SportsHero Limited
ACN 123 423 987
Annual Report
for the year ended
30 June 2020
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
CORPORATE DIRECTORY
Directors
John Dougall (Non-Executive Chairman – appointed 30 October 2019)
Tom Lapping (Director and CEO)
Michael Higginson (Non-Executive Director)
Company Secretary
Michael Higginson
Registered Office and
Principal Place of Business
36 Prestwick Drive
Twin Waters, QLD 4564
Telephone: +61 (7) 5457 0557
Facsimile: +61 (7) 5457 0557
Website: http://sportshero.live/
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
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
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
9
19
20
21
22
23
24
52
53
56
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:
36 Prestwick Drive
Twin Waters, QLD 4564
Telephone: +61 (7) 5457 0557
Facsimile: +61 (7) 5457 0557
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 30
September 2020. The Directors have the power to amend and reissue the financial statements.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
CHAIRMAN’S LETTER
Dear SportsHero Shareholder
The 2019/20 financial year has been exciting and tumultuous for our Company. We have delivered substantial
enhancements to our technologies and forged partnerships with Dugout and La Liga to enrich our digital
offering for sports fans and advertising partners.
Whilst COVID-19 is impacting on our ability to monetise our intelligent, engaging sports prediction platforms
due to the cancellation of football competitions in Indonesia and Europe, we are well placed for commercial
success and material revenue growth as markets reopen and football competitions re-commence.
I took the Chair of SportsHero nearly twelve months ago. As a public company director for 30 years, I have a
strong commitment to building sustainable profitable growth. I believe in good governance, disciplined capital
management and the importance of having an ethical, desirable and respected corporate culture. I believe that
I can assist my co-directors and management team in delivering on SportsHero’s potential as we meet our
obligations to our shareholders, staff, business partners and the millions of football and sporting fans that will
be attracted to our offerings.
In early January 2020 I travelled to Jakarta and Singapore with our CEO Tom Lapping to speak with our
business partner PSSI (Football Association of Indonesia), to meet with our local staff and to present our
business strategy to the Australian Ambassador and senior officers. I was encouraged by the progress we
have made and importantly the scale of the opportunity we are developing. Indonesia is a large, growing and
vibrant market of fanatical sports fans. Our platform is ideally suited for brand partners to access this consumer
demographic.
In March 2020 when COVID first hit, it was critical that we streamlined the business to ensure we could endure
a protracted downturn and retain our ability to capitalise as recovery emerged. Your board took actions to
reduce operating costs, whilst retaining key talent in order to be able to rapidly up scale. In April 2020, the
Company issued convertible notes to the value of AU$300,000 to add to working capital and bolster our
financial position.
Whilst our commercial activities have been impacted through COVID, we have used this time productively. A
number of initiatives have been taken by your directors, including the successful launch of Olahbola, the first-
ever release of a local language app covering international football for the Indonesian market, the signing of a
AU$5,000,000 financing facility with Mint Capital Advisors to fund our growth strategy and the return of a
AU$200,000 bond following the rejection by the Northern Territory Racing Commission of the transfer of an
on-line gaming licence to our Pay-2-Play joint venture.
Your directors and staff are conscious that we are yet to be cash flow positive as we continue to invest in
product development and sales and marketing. In the 2020/21 year we have committed to a number of
operational milestones and we will report on progress against those milestones throughout the next 12 months.
We simply ask that you ‘track us rather than trust us’ and judge us on what we do and what we deliver. Subject
to unforeseen circumstances, we anticipate turning cash flow positive in calendar end 2021. We are committed
to delivering on your investment. It is an exciting time to be at SportsHero and I look forward to updating you
as we progress.
In closing I wish to thank my co-directors and staff for their hard work, dedication and creativity over the past
year. I also thank you, our shareholders, for your encouragement and on-going support.
Sincerely
John Dougall
Chairman
SportsHero Limited
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
OPERATIONS REPORT
SportsHero’s strategy is to build a large and engaged user base of active sports fans utilising our premium
technologies and official associations with the sport’s governing bodies. We will then monetise these strategic
assets with recurring revenue generated from complementary advertising income, brand sponsorship,
subscriptions, competition revenue, video streaming, ecommerce and match and gamification ticket sales.
SportsHero has developed a proprietary, intelligent, engaging sports prediction platform, designed to provide
a dynamic immersive social experience, coupled with both monetary and other prizes.
It has exclusive digital partnerships with the Football Association of Indonesia (PSSI), as well as with Spain's
La Liga, one of the world's most popular sporting leagues, and Dugout, a unique media company co-owned
by 10 of the world’s biggest football clubs with over 40 million views per month in Indonesia.
Having developed a white label digital solution, SportsHero is now able to offer its digital solution across
multiple sports to sporting groups and other partners globally.
SportsHero operates in Indonesia, which is a very large and attractive market in which we are targeting
passionate football fans aged 18-35 years with middle-income demographics. With no obvious competition,
everything is in place for us to grow quickly, build scale and generate substantial revenues.
Olahbola - The Indonesian football app for fanatical fans
SportsHero has developed and owns Olahbola, the Indonesian local market version of SportsHero’s platform.
It was designed and successfully delivered to a planned timetable. The app caters to the millions of fanatical
Indonesian football fans who follow and support international football leagues, such as the English Premier
League and Spain’s La Liga.
Olahbola provides these fanatical football fans with the opportunity to predict outcomes, compete with other
users and climb the leaderboard and win prizes, including ‘money can’t buy’ experiences, merchandise and
entertainment products.
The app, which is dedicated to international football, leverages SportsHero’s exclusive and valuable La Liga
partnership rights and assets in conjunction with Dugout’s premium content covering these leagues.
With the recent commencement of both La Liga and the English Premier League on 12 September 2020, the
Company expects continued growth in Olahbola’s already impressive 770,000+ user numbers. This large and
growing user base will considerably enhance our value proposition to advertising brand partners.
With these foundations in place, we expect material revenue generation this financial year.
Kita Garuda app and PSSI - Commercialisation
SportsHero has an exclusive three-year agreement (with two further three-year options) with PSSI. Under the
agreement, SportsHero and PSSI will share revenues from football fan subscriptions and advertising
campaigns on both the Kita Garuda app and web browser. PSSI is responsible for all marketing costs, while
SportsHero advises on strategy and execution.
Importantly, the web browser enables the capture of all smart phone users. There are over 130 million avid
social media users in Indonesia, with 65 million people aged between 18 and 35.
Pursuant to the agreement, the parties have agreed that net revenue from direct advertising will be split 70/30%
in favour of the party that introduces the advertiser. Included under the agreement revenue is generated from:
Direct advertising
Brand sponsorship
Competition revenue
Video streaming
eCommerce
Match ticketing
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
OPERATIONS REPORT
Gamification-related ticket sales – which are required to participate in weekly, monthly and season
long prediction competitions and PSSI promotions.
With respect to revenue generated from third party sponsorships, direct advertising and relevant competitions,
the party which introduces the revenue source will receive 70% of the revenue, less all applicable taxes and
deductions (the other party will receive 30%).
Throughout the term of the partnership agreement, PSSI will exclusively provide rich content, including access
to video footage of games, events and features of the Indonesian national teams and its players.
La Liga - Partnership agreement
SportsHero has a landmark partnership with Spain’s top football division and one of the world’s most popular
football leagues, La Liga. Pursuant to the partnership, SportsHero was appointed as La Liga’s exclusive
Indonesian partner in the sports prediction app category.
The partnership sees La Liga, home to some of the most successful football clubs in the world as well as some
of sport’s most famous faces, giving SportsHero access to La Liga’s valuable merchandise, Intellectual
Property rights and digital assets. This includes access to ex legend players to help promote SportsHero’s
platforms and digital marketing campaigns through La Liga’s huge social media following and digital channels.
The partnership also provides a host of money can’t buy merchandise and prizes including VIP experiences
such as Partner box tickets to the famous El Classico which are available to SportsHero to offer up as exclusive
prizes to its Indonesian, weekly, monthly and season long competitions.
Dugout - Sporting content deal
The Company has an unparalleled two-year sporting content deal with Dugout for the provision of dynamic
football content covering the biggest and most popular football leagues globally.
Dugout is a unique media company co-owned by 10 of the world’s biggest football clubs that attracts
approximately 40 million video views per month in Indonesia.
The value of this agreement to SportsHero is that in addition to the content portion of the deal, it also includes
pre roll advertising wherein Dugout will advertise SportsHero’s platform to their existing audience, and in so
doing will drive traffic to SportsHero.
The deal gives SportsHero access to and the ability to show the most dynamic football content (which it simply
could not produce internally) that will complement and transform SportsHero’s digital platforms.
In addition, Dugout has guaranteed that an Olahbola promotional video clip will be viewed in Indonesia 750,000
times per month.
Linius Technologies - Licensing agreement
The Group has a binding agreement with leading hyper-personalised video content provider, Linius
Technologies Limited (Linius) (ASX: LNU).
Pursuant to the agreement, SportsHero secured the rights to use the Linius technology across all of the
Group’s platforms, including the mobile application ‘Kita Garuda’, developed for PSSI.
The Linius technology allows a user to customise a video to show only content that is relevant to the individual
requirements and viewing preferences of the user. For example, once integrated, a user of the PSSI app will
be able to search for and watch highlights of their favourite players, the best goals scored, or customise their
viewing content based on virtually any criteria, such as shots on target, goalkeeper saves, injuries,
substitutions, penalties, red cards and many more.
The integration of the Linius technology into the PSSI mobile app has the potential to significantly increase
user engagement and viewer numbers for the ‘Kita Garuda’ mobile app, which in turn is expected to result in
the generation of more substantive advertising revenue for both PSSI and SportsHero.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
Sports Bookmaker License
OPERATIONS REPORT
On 10 January 2019, the Company announced that it had entered into a non-binding Heads of Agreement with
Cross Bet Holdings Pty Ltd (CBH) for the purpose of securing access to a Sports Bookmaker Licence (Licence).
On 8 March 2019, the Company announced the formation of a joint venture with CBH for the purpose of enabling
the granting of a Licence to a newly incorporated joint venture vehicle named Pay-to-Play Australia Pty Ltd (P-
to-P).
Subject to the granting of a Licence to P-to-P by the Northern Territory Racing Commission (NTRC) the joint
venture parties intended to operate a pay-to-play sports prediction platform in Australia.
To facilitate the granting of the Licence to P-to-P, SportsHero loaned P-to-P AU$200,000 to enable P-to-P to
pay a AU$200,000 refundable bond to the NTRC.
The NTRC have not approved the transfer of a Licence to P-to-P. As a consequence, the NTRC has cancelled
the bond and P-to-P has repaid the AU$200,000 loan to SportsHero.
The NTRC has previously either granted or approved the grant of a Licence to Cross Bet Pty Ltd (a wholly
owned subsidiary of CBH) and has recently approved the acquisition by SportsHero of a 50% equity interest
in Cross Bet Pty Ltd (effectively enabling SportsHero to acquire a 50% interest in a Licence). SportsHero is
aware that CBH is intending to use the Licence to undertake gambling operations in Australia. As the proposed
gambling operations would indirectly result in a change in the nature of SportsHero’s activities, SportsHero
has resolved not to acquire a 50% interest in Cross Bet Pty Ltd.
The Board is considering its options with regard to the P-to-P joint venture.
COVID-19
As a consequence of the COVID-19 pandemic:
1. On 17 March 2020, PSSI announced the suspension of all Indonesian football competitions, with no
date being set for its resumption.
2. Spanish football fixtures re-commenced on 11 June 2020, having been suspended since 12 March
2020.
The suspension of football by both the Indonesian and the Spanish football leagues has had a temporary,
although material impact on the Company’s ability to generate revenues from its prediction platforms, sponsor
and partner advertising.
As a response to COVID-19, the Company implemented substantial cost saving measures, whilst at the same
time retaining key talent and personnel in order to retain the ability to rapidly scale up in the future.
Cash savings measures were implemented. These cost saving measures included the following:
the standing down all contracted team members, whilst retaining the ability to scale up immediately
following the COVID-19 crisis.
Chairman and Directors to forego remuneration for the period commencing 1 March 2020 and ending
upon the commencement of revenue generation.
CEO and senior staff to take a 50% salary cut until the commencement of revenue generation.
renegotiation of all retainers, subscription services and reduction of leased office space.
Mint Capital Advisors - AU$5 million financing facility
On 10 September 2020, the Company entered into a definitive Standby Placement Agreement with Bahamas
based Mint Capital Advisors (Mint) to provide up to AU$5m in equity funding over three years (Facility).
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
OPERATIONS REPORT
The equity funding provided by Mint, which SportsHero can access on a discretionary basis as and when it is
required, will be used to fund working capital requirements.
The discretionary nature of the Facility will allow the Company to access funds only when they are needed.
Whilst SportsHero may not require the full AU$5m over the next three years, having the Facility provides
flexibility and a financial backstop during a period of uncertainty surrounding global football competitions.
Indonesian operating entity
On 21 September 2020, the Company announced that it had successfully secured a wholly owned Indonesian
operating entity.
The securing of this entity is a key component for the Company as it will facilitate the building of SportsHero’s
Indonesian presence by enabling such things as the hiring of Indonesian staff, the opening of an Indonesian
bank account, the securing of offices in Indonesia and the collection of revenue.
Pegasus Corporate Advisory
The Company has engaged Pegasus Corporate Advisory as its investor relations advisor. Pegasus specialises
in assisting small cap ASX listed technology companies by helping build their profile, creating investor interest
and improving communications and market engagement.
Precise details of events and activities undertaken are as set out in the Directors’ Report under the headings
“Significant changes in state of affairs” and “Subsequent events”.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
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
2020.
Directors
(i)
Names, qualifications and experience
The names and details of the Group’s Directors in office at any time during the financial period and until the date
of this report are as follows:
John Dougall
Tom Lapping
Michael Higginson
Wayne Johnson
Non-Executive Director and Chairman (appointed 30 October 2019)
Director and CEO
Non-Executive Director
Non-Executive Director (resigned 29 October 2019)
John Dougall – Non-Executive Director and Chairman
Mr Dougall is the holder of Bachelor of Commerce Degree from the University of Melbourne.
Mr Dougall has worked at Chief Executive and board level in a number of technology companies based in
Melbourne, New York, Sydney, London and San Francisco. He has also served as Managing Director of four ASX
listed companies, successfully exporting Australian technology to China, India, Indonesia, The Philippines,
Vietnam and Latin America.
Mr Dougall is currently the Non-Executive Chairman of Tinybeans Group Limited (ASX: TNY), a mobile and web
based technology company based in Sydney and New York, that connects parents with the most trusted tools
and resources to assist, in particular, young families. Tinybeans has an engaged user base of 3.5 million members
and over 1.28 million active monthly users in over 200 countries/territories.
He has also served as President and CEO of an Australian company that ultimately listed on the NASDAQ, selling
its software solutions to major retailers in the USA and Europe.
In addition, Mr Dougall previously served as a director to several industry associations, as chairman of the
Australian Government’s CSIRO Information Technology Advisory Board, as well as advising Government on
industry strategy and trade.
Tom Lapping – Director and CEO
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.
Michael Higginson – Non-Executive Director
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 33
years, held numerous directorship and company secretarial roles with a number of public listed companies across
a range of industry sectors.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
DIRECTORS REPORT
Mr Higginson is a director of Cape Range Limited (ASX: CAG).
Mr Wayne Johnson (Non-Executive Director) – Resigned 29 October 2019
Mr Johnson has over 30 years business and financial transaction experience gained in Australia, New Zealand,
Asia and North America. He has extensive experience in managing businesses, corporate advisory, governance
and compliance as a result of building, managing and directing public and private companies from start up to
established public corporations.
Mr Johnson’s hands on experience in business management and operations, often in markets undergoing
significant change, is a rare attribute not held by many corporate advisors. The knowledge and skills accumulated
through being at the helm of a range of successful enterprises has been at the core of his ability to drive many
merger and acquisition transactions, restructures and recapitalisations. Mr Johnson’s expertise spans a variety of
industries, including telecommunications, electronic payments, financial services and the resources sector.
Mr Johnson is the principal of Noblemen Ventures Pty Ltd, a Sydney based corporate and investment advisory
firm providing services to select public and private entities, primarily in the middle market. He also provides
services as a professional director to public companies. Mr Johnson is chairman of Cape Range Limited (ASX
code: CAG) and a non-executive director Enhanced Oil & Gas Recovery Ltd.
(ii)
Interests in the Shares and Options of the Group
As at the date of this report, the interest of the Directors in the shares and options of the Group are:
John Dougall
Tom Lapping
Michael Higginson
TOTAL
Number of
shares
-
11,782,143
20,834
11,802,977
Number of
options
-
-
-
-
Company Secretary
Michael Higginson
Qualification: B.Bus Fin & Admin
Directors’ meetings
The number of meetings attended by each of the Directors of the Group during the financial year was:
John Dougall
Tom Lapping
Michael Higginson
Wayne Johnson
Directors’ Meetings
(a)
6
6
6
-
(b)
6
6
6
-
(a) Number of meetings held and entitled to attend
(b) Number of meetings attended
Given the size of the Group 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.
For details of the Company’s controlled entities, please refer to note 29.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
DIRECTORS REPORT
Nature of operations and principal activities
The principal activity of the Group during the year was the development of the Group’s sports gamification
platforms.
Results of operations
The operating loss after income tax of the Group for the year ended 30 June 2020 was US$1,259,559 (2019:
US$2,276,625).
As set out in the Statement of Comprehensive Income, the two most significant expense categories for the
financial year were:
Administration expenses, totaling US$657,369 and
Employee and consulting expenses, totaling US$435,634.
The Group’s basic loss per share for the year was 0.39 US cents (2019: 0.93 US cents).
Dividends
No dividend has been paid during or is recommended for the financial year ended 30 June 2020 (2019: nil).
Review of operations
The principal activity of the Group during the financial year was the development of the Group’s sports gamification
platforms.
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 1 July 2019, the Group announced a licensing agreement with Linius Technologies Limited whereby
SportsHero secured the rights to use the Linius video customisation technology. For further information, please
refer to the Operations Report.
On 24 July 2019, the Group issued 4,283,333 shares at an issue price of AU$0.10 per share raising AU$428,333
in working capital. In addition, the Group raised a further AU$820,217 (before costs) following the exercise of
16,404,334 options each exercisable at AU$0.05 and expiring 31 August 2019.
On 1 August 2019, the Group announced an extension of the partnership with PSSI for a term of 3 years, plus
the right to further extend for 2 further periods of 3 years (ie a total of 9 years).
On 12 September 2019, the Group completed the raising of AU$1,862,500 (before costs) pursuant to the issue
of 37,250,000 shares following the exercise of 37,250,000 options each exercisable at AU$0.05 and expiring 31
August 2019 and issued 20,000,000 options each exercisable at AU$0.10 and expiring 30 September 2021.
On 30 October 2019, Mr John Dougall was appointed as a Director of the Company following the resignation of
Mr Wayne Johnson on 29 October 2019.
On 16 April 2020, the Company announced that commitments for the raising of AU$300,000, pursuant to the
issue of 300 10% convertible notes, had been received. The Company also announced the implementation of
cost saving measures.
On 5 May 2020 the Company announced that a 2 year sporting content deal, accessing content covering the
biggest and most popular sporting leagues globally, had been secured. The 2 year deal with Dugout, a unique
media company co-owned by 10 of the world’s biggest football clubs with 40 million video views per month in
Indonesia, will provide SportsHero with compelling and comprehensive content.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
Future developments
DIRECTORS REPORT
Likely future developments in the operations of the Group are referred to in the Chairman’s Letter and Operations
Report. Other than as 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 7 July 2020, the Company announced the launch of Olahbola. Olahbola being SportsHero’s first ever locally
branded and fully localised football app covering international football for the Indonesian market.
On 26 August 2020, the Company announced the appointment of Mr Rob Davies as the Company’s Indonesian
Director of Operations. In order to secure the services of Mr Davies, the Company issued Mr Davies 3,000,000
shares and 4,000,000 performance rights.
On 10 September 2020, the Company announced the signing of a definitive Standby Placement Agreement with
Mint Capital Advisors (Mint) for a financing facility of up to AU$5,000,000 and the issue of 5,000,000 shares to
the nominee of Mint. The Standby Placement Agreement has a term of 36 months and the Company is entitled
to drawdown of up to AU$140,000 per month provided the issue price (calculated in accordance with the terms of
the Standby Placement Agreement) is above a floor price of AU$0.02 per share.
On 21 September 2020, the Company announced that it had successfully secured a wholly owned Indonesian
operating entity.
The securing of this entity is a key component for the Company as it will facilitate the building of SportsHero’s
Indonesian presence by enabling such things as the hiring of Indonesian staff, the opening of an Indonesian bank
account, the securing of offices in Indonesia and the collection of revenue.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially negative for
SportsHero up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after
the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian
Government and other countries, such as maintaining physical distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
Financial position
The Group’s working capital, being current assets less current liabilities, was negative US$202,208 as at 30 June
2020 (2019: negative US$1,162,990).
In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts as
and when they become due and payable.
Proceedings on behalf of the Group
No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or
any part of those proceedings.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2020 are summarised below:
Income
EBITDA
EBIT
Loss after income tax
2020
US$
2019
US$
2018
US$
2017
US$
2016
US$
3,434
463,791
16,841
9,113
(1,204,006) (2,276,050) (3,830,964) (3,410,171)
(1,257,439) (2,276,625) (4,335,566) (3,850,447)
(1,259,559) (2,276,625) (4,335,566) (4,266,614)
-
(151,228)
(151,260)
(151,260)
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
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)
Remuneration report (Audited)
2020
US
1.3
-
0.39
-
0.39
2019
US
4.5
-
0.93
-
0.93
2018
US
5.91
-
1.55
0.29
1.84
2017
US
3.1
-
3.48
0.37
3.85
2016
US
-
-
-
-
-
Details of Remuneration for the Year Ended 30 June 2020
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 2020, the consolidated entity did not engage any external parties for a
review of remuneration practices.
At the 2019 Annual General Meeting, 100% of the eligible votes received supported the adoption of the
remuneration report for the year ended 30 June 2019. The Group 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.
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SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
DIRECTORS REPORT
The tables below show the 2020 and 2019 remuneration of the Directors and other key management personnel:
2020
Short-term
Post-
employment
Share-based
payments
Salary & fees
US$
Superannuation
US$
Shares
US$
Chairman
John Dougall*
Directors
Tom Lapping
Michael Higginson
Wayne Johnson**
Total key
management
personnel
compensation
36,366
112,343
63,070
23,497
235,276
* Appointed on 30 October 2019
** Resigned on 29 October 2019
-
-
-
-
-
-
-
-
Value of
options as a
%
0%
0%
0%
0%
Total
US$
36,366
112,343
63,070
23,497
235,276
0%
2019
Short-term
Post-
employment
Share-
based
payments
Value of
options as a
%
Salary & fees
US$
Cash
Bonus
US$
Superannuatio
n
US$
Shares
US$
Total
US$
Chairman
Michael
Higginson
Directors
Tom Lapping
Wayne Johnson*
Christopher
Green**
Total key
management
personnel
compensation
75,384
107,340
25,903
7,800
-
28,624
-
-
216,427
28,624
* Appointed on 28 November 2018
** Resigned on 27 November 2018
Related party transactions and balances
Payables to key management personnel
-
-
-
-
-
-
-
-
-
-
75,384
135,964
25,903
7,800
0%
0%
0%
0%
245,051
0%
Amounts payable to Directors and Director related entities at the
end of the financial year, included in current liabilities
Consolidated
2020
US$
2019
US$
32,706
35,049
14
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
DIRECTORS REPORT
Other transactions with key management personnel
During the year the Group paid rent of US$3,021 (2019: US$4,293) to Mr Higginson for the provision of
the Group’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 2020 (2019: nil).
Other transactions with related parties
During the year the Group reimbursed Noblemen Ventures Pty Ltd (an entity controlled by Mr Johnson)
for costs of US$523 (2019: US$21,466)
There were no other transactions with related parties throughout the year.
Performance Shares as a Proportion of Total Remuneration
There were no performance shares issued to Directors during the year ended 30 June 2020 (2019: nil).
Ordinary Shares held by Directors
2020
Directors
J Dougall1
M Higginson
T Lapping
W Johnson2
Balance at
beginning of
year
Allotted
during the
year
Purchased
during the
year
Sold during
the year
Balance at
end of year
-
20,834
11,782,143
-
11,802,977
-
-
-
-
-
-
-
-
-
-
-
-
20,834
-
- 11,782,143
-
-
- 11,802,977
1. Opening balance represents shareholding upon appointment as a Director on 30 October 2019
2. Closing balance represents shareholding upon resignation as a Director on 29 October 2019
2019
Directors
M Higginson
C Green1
T Lapping
W Johnson2
Balance at
beginning of
year
20,834
-
11,782,143
-
11,802,977
Allotted during
the year
Purchased
during the
year
Sold during
the year
Balance at
end of year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,834
-
11,782,143
-
11,802,977
1. Closing balance represents shareholding upon resignation as a Director on 27 November 2018
2. Opening balance represents shareholding upon appointment as a Director on 28 November 2018
15
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
DIRECTORS REPORT
Group 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 Group 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 Group and to
continue to work to enhance the Group’s value.
Options Granted for the Year Ended 30 June 2020
2020
Directors
Balance at
beginning
of year
J Dougall1
T Lapping
M Higginson
W Johnson2
Total
-
16,714,286
-
-
16,714,286
Option movements for the year
Granted as
Allotted
compensation Exercised
Expired
Other
changes
Balance
at end of
year
-
-
-
-
-
-
-
-
-
-
-
-
- (14,714,286)
-
-
-
-
-
-
-
(2,000,000)
-
-
-
-
-
-
-
-
1.Opening balance represents number of options held upon appointment as a Director on 30 October 2019.
2.Closing balance represents number of options held upon resignation as a Director on 29 October 2019.
2019
Directors
Balance at
beginning
of year
M Higginson
C Green1
T Lapping
W Johnson2
Total
-
-
16,714,286
-
16,714,286
Option movements for the year
Granted as
Allotted
compensation Exercised
Expired
Other
changes
Balance
at end of
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 16,714,286
-
-
- 16,714,286
1.Closing balance represents number of options held upon resignation as a Director on 27 November 2018.
2.Opening balance represents number of options held upon appointment at 28 November 2018.
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% (2019: 0%).
Employment Contracts of Directors and Senior Executives
On 18 October 2019, the Company entered into an agreement with Mr Dougall that set out the terms and
conditions of his appointment as a Non-Executive Director and Chairman of the Company (Agreement).
In consideration for the appointment of Mr Dougall and subject to the receipt of Shareholder approval in
accordance with the Corporations Act and the ASX Listing Rules (as required), the Company has agreed to pay
Mr Dougall the following:
16
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
DIRECTORS REPORT
Cash fee of AU$4,166.67 per month;
Share fee of AU$50,000 per annum (at an issue price equal to the VWAP of the Company’s Shares for
the year); and
Subject to shareholder approval; the granting of 4,000,000 Performance Rights, converting into 4,000,000
Shares on attainment of the Performance Hurdle set out below.
Performance Hurdle
The milestone required to trigger the conversion of the 4,000,000 Performance Rights into 4,000,000 Shares is
upon the SportsHero Limited consolidated group of companies achieving breakeven operating cash flow (or
better) for any six month period up to and including the six months ended 31 December 2022 as determined by
the audited and/or audit reviewed financial statements lodged with ASX by SportsHero Limited in compliance with
the Listing Rules of the ASX (Performance Hurdle). All Shares issued on conversion of Performance Rights
(following the achievement of the Performance Hurdle) will be subject to a voluntary 12 month escrow from their
date of issue.
Mr Lapping was paid fees at the rate of AU15,000 per month for July and August 2019. From September 2019
Mr Lapping is paid fees at the rate of SG$15,000 per month.
Mr Higginson is paid fees at the rate of AU$2,083 per month. Consulting and secretarial fees paid or payable to
Mr Higginson are AU$75,199.
Mr Johnson was paid fees at the rate of AU$5,000 per month, until the date of resignation and AU$15,000 was
paid on resignation.
As of 30 June 2020, there were no other formal contracts for Non-Executive Directors.
Fees waived by Directors during the year
During the period commencing 1 April 2020 and ending 30 June 2020, the following fees were waived by each
of the Directors as follows:
Mr Dougall waived 100% of his cash fee of AU$4,167 per month (total waived being AU$12,501)
Mr Lapping waived 50% of his cash fee of SG$15,000 per month (total waived being SG$22,500)
Mr Higginson waived 100% of his cash fee of AU$2,083 per month (total waived being AU$6,249)
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
Group.
During the financial year, the Group has not paid bonuses to any Directors or executives.
Loans to key management personnel and their related parties
There are no loans to directors or executives at reporting date (30 June 2019: nil).
End of remuneration report
Share options
At the date of this report, the unissued ordinary shares of the Group under option are as follows:
Grant date
1 February 2018
12 September 2019
Date of Expiry
1 February 2021
30 September 2021
Exercise Price Number Under Option
AU$0.20
AU$0.10
1,000,000
20,000,000
17
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of SportsHero Limited for the year ended 30 June 2020, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
Any applicable code of professional conduct in relation to the audit.
David Wall
Partner
RSM Australia Partners
Perth, WA
Dated: 30 September 2020
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Right of use assets
Plant and equipment
Investment accounted for using the equity method
Other assets
Total non-current assets
Total assets
Current liabilities
Trade payables
Borrowings
Lease liability
Total current liabilities
Total liabilities
Net (liabilities)/assets
Equity
Issued capital
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Total equity
Consolidated
30 June
2020
US$
30 June
2019
US$
154,589
147,655
302,244
49,781
44,246
94,027
Note
8
9
12
10
18
11
14
15
13
16
17
17
16,909
4,508
-
-
21,417
-
1,507
24,623
140,260
166,390
323,661
260,417
281,099
206,045
17,308
504,452
1,257,017
-
-
1,257,017
504,452
1,257,017
(180,791)
(996,600)
11,784,318
474,168
(149,623)
(12,289,654)
(180,791)
10,097,370
92,515
(156,390)
(11,030,095)
(996,600)
The above statement of financial position should be read in conjunction with the accompanying notes.
20
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2020
Continuing operations
Income
Revenue
Other revenue
Expenses
Administration expenses
Commission expense
Employee and consulting expenses
Depreciation expense
Interest expense
Impairment expense
Share based payments
Share of net loss of joint venture accounted for using equity
method
Loss before income tax expense
Income tax expense
Consolidated
2020
US$
-
3,434
2019
US$
423,242
40,549
(657,369)
(1,259,352)
-
(435,634)
(53,434)
(2,120)
-
(12,883)
(243,364)
(844,977)
(575)
-
(158,161)
(223,333)
(101,553)
(10,654)
(1,259,559)
(2,276,625)
-
-
Note
3
3
4a
4b
5
10,12
9
22
20
7
Loss after tax expense for continuing operations
(1,259,559)
(2,276,625)
Loss for the year
(1,259,559)
(2,276,625)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Total comprehensive loss for the year
6,767
(38,975)
(1,252,792)
(2,315,600)
Basic and diluted loss per share for continued operations
(US cents per share)
Basic and Diluted loss per share (US cents per share)
6
6
0.39
0.39
0.93
0.93
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
21
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 201920
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
Issued
Capital
Share
Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
Equity
Note
US$
US$
US$
US$
US$
Consolidated
Balance at 01/07/2019
Comprehensive loss for the year
Exercise of options
Shares issued during the year
Share based payments
Transaction costs
10,097,370
-
1,854,473
299,191
-
(466,716)
16
16
22
16
92,515
-
-
-
12,883
368,770
(156,390)
6,767
-
-
-
-
(11,030,095)
(1,259,559)
-
-
-
-
(996,600)
(1,252,792)
1,854,473
299,191
12,883
(97,946)
Balance at 30/06/2020
11,784,318
474,168
(149,623)
(12,289,654)
(180,791)
Balance at 01/07/2018
Total comprehensive loss for the
year
Performance rights issued during
the year
Shares issued during the year
Share based payments
Transaction costs
8,559,488
97,751
(117,415)
(8,753,470)
(213,646)
-
-
(38,975)
(2,276,625)
(2,315,600)
17
16
22
16
117,035
1,397,136
111,534
(87,823)
(117,035)
-
111,799
-
-
-
-
-
-
-
-
-
-
1,397,136
223,333
(87,823)
Balance at 30/06/2019
10,097,370
92,515
(156,390)
(11,030,095)
(996,600)
The above statement of changes in equity should be read in conjunction with the accompanying notes.
22
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers
Interest received
Consolidated
2020
US$
2019
US$
Note
-
54,469
(2,107,732)
(1,910,731)
3,434
2,042
Net cash flows used in operating activities
18
(2,104,298)
(1,854,220)
Cash Flows from Investing Activities
Payments for plant and equipment
Cash received as part of acquisition
Net cash flows used in investing activities
Cash Flows from Financing Activities
Issue of new share capital
Proceeds from issue of convertible notes
Share issue transaction costs
Lease liability payments
(5,270)
-
(5,270)
(2,086)
(35,277)
(37,363)
2,153,664
1,744,829
205,890
(97,946)
(52,848)
-
(87,823)
-
Net cash provided by financing activities
2,208,760
1,657,006
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
99,192
(234,577)
5,616
49,781
154,589
(38,975)
323,333
49,781
The above statement of cash flows should be read in conjunction with the accompanying notes
23
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
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 2020 was authorised for issue in accordance with a resolution of the Director’s
on 30 September 2020.
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
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117
'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for
short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position. Straight-line operating lease expense recognition is
replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an
interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of
the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results improve as the operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is
disclosed in operating activities and the principal portion of the lease payments are separately disclosed
in financing activities. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have
not been restated. The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 17)
Operating lease commitments discounted based on the weighted average incremental
borrowing rate of 4.8% (AASB 16)
Right of use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities – non-current (AASB 16)
Impact on opening accumulated losses at 1 July 2019
1 July 2019
$
72,270
(4,231)
68,039
(50,533)
(17,506)
-
When adopting AASB 16 from 1 July 2019, the consolidated entity has applied the following practical
expedients:
24
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
●
●
●
●
●
applying a single discount rate to the portfolio of leases with reasonably similar characteristics;
accounting for leases with a remaining lease term of 12 months as at 1 July 2019 as short-term
leases;
excluding any initial direct costs from the measurement of right-of-use assets;
using hindsight in determining the lease term when the contract contains options to extend or
terminate the lease; and
not apply AASB 16 to contracts that were not previously identified as containing a lease.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated or amortised on a straight-line basis over the unexpired period of the
lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity
expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its
estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability
for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments
on these assets are expensed to profit or loss as incurred.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated
entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to
be paid under residual value guarantees, exercise price of a purchase option when the exercise of the
option is reasonably certain to occur, and any anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from a change in an
index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period
ended 30 June 2020.
(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.
25
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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(y).
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 19.
The report is presented in US dollars, unless otherwise stated.
(b) Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and discharge of liabilities in the normal course
of business.
As disclosed in the financial statements, the consolidated entity incurred a net loss of US$1,259,559 and
had net cash outflows from operating activities of US$2,104,298 and a net cash outflow from investing
activities of US$5,270 for the year ended 30 June 2020. As at that date, the consolidated entity had net
current liabilities of US$202,208 and net liabilities of US$180,791.
The ability of the consolidated entity to continue as a going concern is principally dependent upon the
consolidated entity generating sales income from its activities in Indonesia, securing funds by raising
additional capital from equity markets and managing cash flows in line with available funds.
The Directors believe that it is reasonably foreseeable that the consolidated entity will continue as a going
concern and that it is appropriate for it to adopt the going concern basis in the preparation of the financial
statements after consideration of following factors:
The consolidated entity’s budget is forecasting sales income to be generated from its operating
activities;
The Directors expect to retain the continued support from shareholders and other financiers that
have supported the Company’s previous capital raisings to assist with meeting future funding needs;
As disclosed in note 27, on 10 September 2020, the Company announced the signing of a definitive
Standby Placement Agreement with Mint Capital Advisors for a financing facility of up to
AU$5,000,000. The Standby Placement Agreement has a term of 36 months and the Company is
entitled to drawdown of up to AU$140,000 per month provided the issue price (calculated in
accordance with the terms of the Standby Placement Agreement) is above a floor price of AU$0.02
per share; and
The consolidated entity has the ability to curtail corporate and administration expenses and overhead
cash outflows as and when required.
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 statements.
The financial statements do 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.
26
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
(c)
Statement of Compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
SportsHero Limited as at 30 June 2020 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.
Associates and Joint venture entities are consolidated using the equity method. The initial recognition of
the investment in the joint venture has been recognised at cost, with the carrying amount increased or
decreased to recognise SportsHero Limited share of the profit or loss of the investee after the date of
acquisition. The share of the investee’s profit or loss is recognised in the investor’s profit or loss.
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.
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.
(d) 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.
(e)
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.
27
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
(f)
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the Group: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the
time value of money; allocates the transaction price to the separate performance obligations on the basis
of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises
revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the
customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the 'expected value' or 'most likely
amount' method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are initially recognised as deferred revenue in the
form of a separate refund liability.
Competition sales
Revenue from competitions is recognised at the point in time when the competition prize is drawn.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income 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.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(g) 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.
(h)
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any allowance for expected credit losses. Trade receivables are
generally due for settlement within 90 days. The Group has applied the simplified approach to measuring
expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit
losses, trade receivables have been grouped based on days overdue. Other receivables are recognised
at amortised cost, less any allowance for expected credit losses.
(i)
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.
28
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
(j)
Joint venture
Joint ventures are entities over which the consolidated entity has joint control. Investments in joint
ventures are accounted for using the equity method. Under the equity method, the share of the profits or
losses of the joint venture is recognised in profit or loss and the share of the movements in equity is
recognised in other comprehensive income. Investments in joint ventures are carried in the statement of
financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of
the joint venture. Dividends received or receivable from joint ventures reduce the carrying amount of the
investment.
When the consolidated entity's share of losses in an joint venture equals or exceeds its interest in the joint
venture, including any unsecured long-term receivables, the consolidated entity does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the joint venture.
The consolidated entity discontinues the use of the equity method upon the loss of joint control and
significant influence over the joint venture and recognises any retained investment at its fair value. Any
difference between the joint venture's carrying amount, fair value of the retained investment and proceeds
from disposal is recognised in profit or loss.
(k)
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.
(l)
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial assets at fair value through profit or loss. Such
assets are subsequently measured at either amortised cost or fair value depending on their classification.
Classification is determined based on both the business model within which such assets are held and the
contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being
avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's
carrying value is written off.
29
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be
either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an
intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them
as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which
are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly since
initial recognition, based on reasonable and supportable information that is available, without undue cost
or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has increased
significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of
expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in
profit or loss.
(m) 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.
(n) 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.
(o) 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.
30
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
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.
(p)
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.
(q)
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.
31
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
(r)
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.
32
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
(s)
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.
(t)
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the
Group.
(u) 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.
(v) 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.
33
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
(w) 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.
(x) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest
method.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a
liability in the statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a
market rate for an equivalent non-convertible bond and this amount is carried as a current liability until
extinguished on conversion or redemption as the maturity date is within 12 months. The corresponding
interest on convertible notes is expensed to profit or loss.
(y) Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management take 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.
34
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the consolidated entity based on known information. This consideration extends
to the nature of the products and services offered, customers, supply chain, staffing and geographic
regions in which the consolidated entity operates. Other than as addressed in specific notes, there does
not currently appear to be either any significant impact upon the financial statements or any significant
uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably
as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
3. Revenue
Revenue from customers
Competition sales
Other revenue
Interest revenue
Other income
Consolidated
2020
US$
2019
US$
-
-
423,242
423,242
3,434
-
3,434
2,042
38,507
463,791
For the year ended 30 June 2020 and 30 June 2019, all revenue was recognised at a point in time once
the relevant performance obligation was met.
Administration expenses
4a.
Administration expenses include the following:
Advertising and marketing
Professional fees
Sports subscription services
Legal
4b. Commission expense
Consolidated
2020
US$
2019
US$
321,047
144,935
2,150
169,828
303,183
497,518
37,872
149,813
-
-
243,364
243,364
Commission was paid in relation to the revenue generated form the La Liga Hero of the Month
competitions in Indonesia.
5.
Employee and consulting expenses
Salary and wages
35
Consolidated
2020
US$
2019
US$
435,634
435,634
844,977
844,977
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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 for the year attributable to ordinary shareholders
Weighted average number of shares
Consolidated
2020
US$
2019
US$
1,259,559
1,259,559
2,276,625
2,276,625
2020
No. of shares
2019
No. of shares
Weighted average number of ordinary shares for basic and
diluted loss per share
319,318,140 245,674,218
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)
0.39
-
0.39
0.93
-
0.93
(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 16, 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
Income tax recognised in profit or loss
Prima facie tax benefit on operating loss before income tax at
(2019: 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
Consolidated
2020
US$
2019
US$
(346,379)
(626,072)
(134,542)
61,417
480,921
-
564,655
-
The consolidated entity has US$8,253,861 (2019: US$6,185,194) tax losses arising in Australia
that are available indefinitely for offset against future profit of the Group in which the losses arose.
The potential deferred tax asset of US$1,690,487 (2019: US$1,209,566), arising from tax losses
and temporary differences (as disclosed above), has not been recognised as an asset because
recovery of tax losses and temporary differences is not considered probable given the development
stage of the company’s app.
The potential deferred tax asset will only be obtained if:
36
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
the Group derives future assessable income of a nature and an amount sufficient to enable
the benefit to be realised;
the Group continues to comply with the conditions for deductibility imposed by tax legislation;
and
no changes in tax legislation adversely affect the Group in realising the benefit from the
related deduction for the losses.
8. Cash and cash equivalents
Cash at bank
9. Trade and other receivables
Trade receivables
Less: allowance for expected credit losses
Other receivables
Consolidated
2020
US$
2019
US$
154,589
154,589
49,781
49,781
Consolidated
2020
US$
2019
US$
158,161
(158,161)
147,655
147,655
158,161
(158,161)
44,246
44,246
Allowance for expected credit losses
The consolidated entity has recognised a loss of nil (2019: $158,161) in profit or loss in respect of the
expected credit losses for the year ended 30 June 2020.
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Closing balance
Credit Risk
Consolidated
2020
US$
2019
US$
158,161
-
158,161
-
158,161
158,161
The maximum exposure to credit risk at balance date is the carrying amount (net of allowance for expected
credit losses) 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
Foreign exchange differences
37
Consolidated
2020
US$
7,352
(2,879)
35
4,508
2019
US$
2,086
(575)
(4)
1,507
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Balance as at 1 July 2018
Additions
Disposals
Depreciation expense
Foreign exchange differences
Balance as 30 June 2019
Balance at 1 July 2019
Additions
Depreciation expense
Foreign exchange differences
Balance as 30 June 2020
Equipment
US$
5,007
2,086
(5,007)
(575)
(4)
1,507
1,507
5,270
(2,304)
35
4,508
11. Other assets
In 2019 other assets of US$140,260 related to a bond paid to the Northern Territory Racing Commission
(NTRC) for the grant by the NTRC of a Sports Bookmakers License to Pay-to-Play Australia Pty Ltd. Other
assets were classified as non-current assets as at 30 June 2019. As at 30 June 2020 the balance was
classified as other current receivables, as the license was not granted and the balance was returned in
August 2020 to the Group.
12. Right-of-use assets
Land and buildings – right-of-use
Less: Accumulated depreciation
13. Lease liabilities
Lease liability - current
14. Trade and other payables
Current Payables
Trade payables
Other payables
Receipts for shares not issued at year end
Accrued expenses
38
Consolidated
2020
US$
68,039
(51,130)
16,909
Consolidated
2020
US$
17,308
2019
US$
-
-
-
2019
US$
-
Consolidated
2020
US$
221,898
-
-
59,201
281,099
2019
US$
497,640
257,086
455,144
47,147
1,257,017
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
(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.
(iii) Other payables relates discontinued operations.
15. Borrowings
Convertible notes
Consolidated
2020
US$
206,045
2019
US$
-
On 30 June 2020, 300 Convertible Notes were issued with a face value of AU$1,000 (US$686) and a
maturity date of 1 year from the date of issue. The convertible notes accrue interest at 10% and are
convertible into ordinary shares at lower of AU$0.03 or 80% of the volume weighted average price of
shares trading on ASX over the 7 trading days prior to the conversion date. The note holder has the
option to convert the convertible notes (and interest accrued) at any time commencing from 6 months
from the issue date to the maturity date. On maturity date, all the remaining convertible notes that have
not been converted, will be converted into shares.
16. Contributed Equity
(a) Share capital
2020
Number
2020
US$
2019
Number
2019
US$
Ordinary fully paid shares
328,206,064 11,784,318 270,269,397 10,097,370
(b) Movements in ordinary shares
Opening balance
Shares issued at US$0.070 per share ₁
Shares issued at US$0.035 per share ₂
Shares issued at US$0.034 per share 3
Shares issued at US$0.081 per share ₄
Shares issued at US$0.142 per share ₆
Shares issued at US$0.078 per share ₄
Shares issued at US$0.071 per share ₅
Shares issued at US$0.035 per share ₂
Shares issued at US$0.061 per share ₇
Transaction cost on share issue
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
270,269,397 10,097,370 249,370,229
-
299,191
4,283,333
-
16,403,334
572,887
-
37,250,000 1,281,586
1,000,000
-
-
3,582,500
-
-
1,500,000
-
-
10,808,334
-
-
3,508,334
-
-
500,000
-
-
-
(466,716)
-
8,559,488
-
-
-
81,224
508,213
117,035
764,797
124,125
30,311
(87,823)
₁ Issue price AU$0.10 translated to US$ at grant date
₂ Issue price AU$0.05 translated to US$ at grant date
₃ Issue price AU$$0.05 translated to US$ at grant date
₄ Issue price AU$0.11 translated to US$ at grant date
328,206,064 11,784,318 270,269,397 10,097,370
₆ Issue price AU$0.20 translated to US$ at grant date
₅ Issue price AU$0.10 translated to US$ at grant date
₇ Issue price AU$0.085 translated to US$ at grant date
(i) On 24 July 2019, the Group issued 4,283,333 shares to sophisticated investors at an issue price of
AU$0.10 to raise working capital.
(ii) On 24 July 2019, the Group issued 16,403,334 shares following the exercise of 16,403,334 options each
exercisable at AU$0.05 and expiring 31 August 2019.
(iii) On 12 September 2019, the Group issued 37,250,000 shares following the exercise of 37,250,000 options
each exercisable at AU$0.05 and expiring 31 August 2019.
(iv) On 12 July 2018, the Group issued 1,000,000 ordinary shares and 1,500,000 performance rights in
consideration for the engagement of Mr Flintoft as the Group’s Chief Digital Officer.
39
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
(v) On 3 October 2018, the Group issued 3,582,500 ordinary shares at an issue price of AU$0.20 per share.
(vi) On 3 October 2018, 1,500,000 shares were issued to Mr Flintoft following the conversion of 1,500,000
performance rights.
(vii) On 8 February 2019, the Group issued 10,808,334 ordinary shares at an issue price of AU$0.10 per
share.
(viii) On 8 February 2019, the Group issued 3,508,334 shares following the exercise of 3,508,334 options each
exercisable at AU$0.05 and expiring 31 August 2019.
(ix) On 27 February 2019, the Group issued the following shares;
250,000 shares to Mr Giteau in consideration for being appointed as a SportsHero Rugby
Ambassador, and
250,000 shares to Mr Mitchell in consideration for being appointed as a SportsHero Rugby
Ambassador
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Group
in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no
par value and the Group does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well
as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to
maintain a capital structure that ensures the lowest cost of capital available to the entity.
In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets.
The entity does not have a defined share buy-back plan.
No dividends were paid in 2020 (2019: nil) and no dividends are expected to be paid in 2020.
There is no current intention to incur debt funding on behalf of the Group
The Group is not subject to any externally imposed capital requirements.
17. Reserves
Reserves
Share-based payments reserve
As at 1 July 2019
Share based payments
Conversion of rights
Underwriter options – transaction costs on share issue
As at 30 June 2020
Foreign currency reserve
As at 1 July 2019
Foreign currency translation
As at 30 June 2020
40
Consolidated
2020
US$
2019
US$
92,515
12,883
-
368,770
474,168
97,751
111,799
(117,035)
-
92,515
(156,390)
6,767
(149,623)
(117,415)
(38,975)
(156,390)
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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.
18. Notes to Statement of Cash Flows
Consolidated
2020
US$
2019
US$
(a) Reconciliation of net cash used in operating activities to operating loss after income tax
Operating loss after tax
(1,259,559)
(2,276,625)
Add non-cash items:
Depreciation and amortisation
Loss on Disposal of property plant and equipment
Share-based payments expense
Impairment expense
Interest expense on lease liability
Changes in net assets and liabilities:
Movement in receivables
Movement in payables
Share of loss on joint venture
Net cash flow used in operating activities
(b) Non-cash financing and investing activities
Shares issued for provision of services
41
53,434
-
12,883
-
2,120
575
5,007
223,333
158,161
-
34,958
(1,049,687)
101,553
(2,104,298)
(329,828)
354,503
10,654
(1,854,220)
Consolidated
2020
US$
2019
US$
-
-
228,570
228,570
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
19. Parent Information
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
Parent
2020
US$
227,977
-
227,977
2019
US$
59,700
164,883
224,583
408,768
408,768
1,221,183
1,221,183
NET (LIABILITIES)/ASSETS
(180,791)
(996,600)
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Loss for the year
Total comprehensive loss
9,284,318
224,775
(9,689,884)
(180,791)
7,597,370
(24,437)
(8,569,533)
(996,600)
(1,120,351) (2,316,044)
(1,120,351) (2,316,044)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 (2019: nil)
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June
2020 and 30 June 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity,
as disclosed in note 2.
20. Details of Associates and Joint Venture entities
Name of associate / joint venture
Pay-to-Play Australia Pty Ltd
Group's aggregate share of associates and joint
venture entities' profit /(loss) (where material)
Reporting
entity's
percentage
holding
2020
%
2019
%
50% 50%
Contribution to
profit/(loss)
(where material)
2019
2020
US$
US$
(101,553)
(10,654)
Profit/(loss) from ordinary activities before income tax
(101,553)
(10,654)
Income tax on operating activities
-
-
The above joint venture is accounted for using the equity method in the consolidated financial statements.
42
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
21. 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:
J Dougall
T Lapping
M Higginson
W Johnson
Non-Executive Director and Chair
Director and CEO
Non-Executive Director
Non-Executive Director
All of the above persons were key management personnel during the year ended 30 June 2020.
(b) Key management personnel remuneration
Short-term employee benefits
(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
(d) Other transactions with key management personnel
Consolidated
2020
US$
235,276
235,276
2019
US$
245,051
245,051
32,706
35,049
During the year the Group paid rent of US$3,021 (2019: US$4,293) to Mr Higginson for the provision
of the Group’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 2020 (2019: nil).
(e) Other transactions with related parties
During the year the Group reimbursed Noblemen Ventures Pty Ltd (an entity controlled by Mr
Johnson) for costs of US$523 (2019: US$21,466)
There were no other transactions with related parties throughout the year.
(f) Other Entities
There were no other transaction with other entities.
43
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
22. Share based payments
Recognised share-based payment expenses
Shares issued for services rendered
Performance rights vesting over period – issued in prior year
Forfeiture of performance options issued in prior year
Forfeiture of performance rights issued in prior year
Performance rights vesting over a period – issued in prior year
Consolidated
2020
US$
2019
US$
-
12,883
-
-
-
111,534
117,035
(42,586)
(24,429)
61,779
12,883
223,333
Underwriter options – transaction costs on share issue
386,770
-
Employee share option plan
The Group has established an Employee Share Option Plan that allows for share options to be
granted to eligible employees and officers of the Group. 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
No performance rights were granted during the 12 months ending 30 June 2020.
In 2019 performance rights 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)
1,500,000 shares will be issued to Chief Digital Officer, Chris Flintoft for the re-design of the
software and upgrade of application to include new sports, such as cycling, AFL and rugby –
vested on 30 September 2018,
(b) Performance options
There were no performance options issued in the 12 months ending 30 June 2020 (2019: Nil).
(c) Underwriter options – transaction costs on share issue
Grant date
Dividend yield (%)
Expected price volatility
Risk-free interest rate (%)
Expected life of options (years)
Option exercise price (AU$)
Option exercise price in AU$ translated to US$ at grant date
Share price at grant date AU$
Share price in AU$ translated to US$ at grant date
Number of options issued
FV at grant date (AU$)
FV at grant date (US$)
44
12 September 2019
-
100%
1.94%
2
0.10
0.069
0.063
0.043
20,000,000
535,925
368,770
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
2020
2019
Number of
Options
Weighted
Average
Exercise
Price
US$
Number of
Options
Weighted
Average
Exercise
Price
US$
At beginning of reporting year
Granted during the year
- Lapsed
- Exercised
- Early exercise of options expiring on
31 August 2019
68,463,094
20,000,000
(9,526,427)
(57,936,667)
0.010
0.035
0.034
71,971,428
-
-
-
-
(3,508,334)
0.035
Balance the end of reporting year
Exercisable at end of reporting year
21,000,000
21,000,000
68,463,094
68,463,094
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
7 Feb 17 31 Aug 19 67,463,094
1,000,000
1 Feb 18 1 Feb 21
12 Sept 19 30 Sept 21
- (57,936,667)
-
-
-
- 20,000,000
68,463,094 20,000,000 (57,936,667)
Total
(9,526,427)
-
1,000,000
- 20,000,000
(9,526,427) 21,000,000
-
1,000,000
20,000,000
21,000,000
23. Auditors’ Remuneration
Audit of the financial statements - RSM Australia Partners
Audit or review of financial reports
Audit services - Network firms
Audit or review of the financial statements - RSM Chio Lim LLP
Consolidated
2020
US$
2019
US$
30,884
30,884
32,558
32,558
9,401
9,401
40,285
15,383
15,383
47,941
45
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
24.
Commitments
There were no outstanding commitments which are not disclosed in the financial statements
as at 30 June 2020 other than:
Office rental commitments
Within 1 year
After 1 year but not more than 5 years
Consolidated
2020
US$
-
-
-
2019
US$
73,660
25,843
99,503
25. 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 16 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. The Group’s borrowings which are fixed rate convertible notes
expose the Group to fair value 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.
46
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
Interest
Rate
1 year or
less
US$
Over 1-
5 years
US$
Non-
interest
bearing
US$
Total
US$
Consolidated
Notes
2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets for
continuing operations
Financial liabilities
Trade and other payables
Borrowings
8
9
14
15
Total financial liabilities
Net financial assets
0%
10%
-
-
-
-
-
-
-
-
-
-
-
-
Interest
Rate
1 year or
less
US$
Over 1-
5 years
US$
Notes
Consolidated
2019
Financial assets
154,589
147,655
302,244
154,589
147,655
302,244
281,099
206,045
281,099
206,045
487,144
487,144
(184,900)
(184,900)
Non-
interest
bearing
US$
Total
US$
0%
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
8
9
14
Total financial liabilities
Net financial assets
Interest rate sensitivity
-
-
-
-
-
-
-
-
-
-
49,781
49,781
44,246
44,246
94,027
94,027
1,257,017
1,257,017
1,257,017
(1,162,990)
1,257,017
(1,162,990)
At 30 June 2020, 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 2019: Nil), as a result
of lower/higher interest income from cash and cash equivalents.
At 30 June 2020, 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 US$3,091 lower/higher (30 June 2019: Nil), as
a result of lower/higher interest income from borrowings.
A sensitivity of 15% (15%: 2019) has been selected as this is considered reasonable given the current
level of both short term and long term Australian interest rates. A 15% sensitivity would move short term
interest rates at 30 June 2020 from around 0.25% to 0.2875% representing a 0.0375 basis point decrease.
Market expectations are that interest rates in Australia are more likely to move down than up in
subsequent periods.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances are
impacted resulting in a decrease or increase in overall income.
47
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities, and
through the continuous monitoring of budgeted and actual cash flows.
Contracted maturities of payables at 30 June
Payable
- less than 6 months
Borrowings – convertible notes
- 1 year or less
Foreign exchange risk
Note
Weighted
average
interest rate
Consolidated
2020
US$
2019
US$
14
15
-
281,099
544,787
10%
206,045
487,144
-
544,787
The Group has cash and cash equivalents denominated in AU$ of US$122,675 (2019: US$22,299). At
30 June 2020, if USD/AUD rates had changed by 15% with all other variables held constant, loss for the
year and equity would have been US$18,401 lower/higher (30 June 2019: US$3,345), as a result of with
change in fair value of cash and cash equivalents.
A sensitivity of 15% (15%: 2019) has been selected as this is considered reasonable given the current
level of volatility in the USD/AUD rate.
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.
26. 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
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.
48
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
Consolidated - 2019
Revenue
Intersegment sales
Income
Total segment income
Intersegment eliminations
Total revenue
EBITDA
Profit before income tax expense
Income tax expense
Loss after income tax expense
Material items include:
Share based payments
Depreciation
Impairment
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
Consolidated - 2020
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
Depreciation
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
Australia
Singapore
US$
US$
Total
US$
-
463,168
463,168
-
463,168
(1,845,380)
(1,845,380)
-
(1,845,380)
223,333
-
158,161
-
623
623
-
623
-
463,791
463,791
-
463,791
(430,670)
(431,245)
-
(431,245)
(2,276,050)
(2,276,625)
-
(2,276,625)
-
575
-
223,333
575
158,161
224,583
224,583
35,834
35,834
260,417
260,417
1,093,044
-
1,093,044
2,196,522
(2,032,549)
163,973
3,289,566
(2,032,549)
1,257,017
Australia
Singapore
US$
US$
Total
US$
-
1,318
1,318
-
1,318
(366,265)
(421,818)
-
(421,818)
12,883
-
-
2,116
2,116
-
2,116
-
3,434
3,434
-
3,434
(837,741)
(837,741)
-
(837,741)
-
53,434
(1,204,006)
(1,259,559)
-
(1,259,559)
12,883
53,434
259,893
259,893
63,768
63,768
323,661
323,661
408,768
(324,338)
84,430
3,001,439
(2,581,417)
420,022
3,410,207
(2,905,755)
504,452
49
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
27. Subsequent Events
On 7 July 2020, the Company announced the launch of Olahbola. Olahbola being SportsHero’s first ever
locally branded and fully localised football app covering international football for the Indonesian market.
On 26 August 2020, the Company announced the appointment of Mr Rob Davies as the Company’s
Indonesian Director of Operations. In order to secure the services of Mr Davies, the Company issued Mr
Davies 3,000,000 shares and 4,000,000 performance rights.
On 10 September 2020, the Company announced the signing of a definitive Standby Placement
Agreement with Mint Capital Advisors (Mint) for a financing facility of up to AU$5,000,000 and the issue
of 5,000,000 shares to the nominee of Mint for nil consideration. The Standby Placement Agreement has
a term of 36 months and the Company is entitled to drawdown up to AU$140,000 per month provided the
issue price (calculated in accordance with the terms of the Standby Placement Agreement) is above a
floor price of AU$0.02 per share.
On 21 September 2020, the Company announced that it had successfully secured a wholly owned
Indonesian operating entity.
The securing of this entity is a key component for the Company as it will facilitate the building of
SportsHero’s Indonesian presence by enabling such things as the hiring of Indonesian staff, the opening
of an Indonesian bank account, the securing of offices in Indonesia and the collection of revenue.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially negative
for SportsHero up to 30 June 2020, it is not practicable to estimate the potential impact, positive or
negative, after the reporting date. The situation is rapidly developing and is dependent on measures
imposed by the Australian Government and other countries, such as maintaining physical distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
28. Contingent Liabilities and Contingent Assets
In the 2018 financial year the Group recognised in its financial statements a current liability of US$324,338
in relation to claims that arose in relation to a former overseas subsidiary of the Group. The Group confirms
that it has received no claims (or otherwise) in relation to this matter and no claims are currently pending
against the former overseas subsidiary. The directors are of the view that the possibility of any
reimbursement is remote.
The Group does not have any other contingent liabilities as at 30 June 2020 (2019: Nil).
The Group does not have any contingent assets as at 30 June 2020 (2019: Nil).
50
SPORTSHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
29. 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:
Country of
Incorporation
Principal
Activities
Functional
Currency
Ownership
%
Australia
Parent
Australian
Dollars (AUD)
Australian
Dollars (AUD)
Singapore
Dollars (SGD)
100%
100%
Parent entity
SportsHero Limited
Name of Controlled
Entity
Sportz Hero Pty Limited
Australia
Investment holding
SportsHero Enterprise
Pte Ltd
Singapore
Technology
development &
marketing
30. Company Details
The registered office and principal place of business of the Group is:
36 Prestwick Drive
Twin Waters, QLD 4564
51
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 statement of financial position as at 30 June 2020, the statement of comprehensive income, the statement of
changes in equity and the 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 2020 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
We draw attention to Note 2(b) in the financial report, which indicates that the Group incurred a loss of
US$1,259,559 and had net cash outflows from operating activities of US$2,104,298 for the year ended 30 June
2020. As at that date, the Group had net current liabilities of US$202,208 and net liabilities of US$180,791. As
stated in Note 2(b), these events or conditions, along with other matters as set forth in Note 2(b), indicate that a
material uncertainty exists that 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.
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 payment
Refer to Note 22 in the financial statements
During the financial year, the Group incurred capital
raising costs of US$368,770
issue of
20,000,000 options. The Group has brought the capital
raising costs to account in accordance with AASB 2
Share-based Payment.
from
the
Our audit procedures included:
Reviewing the key terms and conditions of the
options issued;
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
key
value of the transaction.
assumptions used by management to value the
options; and
reasonableness of
Challenging
the
Obtaining the valuation models prepared by
management and assessing whether the models
were appropriate for valuing the options;
Reviewing
the relevant disclosures
the
financial statements to ensure compliance with
Accounting Standards.
in
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 2020 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and 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: https://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 2020.
In our opinion, the Remuneration Report of SportsHero Limited, for the year ended 30 June 2020, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
David Wall
Partner
RSM Australia Partners
Perth, Western Australia
30 September 2020
SPORTHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
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 16 September 2020.
Distribution schedules of security holders
Fully Paid
Shares
149
242
138
340
219
1,088
AU$0.20
Options
Expiring
1/02/21
-
-
-
-
1
1
AU$0.10
Options
Expiring
20/9/21
-
-
-
-
1
1
Convertible
Notes
Performance
Rights
8
-
-
-
-
8
-
-
-
-
1
1
1 -1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Number of
Holders
Holders of nonmarketable parcels
There are 631 fully paid ordinary shareholders who hold less than a marketable parcel of shares.
Twenty largest shareholders
The names of the twenty largest shareholders are:
IPV CAPITAL II HK LIMITED
1 MYHERO LIMITED
2
3 SUNSHORE HOLDINGS PTY LTD
4 J & TW DEKKER PTY LTD
5 COLIN JEE FAI LOW
6 THOMAS NAPONG LAPPING TONAVANIK
7 COLIN JEE FAI LOW
8 BNP PARIBAS NOMS PTY LTD
9 JOHN LEONARD WOODWARD
10 CITICORP NOMINEES PTY LIMITED
11 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
12 ALLGREEN HOLDINGS PTY LTD
13 TIMRIKI PTY LTD
14 JEANNE GO LIM
15 KORTANA PTY LTD
16 ADRIAN STEPHEN PAUL + NOELINE FAYE PAUL
17 ONE MANAGED INVESTMENT FUNDS LIMITED
18 ONE MANAGED INVESTMENT FUNDS LIMITED
19 PARRY CAPITAL MANAGEMENT LIMITED
20 LUBOMIR KULISEV
Number of
shares
60,000,000
16,650,000
12,500,000
11,555,511
10,833,242
8,357,143
8,350,000
7,795,759
7,140,322
6,674,064
6,614,327
6,098,671
5,142,857
5,018,310
5,000,000
4,242,857
4,000,000
4,000,000
4,000,000
4,000,000
197,973,063
% Held
17.85
4.95
3.72
3.44
3.22
2.49
2.48
2.32
2.12
1.99
1.97
1.81
1.53
1.49
1.49
1.26
1.19
1.19
1.19
1.19
58.88
56
SPORTHERO LIMITED
ANNUAL REPORT 30 JUNE 2020
SHAREHOLDER INFORMATION
Restricted securities
The Group has no Restricted Securities on issue.
Unquoted equity securities
Options to acquire fully paid shares at AU$0.20 per share and expiring 1
February 2021
Options to acquire fully paid shares at AU$0.10 per share and expiring
20 September 2021
10% Convertible Notes
1,000,000
20,000,000
300
1
1
8
Number on
issue
Number of
holders
Substantial shareholder
MyHero Limited
On-market buy-back
There is no current on-market buy-back.
Acquisition of voting shares
No. of
Shares Held
% of Shares
Held
60,000,000
17.85%
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 Group is treated as a public company for taxation purposes.
Franking credits
The Group has nil franking credits.
57