SportsHero Limited
ACN 123 423 987
Annual Report
for the year ended
30 June 2018
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
CORPORATE DIRECTORY
Directors
Michael Higginson (Chairman)
Tom Lapping (Director and appointed CEO on 4 September 2017)
Christopher Green (Non-Executive Director)
Company Secretary
Michael Higginson
Registered Office and
Principal Place of Business
29 Brookside Place
Lota, QLD 4179
Telephone: +61 (7) 3901 0751
Facsimile: +61 (7) 3901 0751
Website: http://sportshero.mobi/
Auditor
RSM Australia Partners
Level 32/2 The Esplanade
Perth WA 6000
Share Registry
Advanced Share Registry Services Limited
110 Stirling Highway
Nedlands WA 6009
Telephone: +61 (8) 9389 8033
Facsimile: +61 (8) 9262 3723
Stock Exchange Listing
Australian Securities Exchange
ASX Code: SHO
2
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
CONTENTS
PAGE
CHAIRMAN’S LETTER
OPERATIONS REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
STATEMENT OF FINANCIAL POSITION
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
General information
4
5
7
16
17
18
19
20
21
48
49
52
The financial statements cover SportsHero Limited as a consolidated entity consisting of SportsHero Limited and its
subsidiaries. The financial statements are presented in US dollars, which is SportsHero Limited’s functional and
presentation currency.
SportsHero Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
29 Brookside Place
Lota, QLD 4179
Telephone: +61 (7) 3901 0751
Facsimile: +61 (7) 3901 0751
A description of the nature of the consolidated entity's operations and its principal activities are included in the Directors'
Report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 28th September
2018. The Directors have the power to amend and reissue the financial statements.
3
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
CHAIRMAN’S LETTER
Dear Shareholder
On behalf of the Board of Directors of SportsHero Limited, I am very pleased to be able to present the 2018 Annual
Report of the Company.
The year has witnessed significant transformation and development of the Company’s app, culminating in the September
2018 launch of Version 3.
During the year management successfully refined our team, our technology and our vision. In doing so, we built a
localised network in Indonesia and we are now looking to develop and replicate that model in other jurisdictions and
other sports.
Whilst the loss for the year totalled US$4,335,566 it is very important to note that the majority of the loss was as result of
US$2,192,921 in non-cash accounting entries, including the writing down to zero of the value of the Company’s
intellectual property. The relevant accounting entries include the following:
an intellectual property impairment charge of US$1,063,889
an intellectual property depreciation charge of US$504,602
share based payments expense of US$624,340 including the issue of performance rights
Following the appointment of Hong Kong based Mr Tony Wee as SportsHero’s Corporate Advisor in December 2017, the
Company announced a partnership with Walletku, an Indonesian based e-wallet mobile payment platform that enables
SportsHero to connect its platform to over 20,000 merchants throughout Indonesia. These merchants provide
SportsHero with immediate reach and access to tens of millions of passionate football fans in Indonesia – a country that
has the biggest football market by fan base size in South East Asia.
Working with Walletku and utilising their network of merchants has enabled SportsHero to sell tickets so that users can
easily enter into our competitions via Walletku’s e-wallet mobile payment app. Walletku’s merchant network facilitates
ticket purchases for the millions of Indonesians that are unbanked and/or without a credit card.
This partnership with Walletku was effectively launched during the recent 2018 football World Cup in Russia. Very
importantly, the Walletku partnership clearly demonstrated proof of concept, as we were able to monetise and generate
over 160,000 tickets sales, which equates to AUD$107,000 in revenue over the 4-week competition.
This success promptly led to the establishment of a landmark partnership with one of the world’s most popular sporting
leagues, Spain’s LaLiga.
The LaLiga partnership is a huge breakthrough for the Company and gives SportsHero full LaLiga IP rights and support.
Pursuant to the partnership, LaLiga will actively promote our world first LaLiga prediction competition through their
established social media and digital channels. The partnership offers SportsHero’s Indonesian users access to exclusive
money-can’t-buy-prizes, merchandise and experiences.
With the recent launch of Version 3 and commencement of both the LaLiga and English Premier League football
seasons, SportsHero has generated an additional AUD$131,000 in revenue and is positioning itself as a significant
player in the very rapidly expanding global games market, which we expect will deliver both growth and opportunity for
your Company.
Throughout what has been a very dynamic period, I take this opportunity to commend the tireless effort, dedication and
commitment of our CEO Mr Tom Lapping and his team. Their contribution has been enormous.
Yours sincerely
Michael Higginson
Chairman
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
OPERATIONS REPORT
SportsHero is an innovative technology company that has built a social sports prediction platform connecting sports fans
globally to showcase their skills in predicting outcomes of the game they love. It has created a vibrant digital marketplace
within which fans can connect with other fans, brands, consume content and interact with ambassadors and personalities
involved in the sport they are passionate about.
SportsHero is a data driven game that offers fans the chance to compete against family, friends and colleagues and for
the opportunity to win money-can’t-buy-prizes and experiences by picking outcomes in their chosen sport. The robust
platform works on real time odds, challenging expert predictors on not just the final result, but also predictions of winning
margins and many other related player metrics.
Sport franchisees and sponsors globally are seeking new ways to connect with and expand their fan bases into new
geographic markets and increasingly technology driven market segments. The SportsHero platform allows both teams
and sponsors to more effectively engage with their global fans who are increasingly active in their virtual communities
when compared to their traditional localised supporters. The financial rewards for teams, media and new and existing
sponsors into the rapidly expanding ecommerce and gaming industries is exponential.
Version 3
Version 3 of the Company’s app is now available for Android phones at Google Pay and for IOS phones at Apple’s App
Store.
Version 3 highlights include:
1. A complete redesign of the User Interface with an open breathable modern design that will adapt and scale well
when new modules are introduced. This will support the rapid on-boarding of new sports and commercial
partner integration.
2. A redesigned competitions User Experience with highly visual In App promo modules placed within the Football
Matches Feed to drive competition entry and with a much more visually engaging competitions overview page,
which includes large format imagery and partner brand graphics.
3. An upgrade of the core platform to support the:
introduction of a new sports, such as cycling, AFL or rugby
management of multiple territory versions for local market customisation, which was achieved with our
localised Indonesian version
integration of commercial partnerships with brands.
LaLIga
After many months of detailed discussions, LaLiga - the men’s top professional football division in Spain that represents,
among others, Barcelona, Real Madrid and Atletico Madrid – chose SportsHero as their exclusive regional partner in
Indonesia. This was a very significant development for SportsHero for two reasons: Firstly, LaLiga is one of the biggest
and most powerful sporting organisations in the world and they have chosen the SportsHero platform as their exclusive
digital outreach and development concept for Indonesia, which is one of the most rapidly growing youth football
demographics in the world; and secondly, Indonesia is the first of many markets SportsHero plans to enter with a
proprietary and localised product offering.
LaLiga Hero of the Month
Following the Company’s announcement on 23 August 2018 of the formation of a partnership with Spain’s top football
division, LaLiga, SportsHero launched the first official “LaLiga Hero of the Month” competition in Indonesia on 1
September 2018.
The Company is very excited about the launch of the Indonesian LaLiga competition and eagerly awaits the reporting of
ticket sales and revenue.
As the “LaLiga Hero of the Month” competition is only available to Indonesian users, we have reproduced below
examples of the competition screens.
5
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
OPERATIONS REPORT
Precise details of events and activities undertaken throughout the year are as set out in the Directors’ Report under the
heading “Significant changes in state of affairs” and “Subsequent events” (refer pages 10 and 11).
LaLiga Hero of the Month competition screens
6
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
The Directors present their report together with the consolidated financial report for SportsHero Limited (“SportsHero” or
the “Company”) and its controlled entities (collectively the “Group”), for the year ended 30 June 2018.
Directors
(i)
Names, qualifications and experience
The names and details of the Company’s Directors in office at any time during the financial period and until the date of
this report are as follows:
Michael Higginson
Tom Lapping
Christopher Green
Non-Executive Director and Chairman
Non -Executive Director and appointed CEO on 4 September 2017
Non-Executive Director
Michael Higginson – Chairman
Qualification: B.Bus Fin & Admin
Mr Higginson is the holder of a Bachelor of Business Degree with majors in both Finance and Administration.
Mr Higginson is a professional director and company secretary with extensive experience in public company
administration, ASX Listing Rules, the Corporations Act, capital raisings, corporate governance, financial reporting and
due diligence.
Mr Higginson was formerly an executive officer with the Australian Securities Exchange and has, over the last 30 years,
held numerous directorship and company secretarial roles with a number of public listed companies across a range of
industry sectors.
Mr Higginson is a director of Cape Range Limited and Voltage IP Limited.
Tom Lapping – Director and appointed CEO on 4 September 2017
Mr Lapping is highly experienced across the securities and media sectors. Since 2016, he has played an integral role
within SportsHero and was a key member of the team during the transition of the SportsHero business from a
Singaporean unlisted entity to an ASX listed public company in February 2017.
Tom is a successful entrepreneur who has accumulated extensive experience leading both established and early stage
ventures in the Asia-Pacific region. Tom has a keen understanding of consumer behaviour and was recognised as a
40under40 business entrepreneur award winner in Western Australia in 2003
Christopher Green – Non Executive Director
Qualifications: B.Sc (Applied Geology) and Grad Dip Computer Science
Mr Green has been working in the mining and IT industries for 41 years, in the areas of exploration and mining as a
geologist, and in the areas of software development as a programmer, technical analyst, IT Manager and as a Manager
of Innovation.
With his professional qualifications in Geology, Computer Science and Complexity Theory, Chris has over 41 years
professional experience with the last 26 years almost exclusively within the practical application of IT and IT innovation.
7
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
(ii)
Interests in the Shares and Options of the Company
As at the date of this report, the interest of the Directors in the shares and options of the Company are:
M Higginson
T Lapping
C Green
TOTAL
Number of
shares
20,834
11,782,143
-
11,802,977
Number of
options
-
16,714,286
-
16,714,286
Company Secretary
Michael Higginson
Qualification: B.Bus Fin & Admin
Directors’ meetings
The number of meetings attended by each of the Directors of the Company during the financial year was:
Board Meetings
(b)
(a)
Michael Higginson
Tom Lapping
Christopher Green
2
2
2
2
2
1
(a) Number of meetings held and entitled to attend
(b) Number of meetings attended
Given the size of the Company and current level of activities, the Board has assumed the duties and responsibilities
typically delegated to an audit committee, risk committee, remuneration committee and nomination committee.
Corporate structure
SportsHero Limited is a company limited by shares that is incorporated and domiciled in Australia.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
Nature of operations and principal activities
The principal activity of the Group during the year was the development of the Company’s sports gamification platform.
Results of operations
The operating loss after income tax of the Group for the year ended 30 June 2018 was US$4,335,566 (2017: US$
4,266,614).
The Group’s basic loss per share for the year was 1.84 US cents (2017: 3.85 US cents).
Dividends
No dividend has been paid during or is recommended for the financial year ended 30 June 2018 (2017: nil).
Review of operations
The principal activity of the Group during the financial year was the development of the Company’s sports gamification
platform.
An overview of the Group’s operations during the financial year is set out in the Operations Report.
Significant changes in state of affairs
On 4 September 2017, Mr Tom Lapping was appointed as the Company’s CEO.
On 17 October 2017, the Company announced the forming of a strategic partnership with 90min, a global football
(soccer) media and technology company, for the provision of media content.
On 31 October 2017, the Company announced that global investor IPV Capital Ltd had unconditionally agreed to
subscribe for 12,500,000 Shares at an issue price of AUD$0.08 per Share.
On 30 November 2017, the Company announced a partnership with Fantasy Sports Global Limited whereby SportsHero
receives up to AUD$3.00 as a one-off commission for directing users to the Fantasy Sports website and those users
subsequently enter a Fantasy Sports challenge/competition.
On 12 December 2017, Mr Chris Flintoft was appointed as the Company’s Technical Strategy Advisor.
On 22 December 2017, Mr Tony Wee was appointed as the Company’s Corporate Advisor.
On 10 January 2018, the Company announced the issue of the following Shares:
12,500,000 Shares to IPV Capital Limited (raising AUD$1,000,000 in working capital);
500,000 Shares to Mr Chris Flintoft, pursuant to his engagement as the Company’s Technical Strategy Advisor;
1,000,000 Shares to Mr Chris Flintoft, being the conversion of 1,000,000 Performance Rights; and
3,000,000 Shares to Mr Tony Wee, pursuant to his engagement as the Company’s Corporate Advisor.
On 2 February 2018, the Company announced the appointment of Mr Chris Robb as the Company’s Official Cycling
Partner.
On 7 February 2018, the Company announced the issue of 214,286 Shares following the exercise of 214,286 options
each exercisable at AUD$0.05 and expiring 31 August 2019, the issue of 2,000,000 Shares to Mr Tony Wee following
the conversion of 2,000,000 Performance Rights and the issue of 1,000,000 options each exercisable at AUD$0.20 and
expiring 1 February 2021 to Mr Chris Robb.
On 2 March 2018, the Company announced the issue of 3,700,000 Shares as follows:
1,000,000 Shares to Mr Chris Flintoft following the conversion of 1,000,000 Performance Rights;
2,000,000 Shares to Mr Tony Wee following the conversion of 2,000,000 Performance Rights; and
700,000 Shares following the exercise of 700,000 options each exercisable at AUD$0.05 and expiring 31
August 2019.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
On 6 March 2018 the Company announces the finalisation of a strategic Indonesian football partnership with Mr Tri
Putra.
On 12 March 2018, the Company announces the forming of a strategic partnership with Indonesian based PT Walletku
Indompet Indonesia. The partnership creating an alliance for the purpose of providing SportsHero with the opportunity to
monetise its platform in Indonesia through various football gamification offerings to Walletku’s community.
On 9 May 2018, the Company announced the launch of its localised Indonesian platform in Indonesia.
On 28 May 2018, the Company announced the issue of 114,286 Shares following the exercise of 114,286 options each
exercisable at AUD$0.05 and expiring 31 August 2019.
On 15 June 2018, the Company announced the launch of its FootballHero 2018 World Cup Challenge.
Future developments
Likely future developments in the operations of the Group are referred to in the Chairman’s Letter and Operations
Report. Other than that referred to in this report, further information as to likely developments in the operations of the
Group and expected results of those operations would, in the opinion of the Directors, be speculative and prejudicial to
the interests of the Group and its shareholders.
Subsequent events
On 2 July 2018, the Company announced the generation of revenue following the launch of the FootballHero 2018 World
Cup Challenge. Throughout the month-long challenge, a total of AUD$107,000 was generated.
On 12 July 2018, the Company announced the appointment of Mr Chris Flintoft as the Company’s Chief Digital Officer.
Pursuant to the appointment, the Company issued Mr Flintoft 1,000,000 Shares and granted Mr Flintoft 1,500,000
performance rights.
On 23 August 2018, the Company announced a landmark partnership with Spain’s top football division LaLiga. Pursuant
to the partnership, SportsHero was appointed as LaLiga’s exclusive Indonesian partner in the sports prediction app
category for the 2018/2019 LaLiga season. In addition, the Company announced the completion of a Share placement
raising AUD$1,000,000 pursuant to the issue of 5,000,000 Shares at an issue price of AUD$0.20 per Share.
On 5 September 2018, the Company announced the launch of Version 3 of the SportsHero app and the commencement
of the LaLiga Hero of the Month competition in Indonesia. Since the competition launch, the Company has generated a
further AUD$131,000 in revenue.
Financial position
The Group’s working capital, being current assets less current liabilities, was (USD218,653) as at 30 June 2018 (2017:
USD1,267,216).
In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable.
Proceedings on behalf of the Group
No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceedings to
which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those
proceedings.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2018 are summarised below:
Other income
EBITDA
EBIT
Loss after income tax
2018
USD
2017
USD
2016
USD
2015
USD
2014
USD
16,841
(3,830,964)
(4,335,566)
(4,335,566)
9,113
(3,410,171)
(3,850,447)
(4,266,614)
-
(151,228)
(151,260)
(151,260)
-
-
-
-
-
-
-
-
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
The factors that are considered to affect total shareholders return are summarised below:
Share price at financial year end (US cents)
Total dividends declared (US cents per share)
Basic and diluted loss per share for continued
operations (US cents per share)
Basic diluted loss per share for discontinued
operations (US cents per share)
Basic loss per share (US cents per share)
2018
USD
5.91
-
1.55
0.29
1.84
2017
USD
3.1
-
3.48
0.37
3.85
2016
USD
-
-
-
-
-
2015
USD
-
-
-
-
-
2014
USD
-
-
-
-
-
Remuneration report (Audited)
Details of Remuneration for the Year Ended 30 June 2018
Details of the remuneration for each Director and the key management personnel of the Group during the year are set
out in the following tables.
The Board’s policy for determining the nature and amount of remuneration for Directors and senior executives of the
Group is as follows:
All executives receive a base salary (which is based on factors such as length of service and experience).
The Board reviews executive packages annually by reference to the Group’s performance, executive
performance and comparable information from industry sectors.
All remuneration paid to Directors and executives is valued at the cost to the Group and expensed. Options are
valued using the Black-Scholes methodology.
Remuneration of non-executive Directors at market rates for time, commitment and responsibilities.
The Board determines payments to the non-executive Directors and reviews their remuneration annually, based on
market practice, duties and accountability. Independent external advice is sought if required.
During the financial year ended 30 June 2018, the consolidated entity did not engage any external parties for a review of
remuneration practises.
At the 2017 Annual General Meeting, 99.7% of the eligible votes received supported the adoption of the remuneration
report for the year ended 30 June 2017. The Company did not receive any specific feedback at the Annual General
Meeting regarding its remuneration practices.
The key management personnel of the Group include the Directors and Company Secretary. There were no other
persons considered key management personnel as defined in AASB 124 Related Party Disclosures.
The tables below show the 2018 and 2017 remuneration of the Directors and other key management personnel:
2018
Short-term
Post-
employment
Share-based
payments
Salary & fees
USD
Superannuation
USD
Shares
USD
Chairman
Michael Higginson
Directors
Tom Lapping
Christopher Green
Total key management
personnel compensation
74,982
81,733
19,384
176,099
-
-
-
-
11
-
-
-
-
Value of
options
as a %
0%
0%
0%
0%
Total
USD
74,982
81,733
19,384
176,099
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
2017
Short-term
Post-
employment
Share-based
payments
Chairman
Michael Higginson
Directors
Christopher Green
Tom Lapping
Mick McMullen
Howard Dawson
Total key management
personnel compensation
Salary & fees
USD
79,432
Superannuation
USD
-
Shares
USD
-
17,642
18,296
-
11,318
126,688
-
-
-
-
-
-
-
-
-
-
Total
USD
79,432
17,642
18,296
-
11,318
126,688
Value of
options
as a %
0%
0%
0%
0%
0%
0%
Performance Shares as a Proportion of Total Remuneration
There were no performance shares issued to Directors during the year ended 30 June 2018 (2017: nil).
Ordinary Shares held by Directors
2018
Directors
M Higginson
C Green
T Lapping
Balance at
beginning of
year
20,834
-
11,782,143
11,802,977
Allotted during
the year
Purchased
during theyear
Sold during the
year
Balance at
end of year
-
-
-
-
-
-
-
-
-
-
-
-
20,834
-
11,782,143
11,802,977
2017
Directors
M McMullen
M Higginson 1
C Green
T Lapping 2
H Dawson 3
Balance at
beginning of
year
5,710,000
41,668
-
-
50,789
1 for 2
consolidation
Allotted during
the year
Purchased
during the year
Sold during the
year
Balance at
end of year
(2,855,000)
(20,834)
-
-
(25,395)
-
-
-
11,782,143
2,057,142
-
-
-
-
260,000
260,000
(2,855,000)
-
(25,394)
-
20,834
-
11,782,143
2,317,142
(2,880,394)
14,120,119
5,802,457
(2,901,229)
13,839,285
1- Closing balance represents shareholding upon cessation of director duties on 23 January 2017
2- Opening balance represents shareholding upon appointment at 10 April 2017
3-
Closing balance represents shareholding upon cessation of director duties on 10 April 2017
Company Performance, Shareholder Wealth and Director and Executive Remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives.
The achievement of this aim has been through the issue of options or performance rights to Directors and executives to
encourage the alignment of personal and shareholder interests.
Executive and non-executive Directors and other key management personnel may be granted options or performance
rights over ordinary shares.
The recipients of options or performance rights are responsible for growing the Company and increasing shareholder
value. If they achieve this goal the value of the options or performance rights granted to them will also increase.
Therefore, the options or performance provide an incentive to the recipients to remain with the Company and to continue
to work to enhance the Company’s value.
12
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
Options Granted for the Year Ended 30 June 2018
2018
Directors
Balance at
beginning of
year
M Higginson
T Lapping
C Green
Total
-
16,714,286
-
16,714,286
2017
Directors
Balance at
beginning
of year
M McMullen 1
M Higginson
C Green
T Lapping 2
H Dawson 3
Total
20,834
41,667
-
16,714,286
-
16,776,787
Option movements for the year
Granted as
Allotted
compensation Exercised
Expired
Other
changes
Balance at
end of
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,714,286
-
16,714,286
Granted as
Allotted
compensation Exercised
Expired
Other
changes
Balance at
end of
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(20,834)
(41,667)
-
-
-
(62,501)
-
-
-
-
-
-
-
-
-
16,714,286
-
16,714,286
1.Closing balance represents number of options held upon cessation of director duties on 23 January 2017.
2.Opening balance represents number of options held upon appointment at 10 April 2017.
3.Closing balance represents number of options held upon cessation of director duties on 10 April 2017.
Performance Options as a Proportion of Total Remuneration
The value of performance options issued during the year to key management personnel as a percentage of the total
remuneration paid to key management personnel was 0% (2017: 0%).
Employment Contracts of Directors and Senior Executives
As of 30 June 2018 there were no formal contracts for Non-Executive Directors.
Mr Green is paid fees at the rate of AUD$25,000 per annum and
Mr Higginson, as Chair of the Company, is paid fees at the rate of AUD$50,000 per annum
Share-based compensation
The issue of options and/or performance rights to Directors and executives is to encourage the alignment of personal
and shareholder returns. The intention is to align the objectives of Directors and executives with that of the business and
shareholders. In addition, all Directors and executives are encouraged to hold shares in the Company.
The Group has not paid bonuses to Directors or executives to date.
End of remuneration report
Share options
At the date of this report, the unissued ordinary shares of the Company under option are as follows:
Grant date
Date of Expiry
Exercise Price
Number Under Option
7 February 2017
7 February 2018
31 August 2019
1 February 2021
AUD$0.05
AUD$0.20
70,971,428
1,000,000
71,971,428
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
Options granted but not issued
At the date of this report, the unissued options not yet granted are as follows:
Grant date
Date of Expiry
Exercise Price
Number Under Option
28 February 2018 1
28 February 2018 1
28 February 20181
28 February 2011
28 February 2022
28 February 2022
AUD$0.30
AUD$0.30
AUD$0.30
1,000,000
1,000,000
1,000,000
3,000,000
Issue of options is subject to vesting conditions outlined in note 19(b).
During the financial year ended 30 June 2018, 1,028,572 SportsHero Limited shares were issued on the exercise of
1,028,572 options expiring 31 August 2019.
Performance rights
At the date of this report, the following unissued shares are subject to vesting conditions:
Grant date
Date of Expiry
Share price at
grant date USD
Performance rights
27/3/17
27/3/17
27/3/17
8/12/17
1/04/19
1/04/20
1/04/20
8/12/19
0.05
500,000
500,000
500,000
4,000,000
7,500,000
Since the end of the financial year no shares have been issued following the exercise of options.
Since the end of the financial year no options have been issued.
No amounts are unpaid on any of the shares on issue.
No person entitled to exercise an option had or has any right by virtue of the option to participate in any share issue of
any other body corporate.
Indemnification
During the financial year, the Company did not pay premiums to insure the Directors and Company Secretary of the
Group.
Non-audit services
No fees for non-audit services were paid/payable to the Group’s auditors during year (2017:US$31,748).
Auditor’s independence declaration
The auditor’s independence declaration for the year ended 30 June 2018 has been received and immediately follows the
Directors’ Report.
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the
Company support and have adhered to the principles of sound corporate governance.
14
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS REPORT
The Board recognises the recent recommendations of the Australian Securities Exchange Corporate Governance
Council, and considers that SportsHero Limited is in compliance with those guidelines which are of importance to the
commercial operation of a small cap company. The Group’s corporate governance statement and disclosures are
contained on the Company’s website at: http://sportshero.mobi/
This report is made in accordance with a resolution of the Directors.
Michael Higginson
Chairman
15
Level 32, Exchange Tower2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of SportsHero Limited for the year ended 30 June 2018, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
Any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 28 September 2018
DAVID WALL
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
Current assets
Cash and cash equivalents
Prepayments and other receivables
Assets associated with discontinued operations
Total current assets
Non-current assets
Plant and equipment
Intangible asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net (liabilities)/assets
Equity
Issued capital
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Total equity
Consolidated
30 June
30 June
2018
USD
2017
USD
323,333
1,489,666
1,411
324,744
11,423
336,167
12,226
1,501,892
-
1,501,892
5,007
9,609
-
1,563,889
5,007
1,573,498
341,174
3,075,390
554,820
554,820
234,676
234,676
554,820
234,676
(213,646)
2,840,714
8,559,488
7,209,342
97,751
(117,415)
16,682
32,594
(8,753,470)
(4,417,904)
(213,646)
2,840,714
8
9
16
10
11
12
13
14
14
The above statement of financial position should be read in conjunction with the accompanying notes.
17
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2018
Continuing operations
Income
Other revenue
Expenses
Administration expenses
Employee and consulting expenses
Note
3
4
5
Depreciation and amortisation expense
10 ,11
Interest expense
Restructuring expense
Impairment of intangible assets
Share based payments
Loss before income tax expense
Income tax expense
11
19
7
Consolidated
2018
USD
2017
USD
16,841
9,113
(990,340)
(477,875)
(504,602)
-
-
(1,063,889)
(624,340)
(704,434)
(234,326)
(440,406)
(2,443)
(1,931,224)
-
(549,170)
(3,644,205)
(3,852,890)
-
-
Loss after tax expense for continuing operations
(3,644,205)
(3,852,890)
Loss from discontinued operations
16
(691,361)
(413,724)
Loss for the year
(4,335,566)
(4,266,614)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Total comprehensive loss for the year
(150,009)
32,594
(4,485,575)
(4,234,020)
Basic and diluted loss per share for continued operations
(US cents per share)
Basic and diluted loss per share for discontinued operations
(US cents per share)
Basic and Diluted loss per share (US cents per share)
6
6
6
1.55
0.29
1.84
3.48
0.37
3.85
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
18
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
Issued
Capital
Share
Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
Equity
USD
USD
USD
USD
USD
Consolidated
Note
Balance at 01/07/2016
Total comprehensive loss for the year
Share issue for acquisition of subsidiary
Performance rights issued during the year
Shares issued during the year
Share based payments
Transaction costs
2,500,000
-
1,852,605
-
-
-
-
16,682
2,456,254
539,418
(138,935)
-
-
-
13
14
13
13
13
-
(151,260)
2,348,740
32,594
(4,266,644)
(4,234,050)
-
-
-
-
-
-
-
-
-
-
1,852,605
16,682
2,456,254
539,418
(138,935)
Balance at 30/06/2017
7,209,342
16,682
32,594
(4,417,904)
2,840,714
Balance at 01/07/2017
Comprehensive loss for the year
Exercise of options
Performance rights issued during the year
Shares issued during the year
Share based payments
Transaction costs
7,209,342
16,682
32,594
(4,417,904)
2,840,714
13
14
13,14
13
13
-
39,922
-
782,800
544,940
(17,516)
-
-
445,235
(364,166)
-
-
(150,009)
(4,335,566)
(4,485,575)
-
-
-
-
-
-
-
-
-
-
39,922
445,235
418,634
544,940
(17,516)
Balance at 30/06/2018
8,559,488
97,751
(117,415)
(8,753,470)
(213,646)
The above statement of changes in equity should be read in conjunction with the accompanying notes.
19
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers
Interest received
Note
Consolidated
2018
USD
5,541
2017
USD
612
(1,839,497)
(1,463,406)
10,757
8,501
Net cash flows used in operating activities
15
(1,823,199)
(1,454,293)
Cash Flows from Investing Activities
Payments for plant and equipment (note 10)
Cash received as part of acquisition
Net cash flows provided by investing activities
Cash Flows from Financing Activities
Issue of new share capital (note 13)
Share issue transaction costs
Net cash provided by financing activities
Net (decrease) / increase in cash and cash equivalents
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
8
-
-
-
822,722
(17,516)
805,206
(1,017,993)
(148,340)
1,489,666
323,333
(12,665)
78,629
65,964
2,456,254
(82,957)
2,373,297
984,968
68,032
436,666
1,489,666
The above statement of cash flows should be read in conjunction with the accompanying notes
20
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The financial report of SportsHero Limited and its controlled entities (the “Group” or “consolidated entity”) for the
year ended 30 June 2018 was authorised for issue in accordance with a resolution of the Director’s on 28
September 2018.
SportsHero Limited (“SportsHero” or the “Company”) is a company limited by shares, incorporated in Australia, and
whose securities are publicly traded on the Australia Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Director’s Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the material accounting policies adopted by the Group in the preparation of the
financial report. The accounting policies have been consistently applied, unless otherwise stated.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001, as appropriate for for-profit oriented entities. These financial statements also comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant and equipment and derivative financial instruments.
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in note 2(cc).
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in note 17.
The report is presented in US dollars, unless otherwise stated.
(b)
Going concern
These financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the financial statements, the consolidated entity incurred a net loss from continuing operations of
$3,644,205, had net cash outflows from operating activities of $1,823,199 and a net cash inflow from investing
activities of $805,206 for the year ended 30 June 2018. As at that date, the consolidated entity had net current
liabilities of $218,653 and net liabilities of $213,646.
These factors indicate material uncertainty which may cast significant doubt as to whether the consolidated entity
will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report.
The Directors are of the view that there are reasonable grounds to believe that the consolidated entity will continue
as a going concern, after consideration of the following factors:
As disclosed in Note 24, on 23 August 2018 the Company announced it had secured funding amounting to
AUD$1,000,000 from the issue of 5,000,000 ordinary shares at an issue price of AUD$0.20;
The Company may reasonably expect to maintain continued support from shareholders and other financiers
that have supported the Company’s previous capital raisings to assist with meeting future funding needs. The
Company also plans to raise further capital;
As a consequence of the establishment of the partnerships with Mr Tri Putra Permadi and PT Walletku
Indompet Indonesia and the creation of a localised Indonesian app in June 2018, the Company demonstrated
proof of concept in Indonesia (during the recent FIFA World Cup) by generating revenue subsequent to the
21
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
year end. As disclosed in Note 24, subsequent to the year end, the Group has earned revenue of
AUD$107,000 from this initiative; and
Shortly after the World Cup, the Company signed a landmark partnership agreement with Spain’s top football
division LaLiga and on 5 September 2018 launched the LaLiga Hero of the month competition. As disclosed
in Note 24, subsequent to the year end, the Group has earned revenue of AUD$131,000 from this
initiative.
Accordingly, the directors believe that the consolidated entity will be able to continue as a going concern and that it
is appropriate to adopt the going concern basis in the preparation of the financial report.
However, the directors recognise that if further funding is required and is not subsequently secured, the outcome of
which is uncertain until such funding is secured, there is a material uncertainty as to whether the going concern
basis of accounting is appropriate. As a result, the Company may be required to consider curtailing further
expenditure and may have to consider the sale or joint venture of its assets and extinguish its liabilities other than in
the ordinary course of business and at amounts different from those stated in the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets or
liabilities that might be necessary if the consolidated entity does not continue as a going concern.
(c)
Statement of Compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards.
(d)
Adoption of New and Revised Accounting Standards
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting
Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations
did not have any significant impact on the financial performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject
to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured as the
present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to
short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small
office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease
payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate
of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be
replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on
the recognised lease liability (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 will be improved as the operating
expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within
the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and
interest (either operating or financing activities) component. The consolidated entity is progressing with the
assessment to determine the impact of this standard on the financial performance and position of the consolidated
entity. The operating leases will be capitalised and corresponding lease liabilities and right to use assets will be
recorded on the statement of financial position.
22
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides
a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts
(either written, verbal or implied) to be identified, together with the separate performance obligations within the
contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each
distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue
when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than
adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of
the goods. For services, the performance obligation is satisfied when the service has been provided, typically for
promises to transfer services to customers. For performance obligations satisfied over time, an entity would select
an appropriate measure of progress to determine how much revenue should be recognised as the performance
obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a
contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance
and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgments made in applying the guidance to those
contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated
entity will adopt this standard from 1 July 2018. The consolidated entity has made an assessment and determined
that this standard will not have significant impact on the financial performance or position of the Company.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition
and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial
asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in
order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other
financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity
makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not
held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of
the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an
accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. New impairment requirements will use an
'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL
method unless the credit risk on a financial instrument has increased significantly since initial recognition in which
case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The consolidated
entity will adopt this standard from 1 July 2018. The consolidated entity has made an assessment and determined
that this standard will have little to no impact on the entity.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of SportsHero Limited
as at 30 June 2018 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-
consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated
entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the consolidated entity.
23
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, statement of financial position and statement of changes in equity of the
consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full,
even if that results in a deficit balance.
(e)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating
cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to
defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are
classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(f)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker is responsible for allocating resources and assessing
performance of any operating segments.
(g)
Revenue
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is
probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised.
(h)
Interest revenue
Revenue is recognised as interest accrued using the effective interest method. This is a method of calculating the
amortised costs of a financial asset and allocating the interest revenue over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
All revenue is stated net of Goods and Services Tax.
(i)
Service revenue
Revenue from rendering of services that are not significant transactions is recognised as the services are provided
or when the significant acts have been completed.
(j)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits
with an original maturity of three months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above. The Group does not have any bank overdraft facilities.
24
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(k)
Trade and other receivables
Trade and other receivables are recognised and carried at original invoice amount less an allowance for
impairment. Trade receivables are non-interest bearing.
(l)
Plant and equipment
Plant and equipment is stated at historical cost less depreciation and any accumulated impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of these items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged to the statement of
comprehensive income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives. The
expected useful lives are.
-
Equipment - 3 years
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at
each financial year end.
(m)
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite
life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life
intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of
finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are
accounted for prospectively by changing the amortisation method or period.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of
their expected benefit, being their finite life of 2 years.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the consolidated
entity is able to use or sell the asset; the consolidated entity has sufficient resources; and intent to complete the
development and its costs can be measured reliably.
(n)
Impairment of assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
(o)
Financial instruments
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the
related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as
set out below.
At each reporting date, the directors assess whether there is objective evidence that a financial instrument has
income.
been
the statement of comprehensive
losses are
Impairment
recognised
impaired.
in
25
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(p)
Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are
included in the statement of comprehensive income. When revalued assets are sold, it is Group policy to transfer
the amounts included in other reserves in respect of those assets to retained earnings.
(q)
Trade and other payables
Trade payables and other payables are carried at the transaction price minus principal repayments. They represent
liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and
arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and
services.
(r)
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of
a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a
current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
(s)
Employee entitlements
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to
be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees'
services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are
settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the
liability. The liability is measured as the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on national government bonds
with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
26
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using an appropriate option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions
that do not determine whether the consolidated entity receives the services that entitle the employees to receive
payment. No account is taken of any other vesting conditions.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the
cancelled and new award is treated as if they were a modification.
(t)
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific
asset or assets and the arrangement conveys a right to use the asset.
(u)
Income tax
The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax
liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant
taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or
loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where
amounts have been fully expensed but future tax deductions are available. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the
reporting period. Their measurement also reflects the manner in which management expects to recover or settle the
carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it
is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred
tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective
asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are
expected to be recovered or settled.
Tax consolidation
SportsHero Limited and its wholly-owned subsidiaries have not formed an income tax consolidated group under tax
consolidation legislation.
27
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(v)
Equity based payments
The Group provides benefits to its Directors and employees in the form of share-based payments, whereby
Directors and employees render services in exchange for options to acquire shares or rights over shares (equity-
settled transactions).
The cost of these equity-settled transactions is measured by reference to the fair value to the Group of the equity
instruments at the date at which they were granted. The fair value is determined using the Black-Scholes model,
taking into account the terms and conditions upon which the options were granted.
The cost of equity-settled transactions is recognised as an expense, together with a corresponding increase in
equity, on a straight-line basis, over the period in which the vesting and/or service conditions are fulfilled (the
vesting period), ending on the date on which the relevant Directors and employees become fully entitled to the
options (the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income
reflects:
a.
b.
c.
the grant date fair value of the options;
the current best estimate of the number of options that will ultimately vest, taking into account such
factors as the likelihood of employee turnover during the vesting period and the likelihood of vesting
conditions being met, based on best available information at balance date; and
the extent to which the vesting period has expired.
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above
less the amounts already charged in previous periods. There is a corresponding entry to equity.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not
been modified. An additional expense is recognised for any modification that increases the total fair value of the
share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the
cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new
award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
(w)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
(x)
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
(y)
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any
costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
-
-
-
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
28
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(z)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
- where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
-
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows
arising from investing and financial activities, which are recoverable from, or payable to, the taxation authority, are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(aa) Foreign currency transactions and balances
The financial statements are presented in US dollars, which is SportsHero Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into US dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into US dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into US dollars using the average
exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign
exchange differences are recognised in other comprehensive income through the foreign currency reserve in
equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed
of.
(bb) Comparative information
Where required by accounting standards comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(cc) Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management toake judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including
expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next financial year are discussed below.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for
its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a
result of technical innovations or some other event. The depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have
been abandoned or sold will be written off or written down.
29
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
Impairment of non-financial assets and intangible assets
The consolidated entity assesses impairment of non-financial assets and intangible assets at each reporting date
by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If
an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs
of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by using either
the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have
no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
profit or loss and equity.
3. Other revenue
Interest revenue
Sundry income
4.
Administration expenses
Administration expenses include the following :
Advertising and marketing
Professional fees
Sports subscription services
Legal
5.
Employee and consulting expenses
Salary and wages
6.
Loss per share
The following reflects the loss used in the basic and diluted loss
per share computations.
Loss used in calculating earnings per share
For basic and diluted earnings per share:
Loss for year attributed to continued operations
Loss attributed to discontinued operations
Loss for the year attributable to ordinary shareholders
Weighted average number of shares
Consolidated
2018
USD
11,855
4,986
16,841
2017
USD
8,501
612
9,113
408,949
90,918
42,371
118,716
179,376
30,132
11,160
8,039
477,875
477,875
234,326
234,326
3,644,205
691,361
4,335,566
3,852,890
413,754
4,266,644
2018
No. of shares
2017
No. of shares
Weighted average number of ordinary shares for basic and diluted
loss per share
235,191,364
110,723,534
Loss per share
Basic and diluted loss per share for continued operations (US
cents)
Basic and diluted loss per share for discontinued operations (US
cents)
Basic and diluted loss per share (US cents)
30
1.55
0.29
1.84
3.48
0.37
3.85
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(i) Anti-dilutive options on issue are excluded from the dilutive earnings per share calculation.
(ii) Other than the issue of the securities disclosed in note 13, there has been no other transactions
involving ordinary shares or potential ordinary shares that would significantly change the number of
ordinary shares or potential ordinary shares outstanding between the reporting date and the date of
completion of these financial statements.
7.
Income taxes
(a)
Income tax recognised in profit or loss
Consolidated
2018
USD
2017
USD
Prima facie tax benefit on operating loss before income tax at 27.5%
(1,174,798)
(1,173,327)
(2017: 27.5%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Other non-deductible items
Unrecognised deferred tax asset attributable to tax losses and
temporary differences
Income tax attributable to operating loss
715,698
459,100
-
688,180
485,187
-
The consolidated entity has US $5,981,498 (2017: US $4,312,042) tax losses arising in Australia that are
available indefinitely for offset against future profit of the company in which the losses arose.
The potential deferred tax asset of US $644,911 (2017: US $1,185,811), arising from tax losses and
temporary differences (as disclosed above), has not been recognised as an asset because recovery of tax
losses and temporary differences is not considered probable given the development stage of the Company’s
app.
The potential deferred tax asset will only be obtained if:
the Group derives future assessable income of a nature and an amount sufficient to enable the benefit
to be realised;
the Group continues to comply with the conditions for deductibility imposed by tax legislation; and
no changes in tax legislation adversely affect the Group in realising the benefit from the related
deduction for the losses.
In addition, the subsidiary SportsHero Enterprise Pte Ltd has tax losses that are a potential deferred tax asset of
US $141,858 (2017: US $141,858). SportsHero Enterprise Pte Ltd will be taxed independently in Singapore.
8.
Cash and cash equivalents
Cash at bank
9.
Trade and other receivables
Other receivables
Consolidated
2018
USD
2017
USD
323,333
323,333
1,489,666
1,489,666
1,411
1,411
12,226
12,226
31
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
Credit Risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful debts) of
those assets as disclosed in the statement of financial position and notes to the financial statements. The Group
has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit
ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded are
spread amongst approved counterparties.
10. Property, plant and equipment
Equipment – at cost
Less: Accumulated depreciation
Consolidated
Balance as at 1 July 2016
Additions
Depreciation expense
Balance as 30 June 2017
Balance at 1 July 2017
Additions
Depreciation expense
Balance as 30 June 2018
11.
Intangible assets
Software – at cost
Less: Accumulated impairment and amortisation
Consolidated
Balance as at 1 July 2016
Amortisation expense
Balance as 30 June 2017
Balance at 1 July 2017
Impairment expense
Amortisation expense
Balance as 30 June 2018
Consolidated
2018
USD
13,806
(8,799)
5,007
2017
USD
13,806
(4,197)
9,609
Equipment
USD
1,109
12,665
(4,165)
9,609
9,609
-
(4,602)
5,007
Consolidated
2018
USD
2,000,000
(2,000,000)
2017
USD
2,000,000
(436,111)
-
1,563,889
Software
USD
2,000,000
(436,111)
1,563,889
1,563,889
(1,063,889)
(500,000)
-
The intangible assets represent the “SportsHero” app, an internally developed real-time fantasy sports and social
prediction platform mobile application, which was acquired in the prior year from MyHero Limited.
32
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
12.
Trade and other payables
Current Payables
Trade payables
Accrued expenses
Other payables
Consolidated
2018
USD
137,806
165,836
251,178
554,820
2017
USD
198,046
36,630
-
234,676
(i) Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair
value.
(ii) Trade payables are non-interest bearing.
13. Contributed Equity
(a) Share capital
2018
Number
2018
USD
2017
Number
2017
USD
Ordinary fully paid shares
249,370,229
8,559,488
222,841,657
7,209,342
(b) Movements in ordinary shares
Opening balance
Deemed consideration
Issue of public offering
Transaction cost on share issue
Shares issued at US$0.038 per share *
Shares issued at US$0.03 per share **
Shares issued at US$0.03 per share **
Shares issued at US$0.03 per share **
Shares issued at US$0.063 per share ***
Shares issued at US$0.039 per share *
Shares issued at US$0.039 per share *
Shares issued at US$0.038 per share *
Transaction cost on share issue
Shares issued at US$0.031 per share *
Shares issued at US$0.052 per share ****
Shares issued at US$0.041 per share *
Shares issued at US$0.051 per share ****
Shares issued at US$0.036 per share *
222,841,657
-
-
-
-
-
-
-
12,500,000
214,286
700,000
114,286
-
3,500,000
4,500,000
2,000,000
1,000,000
2,000,000
7,209,342
-
-
-
-
-
-
-
782,800
8,446
27,146
4,330
(17,516)
108,010
232,491
82,204
51,190
71,045
6,000,000
33,826,657
168,515,000
-
12,500,000
1,000,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
(ii)
(iii)
(iv)
(v)
(vi)
(viii)
(x)
(xii)
(xiv)
(viii)
(vii)
(ix)
(xi)
(xiii)
(xiii)
2,500,000
1,852,605
2,456,254
(138,935)
479,438
29,940
14,970
15,070
-
-
-
-
-
-
-
-
-
-
249,370,229
8,559,488
222,841,657
7,209,342
* Issue price AUD$0.05 translated to USD at grant date
** Issue price AUD$0.04 translated to USD at grant date
*** Issue price AUD$0.08 translated to USD at grant date
**** Issue price AUD$0.07 translated to USD at grant date
(i) On 7 February 2017, the Company acquired all of the issued capital of SportsHero Enterprise Pte Ltd.
(ii) On 7 February 2017, the Company issued a total of 168,515,000 ordinary shares as follows:
64,040,000 ordinary shares, at an issue price of AUD$0.05 per share, to raise AUD$3,202,000 (before
costs);
96,000,000 ordinary shares in consideration for the acquisition of 100% of the issued share capital of
Sportz Hero Pty Limited and SportsHero Enterprise Pte Ltd; and
8,475,000 ordinary shares to convert 8,475,000 convertible notes.
(iii) On 7 February 2017, the Company issued 12,500,000 ordinary shares at an issue price of AUD$0.05 per share to
Sunshore Holdings Pty Limited.
(iv) On 27 April 2017, the Company issued 1,000,000 ordinary shares at AUD$0.04 per share as a share-based
payment to an external consultant.
33
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(v) On 27 April 2017, the Company issue 500,000 ordinary shares at AUD$0.04 per share per share as a share-based
payment to an external consultant.
(vi) On the 9 June 2017, the Company issue 500,000 ordinary shares at AUD$0.04 per share following the conversion
of 500,000 performance rights.
(vii) On 2 November 2017, 3,500,000 shares were issued to Mr Randhawa following the conversion of 3,500,000
performance rights.
(viii) On 10 January 2018, the Company issued 12,500,000 shares to IPV Capital at an issue price of AUD$0.08 per
share
(ix) On 10 January 2018 the Company issued the following shares;
1,500,000 shares to Mr Flintoft (500,000 shares in consideration for the engagement of Mr Flintoft and
1,000,000 shares following the conversion of 1,000,000 performance rights)
3,000,000 shares in consideration for the engagement of Mr Tony Wee.
(x) On 7 February 2018, the Company issued 214,286 shares following the exercise of 214,286 options each
exercisable at AUD$0.05 and expiring 31 August 2019.
(xi) On 7 February 2018, 2,000,000 shares were issued to Mr Tony Wee following the conversion of 2,000,000
performance rights.
(xii) On 2 March 2018, the Company issued 700,000 shares following the exercise of 700,000 options each exercisable
at AUD$0.05 and expiring 31 August 2019.
(xiii) On 2 March 2018, the Company issued the following shares
1,000,000 shares to Mr Chris Flintoft following the conversion of performance rights
2,000,000 shares to Mr Tony Wee following the conversion of 2,000,000 performance rights.
(xiv) On 28 May 2018, the Company issued 114,286 shares following the exercise of 114,286 options each
exercisable at AUD$0.05 and expiring 31 August 2019.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and
the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a
capital structure that ensures the lowest cost of capital available to the entity.
In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares, enter into joint ventures or sell assets.
The entity does not have a defined share buy-back plan.
No dividends were paid in 2018 (2017: nil) and no dividends are expected to be paid in 2019.
There is no current intention to incur debt funding on behalf of the Group
The Group is not subject to any externally imposed capital requirements.
14. Reserves
Reserves
Share-based payments reserve
As at 1 July 2017
Share based payments
Conversion of rights
As at 30 June 2018
Foreign currency reserve
As at 1 July 2017
34
Consolidated
2018
USD
2017
USD
16,682
445,235
(364,166)
97,751
-
16,682
-
16,682
32,594
-
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
Foreign currency translation
As at 30 June 2018
(150,009)
(117,415)
32,594
32,594
Nature and purpose of reserves
Share-based payment reserve
The share-based payments reserve records the value of share options and performance rights issued by the Group.
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of international
operations to US dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
15. Notes to Statement of Cash Flows
(a) Reconciliation of net cash used in operating activities to operating loss after income tax
Operating loss after tax
(4,335,566)
(4,266,644)
Consolidated
2018
USD
2017
USD
Add non-cash items:
Depreciation and amortisation
Share-based payments expense
Restructuring costs
Impairment of intangible assets
Changes in net assets and liabilities:
Movement in receivables
Movement in payables
Net cash flow used in operating activities
(b) Non-cash financing and investing activities
504,602
624,340
-
1,063,889
440,276
556,100
1,931,224
-
(476)
320,012
2,141
(117,390)
(1,823,199)
(1,454,293)
Share based payment in lieu of directors fees
Shares issued for provision of services
-
-
-
-
556,100
556,100
35
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
16. Discontinued Operations
On 29 June 2018, the consolidated group terminated all employees of Sportshero Information Technology
(Shanghai) Co Limited and ceased operations. The subsidiary has been reported as discontinued operations in the
financial statements for the year ending 30 June 2018. Financial information relating to the discontinued operations
for the period to the date of disposal is set out below.
(a) Financial performance for the disposal entity
The financial performance information is presented for the 12 months ended 30 June 2018 and the year ended 30
June 2017.
Income
Other revenue
Expenses
Administration expenses
Employee and consulting expenses
Loss before income tax expense
Income tax expense
2018
USD
2017
USD
-
-
(165,246)
(526,115)
(691,361)
-
(169,108)
(244,616)
(413,724)
-
Loss after tax expense for discontinuing operations
(691,361)
(413,724)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Total comprehensive loss for the year
-
-
(691,361)
(413,724)
(b) Carrying values of Assets and Liabilities in the disposal entity
Cash and cash equivalents
Other receivables
Total Assets
Net Assets
2018
USD
65
11,358
11,423
11,423
Total liabilities of $324,338 relating to discontinued operations were to be absorbed by the parent entity and have not been
included in the discontinued operations note.
36
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
17.
Parent Information
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
Parent
2018
USD
2017
USD
247,266
2,092,945
-
-
247,266
2,092,945
460,912
460,912
47,322
47,322
NET (LIABILITIES)/ASSETS
(213,646)
2,045,623
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Loss for the year
Total comprehensive loss
6,059,488
4,709,342
(19,645)
(17,974)
(6,253,489)
(2,645,745)
(213,646)
2,045,623
(3,607,744)
(2,645,745)
(3,607,744)
(2,645,745)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2018 and 30
June 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed
in note 2.
18.
Related Party Transactions
(a) Directors and Specified Executives
The names and positions held by key management personnel in office at any time during the year are:
M Higginson
T Lapping
C Green
Non-Executive Director and Chair
Non-Executive Director
Non-Executive Director
All of the above persons were key management personnel during the year ended 30 June 2018.
(b) Key management personnel remuneration
Short-term employee benefits
Share based payments
37
Consolidated
2018
USD
176,099
-
176,099
2017
USD
126,688
-
126,688
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
(c) Payables to key management personnel
Amounts payable to Directors and Director related entities at
the end of the financial year, included in current liabilities
4,818
6,833
(d) Other transactions with key management personnel
During the year the Company paid rent of US $4,264 (2017: US $1,433) to Mr Higginson for the
provision of the Company’s registered and principal office.
There were no other sale or purchase related transactions between the Group and key management
personnel during the year ended 30 June 2018 (2017: US $11,765).
(e) Other transactions with related parties
There were no other transactions with related parties through the year.
(f) Other Entities
There were no other transaction with other entities.
19. Share based payments
Recognised share-based payment expenses
Shares issued for services rendered
Performance rights vesting over period – issued in current year (a)
Performance options vesting over period – issued in current year
(b)
Performance rights vesting over a period – issued in prior year
Consolidated
2018
USD
2017
USD
179,105
291,631
35,272
118,332
624,340
539,418
16,682
-
-
556,100
Employee share option plan
The Company has established an Employee Share Option Plan that allows for share options to be granted
to eligible employees and officers of the Company. The number of share options that can be issued under
the plan cannot exceed 5% of the total number of shares on issue. The terms and conditions of the share
option issued under the plan are at the discretion of the Board, however, the maximum term of the share
option is five years.
(a) Performance rights
The performance rights were granted during the year at no consideration, do not have an exercise price and
will lapse if the vesting conditions are not met. Details of the performance rights issue and their vesting
conditions are set out below:
i)
1,000,000 shares will be issued to the consultant (Mr Chris Flintoft) for the development of a
implementation plan and strategy for Version 3 SportsHero app which delivers an even better user
experience than improved Version 2.4 of the app;
ii) 1,000,000 shares will be issued to the consultant (Mr Chris Flintoft) for the delivery on or before 7/2/18
of an implementation plan and strategy for the introduction of a SportsHero cryptocurrency/coin;
iii) 1,500,000 shares will be issued based on the consultant (Mr Chris Flintoft) for the successful release to
the market on or before 31.5.18 of Version 3 of the SportsHero app that delivers as per milestone 1 and
2 above.
iv) 2,000,000 shares will be issued to Mr Tony Wee based on the market capitalisation of the Company
increasing to $30,000,000.
v) 2,000,000 shares will be issued to Mr Tony Wee based on the market capitalisation of the Company
increasing to $40,000,000.
38
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
vi) 2,000,000 shares will be issued to Mr Tony Wee based on the market capitalisation of the Company
increasing to $50,000,000.
vii) 2,000,000 shares will be issued to Mr Tony Wee based on the market capitalisation of the Company
increasing to $60,000,000.
Set out below are performance rights granted
Grant
Date
Expiry
Date
Share price at
grant date ***
Rights
issued
FV at grant date
(USD)
Probability
i
ii
iii *
iv **
v **
vi **
vii **
8/12/17
8/12/17
8/12/17
8/12/17
8/12/17
8/12/17
8/12/17
31/12/17
7/2/18
31/5/18
8/12/19
8/12/19
8/12/19
8/12/19
0.05
0.05
0.05
0.05
0.05
0.05
0.05
1,000,000
1,000,000
1,500,000
2,000,000
2,000,000
2,000,000
2,000,000
51,173
51,173
76,759
80,853
71,022
62,803
56,135
100%
100%
-
N/A
N/A
N/A
N/A
SBP for year
ended 30 June
2018
51,173
51,173
-
80,853
71,022
20,172
17,238
291,631
*-Performance condition was not met and such the rights were forfeited.
**-Rights are market-based condition and therefore no probability was assigned. On 7 February 2018, 2,000,000
shares were issued upon reaching the condition. The full expense was recognised in this period.
***- Share price has been converted to USD at grant date
(b) Performance options
The following performance options were issued for no consideration and will lapse if the vesting conditions
are not met.
i)
1,000,000 options to be granted exercisable at AUD$0.20 expiring on 1 February 2022 subject to
1,000,000 cycling users within 36 months.
The following performance options have not been issued as at 30 June 2018. Details of the option issues
and their vesting conditions are set out below:
i)
ii)
iii)
1,000,000 options to be granted exercisable at AUD$0.30 expiring on February 2021 subject to
1,000,000 users and US $2m revenue generated within 12 months;
1,000,000 options to be granted exercisable at AUD$0.30 expiring on February 2022 subject to
2,000,000 users and US $4m revenue generated within 24 months; and
1,000,000 options to be granted exercisable at AUD$0.30 expiring on February 2023 subject to
4,000,000 users and US $6m revenue generated within 36 months.
39
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
The following options were issued in the current financial year:
Grant date
Type
Dividend yield (%)
Expected price volatility
Risk-free interest rate (%)
Expected life of options
(years)
Option exercise price (AUD)
Option exercise price in
AUD translated to USD at
grant date
Share price at grant date
AUD
Share price in AUD
translated to USD at grant
date0
Number of options issued
Probability
FV at grant date (AUD)
FV at grant date (USD)
SBP for the year ended 30
June 2018 (USD)
1/2/18
Consultant
Tranche 1
-
100%
1.94%
3
0.20
0.16
0.19
0.15
1,000,000
65%
75,963
58,897
8,007
The following options were granted but not issued in the current financial year:
Grant date
Type
Dividend yield (%)
Expected price volatility
Risk-free interest rate (%)
Expected life of options
(years)
Option exercise price (AUD)
Option exercise price in
AUD translated to USD at
grant date
Share price at grant date
AUD
Share price in AUD
translated to USD at grant
date0
Number of options issued
Probability
FV at grant date (AUD)
FV at grant date (USD)
SBP for the year ended 30
June 2018 (USD)
28/2/18
Consultant
Tranche 2
-
100%
2.11%
28/2/18
Consultant
Tranche 3
-
100%
2.25%
28/2/18
Consultant
Tranche 4
-
100%
2.38%
Total
3
0.30
0.23
0.18
0.14
4
0.30
0.23
0.18
0.14
5
0.30
0.23
0.18
0.14
1,000,000
40%
94,415
73,204
9,814
1,000,000
70%
110,360
85,567
10,023
1,000,000
70%
122,819
95,227
7,428
253,998
27,265
40
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
2018
2017
Number of
Options
76,757,940
1,000,000
-
77,757,940
-
-
(30,000)
(30,000)
(4,697,940)
(1,028,572)
Weighted
Average
Exercise
Price
USD
0.16
0.79
0.96
0.77
0.038
Number of
Options
Weighted
Average
Exercise Price
USD
9,815,882
(300,002)
9,515,880
(4,757,940)
1.01
0.144
72,000,000
0.038
At beginning of reporting year
Granted during the year
- Lapsed
Subtotal
1 for 2 consolidation of capital
- Part consideration for acquisition of the
SportsHero business
- Lapsed
- Lapsed
- Lapsed
- Exercised
Balance the end of reporting year
71,971,428
Exercisable at end of reporting year
71,971,428
76,757,940
76,757,940
Not included in the total number of options are 3,000,000 performance options granted on 28 February 2018. These
options have not been issued and are subject to certain vesting conditions outlined in Note 19 (b).
The following table sets out the movements in the number of options throughout the year:
Grant
date
Expiry
date
Balance at
start of
year
Number
issued
during year
Number
exercised
during year
Number
expired
during
year
Balance at
end of
year
Number
exercisable at
end of year
6 Jan 15
6 Jan 15
27 Oct 15
7 Feb 17
1 Feb 18
Total
31 Dec 17
31 Dec 17
30 Sept 17
31 Aug 19
1 Feb 22
30,000
30,000
4,697,940
72,000,000
-
76,757,940
-
-
-
-
1,000,000
-
-
-
-
(1,028,572)
-
(1,028,572)
(30,000)
(30,000)
(4,697,940)
-
-
-
- 70,971,428
1,000,000
-
(4,757,940) 71,971,428
-
-
-
70,971,428
1,000,000
71,971,428
41
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
The following tables set out the assumptions made in determining the fair value of the options granted in the prior
financial year:
Grant date
Type
6 Jan 2015
Employee
and
Consultant
6 Jan 2015
Employee
and
Consultant
27 Oct 2015
Free
attaching
options
7 Feb 2017
Free
attaching
options
Dividend yield (%)
Expected price volatility
Risk-free interest rate (%)
Expected life of options
(years)
Option exercise price AUD
Option exercise price in AUD
translated to USD at grant date
Share price at grant date AUD
Share price in AUD translated
to USD at grant date
Number of options issued
-
1.00
2.50%
2.99
$1.02
$0.83
$0.14
$0.11
-
1.00
2.50%
2.99
$1.24
$1.01
$0.14
$0.11
-
1.00
2.5%
1.93
$0.20
$0.144
$0.06
$0.04
-
1.00
2.5%
2.15
$0.05
$0.038
$0.05
$0.038
30,000
30,000
4,697,940
72,000,000
20. Auditors’ Remuneration
Audit of the financial statements - RSM Australia Partners
Audit or review of financial reports
Other services - RSM Australia Pty Ltd
Independent expert reports
Audit services - Network firms
Audit or review of the financial statements - Ruihua Certified Public
Accountants
Audit or review of the financial statements - RSM Chio Lim LLP
Consolidated
2018
2017
USD
USD
34,890 33,259
34,890
33,259
-
-
31,748
31,748
10,000
9,500
19,500
54,390
10,000
11,596
21,596
86,603
21.
Commitments
There were no outstanding commitments which are not disclosed in the financial statements as at 30
June 2018 other than:
Office rental commitments
Within 1 year
After 1 year but not more than 5 years
42
Consolidated
2018
USD
-
-
-
2017
USD
38,067
-
38,067
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
22.
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise cash and short-term deposits.
The main purpose of these financial instruments is to finance the Group’s operations. The Group has various
other financial assets and liabilities such as trade receivables and trade payables, which arise directly from
its operations. It is, and has been throughout the entire year under review, the Group’s policy that no trading
in financial instruments shall be undertaken.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk and equity price
risk. Other minor risks are either summarised below or disclosed at note 9 in the case of credit risk and note
13 in the case of capital risk management. The Board reviews and agrees policies for managing each of
these risks.
Cash Flow Interest Rate Risk
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s short-
term deposits with a floating interest rate. These financial assets with variable rates expose the Group to
cash flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables
are non-interest bearing. The Group does not engage in any hedging or derivative transactions to manage
interest rate risk.
The following tables set out the carrying amount by maturity of the Group’s exposure to interest rate risk and
the effective weighted average interest rate for each class of these financial instruments.
The Group has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate
risk, the Group does not have a formal policy in place to mitigate such risks.
Consolidated
Notes
Floating
Interest
Rate
1 year or
less
USD
Over 1-5
years
USD
Non-
interest
bearing
USD
Total
USD
2018
Financial assets
Continuing operations
Cash and cash equivalents
Trade and other receivables
Total financial assets for
continuing operations
Discontinuing operations
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Continuing operations
Trade and other payables
Total financial liabilities
Net financial liabilities from
continuing operations
Net financial assets from
discontinuing operations
Net financial assets
0%
0%
8
9
16
16
12
43
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
323,333
1,411
324,744
323,333
1,411
324,744
65
11,358
65
11,358
11,423
11,423
554,820
554,820
554,820
554,820
(230,076)
(230,076)
11,423
11,423
(218,653)
(218,653)
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
Floating
Interest
Note
s
Rate 1 year or less
USD
Over 1-5
years
USD
Non-
interest
bearing
USD
Total
USD
8
9
12
0%
1,244,421
-
1,244,421
-
-
1,244,421
-
-
-
-
-
-
245,245
1,489,666
12,226
12,226
257,471
1,501,892
234,676
234,676
234,676
234,676
22,795
1,267,216
Consolidated
2017
Financial assets
Continuing operations
Cash and cash
equivalents
Trade and other
receivables
Total financial assets
Financial liabilities
Trade and other
payables
Total financial liabilities
Net financial assets
Interest rate sensitivity
At 30 June 2018, if interest rates had changed by 15% during the entire year with all other variables held
constant, income for the year and equity would have been nil lower/higher (30 June 2017: Nil), as a result of
lower/higher interest income from cash and cash equivalents.
A sensitivity of 15% (15%: 2017) has been selected as this is considered reasonable given the current level of
both short term and long term Australian interest rates. A 15% sensitivity would move short term interest rates
at 30 June 2018 from around 1.50% to1.75% representing a 25 basis point increase. Market expectations are
that interest rates in Australia are more likely to move up than down in subsequent periods.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances are
impacted resulting in a decrease or increase in overall income.
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities, and
through the continuous monitoring of budgeted and actual cash flows.
Contracted maturities of payables at 30 June
Payable
- less than 6 months
Foreign exchange risk
Consolidated
2018
USD
2017
USD
Notes
12
303,642
234,676
The Group has cash and cash equivalents denominated in AUD of US $284,189 (2017: US $1,489,666). At 30
June 2018, if USD/AUD rates had changed by 15% with all other variables held constant, loss for the year and
equity would have been US $42,628 lower/higher (30 June 2017: US $223,450), as a result of with change in
fair value of cash and cash equivalents.
A sensitivity of 15% (15%: 2017) has been selected as this is considered reasonable given the current level of
volatility in the USD/AUD rate.
44
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
Net fair values
For financial assets and liabilities, the net fair value approximates their carrying value. No financial assets and
financial liabilities are readily traded on organised markets in standardised form, other than listed investments.
The consolidated entity has no financial assets where carrying amount exceeds net fair values at balance
date.
23.
Segment Information
For management purposes the group is organised into two strategic units:
- corporate head office in Australia
- Technology development and marketing based in Singapore and until 29 June 2018 China
Such structural organisation is determined by the nature of risks and returns associated with each business
segment and define the management structure as well as the internal reporting system. It represents the
basis on which the Group reports its primary segment information to the Board.
The operating segment analysis presented in these financial statements reflects operations analysis by
business. It best describes the way the group is managed and provides a meaningful insight into the business
activities of the Group.
The following table presents details of revenue and operating loss by business segment as well as
reconciliation between the information disclosed for reportable segments and the aggregated information in
the financial statements. The information disclosed in the table below is derived directly from the internal
financial reporting system used by the Board of Directors to monitor and evaluate the performance of our
operating segments separately.
Consolidated - 2018
Revenue
Intersegment sales
Other revenue
Total segment revenue
Intersegment eliminations
Total revenue
EBITDA
Profit before income tax expense
Income tax expense
Loss after income tax expense
Material items include:
Share based payments
Impairment
Amortisation
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
Australia
USD
Singapore
USD
China
USD
Total
-
10,757
10,757
-
10,757
-
6,084
6,084
-
6,084
-
-
-
-
-
-
16,841
16,841
16,841
(1,560,684)
(1,560,684)
-
(1,560,684)
(1,578,919)
(2,083,521)
-
(2,083,521)
(691,361)
(691,361)
-
(691,361)
(3,830,964)
(4,335,566)
-
(4,335,566)
624,340
-
-
-
1,063,889
504,602
-
-
-
624,340
1,063,889
504,602
284,189
284,189
45,562
45,562
11,423
11,423
341,174
341,174
80,140
-
80,140
1,820,888
(1,670,547)
150,341
1,040,470
(716,131)
324,339
2,941,498
(2,386,678)
(554,820)
45
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
Australia
USD
Singapore
USD
China
USD
Total
-
8,764
8,764
-
8,764
-
350
350
-
350
-
-
-
-
-
9,113
9,113
-
9,113
(2,648,383)
(2,648,383)
-
(2,648,383)
(348,064)
(1,204,537)
-
(1,204,537)
(413,724)
(413,724)
-
(413,727)
(3,410,171)
(4,266,644)
-
(4,266,644)
556,100
-
1,931,224
-
436,111
-
-
-
-
556,100
436,111
1,931,224
1,320,262
1,320,262
1,746,668
1,746,668
11,460
11,460
3,078,390
3,078,390
47,321
-
47,321
935,585
(753,299
182,285
353,040
(347,971)
5,069
1,335,946
(1,101,270)
234,676
Consolidated - 2017
Revenue
Intersegment sales
Other revenue
Total segment revenue
Intersegment eliminations
Total revenue
EBITDA
Profit before income tax expense
Income tax expense
Loss after income tax expense
Material items include:
Share based payments
Amortisation
Restructuring expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
24. Subsequent Events
On 2 July 2018, the Company announced the generation of revenue following the launch of the FootballHero
2018 World Cup Challenge. Throughout the month-long challenge, a total of AUD$107,000 was generated.
On 12 July 2018, the Company announced the appointment of Mr Chris Flintoft as the Company’s Chief
Digital Officer. Pursuant to the appointment, the Company issued Mr Flintoft 1,000,000 Shares and granted
Mr Flintoft 1,500,000 performance rights.
On 23 August 2018, the Company announced a landmark partnership with Spain’s top football division
LaLiga. Pursuant to the partnership, SportsHero was appointed as LaLiga’s exclusive Indonesian partner in
the sports prediction app category for the 2018/2019 LaLiga season. In addition, the Company announced
the completion of a Share placement raising AUD$1,000,000 pursuant to the issue of 5,000,000 Shares at
an issue price of AUD$0.20 per Share.
On 5 September 2018, the Company announced the launch of Version 3 of the SportsHero app and the
commencement of the LaLiga Hero of the Month competition in Indonesia. Since the competition launch, the
Company has generated a further AUD$131,000 in revenue.
46
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
25. Contingent Liabilities and Contingent Assets
During the period leading up to the 15 February 2017 ASX listing of SportsHero Limited, TradeHero Limited
incurred operational cost expenditure for and on behalf of SportsHero Limited. After considerable negotiation
and subject to SportsHero completing a further capital raising, SportsHero Limited has agreed to reimburse
TradeHero an amount of US$ 91,461.
The Group does not have any other contingent liabilities.
The Group does not have any contingent assets as at 30 June 2018 (2017: nil).
26. Investment in Controlled Entities
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-
owned subsidiaries in accordance with the accounting policy described in note 1:
Parent entity
SportsHero Limited
Name of Controlled Entity
Sportz Hero Pty Limited
SportsHero Enterprise Pte Ltd
SportsHero Information Technology
(Shanghai) Co Limited.
Country of
Incorporation
Principal Activities
Ownership
%
Australia
Parent
Australia
Singapore
China
Investment holding
Technology development &
marketing
Technology development
100%
100%
100%
27. Company Details
The registered office and principal place of business of the Company is:
29 Brookside Place
Lota, QLD 4179
47
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of SportsHero Limited, I state that:
In the opinion of the Directors:
(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its
performance for the year ended on that date; and
(ii) complying with
the Australian Accounting Standards (including
the Australian Accounting
Interpretations) and Corporations Regulations 2001; and
(b) the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in note 2; and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2018.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
On behalf of the Board
Michael Higginson
Chairman
Dated this 28th day of September 2018
48
Level 32 Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of SportsHero limited
Opinion
We have audited the financial report of SportsHero Ltd (Company) and its subsidiaries (Group), which comprises
the consolidated statement of financial position as at 30 June 2018, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant accounting policies,
and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial
performance for the year then ended; 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 auditor independence requirements of 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 (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.
Material uncertainty related to going concern
Without modifying our opinion, we draw attention to Note 2 in the financial report, which indicates that the Group
incurred a net loss of USD$4,335,566 and had net cash outflows from operating activities of USD$1,823,199 for
the year ended 30 June 2018. As at that date, the Group’s current liabilities exceeded its current assets and total
assets by USD$218,653 and USD$213,646 respectively. These conditions, along with the other matters as set
forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt on the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
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.
In addition to the matter described in the Material uncertainty related to going concern section of our report, we
have determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed this matter
Share based payments
Refer to Note 19 in the financial statements
During the financial year the Group incurred share-
based payment expenses of $326,903 in accordance
with AASB 2 Share-based Payment from the issue of
the following performance rights and performance
options:
8,000,000 performance rights were issued with
market based vesting conditions. Management
used a valuation model to value these rights and
estimated the length of the expected vesting period.
The fair value is being apportioned over the vesting
period and the proportionate share-based payment
expense of $291,631 is recorded in the current
reporting period.
3,500,000 performance
rights and 4,000,000
performance options were granted with non-market
based vesting conditions. Management was
required to assess the probability of achieving the
non-market performance conditions attached to the
rights and options. The
is being
fair value
apportioned over
the vesting period and the
proportionate share-based payment expense of
$35,272 is recorded in the current reporting period.
We determined this to be a key audit matter due to the
material amount of the share-based payment and the
significant judgement involved in assessing the fair
value of the transactions.
Our audit procedures in relation to performance
rights with market based vesting conditions included:
Obtaining the valuation model and assessed
whether the model was appropriate for valuing
the rights issued during the year;
Checking the mathematical accuracy of the
computation and the apportioned expense over
the vesting period;
Reviewing management’s assessment of the
the
length of
probability of
expected vesting period; and
the estimated
Assessing
the
appropriateness
of
the
Company’s disclosures in the financial report.
Our audit procedures in relation to performance
rights and performance options with non-market
based vesting conditions included:
Obtaining the valuation model and assessed
whether the model was appropriate for valuing
the rights issued during the year;
Checking the mathematical accuracy of the
computation and the apportioned expense over
the vesting period;
Assessing
the
reasonableness
the
assumptions used in the valuation model, such
as the price volatility of the underlying share and
risk-free interest rate;
of
Reviewing management’s assessment of the
the
the estimated
length of
probability of
expected vesting period; and
Assessing
the
appropriateness
of
the
Company’s disclosures in the financial report.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2018, 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 accordingly 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 have 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 at: http://www.auasb.gov.au/auditors_responsibilities/ar1.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 within the directors' report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of SportsHero Limited, for the year ended 30 June 2018, 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.
DAVID WALL
Partner
RSM Australia Partners
Perth, Western Australia
28 September 2018
SPORTHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
SHAREHOLDER INFORMATION
Additional information required by Australian Securities Exchange Limited and not shown elsewhere in this
Annual Report is as follows. The information is made up to 24 September, 2018.
Distribution schedules of security holders
Fully Paid
Shares
AUD 0.05
Options
Expiring
31/08/19
1 -1,000
1,001 - 5,000
5,001 - 10,000
10,001 -
100,000
100,001 and
over
Number of
Holders
149
364
214
324
141
1,192
-
-
-
-
8
10
Holders of nonmarketable parcels
AUD 0.20
Options
Expiring
1/02/21
-
-
-
-
1
1
There are 350 fully paid ordinary shareholders who hold less than a marketable parcel of shares.
Twenty largest shareholders
The names of the twenty largest shareholders are:
1 MyHero Limited
2 Sunshore Holdings Pty Ltd
3
IPV Capital II HK Limited
4 BNP Paribas Nominees Pty Ltd
5 JD Reis
6 TNT Lapping
7 T Wee
8 Citicorp Nominees Pty Ltd
9 Allgreen Holdings Pty Ltd
10 JP Morgan Nominees Australia Ltd
11 Timriki Pty Ltd
12 JG Lim
13 Lim & Tan Securities Pte Ltd
14 CJF Low
15 AS & NF Paul
16 A Mehra
17 Kortana Pty Ltd
18 KM Lapping
19 CJ Barnett
20 Allnorth Nominees Pty Ltd
Number of
shares
60,000,000
12,500,000
12,500,000
10,414,408
8,357,143
8,357,143
7,000,000
6,259,792
6,214,286
6,159,764
5,142,857
5,018,310
5,000,000
4,954,289
4,242,857
3,885,510
3,500,000
3,425,000
3,415,000
3,214,286
179,561,145
% Held
23.96%
4.99%
4.99%
4.16%
3.34%
3.34%
2.80%
2.50%
2.48%
2.46%
2.05%
2.00%
2.00%
1.98%
1.69%
1.55%
1.40%
1.37%
1.36%
1.28%
71.72%
52
SPORTHERO LIMITED
ANNUAL REPORT 30 JUNE 2018
SHAREHOLDER INFORMATION
Restricted securities
The Company has the following Restricted Securities on issue.
Number
Class
74,557,142
Fully paid ordinary shares (held in ASX imposed escrow for 24 months from 13 February 2017).
4,114,286
Options each exercisable at A$0.05 and expiring 31 August 2019 (held in ASX imposed escrow
for 24 months from 13 February 2017).
Unquoted equity securities
Options to acquire fully paid shares at A$ 0.05 per share and expiring 31 August
2019
Options to acquire fully paid shares at A$0.20 per share and expiring 1 February
2021
Performance rights to acquire fully paid shares
Substantial shareholders
Number on
issue
66,857,142
1,000,000
8,500,000
Number of
holders
8
1
3
No. of Shares
Held
% of Shares
Held
MyHero Limited – as per Form 603 lodged with ASX on 10 Feb 2017
60,000,000
23.96%
On-market buy-back
There is no current on-market buy-back.
Acquisition of voting shares
No issues of securities have been approved for the purposes of Item 7 of section 611 of the Corporations Act
2001.
Voting Rights
Ordinary fully paid shares – on a show of hands, every member present in person or by proxy shall have one vote
and upon a poll, each member shall have one vote per share.
Tax status
The Company is treated as a public company for taxation purposes.
Franking credits
The Company has nil franking credits.
53