed annually by the Nomination and Remuneration Committee
taking into account comparable roles and market data provided by the
Committee’s independent remuneration advisor. The fees for FY2020 were
based on the benchmarking from the independent remuneration consult-
ant data referred to in section 3 of this report. The current base fees were
reviewed with effect from 1 July 2020.
Performance rights are granted by the Company for nil consideration. Each right is a right to receive one fully paid ordinary share in Jumbo Interactive Limited
at no cost if the vesting conditions are satisfied. Rights granted carry no dividend or voting rights.
Short term incentives (STIs)
50% of any STI for KMP will be awarded in rights to ordinary shares with the number of rights based on the 10-day VWAP period up to 30 June each year.
The rights will vest and convert into shares after a 12-month time based qualifying period provided the executive remains employed by the Group at the vest-
ing date, unless otherwise determined by the Board. The sale of these shares is restricted for a further 12 months, resulting in a total two-year lock-up period.
Executives will have full entitlement to dividends and voting rights during the 12-month lock-up period. The rights awarded to the CEO under the STI for
FY2020 are subject to shareholder approval at the upcoming Jumbo AGM.
Grant date
30 June 2020
Long term incentives (LTIs)
Vesting date
30 June 2021
Grant date value
$9.95
KMP receive an annual grant of rights to a dollar value equal to 25% of their Total Remuneration Opportunity with the number of rights based on the 10-day
VWAP period up to 30 June of each year. The rights are exercisable into shares 3 years after grant and achievement of the price performance hurdle and pro-
vided the executive remains employed by the Group at the vesting date, unless otherwise determined by the Board. The rights awarded to the CEO under the
LTI for FY2020 are subject to shareholder approval at the upcoming Jumbo AGM.
Grant date
1 July 2019
1 July 2020
Vesting date
1 July 2022
1 July 2024
Grant date value
$19.80
$10.61
Details of the terms and conditions of rights granted to key management personnel as compensation during the reporting period are as follows:
Options and Rights
FY2020
Directors
Mike Veverka
LTI rights FY2020
STI rights FY2020
Other key management personnel
David Todd
LTI rights FY2020
STI rights FY2020
Xavier Bergade
LTI rights FY2020
STI rights FY2020
Brad Board
LTI rights FY2020
STI rights FY2020
No. options/
rights
granted
No. options/
rights vested
Fair value per
option/right
at grant date
Exercise price
Amount paid
or payable
Expiry date Date exercisable
-
20,202
10,050
30,252
8,838
4,397
8,838
4,397
8,838
4,397
39,705
-
$11.809
$9.95
$11.809
$9.95
$11.809
$9.95
$11.809
$9.95
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 July 2023
1 July 2022
30 June 2021
30 June 2021
1 July 2023
1 July 2022
30 June 2021
30 June 2021
1 July 2023
1 July 2022
30 June 2021
30 June 2021
1 July 2023
1 July 2022
30 June 2021
30 June 2021
54
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
55
The weighted average fair value of rights granted during the 2020 financial year was $11.19.
Shareholdings
9. 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:
2020
Other key management personnel
David Todd
Xavier Bergade
Brad Board
Number of
shares issued on
exercise of options
Number of
options exercised
Amount paid per share
Amount unpaid
per share
25,000
150,000
25,000
200,000
25,000
150,000
25,000
200,000
$3.50
$3.50
$3.50
-
-
-
10. Value of options and rights 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 summarised below:
Details of ordinary shares in Jumbo Interactive Limited held directly, indirectly or beneficially by key management personnel and their related parties are as
follows:
FY2020
Directors
David Barwick
Bill Lyne
Sharon
Christensen
Giovanni Rizzo
Mike Veverka
Other key management personnel
David Todd
Xavier Bergade
Brad Board
Balance at
1 July 2019
Granted as
remuneration
during the year
Issued on exercise
of options
during the year
Other changes
during the year1
Balance at
30 June 2020
-
-
-
-
9,656,848
50,000
150,000
10,000
9,866,848
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
150,000
25,000
200,000
3,000
2,000
2,050
2,000
3,000
2,000
2,050
2,000
(141,119)
9,515,729
(25,000)
(150,000)
(25,000)
(332,069)
50,000
150,000
10,000
9,734,779
Name
Other key management and personnel
David Todd
Xavier Bergade
Brad Board
Value of options at grant date1
$
Value of options exercised at exercise date2
$
1 these were mainly on-market sale of the shares that were issued on exercise of options during the year
3,829
-
3,829
404,250
2,706,000
404,250
11. Other transactions and balances
Other related party transactions
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.
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:
Options
FY2020
Mike Veverka
Balance at
1 July 2019
-
David Todd
25,000
Xavier Bergade
750,000
Brad Board
25,000
800,000
Rights to deferred shares
Granted as
remuneration
during the year
-
-
-
-
-
Exercised
during
the year
-
(25,000)
(150,000)
(25,000)
(200,000)
Other changes
during the year
Balance at 30
June 2020
Vested at 30
June 2020
Total vested and
exercisable at
30 June 2020
Total vested
and unexer-
cisable at 30
June 2020
-
-
-
-
-
-
-
-
-
-
-
600,000
600,000
600,000
-
-
-
600,000
600,000
600,000
-
-
-
-
-
FY2020
Mike Veverka
David Todd
Xavier Bergade
Brad Board
Balance at
1 July 2019
Granted as
remuneration
during the year
Exercised
during
the year
Other changes
during the year
Balance at 30
June 2020
Vested at 30
June 2020
Total vested and
exercisable at
30 June 2020
Total vested
and unexer-
cisable at 30
June 2020
-
-
-
-
-
30,252
13,235
13,235
13,235
69,957
-
-
-
-
-
-
-
-
-
-
30,252
13,235
13,235
13,235
69,957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
Salary and superannuation
Consolidated Group
2020
$
2019
$
8,580
787
7,865
715
86,505
84,315
56
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
57
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
FINANCIAL REPORT
For the year ended 30 June 2020
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 2020, 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, 26 August 2020
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.
Financial Statements
Page
Consolidated statement of profit or loss and other comprehensive income 58
59
Consolidated statement of financial position
60
Consolidated statement of changes in equity
62
Consolidated statement of cash flows
Notes to the financial statements
About this report
Key events and transactions for the reporting period
Results for the year
Note 1: Segment information
Note 2: Revenue and other income
Note 3: Expenses
Note 4: Income tax
Note 5: Earnings per share
Operating assets and liabilities
Note 6: Cash and cash equivalents
Note 7: Trade and other receivables
Note 8: Property, plant and equipment
Note 9: Intangible assets
Note 10: Right-of-use assets
Note 11: Trade and other payables
Note 12: Employee benefits obligations
Note 13: Lease liabilities
Capital and financial risk management
Note 14: Capital risk management
Note 15: Dividends
Note 16: Equity and reserves
Note 17: Borrowings
Note 18: Financial risk management
Group structure
Note 19: Business combinations
Note 20: Controlled subsidiaries
Note 21: Parent disclosures
Other information
Note 22: Investments accounted for using the Equity Method
Note 23: Available-for-sale financial assets (non-current)
Note 24: Related party transactions
Note 25: Key Management Personnel compensation
Note 26: Share-based payments
Note 27: Remuneration of auditors
Note 28: Summary of other significant
accounting policies
Unrecognised items
Note 29: Contingencies
Note 30: Commitments
Note 31: Events after the reporting date
Signed reports
Directors’ declaration
Independent auditor’s report
ASX information
Shareholder information
Company Information
63
63
65
66
67
67
69
71
71
71
72
74
75
75
75
78
78
78
79
80
84
85
85
88
88
88
88
89
91
91
94
94
94
95
96
100
102
58
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
59
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Financial Position
For the year ended 30 June 2020
Revenue from operations
Cost of sales
Gross profit
Other revenue/income
Distribution expenses
Marketing costs
Occupancy expenses
Administrative expenses
Fair value movement on financial liabilities
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Note
2
3
2
3
19
2020
$’000
71,168
(5,326)
65,842
1,318
(31)
(5,578)
(104)
2019
$’000
65,212
(5,068)
60,144
1,936
(28)
(6,956)
(742)
(23,624)
(16,128)
(176)
(222)
-
(7)
37,425
38,219
As at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Right-of-use assets
Deferred tax assets
4
(11,542)
(11,799)
Other non-current assets
Profit/(loss) after income tax expense for the year attributable to the owners of Jumbo Interactive Limited
25,883
26,420
TOTAL NON-CURRENT ASSETS
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
(676)
(676)
(6)
(6)
Total comprehensive income for the year attributable to the owners of Jumbo Interactive Limited
25,207
26,414
Earnings Per Share (cents per share)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
5
5
¢
41.5
41.1
¢
43.9
42.5
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Current tax liabilities
Contingent consideration at fair value
Employee benefit obligations
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
Employee benefit obligations
Make good provision
Contingent consideration at fair value
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Profits Appropriation Reserve
Reserves
TOTAL EQUITY
Note
2020
$’000
2019
$’000
6
7
19
8
9
10
4
19
11
13
4
19
12
13
12
19
4
72,259
1,961
31
1,757
76,008
84,583
922
31
-
85,536
485
451
24,824
14,683
5,185
1,265
1,761
-
992
-
33,520
16,126
109,528
101,662
19,060
22,070
990
1,235
1,757
532
-
1,258
-
338
23,574
23,666
4,395
668
47
1,581
344
7,035
30,609
78,919
-
517
24
-
77
618
24,284
77,378
16
80,089
79,302
(17,399)
(17,399)
16.027
15,103
202
372
78,919
77,378
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
60
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
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61
Jumbo Interactive Limited and its Controlled Subsidiaries
Consolidated Statement Of Changes In Equity
For the year ended 30 June 2020
Consolidated group
Balance at 1 July 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
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 2020
Contributed equity
$’000
Accumulated losses
$’000
Profits appropriation reserve
$’000
55,917
(17,399)
-
-
-
23,385
-
-
23,385
79,302
-
-
-
787
-
-
787
80,089
-
-
-
-
-
-
-
(17,399)
-
-
-
-
-
-
-
(17,399)
9,364
26,420
-
26,420
-
(20,681)
-
(20,681)
15,103
25,883
-
25,883
-
(24,959)
-
(24,959)
16,027
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
Share-based
payments reserve
$’000
1,704
-
-
-
-
-
1,049
1,049
2,753
-
-
-
-
-
506
506
3,259
Foreign currency translation reserve
$’000
Financial assets at fair value through other comprehensive
income reserve
$’000
(73)
-
(6)
(6)
-
-
-
-
(79)
-
(676)
(676)
-
-
-
-
(755)
(2,302)
-
-
-
-
-
-
-
(2,302)
-
-
-
-
-
-
-
(2,302)
Total equity
$’000
47,211
26,420
(6)
26,414
23,385
(20,681)
1,049
3,753
77,378
25,883
(676)
25,207
787
(24,959)
506
(23,666)
78,919
62
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
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63
Jumbo Interactive Limited and its Controlled Subsidiaries.
Consolidated Statement Of Cash Flows
For the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Interest on lease liabilities
Income tax received
Income tax paid
Net cash inflows/(outflows) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for intangibles
Payment for purchase of business net of cash acquired
Payment of deposit for contingent consideration
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
Payment of lease liabilities
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
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Note
2020
$’000
2019
$’000
76,690
71,556
(37,632)
(22,800)
976
(17)
(205)
22
1,463
(7)
-
85
(11,592)
(11,161)
6(b)
28,242
39,136
(243)
(6,454)
(4,996)
(3,792)
-
(353)
(4,824)
-
-
3
(15,485)
(5,174)
787
(903)
(24,959)
(25,075)
(12,318)
(6)
84,583
72,259
23,385
-
(20,681)
2,704
36,666
(2)
47,919
84,583
16
15
6(a)
Jumbo Interactive Limited and its Subsidiaries
Notes To The Consolidated Financial Statements
Significant and other accounting policies that summarise the measurement
basis used and are relevant to an understanding of the financial statements
are provided throughout the notes of the financial statements.
For the year ended 30 June 2020
About this report
Jumbo Interactive Limited is a company limited by shares, incorporated and
domiciled in Australia, whose shares are publicly traded on the Australian
Securities Exchange (ASX: JIN), and is a for-profit entity for the purposes of
preparing the financial statements. The consolidated financial statements
are for the consolidated entity consisting of Jumbo Interactive Limited (the
Company) and its subsidiaries and together are referred to as the Group or
Jumbo.
The consolidated financial statements were approved for issue in accord-
ance with a resolution by the Directors on 26 August 2020. The Directors
have the power to amend and reissue the consolidated financial statements.
The consolidated financial statements are general purpose financial state-
ments which:
• Have been prepared in accordance with the Corporations Act 2001,
Australian Accountings Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) and International
Financial reporting Standards (IFRS) issued by the International Financial
Standards Board
• Have been prepared under the historical cost convention
• Are presented in Australian dollars (A$), with all amounts in the financial
report being rounded off in accordance with the requirements of ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 issued by the Australian Securities and Investments Commission
to the nearest thousand dollars, unless otherwise indicated
• Where necessary, comparative information has been restated to conform
with changes in presentation, in the current year
• Adopts all new and amended Accounting Standards and Interpretations
issued by the AASB that are relevant to the operations of the Group effec-
tive for reporting periods beginning on or after 1 July 2019
• Adopts AASB16 Leases in the year beginning 1 July 2019
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:
Significant judgements and estimates
In the process of applying the Group’s accounting policies, man-
agement 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
Lease liabilities
Contingent consideration at fair value
Note
Page
9
9
13
19
74
73
75
84
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 disclo-
sures that management deemed to be immaterial were excluded
from the notes to the financial statements. The determination of
the relevance and materiality of disclosures involved significant
judgement.
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:
1. Higher levels of customer activity and mixed large jackpot activity (see
Directors’ Report for details);
2. Acquisition of Gatherwell Limited UK for cash 29 November 2019 (see
note 19: Business combinations for details);
3. Payment of dividends (see Directors’ Report and note 15: Dividends for
details); and
4. The effect of adpoting AASB 16 Leases effective 1 July 2019 (see note 10:
Right-of-use assets and note 13: Lease liabilities for details).
• 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
•
64
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
65
RESULTS FOR
THE YEAR
In this section
Results for the year provides segment information and a breakdown of indi-
vidual 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
Page 65
Page 66
Page 67
Page 67
Page 69
Note 1: Segment information
Jumbo determines and presents operating segments on a product and a geographic basis as this is how the results are reported internally to the Chief
Executive Officer (CEO) (chief operating decision maker) and how the business is managed. The CEO assesses the performance of the Group based on the
net profit before tax (NPBT). Comparatives for 2019 are stated on this basis.
(a) Description of segments
The following summary describes the operations in each of the Group’s reportable segments:
Internet Lotteries Australia
Retail of Australian lottery tickets sold in Australia and eligible international jurisdictions, and internet database management/marketing. Revenue of $260,000
from the burgeoning Software-as-a-Service in Australia has been included.
Other
Business activities which are not reportable in terms of AASB 8, which are currently the online sale of an internally developed proprietary payroll software
system.
Software-as-a-Service UK
An external lottery manager (ELM) providing a turnkey digital solution to lotteries.
Corporate
Corporate costs include costs in respect of the Directors, CEO, CFO, corporate advertising, promotion and marketing, corporate investment and finance, tax,
audit, risk, governance, and strategic projects.
(b) Segment information
The segment information provided to the CEO is as follows:
2020
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
Fair value movement on financial liabilities
Finance costs
NPBT
Income tax expense
NPAT (per P&L)
Interest revenue
Depreciation and amortisation
Fair value movement on financial liabilities
Foreign exchange gain
Internet Lotteries Australia
$’000
Other
$’000
SaaS UK
$'000
Corporate
$’000
Total
operations
$’000
68,746
-
68,746
(5,130)
63,616
904
(31)
(5,461)
(104)
902
-
902
(7)
895
-
-
(68)
-
1,520
-
1,520
(189)
1,331
43
-
(42)
-
-
-
-
-
-
371
-
(7)
-
71,168
-
71,168
(5,326)
65,842
1,318
(31)
(5,578)
(104)
(18,095)
(377)
(1,174)
(3,978)
(23,624)
-
(215)
40,614
-
-
450
-
(7)
151
(176)
-
(3,790)
573
-
-
(5,606)
(113)
(267)
-
323
-
-
-
-
402
-
(176)
(31)
(176)
(222)
37,425
(11,542)
25,883
976
(5,986)
(176)
291
66
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
67
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
Income tax expense
NPAT (per P&L)
Interest revenue
Depreciation and amortisation
Foreign exchange gain
Internet Lotteries Australia
$’000
Other
$’000
SaaS UK
$'000
Corporate
$’000
64,283
-
64,283
(5,060)
59,223
1,409
(28)
(6,867)
(711)
929
-
929
(8)
921
-
-
(80)
(31)
(12,616)
(316)
(7)
40,403
936
(3,342)
398
-
494
-
(91)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
527
-
(9)
-
(3,196)
-
(2,678)
527
-
-
Total
operations
$’000
65,212
-
65,212
(5,068)
60,144
1,936
(28)
(6,956)
(742)
(16,128)
(7)
38,219
(11,799)
26,420
1,463
(3,433)
398
Sale of Goods and/or Rendering of Services
Revenue from sale of goods and/or rendering of services is recognised
when control of the goods or services is transferred to the buyer in an
amount that reflects the consideration to which the entity expects to be enti-
tled in exchange for these goods and/or services. Control is the ability of the
customer to direct the use of, and obtain substantially all of the remaining
benefits from, an asset. Indicators that control has passed includes that the
customer has (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 interest rate which
is the rate that exactly discounts the estimated future cash receipts over the
expected life of the financial asset.
Dividends
Dividends are recognised as revenue when the Group’s right to receive
payment is established. Dividends received in the entity’s separate financial
statements that are paid out of pre-acquisition profits of a subsidiary, asso-
ciate or joint venture are recognised as revenue when the entity’s right to
receive payment is established.
Government grants
The export market development grant from the government is recognised
at its fair value when there is reasonable assurance that the grant will be
received and the Group will comply with any attached conditions.
(c) Other segment information
Note 2: Revenue and other income
Note 3: Expenses
Presentation - Cost of sales - rendering of services
The Group changed its presentation relating to the recognition of Cost
of sales-rendering of services for the financial year ending 30 June 2020
under AASB 101: Presentation of Financial Statements which applies to
accounting periods beginning on or after 1 January 2020 but before 1
January 2021. Service Fees and Merchant Fees were previously presented
on an indirect cost basis in Administration expenses and are now disclosed
in Cost of sales-rendering of services. This change has been implemented
as management is of the opinion that, after judgement and consideration
of all the relevant facts and circumstances, that these costs are directly
related to the rendering of services. The aggregate effect of the change in
presentation on the annual financial statements for the year ended 30 June
2020 is as follows:
Consolidated Statement of Comprehensive Income
2020
Cost of sales - sale of goods
Cost of sales - rendering of services
Total cost of sales
Gross profit
Administration expenses
Previous
presenta-
tion
$’000
806
1,051
1,857
Revised
presenta-
tion
$’000
806
4,520
5,326
Adjustment
$’000
-
3,469
3,469
69,311
(3,469)
65,842
- Other admin expenses
55
(55)
- Bank merchant fees and charges
3,480
(3,414)
-
66
Total administrative expenses
(27,093)
3,469
(23,624)
2019
Cost of sales - sale of goods
Costof sales - rendering of services
Total cost of sales
Gross profit
Administration expenses
870
1,209
2,079
-
2,989
2,989
870
4,198
5,068
63,133
(2,989)
60,144
Profit from continuing operations before income tax includes the following
specific expenses:
Consolidated
2020
$’000
2019
$’000
Cost of sales
– Sale of goods
– Rendering of services
Administration expenses
Depreciation of non-current assets
Amortisation of non-current assets
– Leasehold improvements
– Intangibles
– Right-of-use assets
Other administration expenses
806
4,520
870
4,198
- Other admin expenses
62
(62)
- Bank merchant fees and charges
2,987
(2,927)
-
60
Total administrative expenses
(19,117)
2,989
(16,128)
– Plant and equipment
160
139
This changed presentation has no effect on profit, the Consolidated
Statement of Financial Position, or Consolidated Statement of Changes in
Equity.
59
4,664
1,103
40
3,254
-
Note 4: Income tax
Current tax
– Employee benefit expense
10,250
7,842
– Defined contribution superannuation expense
– Bank merchant fees and charges
1,238
66
889
60
– Other administration expenses
6,084
3,904
Current
Income tax liability
Consolidated
Note
2020
$’000
2019
$’000
1,235
1,258
Occupancy expenses
– Operating lease rentals minimum lease
payments
Fair value movement on financial liabilities
104
176
742
-
Geographical information
The entity is domiciled in Australia. Segment revenues are allocated based
on the country in which the customer is located.
Total revenue from external customers
Australia (domicile)
United Kingdom
Fiji
Other
Consolidated Group
2020
$’000
2019
$’000
65,790
60,989
1,563
1,467
3,666
-
1,628
4,531
72,486
67,148
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.
Consolidated Group
2020
$’000
2019
$’000
Sales revenue
– Revenue from sale of goods (i)
2,183
2,324
– Revenue from rendering of services (i)
68,985
62,888
Non-current assets in Australia are $25,295,000 (2019: $15,123,000). Non-
current assets in other countries are (i) UK $8,000 (2019: nil) and (ii) Fiji
$6,000 (2019: $11,000).
The geographical non-current assets above are exclusive of, where appli-
cable, financial instruments, deferred tax assets, post-employment benefits
assets, and rights under insurance contracts.
Other revenue/income
– Interest
– Other income
– Foreign exchange gains
– Export market development grants
No single external customer derives more than 10% of total revenues.
– Other
71,168
65,212
976
1,463
291
-
51
398
67
8
1,318
1,936
72,486
67,148
(i) the Consolidated Entity derives revenue from the transfer of goods and
services at a point-in-time.
Recognition and measurement
Revenue is recognised at the fair value of consideration received or receiva-
ble. 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:
68
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
69
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
numerator
Consolidated
2020
$’000
2019
$’000
Profit attributable to the owners of the Company
25,883
26,420
(d) Weighted average number of shares used as denominator
Weighted average number of ordinary shares
used as the denominator in calculating basic EPS
Adjustments for calculation of diluted EPS:
— options
Weighted average number of ordinary shares
used as the denominator in calculating diluted
EPS
Consolidated
2020
Number
2019
Number
62,312,828 60,231,699
631,472
1,981,119
62,944,300 62,212,818
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.
(a) Income tax expense
The components of tax expense comprise:
– Current tax
– Deferred tax
– Overprovision tax prior years
– Current tax overseas operations
– Tax at the Australian tax rate 30% (2019:
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
Consolidated
Deferred tax assets
Note
2020
$’000
2019
$’000
Deferred tax assets comprise tem-
porary difference recognised in the
profit and loss as follows:
11,397
11,732
Property, plant and equipment
4(b)
(6)
(4)
155
59
-
8
– Depreciation
– Amortisation
Accruals
Provisions
Other
Balance at 30 June 2019
Property, plant and equipment
11,227
11,466
– Depreciation
33
152
130
30
314
(11)
– Amortisation
Accruals
Provisions
Other
11,542
11,799
Balance as at 30 June 2020
Opening
balance
$’000
Charged
to Profit or
Loss
$’000
Closing
Balance
$’000
115
166
311
444
10
1,046
110
14
340
502
26
992
(5)
(152)
29
58
16
(54)
60
(14)
(160)
260
127
273
110
14
340
502
26
992
170
-
180
762
153
1,265
Total income tax expense/(benefit) in profit
and loss
11,542
11,799
Reconciliation
Profit before income tax expense
37,425
38,219
(b) Deferred tax
Deferred tax liabilities
Deferred tax liabilities comprise
temporary difference recognised in
the profit and loss as follows:
Property, plant and equipment
– Depreciation
Accruals
Other
Balance at 30 June 2019
Property, plant and equipment
– Depreciation
Accruals
Other
Balance as at 30 June 2020
Opening
balance
$’000
Charged
to Profit or
Loss
$’000
Closing
Balance
$’000
-
72
-
72
-
77
-
77
-
5
-
5
282
(15)
-
267
-
77
-
77
282
62
-
344
Recognition and measurement
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 juris-
diction 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 dif-
ferences, between carrying amounts of assets and liabilities for financial
reporting purposes and their respective tax bases, at the tax rates expected
to apply when the assets are recovered or liabilities settled, based on those
tax rates which are enacted or substantively enacted for each jurisdiction.
Exceptions are made for certain temporary differences arising on initial rec-
ognition of an asset or a liability if they arose in a transaction, other than a
business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary differ-
ences 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 dif-
ferences 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 compre-
hensive income.
Tax consolidation
Jumbo Interactive Limited and its wholly owned Australian controlled sub-
sidiaries are part of a tax consolidated group under Australian taxation law
since 1 July 2006. Jumbo Interactive Limited 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.
70
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
OPERATING ASSETS
AND LIABILITIES
In this section
Operating assets and liabilities provides information about the working cap-
ital of the Group and major balance sheet items, including the accounting
policies, judgements and estimates relevant to understanding these items.
Note 6: Cash and cash equivalents
Note 7: Trade and other receivables
Note 8: Property, plant and equipment
Note 9: Intangible assets
Note 10: Right-of-use assets
Note 11: Trade and other payables
Note 12: Employee benefit obligations
Note 13: Lease liabilities
Page 71
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Page 71
Page 72
Page 74
Page 75
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71
2019
$’000
190
-
190
232
500
922
Note 6: Cash and cash equivalents
Note 7: Trade and other receivables
Consolidated
Consolidated
Note
2020
$’000
2019
$’000
Current
(a) Cash and cash equivalents
Total cash and cash equivalents
72,259
84,583
Included in the above balance:
General account balances
61,278
73,799
Online lottery customer account balances
11
10,981
10,784
Trade receivables
Allowance for doubtful debts
Other receivables
Prepayments
72,259
84,583
2020
$’000
311
-
311
160
1,490
1,961
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.
At the review period end 30 June 2020, $632,000 was held in trust for the
payment of prizes and charity distributions relating to the Gatherwell busi-
ness, and neither the cash nor the corresponding liability is recognised in the
Statement of Financial Position.
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.
Consolidated
2020
$’000
2019
$’000
Recognition and measurement
Trade receivables are recognised at original invoice amounts less an allow-
ance 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. Refer note 18(b): Financial
risk management for details.
Trade receivables had not had a significant increase in credit risk since they
were originated.
(b) Reconciliation of Cash Flow from Operations with
Profit after Income Tax
Profit/(loss) for the year after income tax
25,883
26,420
Note 8: Property, plant and equipment
Plant and equipment–at cost
Accumulated depreciation
Leasehold improvements–at cost
Accumulated amortisation
Total property, plant and equipment
Consolidated
2020
$’000
2019
$’000
1,887
1,741
(1,598)
(1,430)
289
777
311
661
(581)
(521)
196
485
140
451
Non-cash flows
Amortisation
Depreciation
Fair value movement on contingent consideration
Share option expense
Net foreign exchange effects - (gain)/loss
Other
Changes in operating assets and liabilities, net of the
effects of purchase and disposal of subsidiaries
Decrease/(increase) in trade receivables
Decrease/(increase) in other receivables
Decrease/(increase) in inventories
Decrease/(increase) in DTA
Increase/(decrease) in trade payables
Increase/(decrease) in other payables
Increase/(decrease) in other provisions
Increase/(decrease) in DTL
Increase/(decrease) in provision for income tax
5,826
3,294
160
176
506
(33)
-
(14)
(918)
-
(273)
139
-
1,049
(6)
2
(138)
(275)
26
54
(5,919)
6,026
1,713
1,698
891
267
(23)
178
5
664
Cash flow from operations
28,242
39,136
72
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
73
Movements in Carrying Amounts
Plant and
equipment
$’000
Leasehold
Improvements
$’000
Total
$’000
(iv) Derecognition
An item of property, plant or equipment is derecognised when it is disposed
of or no future economic benefits are expected from its use or disposal.
Gains and losses on disposal are calculated as the difference between the
net disposal proceeds and the asset’s carrying value, and are included in
profit or loss in the year that the item is derecognised.
Note 9: Intangible assets
Consolidated Group
2019
Balance at the beginning of
year
Additions
Disposals
Depreciation/amortisation
expense
Carrying amount at the end
of year
2020
Balance at the beginning of
year
Additions
Additions through acquisition
Disposals
Depreciation/amortisation
expense
Carrying amount at the end
of year
219
234
(3)
(139)
311
311
125
16
(3)
(160)
289
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 man-
agement, less depreciation and any impairments.
(ii) Subsequent costs
Improvements to leasehold property are recognised as a separate asset.
All repairs and maintenance are charged to the profit or loss during the
reporting period in which they occur.
(iii) Depreciation and amortisation
Property, plant and equipment are depreciated or amortised from the date
of acquisition, or, in respect of internally generated assets, from the time an
asset is held ready for use.
Plant and equipment are depreciated using the straight-line method to allo-
cate their costs, net of their residual values, over their estimated useful lives.
Leasehold improvements are amortised over the shorter of either the unex-
pired 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.
61
119
-
280
353
(3)
(40)
(179)
140
451
Goodwill
140
115
-
-
451
240
16
(3)
(59)
(219)
Accumulated impairment losses
Net carrying value
Intellectual property
Accumulated impairments loss
Net carrying value
Website development costs
Accumulated amortisation
Net carrying value
196
485
Customer contracts and relationships costs
Accumulated amortisation
Net carrying value
Software costs
Accumulated amortisation
Net carrying value
Domain names – cost
Accumulated impairment losses
Net carrying value
Other
Accumulated amortisation
Net carrying value
Total intangibles
Consolidated
2020
$’000
9,957
(855)
9,102
53
(23)
30
2019
$’000
3,687
(855)
2,832
53
(23)
30
38,795
32,364
(25,783)
(21,390)
13,012
10,974
1,258
(147)
1,111
936
(227)
709
904
(62)
842
86
(68)
18
-
-
-
133
(133)
-
904
(62)
842
63
(58)
5
24,824
14,683
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 9(b). Goodwill is tested
for impairment half yearly.
Impairments assessment of other intangible assets
The Group considers half yearly whether there have been any indica-
tors of impairment and then tests whether non-current assets have
incurred any impairment in accordance with the accounting policy.
Estimated useful life of website development costs
Management estimates the useful of intangible assets-website
development costs based on the expected period of time over
which economic benefits from the use of the asset will be derived.
Management reviews useful life assumptions on an annual basis
having given consideration to variables including historical and fore-
cast 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.
(a) Movements in carrying values
Consolidated Group
2019
Goodwill
$’000
Intellectual
property
$’000
Website
development
costs
$’000
Customer con-
tracts and
relationships
$'000
Software
$’000
Balance at the beginning of the year
2,832
30
Additions internally developed
Amortisation charge
Effects of movements in foreign
exchange
-
-
-
-
-
-
Closing value at 30 June 2019
2,832
30
9,396
4,839
(3,246)
(15)
10,974
2020
Balance at the beginning of the year
Additions through acquisitions
Additions internally developed
Amortisation charge
Effects of movements in foreign
exchange
Closing value at 30 June 2020
2,832
6,761
-
-
(490)
9,102
30
10,974
-
-
-
-
-
6,431
(4,391)
(2)
30
13,012
-
-
-
-
-
-
-
-
-
-
-
-
-
1,356
-
865
-
(161)
(102)
(84)
1,111
(54)
709
Domain
names
$’000
842
-
-
-
842
842
-
-
-
-
842
Other
$’000
Total
$’000
13
-
(8)
-
5
5
-
23
13,110
4,839
(3,254)
(15)
14,683
14,683
8,982
6,454
(10)
(4,664)
-
18
(631)
24,824
(b) Impairment testing of Cash-Generating Units containing goodwill
or intangible assets with indefinite useful lives
Goodwill and domain names have been allocated to the Australian Internet
Lottery cash-generating unit which is an operating segment.
The recoverable amount of the cash-generating units is based on a val-
ue-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:
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 for further periods when they expire, an impairment loss would
be recognised up to the maximum carrying value of $21,611,000.
SaaS UK CGU is estimated to be $9,231,000 which exceeds the carrying
amount of goodwill, customer contracts and relationships, and software
by $1,141,000. If a discount rate of 15% and a growth rate of 7% was used
instead of 14% and 10% respectively, an impairment loss of $367,000 would
be recognised. Should all customer contracts cease, an impairment loss
would be recognised up to the maximum carrying value of $8,090,000.
• Annual growth rate of 3% except SaaS UK (Gatherwell) of 10% given its
Recognition and measurement
recent growth rate and early growth stage (2019: 3%);
• Terminal growth rate of 3% (2019: 3%);
• Discount rate of 14% being the calculated weighted average cost of capi-
tal based on the capital asset pricing model (2019: 14%); and
• Reseller agreements will be renewed as and when they expire.
Management determined projections based on past performance and its
expectations for the future. The growth rate used is consistent with those
used in industry reports. The discount rate used is pre-tax and is specific to
the relevant segment in which the unit operates.
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 impair-
ment 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.
Internet Lotteries Australia CGU is estimated to be $310,000,000 which
exceeds the carrying amount of goodwill, domain names and other intan-
gible assets by $288,389,000. If a discount rate of 15% and growth rate of
Goodwill acquired is allocated to each of the cash-generating units
expected to benefit from the combination’s synergies. Impairment is deter-
mined by assessing the recoverable amount of the cash-generating unit
74
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
75
to which the goodwill relates. Impairment losses on goodwill cannot be
reversed.
Note 10: Right-of-use assets
Note 11: Trade and other payables
Recognition and measurement
Intellectual Property
Acquired intellectual property is stated at cost, and is measured at cost
less any accumulated impairment losses. Intellectual property is considered
to have an indefinite useful life and is not amortised. The carrying value of
intellectual property is tested for impairment annually, or more frequently if
events or changes in circumstances indicate that the carrying value may be
impaired. Impairment losses are recognised in profit or loss. Any reversal of
impairment losses of intellectual property is recognised in profit or loss.
Website Developments Costs
Expenditure during the research phase of a project is recognised as an
expense when incurred. Development costs are capitalised only when tech-
nical and financial feasibility studies identify that we have the resources to
complete the development and the project will deliver future economic bene-
fits and these benefits can be measured reliably.
Development costs have a finite life and are amortised on a straight-line
basis matched to the future economic benefits over the useful life of the pro-
ject of three years up to 30 June 2015 and five years from 1 July 2015.
Customer contracts and relationships
Customer contracts and relationships acquired in a business combination
are amortised on a straight-line basis over the period of their expected ben-
efit, being their finite life of 5 years.
Software
Software acquired in a business combination is amortised on a straight-line
basis over the period of their expected benefit, being their finite life of 5
years.
Domain Names
Acquired domain names are stated at cost and are considered to have indef-
inite useful lives and are not amortised. The useful life is assessed annually
to determine whether events or circumstances continue to support an indef-
inite useful life assessment. The carrying value of domain names is tested
semi-annually at each reporting date for impairment.
Impairment of assets
Assets are tested for impairment at the end of each reporting period or
whenever events or changes in circumstances indicate that the carrying
amount may not be recovered.
An impairment loss is recognised for the amount by which the asset’s carry-
ing amount exceeds its recoverable amount. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows which are largely independent of the cash
flows from other assets or groups of assets (CGUs).
The recoverable amount is the greater of the asset’s fair value less costs to
sell and value-in-use. In assessing value-in-use, the estimated cash flows are
discounted to their present value using a pre-tax discount rate that reflects
market assessments of the time value of money and the specific risks of the
asset.
Impairment losses are recognised in the profit or loss. Non-financial assets
other than goodwill that incur impairment are reviewed for possible reversal
of impairment at each reporting period.
Land and buildings - right-of-use
Less: Accumulated amortisation
Plant and equipment - right-of-use
Less: Accumulated amortisation
Consolidated
2020
$’000
6,077
(1,038)
5,039
164
(18)
146
5,185
2019
$’000
-
-
-
-
-
-
-
The consolidated entity has adopted AASB16 Leases from 1 July 2019 - see
note 13: Lease liabilities for details.
$6,058,000 right-of-use assets were recognised on adoption of AASB 16
Leases, with additions of $183,000 during the year. Other than an amortisa-
tion expense of $1,103,000, there were no other movements.
The consolidated entity leases land and buildings for its offices under agree-
ments of between two to seven years with, in some cases, options to extend
which have been included in the lease liability where the options is expected
to be exercised. The leases have various escalation clauses. On renewal, the
terms of the leases are renegotiated. The consolidated entity also leases
plant and equipment under agreements of four years.
The consolidated entity leases land and buildings and office equipment
under agreements of less than one year. These leases are either short-term
or low-value, so have been expensed as incurred and not capitalised as
right-of-use assets.
For impairment testing, the right-of-use assets have been allocated to the
internet lotteries cash-generating unit. Refer to note 9 for further information
on the impairment testing key assumptions and sensitivity analysis.
Recognition and measurement
A right-of-use asset is recognised at the commencement date of a lease.
The right-of-use asset is measured at cost, which comprises the initial
amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives
received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for disman-
tling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unex-
pired period of the lease or the estimated useful life of the asset, whichever
is the shorter. Where the consolidated entity expects to obtain ownership
of the leased asset at the end of the lease term, the depreciation is over
its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset
and corresponding lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
Total trade and other payables
19,060
22,070
Consolidated
Note
2020
$’000
2019
$’000
Included in the above:
Trade creditors
GST payable
Sundry creditors and accrued expenses
Employee benefits
1,341
1,020
4,373
1,345
7,260
742
2,462
822
8,079
11,286
(i) Long service leave
Liabilities for long service leave are not expected to be settled wholly within
12 months after the end of the reporting period. They are recognised as part
of the provision for employee benefits and measured as the present value
of expected future payments to be made in respect of services provided
by employees to the end of the reporting period. Consideration is given to
expected future salaries and wages levels, experience of employee depar-
tures 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.
Customer funds payable
6(a)
10,981
10,784
Note 13: Lease liabilities
19,060
22,070
CURRENT
Lease liabilities
NON-CURRENT
Lease liabilities
Consolidated
2020
$’000
2019
$’000
990
4,395
5,385
-
-
-
Recognition and measurement
The consolidated entity has adopted AASB 16 Leases from 1 July 2019. The
standard replaces AASB 117 ‘Leases’ and for lessees eliminates the classifi-
cations of operating leases and finance leases. Except for short-term leases
and leases of low-value assets, right-of-use assets and corresponding lease
liabilities are recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation charge
for the right-of-use assets (included in operating costs) and an interest
expense on the recognised lease liabilities (included in finance costs). In the
earlier periods of the lease, the expenses associated with the lease under
AASB 16 will be higher when compared to lease expenses under AASB
117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results improve as the operating expense is now replaced by
interest expense and depreciation in profit or loss. For classification within
the statement of cash flows, the interest portion is disclosed in operating
activities and the principal portion of the lease payments are separately dis-
closed in financing activities. For lessor accounting, the standard does not
substantially change how a lessor accounts for leases.
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 to the end of the reporting
period and are measured at amounts expected to be paid when the liabilities
are settled. Liabilities for non-accumulating sick leave are recognised when
leave is taken and measured at the actual rates paid or payable.
(ii) Superannuation
Employees have defined contribution superannuation funds. Contributionsa
are recognised as expenses as they become payable. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
(iii) Termination benefits
Termination benefits are payable when employment is terminated before
the retirement date, or when an employee accepts voluntary redundancy in
exchange for these benefits. The Group recognises termination benefits as
an expense and a liability on the earlier of when the Group:
• Can no longer withdraw the offer and the benefits; and
• Recognises costs for restructuring under AASB 137 Provisions,
Contingent Liabilities and Contingent Assets and which involves the pay-
ment of termination benefits.
Benefits falling due more than 12 months after the end of the reporting
period are discounted to present value.
Note 12: Employee benefit obligations
CURRENT
Long service leave
NON-CURRENT
Long service leave
Consolidated
2020
$’000
2019
$’000
532
338
668
1,200
517
855
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
77
CAPITAL AND
FINANCIAL RISK
MANAGEMENT
In this section
Capital and financial risk management provides information about the cap-
ital 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 14: Capital risk management
Note 15: Dividends
Note 16: Equity and reserves
Note 17: Borrowings
Note 18: Financial risk management
Page 78
Page 78
Page 78
Page 79
Page 80
76
Impact of adoption
AASB 16 Leases was adopted using the modified retrospective approach
and as such the comparatives have not been restated.
The following is a reconciliation of total operating lease commitments at 30
June 2019 (as disclosed in the financial statements to 30 June 2019) to the
lease liabilities recognised at 1 July 2019:
Operating lease commitments as at 1 July 2019 (AASB 117)
Adjustment to operating lease commitments as at 1 July 2019
Discount using incremental borrowing rate
Short term leases not recognised as a lease liability (AASB 16)
Total lease liabilities recognised as at 1 July 2019 (AASB 16)
The impact of adoption on opening retained profits as at 1 July 2019 as
as follows:
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB16)
Lease liabilities - non-current (AASB 16)
Adjustment in opening retained profits as at 1 July 2019
$’000
6,032
737
(666)
(45)
6,058
6,058
(897)
(5,161)
-
Significant judgements and estimates
A key judgement by management is the incremental borrowing rate of
3.50% p.a. being applied as the discount rate in the initial recognition
of the lease values.
A lease liability is recognised at the commencement date of a lease. The
lease liability is initially recognised at the present value of the lease pay-
ments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the con-
solidated entity’s incremental borrowing rate. Lease payments comprise of
fixed payments less any lease incentives receivable, variable lease payments
that depend on an index or a rate, amounts expected to be paid under resid-
ual value guarantees, exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a
rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest
method. The carrying amounts are remeasured if there is a change in the
following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the carry-
ing amount of the right-of-use asset is fully written down.
78
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
79
Note 14: Capital risk management
(b) Dividends not recognised at the end of the reporting period
Movements in ordinary share capital
(b) Ordinary shares
Total borrowings
Consolidated
2020
$’000
2019
$’000
-
-
Note
17
Less: cash and cash equivalents
6(a)
(72,259)
(84,583)
-
-
Consolidated
2020
$’000
2019
$’000
Since year end, the Directors have recommended
the payment of a final 2020 fully franked ordi-
nary dividend of 17.0 (2019: 21.5) cents per share
franked at the rate of 30% (2019: 30%). The aggre-
Details
Consolidated
Shares
$’000
Opening balance 1 July 2018
54,374,265
55,917
Shares issued during the year
2 Jul 2018-Exercise of options
50,000
200
3 Jul 2018-Exercise of options
3,474,492
8,234
Net debt
Total equity
Total capital
Gearing ratio
16
80,089
79,302
gate amount of the proposed dividend expected
80,089
79,302
to be paid on 30 September 2020 (2019: 22
0%
0%
September 2019), but not recognised as a liability
at year end, is:
10,616
13,357
The Group’s objective is to maintain a strong capital base so as to aintain
investor, creditor and market confidence and sustain future development of
the business.
(c) Franked dividends
The Group monitors its capital structure by reference to its gearing ratio.
his 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 15: Dividends
(a) Ordinary shares
The franked portions of dividends paid and recom-
mended after 30 June 2020 will be franked out of
existing franking credits or out of franking credits aris-
ing from the payment of income tax in the year ending
30 June 2020.
Franking credits available for subsequent financial
Consolidated
2020
$’000
2019
$’000
Final fully franked ordinary dividend of 21.5 (2019:
11.0) cents per share franked at the tax rate of
Consolidated
2020
$’000
2019
$’000
years based on a tax rate of 30% (2019: 30%):
12,372
11,509
The above amounts represent the balance of the franking account as at he
reporting date adjusted for:
(i) Franking credits that will arise from the payment of the amount of the pro-
30% (2019: 30%)
13,410
6,438
vision for income tax, and
Interim fully franked ordinary dividend of 18.5
(2019: 15.0) cents per share franked at the tax
rate of 30% (2019: 30%)
11,549
9,273
Special fully franked ordinary dividend of nil (2019:
8.0) cents per share franked at the tax rate of 30%
(2019: 30%)
-
4,970
Total dividends paid or provided for
24,959
20,681
(ii) Franking debits that will arise from the payment of dividends recognised
as a liability at the reporting date.
The impact on the franking account of the dividends paid and recommended
by the directors since the end of the reporting period, but not recognised as
a liability at the reporting date, will be a reduction in the franking account of
$4,550,000 (2019: $5,724,000).
Dividends paid in cash or satisfied by the issue of
shares under the dividend reinvestment plan during
the years ended 30 June 2020 and 30 June 2019
were as follows:
Paid in cash
Satisfied by issue of shares
Note 16: Equity and reserves
(a) Contributed equity
Issued shares
24,959
20,681
-
-
24,959
20,681
Consolidated
Consolidated
2020
Shares
2020
$'000
2019
Shares
2019
$’000
Ordinary shares – fully paid
62,423,757 80,089 62,123,757 79,302
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
24 Sep 2018-Exercise of options
26 Sep 2018-Exercise of options
10 Oct 2018-Exercise of options
7 Dec 2018-Exercise of options
11 Dec 2018-Exercise of options
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
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
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
120
60
80
100
100
460
200
630
87
600
437
788
525
87
788
525
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 30 June 2019
Balance 1 July 2019
Shares issued during the year
23 Aug 2019-Exercise of options
19 Nov 2019-Exercise of options
50,000
250,000
175
875
62,123,757
79,302
62,123,757
79,302
250,000
50,000
613
175
Balance 30 June 2020
62,423,757
80,089
Issued capital represents the amount of consideration received for securi-
ties issued or paid for securities bought back by Jumbo.
Costs directly attributable to the issue of new shares or options are
deducted from the consideration received, net of income taxes.
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 pro-
ceeds on winding up of the Company in proportion to the number of and
amounts paid on the shares held. Every ordinary shareholder present at a
meeting in person or by proxy is entitled to one vote on a show of hands and
upon a poll each share is entitled to one vote.
(c) Options
(i) Details of the employee option plan, including details of options issued,
exercised and lapsed during the financial year and options outstand-
ing at the end of the financial year are set out in note 26: Share-Based
Payments.
(ii) For information relating to share options issued to third parties during the
financial year, refer to note 26: 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 estab-
lished to ensure the accumulated losses up until then were ‘ring-fenced’ and
that future profits were available for distribution, in particular for dividend
payments.
Share-based payments reserve
The share-based payments reserve records items recognised as expenses
on the fair value of share-based remuneration provided to employees. This
reserve can be reclassified as retained earnings if options lapse.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign exchange differ-
ences arising on translation of investments in foreign 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 reclassified.
Note 17: Borrowings
(a) Facilities with Banks
Credit facility
Bank guarantees
Commercial card
Facilities utilised
Bank guarantees
Commercial credit card
Amount available
Consolidated
Note
2020
$’000
2019
$’000
800
300
550
300
29
(682)
(295)
123
(478)
(295)
77
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 2020 (2019: nil).
80
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
81
(b) Assets pledged as security
The bank facilities are secured by a fixed and floating charge over all the
assets of the Group.
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 before tax, with all other
variables remaining constant, as at 30 June 2020:
(c) Defaults and breaches
There have been no defaults or breaches during the financial year ended 30
June 2020.
Note 18: Financial risk management
The Group has exposure to a variety of financial risks including market risk
(foreign exchange risk and interest rate risk), credit risk and liquidity risk.
Risk management is performed by a central Treasury function on behalf
of the Group under Treasury Policies approved by the Board annually.
Speculative activities are strictly prohibited. Compliance with the Treasury
Policies is monitored on an ongoing basis through regular reporting to the
Board.
Whilst there has been no noticable impact on financial performance from
COVID-19, there is a risk that any future economic downturn could reduce
disposable income and consequently may impact customer spending levels.
(a) Market risk
Market risk is the risk that adverse movements in foreign exchange and
interest rates will affect the Group’s financial performance or the value of
its holdings of financial instruments. The Group measures market risk using
cash flow at risk. The objective of risk management is to manage the market
risks inherent in the business to protect profitability and return on assets.
(i) Foreign exchange risk
Exposure to foreign exchange risk
Foreign exchange risk arises from commercial transactions (transactional
risks) and recognised assets and liabilities (translational risks) that are
denominated in or related to a currency that is not in the Group’s functional
currency. The Group’s foreign exchange risk relates largely to the Fiji Dollar
(FJ$) and Great British Pound (GBP).
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 prices in foreign currency.
Sensitivity on foreign exchange risk
Any movement in foreign exchange rates would not be significant to the
Group.
(ii) Interest rate risk
Exposure to interest rate risk
The Group’s has interest bearing assets and therefore its income and oper-
ating cash flows are subject to changes in market interest rates.
At the reporting date, the Group has exposure to the following interest rates:
Consolidated
Rate1
%
0.80
3.50
2020
$’000
Rate1
%
2019
$’000
72,259
1.64
84,583
5,385
-
Deposits
Lease liabilities
1 weighted 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 23 days (2019: 31 days). Term deposits cur-
rently in place cover approximately 79% (2019: 66%) of the total cash and
cash equivalent balances.
Consolidated
Effect on profit
(before tax)
Effect on equity
(before tax)
2020
2019
2020
2019
200 bps movement in inter-
est rates
200 bps increase in inter-
est rates
200 bps decrease in inter-
est rates
1,445
1,692
1,445
1,692
(1,445)
(1,692)
(1,445)
(1,692)
(b) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counter-
party 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
17(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.
(i) Trade receivables
The Group applies the AASB 9 simplified model of recognising lifetime
expected credit losses for all trade receivables as these items do not have a
significant financing component.
In measuring the expected credit losses, the trade receivables have been
assessed on a collective basis as they possess shared credit risk charac-
teristics. They have been grouped based on the days past due and also
according to the geographical location of customers.
The expected loss rates are based on the payment profile for sales over the
past 60 months before 30 June 2020 and 30 June 2019 respectively as well
as the corresponding historical credit losses during that period. The histori-
cal rates are adjusted to reflect current and forecast expected losses.
Trade receivables are written off (ie derecognised) when there is no reason-
able expectation of recovery. Failure to make payments within 180 days from
the invoice date and failure to engage with the Group on alternative pay-
ment arrangement amongst other is considered indicators of no reasonable
expectation of recovery.
Trade receivables days past due
30 June 2020
$’000s
Cur-
rent
1-30
days
31-60
days
61-90
days
> 90
days
Total
Expected credit loss rate
0.0% 0.0% 0.0% 0.0% 0.0%
Gross carrying amount $
Lifetime expected credit
loss $
1
-
138
-
36
-
33
102
311
-
-
-
Trade receivables days past due
(d) Fair value hierarchy
30 June 2019
$’000s
Cur-
rent
1-30
days
31-60
days
61-90
days
> 90
days
Total
Expected credit loss rate
0.0% 0.0% 0.0% 0.0% 0.0%
Gross carrying amount $
Lifetime expected credit
loss $
-
-
153
-
1
-
-
-
36
190
-
-
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting
the obligations associated with its financial liabilities. The Group manages
liquidity risk by monitoring forecast cash flows and ensuring that adequate
cash balances are maintained to meet its liabilities when due.
The following table summarises the contractual timing of undiscounted cash
flows of financial instruments:
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 tech-
niques. The valuation techniques maximise the use of observable market
data where possible and rely as little as possible on entity specific estimates.
The following tables detail the consolidated entity's assets and liabilities,
measured or disclosed at fair value, using a three level hierarchy, based on
the lowest level of input that is significant to the entire fair value measure-
ment, being:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
2020
Financial
assets
Cash
and cash
equivalents
Trade
and other
receivables
Other assets
Financial
liabilities
Trade
and other
payables
Lease
liabilities
Contingent
consideration
2019
Financial
assets
Cash
and cash
equivalents
Trade
and other
receivables
Financial
liabilities
Trade
and other
payables
Less than
1 year
$’000
Between
1 and 2
years
$’000
Between
3 and 5
years
$’000
Over 5
years
$’000
72,259
1,961
1,757
75,977
-
-
1,761
1,761
19,060
-
-
-
-
-
-
1,181
1,149
3,136
1,757
21,998
1,581
2,730
-
3,136
-
-
-
-
-
-
-
Total
$’000
Consolidated - 2020
Assets
Liabilities
Contingent consideration
72,259
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
3,338
3,338
3,338
3,338
There were no assets and liabilities, measured or disclosed at fair value,
using the three level hierarchy in FY2019.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other
payables are assumed to approximate their fair values due to their short-
term nature.
The fair value of the contingent consideration is estimated by discounting
the probability-adjusted profit in Gatherwell Ltd at the company’s weighted
average cost of capital.
1,961
3,518
77,738
19,060
5,466
3,338
27,864
Less than
1 year
$’000
Between
1 and 2
years
$’000
Between
3 and 5
years
$’000
Over 5
years
$’000
Total
$’000
84,583
922
85,505
22,070
22,070
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
84,583
922
85,505
22,070
22,070
82
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
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83
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous
financial year are set out below:
Consolidated
Balance at 1 July 2018
Balance at 30 June 2019
Additions
Effects of movements in foreign
exchange recognised in other compre-
hensive income
Fair value movement recognised in profit
or loss
Balance at 30 June 2020
Contingent
consideration
$'000
-
-
Total
$'000
-
-
3,410
3,410
(248)
(248)
176
3,338
176
3,338
The level 3 assets and liabilities unobservable inputs and sensitivity are as
follows:
Description
Unobservable
inputs
Range
Sensitivity
Contingent
consideration
Probability rate
90%
5% change would
increase/decrease fair
value by $88,000
Future profit
$568,000 to
$663,000
Less than $500,000 would
decrease fair value by
$1,581,000
Discount rate
16%
1.00% change would
increase/decrease fair
value by $14,000
GROUP
STRUCTURE
In this section
Group structure provides information about particular subsidiaries and
associates and how changes have affected the financial position and perfor-
mance of the Group.
Note 19: Business combinations
Note 20: Controlled subsidiaries
Note 21: Parent disclosures
Page 84
Page 85
Page 85
84
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
85
Note 19: Business combinations
On 29 November 2019, the Group acquired 100% of the issued share capital
and voting rights of Gatherwell Limited (Gatherwell), a company based in the
United Kingdom that operates as an External Lottery Manager. The primary
objective of the acquisition is to provide the Group an entry point to licence
its lottery software platform in the UK charities lottery market.
Details of the business combination are as follows:
Fair value of purchase consideration
Note
Cash paid on completion
Contingent consideration
Working capital settlement adjustment payable
Total consideration
19(b)
19(a)
$’000s
5,684
3,410
78
9,172
Fair value of identifiable assets and liabilities at acqusiition date:
Note
$’000s
Cash
Trade and oher receivables
Property, plant and equipment
Software
Customer contracts and relationships
Trade and other payables
Net assets
Goodwill on consolidation
19(d)
Gatherwell acquisition at fair value
Cash consideration paid
Cash acquired on acquisition
Cash outflow
688
108
11
865
1,356
(617)
2,411
6,761
9,172
5,684
(688)
4,996
Following the 30 June 2021 financial year end, any amount not paid out will
be returned to Jumbo.
At 30 June 2020 these funds, held in an Escrow account for the Gatherwell
contingent consideration, are recognised in the Statement of Financial
Position as:
Other current assets
Other non-curent assets
Total
$'000s
1,757
1,761
3,518
The fair value of the contingent consideration arrangement of $3,410,000
was estimated by calculating the present value of the future expected cash
flows. The estimates are based on a discount rate of 16% and assumed
probability-adjusted profit in Gatherwell of GBP300,000 (~$568,000) to
GBP350,000 (~$663,000).
The probability-adjusted profit in Gatherwell is recalculated at each
reporting date with any gains/losses on the fair value of the contingent con-
sideration recognised in profit or loss.
At 30 June 2020 the fair value of the contingent consideration liability is rec-
ognised on the Statement of Financial Position as:
Current contingent consideration
Non-current contingent consideration
Total
$'000s
1,757
1,581
3,338
(c) Identifiable net assets
Developed software and customer contracts and relationships have been
identified as separately identifiable assets. These assets have been valued
by an independent valuer according to the cost approach/cost to create
methodology for developed software and income approach/excess earnings
methodology for customer contracts and relationships.
Acquisition costs charged to expenses
19(a)
406
(d) Goodwill
Significant judgements and estimates
A key judgement by management is a 100% probabilty of the contin-
gent consideration being paid following the 30 June 2020 financial
year end and a 90% probability of the contingent consideration being
paid following the 30 June 2021 financial year end.
The goodwill that arose on the combination can be attributed to Gatherwell’s
strong position, competitive advantage and strong growth prospects in the
digital charities lottery market. No amount of goodwill is expected to be
deductible for tax purposes.
(e) Revenue and profit contribution
Gatherwell contributed TTV of $7,612,000, revenue of $1,520,000 and net
profit of $267,000 to the Group from the date of acquisition to 30 June
2020. If the acquisition had occurred on 1 July 2019, the Group’s pro-
forma TTV, revenue and net profit after tax for the financial year ended
30 June 2020 would have been $12,570,000, $2,505,000, and $477,000
respectively.
(a) Consideration transferred
Acquisition-related costs amounted to $406,000 are not included as part
of the consideration transferred and have been recognised as an expense
in the consolidated statement of profit or loss and other comprehensive
income, as part of administrative expenses.
Recognition and measurement
The acquisition method of accounting is used to account for business
combinations regardless of whether equity instruments or other assets are
acquired.
The actual net working capital was in excess of the target working capital
resulting in a working capital settlement adjustment $78,000 being payable
to the vendors of Gatherwell.
(b) Contingent consideration
The contingent consideration arrangement requires the Group to pay the
former owners of Gatherwell up to an additional undiscounted amount of
GBP2,000,000 (~$3,518,000) in cash to the Gatherwell Vendors if certain
Revenue and Profit targets are met, to be paid in up to two instalments fol-
lowing the 30 June 2020 and 30 June 2021 financial year ends.
The contingent consideration funds are held by an Escrow Agent in the UK
in an interest-bearing bank account from which any instalments will be paid.
The consideration transferred is the sum of the acquisition-date fair values
of the assets transferred, equity instruments issued or liabilities incurred
by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the
non-controlling interest in the acquiree is measured at either fair value or at
the proportionate share of the acquiree’s identifiable net assets. All acquisi-
tion costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the finan-
cial assets acquired and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic conditions,
the consolidated entity’s operating or accounting policies and other perti-
nent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated
entity remeasures its previously held equity interest in the acquiree at the
acquisition-date fair value and the difference between the fair value and the
previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at
the acquisition-date fair value. Subsequent changes in the fair value of the
contingent consideration classified as an asset or liability is recognised in
profit or loss. Contingent consideration classified as equity is not remeas-
ured and its subsequent settlement is accounted for within equity.
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 which control is transferred to the Group and are deconsolidated
from the date on which control ceases.
All intercompany balances and transactions, including unrealised profits aris-
ing from intragroup transactions have been eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment
of the asset transferred.
The difference between the acquisition-date fair value of assets acquired,
liabilities assumed and any non-controlling interest in the acquiree and the
fair value of the consideration transferred and the fair value of any pre-exist-
ing investment in the acquiree is recognised as goodwill. If the consideration
transferred and the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the acquirer,
the difference is recognised as a gain directly in profit or loss by the acquirer
on the acquisition-date, but only after a reassessment of the identification
and measurement of the net assets acquired, the non-controlling interest in
the acquiree, if any, the consideration transferred and the acquirer’s previ-
ously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The
acquirer retrospectively adjusts the provisional amounts recognised and also
recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that
existed at the acquisition-date. The measurement period ends on either
the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
Note 20: Controlled subsidiaries
Changes in ownership interests
When the Group ceases to have control, joint control or significant influ-
ence, 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 availa-
ble-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 had directly disposed of the relative assets or liabilities. This may
mean that amounts previously recognised in other comprehensive income
are reclassified to profit or loss.
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 reclassi-
fied to profit or loss, where appropriate.
Note 21: Parent disclosures
The parent and ultimate parent entity within the Group is Jumbo Interactive
Limited.
The Group’s subsidiaries that were controlled during the year and prior years
are set out below:
(a) Summary financial information
Percentage
Ownership
Country of
Incorporation
2020
%
2019
%
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
Gatherwell Limited
Mexico
UK
Subsidiaries of TMS Global Services
Pty Ltd:
TMS Global Services (NSW) Pty Ltd
TMS Global Services (VIC) Pty Ltd
TMS Fiji Limited
TMS Fiji On-Line Limited
TMS Global Services (PNG) Limited
Australia
Australia
Fiji
Fiji
Papua New
Guinea
Cook Islands Tattslotto Pty Ltd
Cook Islands
100
100
100
100
100
1
100
100
100
100
100
100
100
99
100
100
100
100
100
1
100
-
100
100
100
100
100
99
Jumbo Lotteries North America, Inc.
United States of
America
100
100
Principles of consolidation
The consolidated financial statements comprise the financial statements
of Jumbo Interactive Limited and its subsidiaries at 30 June each year (‘the
Group’). Subsidiaries are entities over which the Group has control. The
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
2020
$’000
2019
$’000
25,336
32,946
38,438
34,043
63,774
66,989
3,216
2,308
5,524
1,986
198
2,184
58,250
64,805
80,089
79,302
Retained earnings/(accumulated losses)
(26,037)
(26,037)
Profits appropriation reserve
Other reserves
Total shareholders’ equity
3,245
11,090
953
450
58,250
64,805
Profit for the year
17,113
21,359
Total comprehensive income for the year
17,113
21,359
(b) Guarantees
The parent entity has provided guarantees to third parties in relation to the
obligations of controlled entities in respect to banking facilities. The guar-
antees are for the terms of the facilities per note 17: Borrowings, and are
ongoing.
The parent entity has also provided a guarantee in favour of Tabcorp in
respect of payment obligations of a subsidiary company in terms of the
Agent reseller agreements, between its subsidiary and the favouree.
86
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
87
(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 2020
(2019: $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 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 imple-
mented the tax consolidation legislation for the whole of the financial year.
Refer to note 4 for details.
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 posi-
tion of the Group.
Note 22: Investments accounted for using the Equity Method
Page 88
Note 23: Financial assets at fair value through other comprehensive income Page 88
Page 88
Note 24: Related party transactions
Page 88
Note 25: Key Management Personnel compensation
Page 88
Note 26: Share-based payments
Page 89
Note 27: Remuneration of auditors
Page 91
Note 28: Summary of other significant accounting policies
88
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
89
Note 22: Investments accounted for using the Equity
Method
Note 24: Related party transactions
Parent entity
Jumbo Interactive Limited is the parent entity.
Interest in Associ-
ate – Lotto Points
Plus Inc., USA
Unlisted shares
Place of busi-
ness/ Country
of Incorpora-
tion
2020
%
2019
%
2020
$’000
2019
$’000
Subsidiaries
Interests in subsidiaries are set out in note 20.
Lotto Points Plus Inc
New York, USA
30.9
30.9
Net investment in associate company
-
-
-
-
Lotto Plus Inc is an investment company, with its only investment being a
16.9% (2019: 16.9%) shareholding (non-voting) in Lottery Rewards Inc., USA
(see note 23(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 state-
ments using the equity method of accounting. Under the equity method of
accounting, the Group’s share of post-acquisition profits or losses of asso-
ciates 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-acquisi-
tion 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 recog-
nise further losses unless it has obligations to, or has made payments, on
behalf of the associate.
The financial statements of the associates are used to apply the equity
method. The end of the reporting period of the associates and the parent
are identical and both use consistent accounting policies.
Note 23: Financial assets at fair value through other
comprehensive income (FVOCI)
Unlisted securities comprise investments in:
(a) Sorteo Games Inc., USA. The Company owns 7% of the issued share
capital of Sorteo Games Inc. Shares in Sorteo Games Inc are carried at
fair value of $nil (2019: $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 (2019: $nil).
Significant judgement and estimates
A key judgement by management is the uncertainty of future eco-
nomic benefits of both Sorteo Games Inc and Lottery Rewards Inc
Recognition and measurement
Non-current assets are classified as held-for-sale if their carrying amount
will be recovered principally through a sale transaction, rather than through
continuing use. After initial recognition at cost, 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.
Key management personnel
Disclosures relating to key management personnel are set out in note 25
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
2020
$
2019
$
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
8,580
7,865
Consolidated
2020
$
2019
$
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.
- salary and superannuation
86,505
84,315
Receivables from related parties
The following balances are outstanding at the reporting date in relation to
transactions with related parties:
Consolidated
2020
$
2019
$
Trade receivables from Mr Mike Rosch (director-related party
of Mike Veverka)
787
715
Note 25: Key Management Personnel compensation
Consolidated
2020
$
2019
$
Short term employee benefits
2,668,138
2,296,102
Post employment benefits
Other long term benefits
Termination benefits
Share based payments
208,045
183,817
137,212
19,315
-
-
487,856
934,883
3,501,251
3,434,117
Further information regarding the identity of key management personnel and
their compensation can be found in the Audited Remuneration Report con-
tained in the Directors’ Report.
LTI rights are granted for no consideration, have a three year term, and are
exercisable when the 90-day VWAP for the period up to 30 June 2022 is equal
to or more than $24.98 less any dividends paid during the term
Grant date
Share price at grant date
Exercise price
Expected volatility
Expected dividend yield
Risk free rate
2020
1 July 2019
$19.98
$nil
52.125%
2.00%
0.98%
Expected volatility was determined based on the historic volatility (based on
the remaining life of the right), adjusted for any expected changes to future
volatility based on publicly available information.
Note 26: Share-based payments
Share-based payment expenses
recognised during the financial year
Consolidated
2020
$
2019
$
Options issued under employee option plan
90,745
1,048,690
Rights issued under employee incentives schemes
415,140
-
505,885
1,048,690
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 commer-
cially acceptable transaction in Australia. Options vest when the volume
weighted average share price over five consecutive trading days equals the
exercise price and provided an acceptable transaction has been brought to
the Company with terms and conditions acceptable to the Company by 31
December 2017 failing which the options will lapse. This was subsequently
extended to 30 June 2018, and finally to 30 June 2019 with 150,000 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 2020 financial year.
Third parties
There were no options granted during the 2020 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.
Fair value of rights granted
The fair value of STI rights approximates the grant date value of the 10-day
VWAP period up to 30 June annually as their is no market vesting condition
and due to their short term nature.
The fair value of LTI rights at grant date was determined by an independent
valuer using the Monte Carlo Simulation option pricing model that takes into
account the share price at grant date, exercise price, expected volatility,
option life, expected dividends, and the risk free rate. The inputs used for the
Monte Carlo Simulation option pricing model for options granted during the
year ended 30 June 2020 were as follows:
90
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
91
Total
Weighted average
exercise price
KMP rights
1 July 2019
30 June 2020
-
-
Total
2019
Grant date
KMP and staff
options
3 Sep 2013
6 Nov 2013
Details of options and rights outstanding during the financial year are as follows:
2020
Grant date
KMP and staff
options
Exercise
Price
Expiry date
Balance at
beginning
of year
Granted
during the
year
Lapsed/ For-
feited during
the year
Exercised
during the
year
Expired
during
the year
Balance at
end of year
Exercisa-
ble at end
of year
18 Nov 2015
$1.75
18 Nov 2020
250,000
26 Oct 2017
$3.50
15 Nov 2022
775,000
1,025,000
$3.01
-
-
-
-
1 July 2023
30 June 2021
-
-
-
46,716
23,241
69,957
-
-
-
-
-
-
-
(150,000)
(150,000)
(300,000)
$2.62
-
-
-
-
-
-
-
-
-
-
100,000
100,000
625,000
625,000
725,000
725,000
$3.26
$3.26
46,716
23,241
69,957
-
-
-
Exercise
Price
Expiry date
Balance at
beginning
of year
Granted
during the
year
Lapsed/ For-
feited during
the year
Exercised
during the
year
Expired
during
the year
Balance at
end of year
Exercisa-
ble at end
of year
$4.00
$4.00
3 Sep 2018
400,000
6 Nov 2018
150,000
18 Nov 2015
$1.75
18 Nov 2020
300,000
26 Oct 2017
$3.50
15 Nov 2022
4,450,000
Third party
options
2 Feb 2017
13 Jul 2017
Total
Weighted average
exercise price
$2.25
$2.37
2 Feb 2022
200,000
13 Jul 2018
3,474,492
8,974,492
$3.01
-
-
-
-
-
-
-
-
-
-
-
-
(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
Options were exercised regularly throughout the year and the weighted
average share price at date of exercise for the year ended 30 June 2020
was $19.77 (2019: $7.02).
changed. In addition, at the date of the modification, a further expense is
recognised for any increase in fair value of the transaction as a result of the
change.
The weighted average exercise price for the year ended 30 June 2020 was
$3.23 (2019: $3.33).
The weighted average remaining contractual life of share options outstand-
ing at 30 June 2020 was 2 years 1 month (2019: 2 years 11 months).
Where options are cancelled, they are treated as if vesting occurred on can-
cellation 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 can-
cellation and replacement options are treated as if they were a modification.
Recognition and measurement
The fair value of options granted to Directors, employees and consult-
ants is recognised as an expense with a corresponding increase in equity
(share based payments reserve). The fair value is measured at grant date
and recognised over the period during which the employees or consultants
become unconditionally entitled to the options. Fair value is determined by
an independent valuer using the Black-Scholes, Bi-nomial, and Monte Carlo
Simulation option pricing models as appropriate. In determining fair value,
no account is taken of any performance conditions other than those related
to the share price of Jumbo Interactive Limited (“market conditions”). The
cumulative expense recognised between grant date and vesting date is
adjusted to reflect the Directors’ best estimate of the number of options that
will ultimately vest because of internal conditions of the options, such as the
employees having to remain with the Group until vesting date, or such that
employees are required to meet internal sales targets. No expense is rec-
ognised for options that do not ultimately vest because internal conditions
were not met. An expense is still recognised for options that do not ulti-
mately 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
Note 27: Remuneration of auditor
During the year the following fees were paid or payable for services pro-
vided by the auditor of the parent entity and its related practices:
Audit services
Amounts paid/payable to BDO for audit or review of
the financial statements for the entity or any entity
in the Group
Taxation services
Amounts paid/payable to BDO for taxation services
for the entity or any entity in the Group:
Review of income tax return
Transfer pricing consulting
Other taxation advice
Other services
Amounts paid/payable to BDO for other services for
the entity or any entity in the Group:
Due diligence
Whistleblower services
Accounting advice
Export grant services
Consolidated
2020
$
2019
$
130,138
105,532
130,138
105,532
52,500
43,000
-
-
9,300
6,000
61,800
49,000
84,423
6,500
-
-
--
5,250
5,000
90,923
10,250
282,861
164,782
Note 28: 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 infor-
mation has been restated to conform with changes in presentation in the
current year.
Standards. Where the consolidated entity has relied on the existing frame-
work in determining its accounting policies for transactions, events or
conditions that are not otherwise dealt with under the Australian Accounting
Standards, the consolidated entity may need to review such policies under
the revised framework. At this time, the application of the Conceptual
Framework is not expected to have a material impact on the consolidated
entity's financial statements.
(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 func-
tional 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 transactions. Foreign
exchange gains and losses resulting from the settlement of such trans-
actions and from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in
profit or loss, except when attributable to part of the net investment in a for-
eign operation.
Foreign exchange gains and losses are presented in profit or loss on a net
basis within other income or other expenses, unless they relate to borrow-
ings, in which case they are presented as a part of finance costs.
Non-monetary items measured at fair value in a foreign currency are trans-
lated using the exchange rates at the date when fair value was measured.
The functional currency of the overseas subsidiaries is measured using the
currency of the primary economic environment in which that entity oper-
ates. At the end of the reporting period, the assets and liabilities of these
overseas subsidiaries are translated into the presentation currency of the
Company at the closing rate at the end of the reporting period and income
and expenses are translated at the average exchange rates for the year.
All resulting exchange differences are recognised in other comprehensive
income as a separate component of equity (foreign currency translation
reserve). On disposal of a foreign entity, the cumulative exchange differ-
ences recognised in foreign currency translation reserves relating to that
particular foreign operation is recognised in profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and translated
at the closing rate.
(a) Basis of preparation
(c) Financial instruments
(i) New, revised or amended Accounting Standards and Interpretations
adopted
None of the new standards and amendments to standards that are manda-
tory for the first time for the financial year beginning 1 July 2019 materially
affect the amounts recognised in the current period or any other prior period
and are not likely to affect future periods, with the exception of AASB 16
Leases. Refer to note 13: Lease liabilities for details on the impact of adopt-
ing AASB 16.
(ii) New accounting Standards and Interpretaions not yet mandatory
or early adopted
Australian Accounting Standards and Interpretations that have recently been
issued or amended but are not yet mandatory, have not been early adopted
by the consolidated entity for the annual reporting period ended 30 June
2020. The consolidated entity's assessment of the impact of these new or
amended Accounting Standards and Interpretations, most relevant to the
consolidated entity, are set out below.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting peri-
ods beginning on or after 1 January 2020 and early adoption is permitted.
The Conceptual Framework contains new definition and recognition criteria
as well as new guidance on measurement that affects several Accounting
(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 asset is
not subsequently accounted for at fair value through profit or loss, then the
initial measurement includes transaction costs that are directly attributable
to the asset’s acquisition or origination. On initial recognition, the Group clas-
sifies its financial assets as subsequently measured at either amortised cost
or fair value, depending on its business model for managing the financial
assets and the contractual cash flow characteristics of the financial assets.
Refer to notes 22 and 23 for further details.
(ii) Financial assets measured at amortisation cost
A financial asset is subsequently measured at amortised cost, using effec-
tive 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
92
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
93
• 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 evi-
dence that a financial asset (or group of financial assets) is impaired.
Refer to notes 6 and 7 for further details.
(iii) Non-derivative liabilities
The Group initially recognises loans on the date when they originated. Other
financial liabilities are initially recognised on the trade date. The Group
derecognises a financial liability when its contractual obligations are dis-
charged or cancelled or expire.
Non-derivative financial liabilities are initially recognised at fair value less
any directly attributable transaction costs. Subsequent to initial recognition,
these liabilities are measured at amortised cost using the effective interest
rate method.
Refer to note 11 for further detail
(d) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of GST, unless the
amount of GST incurred is not recoverable from the Australian Taxation
Office (ATO), in which case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST receivable or
payable included. The net amount of GST recoverable from, or payable to,
the ATO is included as part of receivables or payables in the consolidated
statement of financial position.
Cash flows are included in the consolidated statement of cash flows on a
gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the 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.
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 signifi-
cant impact on the Group’s financial position and performance.
Note 29: Contingencies
Note 30: Commitments
Note 31: Events after the reporting date
Page 94
Page 94
Page 94
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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 2020 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 47 to 55 of the Directors’
report (as part of the audited Remuneration Report), for the year ended
30 June 2020, 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, 26 August 2020
Note 29: Contingencies
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.
Estimates of the potential financial effect of contingent liabilities
that may become payable:
Guarantees provided by the Group’s bankers
Consolidated
2020
$’000
682
2019
$’000
478
The Group’s bankers have provided guarantees to third parties in relation
to premises leased by Group companies. These guarantees have no expiry
term and are payable on demand, and are secured by a fixed and floating
charge over the Group’s assets.
Note 30: Commitments
Short-term lease commitments (2019: Operating lease
commitments under AASB 117)
Non-cancellable operating leases contracted for
but not capitalised in the consolidated financial
statements
Payable
Not later than one year
Later than one year but not later than five years
Later than five years
Consolidated
2020
$’000
2019
$’000
48
1,096
-
-
4,044
892
48
6,032
The Group leases various premises in Fiji under operating leases expiring in
less than one year.
Recognition and measurement pre 1 July 2019
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 of leasehold improvements
and are amortised over the shorter of the term of the lease or the useful life
of the assets.
Note 31: Events after the reporting date
Apart from (i) the revised long-form reseller agreement signed with Tabcorp
as announced 25 August 2020 and payment of the $15,000,000 exten-
sion fee, and (ii) the final dividend declared, as at the date of this Directors’
Report, the directors are not aware of any matter or circumstance that has
arisen that has significantly affected, or may significantly affect, the opera-
tions of the Company in the financial years subsequent to 30 June 2020.
The above items are not recognised in the financial statements 30 June
2020.
96
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
97
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 2020, 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 2020 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 (including Independence Standards) (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.
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 assets, including the impairment
assessments of goodwill and other intangible
assets are included in Note 9.
The carrying value of intangible assets
represent a significant asset of the Group.
The Group is required to annually test the
amount of goodwill and indefinite useful life
intangible assets for impairment and assess
other intangible assets for impairment
indicators. This annual impairment test 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.
Our procedures included, amongst others:
•
•
•
•
•
•
Evaluating management’s determination of the Group’s
Cash Generating Units ("CGU's") to ensure they are
appropriate, including being at a level no higher than the
operating segments of the entity
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 amount of its assets
Assessing the Group’s assumptions and estimates relating
to forecast revenue, costs, capital expenditure, discount
rates and the life of the revised reseller agreements
based on the Binding Term sheet entered into on 28 June
2020, used to determine the recoverable value of its
assets. Comparing the terms of the Binding Term sheet
with the revised long-form reseller agreement signed on
25 August 2020
Assessing the historical accuracy of forecasting of the
Group by comparing the current year actual results with
FY19 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.
Revenue recognition and measurement
Key audit matter
How the matter was addressed in our audit
•
•
The assessment of revenue recognition
was significant to our audit because
revenue is a material balance in the
financial statements for the year ended
30 June 2020
The assessment of revenue recognition
and measurement required significant
auditor effort.
Our procedures included, amongst others:
•
•
•
•
•
Assessing the revenue recognition policy for compliance
with AASB 15 Revenue from Contracts with Customers,
including the revenue recognition policy of the
Gatherwell Limited
Documenting the processes and assessing the internal
controls relating to revenue processing and recognition
Tracing a sample of revenue transactions to supporting
documentation
Developing expectations of monthly trends taking into
account of seasonality and timing of major prize monies
for each lotto draw and comparing with actual revenue
recognised each month
Assessing the adequacy of the Group's disclosures within
the financial statements
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.
98
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
99
Accounting for the Acquisition of Gatherwell Limited
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 19 of the financial report,
the company acquired Gatherwell Limited (a
company based in UK).
The audit of the accounting for this
acquisition is a key audit matter due to the
significant judgment and complexity involved
in assessing the determination of the fair
value of identifiable intangible assets and the
final purchase price which included contingent
deferred consideration.
Our procedures included, amongst others:
• Obtaining an understanding of the transaction including
an assessment of the accounting acquirer and whether
the transaction constituted a business or an asset
acquisition
•
Comparing the assets and liabilities recognised on
acquisition against the historical financial information
included in the due diligence report
• Obtaining a copy of the Purchase Price Allocation (PPA)
report prepared by an independent expert to assess the
determination of the fair values of the identifiable
intangible assets associated with the acquisition
•
•
•
In conjunction with internal experts, reviewing the
valuation methodology used in the PPA report, in
assessing the fair values of intangible assets acquired
including developed software, customer contracts and
relationships
Assessing the estimation of the contingent consideration
by challenging the key assumptions including probability
of achievement of future profit targets. This included
comparing the actual performance since acquisition
against the forecast performance
Assessing the adequacy of the Group's disclosures of the
acquisition
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 2020, 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.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 47 to 55 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Jumbo Interactive Limited, for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
K L Colyer
Director
Brisbane, 26 August 2020
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.
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.
100
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
101
SHAREHOLDER
INFORMATION
The Company has 62,448,757 ordinary shares on issue, each fully paid.
There are 13,551 holders of these ordinary shares as at 31 July 2020. 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 700,000 options and 46,716 rights
over ordinary shares on issue but not quoted on the Australian Securities
Exchange.
Corporate Governance Statement
The Corporate Governance Statement is available on the Company's
website at https://www.jumbointeractive.com/governance/corporate_gov-
ernance_statement.pdf
(a)The range of fully paid ordinary shares as at 31 July
2020
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
Holders
9,595
3,253
408
263
32
Units
% of issued capital
3,517,177
7,507,553
2,991,576
6,551,464
41,880,987
5.63
12.02
4.79
10.49
67.06
Total
13,551
62,448,757
100.00
(b)Unmarketable parcels
Minimum $500.00 parcel at
$10.88 per unit
46
574 16,507
Minimum parcel size
Holders
Units
The number of shareholders holding less than the marketable parcel of
shares is 574 (shares 16,507)
(c) Substantial holders of 5% or more fully paid ordinary
shares as at 31 July 20201:
Name
Notice date
Shares Percentage Held
Vesteon Pty Ltd
and associates
15 October 2018
9,436,955
Tatts Online Pty Ltd
5 July 2018
7,234,178
15.8
12.5
Ordinary
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 and Rights over Unissued Shares
• Holders have no voting rights until their options/rights are exercised.
Units
% of Units
8,798,938
7,925,787
7,234,178
6,132,380
1,754,072
1,691,631
1,161,702
1,125,000
680,911
666,791
573,420
400,000
358,215
318,214
308,152
303,092
263,367
220,021
186,534
173,198
40,275,609
22,173,148
14.09
12.69
11.58
9.82
2.81
2.71
1.86
1.80
1.09
1.07
0.92
0.64
0.57
0.51
0.49
0.49
0.42
0.35
0.30
0.28
64.49
35.51
(e)Top 20 holders of fully paid ordinary shares as at 31 July 2020
Name
1. VESTEON PTY LTD
2. JP MORGAN NOMINEES AUSTRALIA PTY LTD
3. TATTS ONLINE PTY LTD
4. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5. CITICORP NOMINEES LIMITED
6. NATIONAL NOMINEES LIMITED
7. BNP PARIBAS NOMINEES PTY LTD
8. MR BARNABY COLMAN CADDICK
9. BNP PARIBAS NOMS PTY LTD
10. MR MIKE VEVERKA
11. BNP PARIBAS NOMINEES PTY LTD
12.SEYMOUR GROUP PTY LTD
13. UBS NOMINEES PTY LTD
14. BNP PARIBAS NOMINEES PTY LTD
15. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
16. BNP PARIBAS NOMS (NZ) LTD
17. BUTTONWOOD NOMINEES PTY LTD
18. MR JOHN ROSAIA
19. MR BRIAN ROBERTS
20. SANDHURST TRUSTEES LTD
Total Top 20 shareholders of ordinary fully paid shares
Total remaining holders balance
(f) Unquoted securities as at 31 July 2020
Options over Unissued Shares. A total of 700,000 options are on issue to
employees for services rendered.
Exercise price
Expiry date
Number
on issue
Number of
holders
$1.75
$3.50
18 November 2020
15 November 2022
100,000
600,000
1
1
Rights over Unissued Shares. A total of 46,716 rights are on issue to KMP
Exercise price
Expiry date
$nil
1 July 2022
Number
on issue
46,716
Number of
holders
4
(g) On-market buy-back
There is no current on-market buy-back in effect.
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JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
JUMBO INTERACTIVE LTD ANNUAL REPORT 2020
103
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)
Sharon Christensen (Non-Executive Director)
Giovanni Rizzo (Non-Executive Director)
Mike Veverka (Executive Director and Chief Executive Officer)
Chief Financial Officer
David Todd
Company Secretary
Bill Lyne
Registered Office
Level 1, 601 Coronation Drive, Toowong, QLD 4066
Telephone: 07 3831 3705
Facsimile: 07 3369 7844
Auditor
BDO Audit Pty Ltd
Level 10, 12 Creek Street, Brisbane, QLD 4000
Share Registrar
Computershare Investor Services Pty Ltd
Level 1, 200 Mary Street, Brisbane, QLD 4000
Telephone: 07 3237 5999
Facsimile: 07 3221 9227
Jumbo Interactive Limited
Level 1, 601 Coronation Drive
PO Box 824
Toowong, Queensland, 4066
Australia
+61 7 3831 3705
www.jumbointeractive.com
See you
next year