Jumbuck Entertainment Limited ABN 69 092 817 171 Appendix 4E

Transcription

Jumbuck Entertainment Limited
ABN 69 092 817 171
Appendix 4E
Full year report
Information for the full-year ended 30 June 2008 given to ASX under listing rule 4.3A
(Comparative information is for the full-year ended 30 June 2007)
Pursuant to listing rule 4.3A.3, the following information is given to the ASX by Jumbuck
Entertainment Limited (“Jumbuck”). The following information should be read in conjunction with
the attached annual financial report together with any public announcements made by Jumbuck
and its controlled entities during the year ended 30 June 2008 in accordance with the continuous
disclosure obligations under the Corporations Act 2001. Accounting policies, estimation methods
and measurement bases used in this Appendix 4E are the same as those used in the last annual
report and the last half-year report.
Results for announcement to the market
The Board of Jumbuck is pleased to report on the full year results for the period 1 July 2007 to 30
June 2008 (“FY2008”).
In FY2008, Jumbuck continued to deliver strong trading margins and operating cash flow.
With the recent acquisitions of Plutolife and Oztion, Jumbuck has added much needed new
products, which can be sold through a very strong sales channel.
The focus for the Jumbuck team in FY2009 will be to grow revenue and profit with the wider
range of both on portal and off portal products available.
Key Highlights
•
Sales Revenue up 1% to $15.0million
•
EBITDAI up 2% to $7.9million
•
Non cash impairment in value of Mobileactive shareholding of $1.9M
•
NPAT of $2.7million after taking account of impairment
•
EPS (diluted) of 5.6 cents
•
Cash at bank of $6.7million
•
Nil debt
•
Acquisition of Plutolife in July 2008 with complementary mobile products and new
carrier relationships
Key Jumbuck Performance Statistics
2007/08
$000
Revenue
Sales Revenue
2006/07
$000
Change
%
14,833
a
0.9%
758
843
b
-10.1%
15,730
15,676
a
0.3%
EBITDAI
(Earnings before interest,tax,
depreciation, amortisation and
impairment)
7,873
7,705
a
2.2%
Less: Depreciation
Amortisation
Impairment of Investment
(325)
(1,098)
(2,046)
(293)
(795)
0
a
a
10.9%
38.1%
0.0%
4,404
6,617
b
-33.4%
458
374
a
22.5%
Net Profit Before Tax
4,862
6,991
b
-30.5%
Income Tax Expense
(2,154)
(1,995)
a
8.0%
Net Profit After Tax
2,708
4,996
b
-45.8%
EPS Diluted (cents)
5.6
10.3
b
-45.6%
Other Revenue
Total Revenue
EBIT
Add:
Interest revenue
14,972
Jumbuck holds a 15% shareholding in ASX listed Mobileactive. Following a decline in the share
price of Mobileactive, Jumbuck has written down the value of this shareholding by $1.9million. In
addition Jumbuck has written down the value of its holding in WAP3 by $0.1million.
Customers
With the acquisition of Plutolife, Jumbuck has gained new carrier relationships in Northern Europe
and several products that will fit alongside the existing Jumbuck chat and dating products.
Jumbuck now has a global network of over 100 carrier relationships, with particular strength in
Europe, The Americas and Australasia.
Dividends
No dividends have been declared for FY 2008.
Change to capital
During the financial year, 464,565 shares were acquired by Jumbuck and cancelled by Jumbuck
under a share buyback. At 30 June 2008 there were 48,020,105 shares remaining in issue.
Subsequent events
Just after the year end, on 2 July 2008 Jumbuck acquired 100% of the share capital of Plutolife
AS and its subsidiaries for an initial cash cost of $2.1million, with a further payment of $1.1million
due in July 2009. There is also an earnout payable in December 2009, the scale of which will
depend on the revenue and profitability of Plutolife in the next 18 months.
Outlook
Over the next 12 months Jumbuck will focus on achieving revenue and profit growth through the
wider carrier base and community of users.
This report is based on the attached full year financial report which has been subject to an audit.
The financial report contains:
• A statement of financial performance together with the notes to the statement prepared in
compliance with Accounting Standards
• A statement of financial position together with notes to the statement
• A statement of cash flows together with notes to the statement
• A statement of retained earnings showing movements
• The financial statements are not subject to any audit dispute or qualifications.
• The Company has a duly constituted audit committee.
For and on behalf of the Board
Adrian Risch
Chief Executive Officer
28 August 2008
About Jumbuck Entertainment Ltd
Jumbuck Entertainment Ltd (ASX: JMB) Jumbuck is the world’s leading mobile community and
social networking services provider, delivering to over 100 global carriers
It develops, supports and sells services such as chatrooms, dating and online auctions.
Jumbuck operates out of offices in San Francisco, London, Cologne, Perth, Oslo, Ukraine and
Rio de Janeiro with headquarters based in Melbourne, Australia. The primary business model is
revenue sharing direct with carriers. The carrier bills the subscribers on Jumbuck’s behalf.
For additional information please visit: www.jumbuck.com
For further information please contact:
Adrian Risch
CEO
Jumbuck Entertainment Ltd
Telephone: (613) 9620 3839
Facsimile: (613) 9620 3840
Email: [email protected]
Mark Doughty
CFO and Company Secretary
Telephone: (613) 9620 3839
Facsimile: (613) 9620 3840
Financial Summary and Ratios
2008
$’000
Sales& Profitability
Sales revenue
Other revenue
Total EBITDAI
Total EBITDA
Net profit before tax
Net profit after tax
14,972
758
7,873
5,827
4,862
2,708
14,833
844
7,705
7,705
6,991
4,996
5,141
4,819
11,328
2,707
0
9,789
24,175
13,599
3,744
0
10,499
21,504
Cash Flow
Gross operating cash flow
Financial Position
Current assets
Current liabilities
Net debt
Net tangible assets
Total equity
Per Share Performance
Earnings per share
NTA per share
Share Statistics (at 30 June each year)
Total shares on issue – millions
Closing share price
Market capitalization
Key Ratios
EBITDAI/Sales
EBITDA/Sales
EBIT/Sales
NPAT/Sales
2007
$’000
5.6cents
20.4cents
10.3cents
21.7cents
48.02
59 cents
$28.3million
48.48
$1.41
$68.4million
%
%
52.6
38.9
29.4
18.1
51.9
51.9
44.6
33.7
JUMBUCK ENTERTAINMENT LTD
2008 ANNUAL REPORT
Jumbuck Entertainment Ltd and Controlled Entities
ABN 69 092 817 171
2008 ANNUAL REPORT
Table of Contents
(INSIDE FRONT COVER)
Highlights
1
Company Profile
2
Message from the Chairman
3
CEO’s Report
Financial Reports
• Corporate Governance Statement
• Directors’ Report
• Auditors’ Independence Declaration
Financial Statements
• Income Statement
• Balance Sheet
• Statement of changes in Equity
• Cash flow statement
• Notes of the Financial Statements
• Directors’ Declaration
• Independent Audit Report
4 - 10
11 - 15
16 - 29
30
31
32
33
34
35 - 75
76
77-78
Additional Investor Information
79-80
Corporate Directory and Glossary
81-82
2008 Annual Report
This 2008 Annual Report is a summary of our activities and financial position.
In the 2008 Annual Report, the expression “JMB” refers to Jumbuck Entertainment Ltd, and reference to Group refer to Jumbuck
Entertainment Ltd and its controlled entities.
Reference in this Report to a “year” is to the financial year ended 30 June 2008 unless otherwise stated. All figures are expressed
in Australian currency unless otherwise stated.
Revenues and expenses are recognised net of the amount of Goods and Services Tax.
A glossary of terms used in this Report is contained at the end of this document.
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ABN 69 092 817 171
2008 ANNUAL REPORT
PERFORMANCE HIGHLIGHTS
•
Expanded product range created through internal development and corporate acquisition
•
Successful launch of flirting and chat products across several major carriers
•
100+ wireless carrier relationships
•
Oztion acquisition completed June 2008
•
Plutolife acquisition completed July 2008
FINANCIAL HIGHLIGHTS
•
SALES REVENUE up 1% to $15.0 million
3.9%
•
EBITDAI up 2% to $7.9 million
•
Non cash write down in value of investment in Mobileactive by $1.9million
•
EBIT down 33% to $4.4 million following write down of investment in Mobileactive
20.8%
•
NPBT down 30% to $4.9 million
16.2%
•
Cash at bank of $6.7 million
10.7%
•
Nil debt
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COMPANY PROFILE
Jumbuck Entertainment Ltd (ASX: JMB) is the world’s leading mobile community and social networking services provider,
delivering to 108 carriers worldwide. It develops, supports and sells services such as chatrooms and dating applications direct to
wireless carriers.
The Company provides a large community on a 24-7 basis to maximise user interaction and allows integration of carriers globally.
Jumbuck also provides carriers with monitoring of chat services to ensure safety of users. Jumbuck has 108 wireless carrier
relationships on 6 continents.
In addition Jumbuck owns oztion.com.au the largest Australian owned online auction community.
Jumbuck operates out of offices in San Francisco, London, Cologne, Perth, Ukraine, Rio de Janeiro and Oslo with headquarters
based in Melbourne, Australia. The primary business model is revenue sharing direct with carriers. The carrier bills the
subscribers on Jumbuck’s behalf.
Business models range from monthly user subscription to flat fees.
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Message from the Chairman
Dear Fellow Shareholder
The Board of Jumbuck Entertainment Ltd (“Company”) is pleased to present to shareholders the Annual Report of the Company
and its subsidiaries, covering the financial year ended 30 June 2008.
The year has been an interesting challenge for the Company with the continued strength of the Australian dollar, holding back
growth in revenue. As an example the US Dollar was trading against the Australian Dollar this year at double the level it was when
I joined the Board of Jumbuck in February 2002.
However we look forward to the next financial year having created a platform for future growth. We have developed some exciting
new products internally such as www.fastflirting.com the dating website, as well as having acquired two exciting companies in the
past few months.
The two acquisitions, Oztion and Plutolife bring the Company a range of new products and markets.
Oztion will allow us to build on the web presence we have created with www.fastflirting.com. The Oztion auction site is ranked as
one of the top 120 most visited websites in Australia.
The acquisition of Plutolife has given us some exciting new opportunities to cross market products, as well as monetise existing
products via SMS.
As a result of the prolonged drop in the share price of our 15.5% investment in Mobileactive (ASX: MBA) we decided to write down
the value of that investment by $1.9million. The investment is now carried at 4 cents per share.
The underlying trading of the business continues to be strong, and our profit margins on sales are as strong as ever.
The Board acknowledges with thanks the contribution to the company performance of the whole Jumbuck team, spread around the
world.
We enter the new financial year with a wider set of products and customer base than ever before, and this gives the Board great
encouragement.
We look forward to the current year being more productive, to the benefit of shareholders, the employees, business partners and
other stakeholders.
Kevin V. Campbell AM
CHAIRMAN
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CEO’s Report
Year in Review
In FY 2008, Jumbuck has continued to deliver strong trading margins from its revenue. It has also been a year of positioning
Jumbuck to deliver stronger growth.
Trading during FY 2008 was at similar levels to FY 2007, we were able to achieve this despite the strong Australian dollar
creating a difficult environment for Jumbuck, which delivers most of its revenue from international markets particularly the
Americas and Europe.
We are predicting an exciting future for Jumbuck, as the company has a stable platform of cash flow, a debt free balance sheet,
and the potential for exciting growth.
This growth will come from:
-The expanded product range as we have gone from two core products to six;
-A widened territorial coverage as we have increased the customer carrier network; and
-Increased off deck and web monetisation.
2007/08
2006/07
Change
$000
$000
%
Revenue
Sales Revenue
14,972
14,833
▲
0.9%
Other Revenue
758
843
▼
(10.1%)
15,730
15,676
▲
0.3%
7,873
7,705
▲
2.2%
Less: Depreciation
(325)
(293)
▲
10.9%
Amortisation
(1,098)
(795)
▲
38.1%
(2,046)
-
4,404
6,617
▼
(33.4)%
458
374
▲
22.5%
Net Profit Before Tax
4,862
6,991
▼
(30.5%)
Income Tax Expense
(2,154)
(1,995)
▲
8.0%
2,708
4,996
▼
(45.8%)
5.6
10.3
▼
(45.6%)
Total Revenue
EBITDAI
(Earnings before interest,
depreciation,
amortisation
impairment)
EBIT
Add: Interest revenue
Net Profit After Tax
EPS (Diluted) (Cents)
tax,
and
-
In the current financial year we have chosen to write down the value of minority investments by $2.046 million through the profit
and loss account of which $1.890 million relates to the impairment of investment in Mobileactive (ASX: MBA). This is a non-cash
impact. These investments are now carried at a value of $1.138 million.
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CEO’s Report (Cont.)
SALES REVENUE ($000s)
ACTUAL 2003 ‐2008
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2003/04
2004/05
2005/06
2006/07
2007/08
Financial Year
With such a large proportion of Jumbuck sales revenue being earned in international markets, the sales revenue growth
has been eroded by the strong Australian dollar over the past 24 months.
Revenue by geographic territory showed strong growth in South America, whilst being flat in North America.
In Europe, FY 2007 had been supported by some one-off income. In FY 2008 sales revenue in Europe suffered in the UK from
a strong Australian dollar versus sterling and the new subscription billing model with O2 which has given strong potential for
future growth however always with a new subscription billing model it starts from a low level.
Sales Revenue by Territory (AUD)
2007
Territory
Australia
Asia Pacific
$000
2008
Share %
796
5.4
$000
845
Share %
Growth %
5.6
6.2
301
2.0
236
1.6
(21.6)
Europe
5,623
38.0
5,128
34.3
(8.8)
The Americas
8,112
54.6
8,699
58.1
7.2
1
-
64
0.4
>100
TOTAL
Sales Revenue by Product (AUD)
14,833
100.0
14,972
100.0
0.9
Product
$000
Africa and Middle East
2007
2008
Share %
$000
Share %
Change %
Power Chat
8,588
57.9
8,450
56.4
(1.61)
Fast Flirting
3,445
23.2
3,394
22.7
(1.50)
Chat del Mundo/Chat do Mundo
Other Products
Oztion
TOTAL SALES REVENUE
791
5.3
1,573
10.5
98.86
2,009
13.6
1,465
9.8
(27.08)
-
-
90
0.6
-
14,833
100.0
14,972
100.0
0.94
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2008 ANNUAL REPORT
Power Chat and Fast Flirting sales revenues are stable whilst both the Spanish and Portuguese versions of our chat products
(Chat del Mundo and Chat do Mundo) have shown strong growth.
Following the acquisition of the web auction site Oztion on 2 June 2008, sales revenue for Oztion is included for June only.
The Plutolife acquisition occurred after the end of FY 2008, subsequently there is no Plutolife revenue included within the FY 2008
results.
EBITDAI ($000s)
ACTUAL 2003 ‐2008
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2003/04
2004/05
2005/06
2006/07
2007/08
Financial Year
Earnings in FY 2008 are similar to FY 2007. Margins have been maintained despite revenue from international markets being
squeezed due to the Australian dollar strength, and much of the Jumbuck cost base being within Australia.
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CEO Report (Cont.)
Jumbuck now has the following core products:
A simple, powerful, customisable chat application, with an easy interface allowing users to chat with new friends around
the world all day, every day. Users can chat in public and private rooms, make new friends, and interact using key
product features such as photo profiles.
Chat del Mundo – This is a Spanish language version of the successful Power Chat Product. It now contains one of the
world’s largest mobile Hispanic communities.
Chat do Mundo – This is the Portuguese language version of Power Chat.
On Mobile : Users choose a flirting partner instantly based on age and preference and have up to 10-minute private text
conversations. Users can customise their identity with graphically rich avatars and enhance their flirts with actions,
including sending a drink or a wink!
On Web: The new fastflirting.com website allows instant registration and flirting in a way that other dating sites do not.
NEW PRODUCT : This is an
SMS based mobile speed dating game based upon the popular American dating TV
shows such as The Love ConnectionTM.
Mobiflirt pits up to 50 players against each other for the heart of one lucky “single”!
This is a new addition to Jumbuck’s product range, following the acquisition of Plutolife.
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CEO Report (Cont.)
NEW PRODUCT : Mobile dating service available in SMS, WAP, JAVA, XML and i-Mode, allowing users to enter
group or private chat sessions with users who meet their search requirements.
NEW PRODUCT : Mobimodels is a simple and fun picture rating service where members vote on who is the hottest
in the picture community. It is available in WAP and MMS/SMS format.
NEW PRODUCT : Oztion is the largest Australian owned on-line auction website, acquired by Jumbuck in June
2008.
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CEO Report (Cont.)
Our Carriers
North America
Europe
Admob
OpenMarket
Base (Belgium)
Saunalahti (Finland)
Alltel
Rogers
Bouygues (France)
TMN PT(Portugal)
AT&T
Sprint
BITE (Lithuania)
Tele2 Norge (Norway)
Bell Mobility
Suncom
Chess (Norway)
Tele2 Sweden
Boost
Telcel Mexico
DJuice (Norway)
Telia (Sweden)
Cellmania
Telus Mobility
DNA Finland
Tele2Tango (Sweden)
Cingular
T-Mobile US
Eplus (Germany)
Tele2 Lithuania
Ericsson IPX
Verizon Wireless
Elisa (Finland)
Telia (Denmark)
LavaLife Corp
Virgin Mobile US
Jamba (Germany)
TietoEnator (Finland)
Midwest Wireless
Virgin Mobile Canada
Hutchison 3 (Scandinavia)
Telenor (Norway)
Mythum
Wmode
Halebop (Sweden)
Telenor (Sweden)
Nextel
Western Wireless
Interaktif Medya(Turkey)
T-Mobile (Austria)
KPN (Netherlands)
T-Mobile (Croatia)
Kyvistar (Ukraine)
T-Mobile (Germany)
Red Pyramid (Russia)
T-Mobile (Poland)
Netcom (Norway)
T-Mobile (UK)
Omnitel (Lithuania)
TDC (Denmark)
O2 (Germany)
TDC (Switzerland)
O2 (UK)
TDC (France)
Orange (Poland)
Telefonica (Spain)
Orange (Spain)
Telering (Austria)
Optimns (Portugal)
TIM (Italy)
Promonte (Poland)
Voxmobile (Luxembourg)
SFR (France)
Vodafon (Portugal)
Shamrock (Russia)
Wind (Italy)
Sonofon (Denmark)
Wmode (Swizerland)
nTelos
Sonera (Finland)
Africa & Middle East
Central & South America
Axiom (UAE)
Atech (Chile)
Movistar (Nicaragua)
Exact Mobile (South Africa)
Alerlatina Eirl
Movistar (Panama)
Pelephone (Israel)
Codetel (Dominican Republic)
Movistar (Venezuela)
Equipos Telemo (Venezuela)
OIL (Brazil)
3G one (Panama)
Satelnet (Ecuador)
IU SACELL (Mexico)
Telecommunications Movinet
(Venezuela)
Movistar (Argentina)
Movistar (Chile)
Movistar (Columbia)
Movistar (El Salvador)
Movistar (Ecuador)
TIM (Brazil)
Verizon Wireless (Puerto Rico)
Verizon Wireless (Dominican
Republic)
Vivo (Brazil)
Movistar (Guatemala)
Australia & New Zealand
Asia
Hutchison Telecommunications (3) (Australia)
Hutchison CAT (Thailand)
Optus Mobile (Australia)
Telstra (Australia)
Telecom (NZ)
Vodafone (NZ)
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2008 ANNUAL REPORT
I take this opportunity to thank the Jumbuck team for their dedicated efforts in FY2008.
Adrian Risch
Chief Executive Officer
28 August 2008
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Corporate Governance Statement
In March 2003, ASX published the ASX Best Practice Recommendations (ASXBPR) for listed companies to adhere. These recommendations are
guidelines designed to produce an efficiency, quality or integrity outcome. The recommendations are not prescriptive so that if a company
considers that a recommendation is inappropriate having regard to its particular circumstances, the company has the flexibility not to follow it.
When a company has not followed all the recommendations, the annual report must identify which recommendation has not been followed and
give reasons for not following them. In this respect, the Directors have evaluated with due care the situation of JMB and have strived to comply, to
the best possible extent, the guidelines laid down.
Without doubt, the Directors recognise the need for a high standard of behaviour and accountability and accordingly support good corporate
governance practices. In general, the Board considers that adequate measures have been taken in the areas of board structure and responsibility
definition, timely and adequate disclosure for the best interests of shareholders, minimising risk by reinforcing internal controls as well as overall
compliance with the ASX Listing Rules.
On self-evaluation of the extent to which JMB has followed the ASXBPR, the Board is of the opinion that, subject to certain departures which is
not justified for adoption due to the particular circumstances of JMB, our policies and practices are in compliance with the ASXBPR. Details have
been included at the end of this statement setting out the ASXBPR with which JMB has not complied in this reporting period.
JMB Board of Directors
To comply with the ASXBPR, JMB has established clear guidelines to distinguish between the roles of the Board and that of management.
In essence, the Board is responsible for the overall strategic planning and decision making of the Company as a whole and answerable to the
shareholders for the business performance of Jumbuck and its controlled entities. Management on the other hand is delegated with all the
functions in relation to the day-to-day operations of JMB and is accountable to the Board in this respect.
The Board of Directors is responsible for protecting the rights and interests of members and is accountable to them for the overall management of
JMB. The Board has the overall responsibility for the governance of JMB, including:
–
Setting strategies, directions and establishing goals for the Group;
–
The monitoring of performance against these goals and objectives;
–
Oversight of JMB including control and accountability systems;
–
Ensuring there are adequate internal controls and ethical standards of behaviour;
–
The review of the Managing Director and Key Management Personnel performance, conduct and reward;
–
The monitoring of the major risks of JMB’s business and ensuring there are appropriate policies and procedures to satisfy its legal and
ethical responsibilities;
–
The approval and monitoring of financial and other reporting;
–
Approving all mergers and acquisitions;
–
Reviewing the annual progress and performance of JMB in meeting the objectives of the Group, including reporting the outcome of such
reviews;
–
Establishing and determining the powers and functions of the committees of the Board;
–
The review and approval of the major operational and capital expenditure plans established by the management team, and
–
The monitoring of performance against those plans.
Board structure
Jumbuck recognises the need to have a board of the appropriate composition, size and commitment with an appropriate range of expertise, skill,
knowledge and vision to enable it to operate the Company’s business with excellence. With this objective in mind, our board is structured to
consist of five (5) Directors of which four (4) are independent Non-Executive Directors including the Chairman.
The composition of the Board is determined by Jumbuck using the following principles:
The Board should comprise at least 3 Directors. This number may be increased where it is felt that additional expertise is required in
specific areas;
The Chairman of the Board is an independent Non-Executive Director;
The Board comprises a majority of Non-Executive Directors with at least 50% of the Board being independent Non-Executive Directors;
The Board has enough Directors to serve on various committees of the Board without overburdening the Directors or making it difficult
for them to fully discharge their duties; and
The Board comprises Directors with a broad range of expertise both nationally and internationally.
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Corporate Governance Statement (Cont.)
Board structure (Cont.)
Details of the Directors are found in the Directors’ Report. The Board has significant experience in various fields, including funds management,
media, telecommunications and financial markets. During FY2008, the Board met eleven times.
The Board’s composition of 5 Directors is considered an appropriate size for the Company at its present stage of development and given the
breadth of its membership, most issues can be decided at Board level without the need for separate committees such as a nomination committee.
The full Board incorporates the responsibilities of the Nomination Committee. It has the responsibility for reviewing the composition of the Board
and recommending new nominees for membership of the Board, should the need arise. The selection of Directors must be approved by the
majority of shareholders at the next AGM.
The Chairman reviews the performance of all Directors each year. Directors whose performance is unsatisfactory are asked to retire. To date, no
Director has been asked to retire for unsatisfactory performance.
Each year the Board conducts an evaluation review of the Directors. This is carried out by a review as a whole of a Director’s attendance at and
involvement in Board meetings, their performance and other matters identified by the Board or other Directors. Significant issues are actioned by
the Board. Due to the Board’s assessment of the effectiveness of these processes, the Board has not otherwise formalised measures of a
Director’s performance.
The Board assesses the independence of Directors as appropriate. In considering whether a Director is independent, the Board has regard to the
independence criteria in ASXBPR Principle 2 and other facts, circumstances and information the Board considers relevant.
Director Participation
Directors of JMB regularly visit the business offices of JMB and meet with management to gain a better understanding of business practices.
Committees of the Board
To assist in the execution of its corporate governance responsibilities, the Board has established three committees, the Audit Committee, the
Remuneration Committee and the Corporate Governance Committee. Requirements for Board committees are reviewed regularly. All
committees operate principally in a review or advisory capacity, except in cases where powers are expressly conferred on or delegated to a
committee by the Board. A set of standing rules for Committees has been adopted by the Board and a copy is available on the Jumbuck website
at www.jumbuck.com.
Audit Committee
The Board has established an Audit Committee that operates under a charter approved by the Board. It is the Board’s responsibility to ensure
that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency
of significant business processes.
This includes the safeguarding of assets, the maintenance of proper accounting records, the monitoring of risks and the reliability of financial
information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The Board has
delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of
the economic entity to the Audit Committee. The Committee also provides the Board with additional assurance regarding the reliability of financial
information for inclusion in the financial statements.
The Committee currently comprises three Non-Executive Directors. Non-Executive Director membership is reviewed at three-yearly intervals.
The members of the Audit Committee during the year were Jeffrey Kennett (Chair), Kevin Campbell and Paul Choiselat (now replaced by Tom
Kiing). Full details and qualifications of the members are contained in the Directors’ Report. All members are experienced in executive
management, public company management and finance. The Chair of the Audit Committee is not the chairman of the Board. The external
auditors, the CEO and CFO are invited to Audit Committee meetings at the discretion of the Committee. The Committee met two times during the
year. Attendance at the meetings is set out in the Directors’ Report.
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Audit Committee (Cont.)
The Audit Committee is also responsible for directing and monitoring the internal audit function, nomination of the external auditor, monitoring the
independence of the external auditor and reviewing the adequacy of the scope and quality of the annual statutory audit or review.
The
Committee reviews the performance of the external auditors on an annual basis and meets regularly with them during the year. The Audit
Committee also conducts an annual review of its processes to ensure it has carried out its functions in an effective manner.
Remuneration Committee
The Remuneration Committee is responsible for reviewing the remuneration of Directors and senior management, evaluation of senior
management and makes recommendations to the Board on these matters. This role also includes responsibility for recommendations to the Board
on share and option schemes, incentive performance packages, superannuation entitlements, fringe benefits policies and professional indemnity
and liability policies. A copy of the Remuneration Committee Charter is available on the Jumbuck website at www.jumbuck.com.
Remuneration levels are competitively set to attract the most qualified and experienced Directors and key management personnel. The
Committee obtains independent advice on the appropriateness of remuneration packages. The Committee currently comprises Kevin Campbell
(Chair), Jeffrey Kennett and Tom Kiing. The Committee met twice during the year. Attendance at the meetings is set out in the Directors’ Report.
Details of the amount of remuneration, and all monetary and non-monetary components, for each of the 5 highest-paid (non-Director) executives
and all Directors during the year ending 30 June 2008 are contained in Table A in the Remuneration Report. Termination entitlements for key
management personnel, if any, are also contained in Table A.
Non-Executive Directors are remunerated by way of fees and are not provided with retirement benefits.
Corporate Governance Committee
The Corporate Governance Committee is responsible for reviewing the corporate governance policies and procedures. The Committee conducts
or facilitates to conduct formal annual reviews of the internal guidelines relating to corporate governance, Board operation and membership and
committee structures. This process ensures not only that the functions of board and management are clearly defined and understood but also
that JMB’s Board procedures are continually reviewed and the highest standards of performance are maintained.
The Committee comprises Kevin Campbell (Chairman), Jeffrey Kennett and Tom Kiing. The Committee did not meet during the year but
corporate governance matters were discussed at full board meetings on a number of occasions. Attendance at the meetings is set out in the
Directors’ Report.
Access to Independent Professional Advice
The Directors, the Board and the Board Committees are empowered to seek external professional advice, as considered necessary, at JMB’s
expense, subject to prior consultation with the Chairman. If appropriate, any advice so received will be made available to all Directors.
Access to Information
Directors are entitled to obtain access to company employees, documents and information.
Risk Management
The Board has in place a number of arrangements and policies intended to identify and manage areas of significant strategic or financial business
risk. These include the maintenance of:
procedures to consider and approve the strategic direction of the Group;
detailed and regular budgetary, financial and management reporting;
procedures to manage financial and operational risks;
established organisational structure, procedures, manuals and policies;
comprehensive insurance and risk management programs; and
the retention of specialised staff and external advisers.
The program is designed to provide an enterprise wide risk management methodology which incorporates risk identification, analysis,
assessment, treatment and monitoring/review of a wide range of risk and compliance issues including external environment, process risk and
decision making risks.
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Risk Management (Cont.)
The Board receives regular reports about the financial conditions and operating results of JMB. The CEO and CFO annually provide a formal
statement to the Board that in all material respects and to the best of their knowledge and belief:
•
JMB’s financial reports present a true and fair view of JMB’s financial condition and operational results and are in accordance with relevant
accounting standards; and
•
JMB’s risk management and internal control systems are sound, appropriate and operating efficiently and effectively.
The Board ensures the establishment of a framework for management including a system of internal control, a business risk management process
and the establishment of appropriate ethical standards.
The Board acknowledges that it is responsible for the overall internal control framework but recognises that no cost effective internal control
system will preclude all errors and irregularities. The system is based upon written procedures, policies and guidelines, organisational structures
that provide an appropriate division of responsibility, a program of internal audit and the careful selection and training of qualified personnel.
Ethical Standards
The Directors acknowledge the need for and continued maintenance of the highest standards of corporate governance practices and ethical
conduct by all Directors and employees of JMB. All Directors, Executives and employees are expected to act with the utmost integrity and
objectivity in their dealings with each other, competitors, suppliers, customers, and the community, aiming at all times to enhance the reputation
and performance of JMB.
JMB has adopted a Code of Conduct which sets standards of behaviour required of all employees including:
•
to act properly and efficiently in pursuing the objectives of JMB;
•
to avoid situations which may give rise to a conflict of interest;
•
to know and adhere to JMB’s policies;
•
to maintain confidentiality in the affairs of JMB and its customers;
•
to be absolutely honest in all professional activities.
These standards are regularly communicated to staff and Directors and are accepted and agreed to by all. A copy of the code of conduct is
available on the Jumbuck website at www.jumbuck.com.
Political contributions as a rule are not allowed by JMB. Sponsorships undertaken by JMB are aligned with the achievement of corporate
objectives.
In accordance with the Constitution and the Corporations Act 2001, Directors disclose to the Board any material contract in which they may have
an interest. In compliance with section 195 of the Corporations Act 2001 any Director with a material personal interest in a matter being
considered by the Board will not be present when the matter is being considered and will not vote on the matter.
Dealings in JMB securities
JMB has a share trading policy in place, which regulates the trading of shares in JMB by Directors and employees. A copy of the share trading
policy is available on the Jumbuck website at www.jumbuck.com.
Continuous Disclosure
Procedures and practices are in place to ensure compliance with the continuous disclosure requirements of the ASX Listing Rules. Continuous
disclosure involves the timely announcement of information to keep the market informed of material events and developments as they occur.
Once the Board becomes aware of information concerning JMB that would be likely to have a material effect on the price or value of JMB’s
securities, the Board ensures that the information is released to the ASX.
The Company Secretary must ensure that information for release to the market is not released to any other person until JMB has given the
information to the ASX and has received an acknowledgement that the ASX has released the information to the market.
A communication policy has been adopted by the Board and a copy is available on the Jumbuck website at www.jumbuck.com.
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Shareholders
The Board aims to ensure that shareholders are kept informed of all major developments affecting Jumbuck. Information is communicated to
shareholders as follows:
•
regular announcements are made to the ASX, including half-year reviewed financial report and year end audited annual report;
•
continuous disclosure releases made to the ASX;
•
information is posted to the JMB website;
•
the Board ensures the annual report includes relevant information about the operations of JMB during the year, changes in the state of affairs
and details of future developments;
•
the Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and
identification of JMB’s strategies and goals. All shareholders who are unable to attend these meetings are encouraged to communicate or
ask questions by writing to JMB; and
•
the external auditor is requested to attend the Annual General Meetings to answer any questions concerning the audit and the contents of
the Auditor’s Report.
Interests of stakeholders
JMB acknowledges the obligation it has towards stakeholders such as shareholders, customers, employees, suppliers and the community it
serves. To fulfill its obligations, JMB strives to observe the laws, act in the best interests of shareholders, manage the Company’s assets properly,
act in a highly professional way and promote a good corporate image among the industry and potential users.
Privacy
JMB has developed and introduced a privacy policy following the implementation of the Privacy Act in December 2001 which deals with
•
collection of information;
•
disclosure of information;
•
storage of information;
•
security; and
•
access to and correction of information.
Environment
The Board considers that responsible environmental management is important in JMB’s business and as a result, in the last year, JMB had
undertaken projects in an effort to monitor and reduce our environmental impact. Areas that have been concentrated on are the reduction of
energy consumption; the minimisation of waste; and increasing our recycling efforts.
Registry
Computershare Investor Services Pty Limited is JMB’s security register manager and holds all shareholder records electronically. Computershare
is also responsible for the maintenance of shareholder records.
ASX Best Practice Recommendations
Pursuant to the ASX Listing Rules, JMB advises that it does not comply with the following ASXBPR. Reasons for JMB’s non-compliance are as
detailed below.
Recommendation 2.4
The Board should
establish
a
Nomination
Committee
The functions to be performed by a nomination committee under the ASXBPR are currently
performed by the full Board. Having regard to the number of members currently
comprising the Board, the Board does not consider it necessary to delegate these
responsibilities to a sub-committee. These arrangements will be reviewed periodically by
the Board to ensure that they continue to be appropriate to JMB’s circumstances.
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DIRECTORS’ REPORT
Your Directors present their report on Jumbuck Entertainment Ltd (“Jumbuck”) together with the financial statements of the Group, being the
Company and its controlled entities, for the year ended 30 June 2008.
Directors and Officers
The Board of Directors (Board) has power to appoint persons as Directors to fill any vacancies. Other than those Directors appointed during the
year, one-third (or the nearest number to) are required to retire by rotation at each annual general meeting and are eligible to stand for re-election
together with those Directors appointed during the year to fill any vacancy who must retire and stand for election.
The names of the Company’s Directors in office during or since the end of the financial year are as follows:
Kevin V Campbell AM
Paul G Choiselat
Hon Jeffrey G Kennett AC
Bruce R Bennie
Tom SP Kiing
Adrian P Risch
Chairman and Non-Executive Director
Executive Managing Director
Non-Executive Director
CEO and Executive Director
resigned 23 June 2008
appointed 29 July 2008
Details of the Directors and Company Secretary of the Company in office at the date of this report, and each officer’s qualifications, experience
and special responsibilities are below.
Kevin V Campbell AM Age: 64
Chairman (non-executive)
Hon Jeffrey G Kennett AC Age: 60
Director (non-executive)
Bruce R Bennie B.Ec Age: 43
Tom SP Kiing Age: 30
Board member and Chairman since April 2004, Mr. Campbell has had an extensive and diverse career in
the broadcasting industry in Australia for over thirty-five years and has experience in media technology.
He is a former managing Director of TVW Enterprises Ltd, Perth and a former chairman of the Lotteries
Commission of Western Australia. He is Chairman of Q Ltd, Chairman of Quickflix Ltd and immediate
past Chairman of the Telethon Institute for Child Health Research. Mr. Campbell is also a member of the
General Division of the Order of Australia. Mr. Campbell is also Chairman of the Remuneration and
Corporate Governance Committees and a member of the Audit and Finance Committee.
Mr. Campbell holds an interest in 110,957 shares in Jumbuck as at the date of this report.
Board member since April 2004, The Hon Jeffrey Kennett was a Member of the Victorian Parliament for
23 years, and was Premier of the State from 1992 to 1999. Mr. Kennett is currently Chairman of Open
Windows Australia Propriety Limited and PFD Food Services Pty Ltd and a Director of Q Ltd. He is also
Chairman of Beyondblue, the national depression initiative, Chairman of Enterprize Ship Trust and
President of Hawthorn Football Club. Mr Kennett is Chairman of the Audit and Finance Committee and a
member of the Remuneration and Corporate Governance Committees.
Mr Kennett holds an interest in 530,210 shares in Jumbuck as at the date of this report.
Board member since April 2004, Mr Bennie has held senior sales and management positions in major
corporations, including, a number of large US based telecommunication vendors such as sales Director
for Lucent Technologies Australia/NZ. He has strong skills in developing marketing strategies, contract
negotiation and strategic selling to major telecommunications companies and brings to Jumbuck over 22
years of sales, management and marketing experience in the IT & T sector. Mr Bennie is also a Director
of Q Ltd.
Mr Bennie holds an interest in 208,889 shares in Jumbuck as at the date of this report.
Board member since July 2008, Mr Kiing has experience in mergers and acquisitions, corporate finance
and strategic marketing and planning with a particular focus on branding and e-commerce. Mr Kiing is
also a director of Bridge Capital Pty Ltd and sits on the Boards of: Clarity International, a world leader in
visual intelligence software; The Atomic Group, an integrated sports and entertainment company and
ASX listed, Melbourne IT, one of Australia’s largest technology companies. He travels extensively
through the ASEAN region to promote a wide range of Australian investment opportunities to Asian
institutions and private investors. Mr Kiing is a member of the Remuneration and Audit Committees.
Mr Kiing holds an interest in 5,385,270 shares in Jumbuck as at the date of this report.
.
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DIRECTORS’ REPORT (Cont.)
Adrian P Risch Age: 30
CEO and Executive Director
Mark Doughty, BA CA Age: 39
CFO and Company Secretary
Board member since April 2004, Mr Risch is the founder of Jumbuck and was appointed chief executive
officer on 30 July 2007 to manage the Company’s day-to-day operations. He has extensive experience in
managing web projects and applications development teams. He has an in-depth understanding of
international telecommunication markets and consumer consumption of mobile data services. He is a
member of the Corporate Governance Committee.
Mr Risch holds an interest in 2,660,000 shares in Jumbuck as at the date of this report.
Chief Financial Officer since November 2006. Mr Doughty has many years of experience in the role of
CFO with fast moving technology businesses, both listed and private. In addition he has been CEO and
COO of several companies. Mr Doughty is a member of the Institute of Chartered Accountants of
Scotland. Previous roles have been as CFO and CEO of UK AIM and then NASDAQ Europe listed
Memory Corporation plc as well as co-founding semiconductor design software company Critical Blue.
Responsibilities at Jumbuck include financial management and planning, strategic advice and strategic
planning, sourcing and securing acquisitions and company secretarial.
Mr Doughty holds an interest in 5,000 shares in Jumbuck as at the date of this report.
Directors’ and officers’ indemnity
The Company has indemnified each Director referred to in this report, the Company Secretary and previous Directors and secretaries (Officers)
against all liabilities or loss (other than to the Company or a related body corporate) that may arise from their position as Officers of the Company
and its controlled entities, except where the liability arises out of conduct involving a lack of good faith or indemnification is otherwise not permitted
under the Corporations Act. The indemnity stipulates that the Company will meet the full amount of any such liabilities, including costs and
expenses, and covers a period of seven years after ceasing to be an Officer of the Company.
The Company has also indemnified the current and previous Directors of its controlled entities and certain members of the Company’s senior
management for all liabilities and loss (other than to the Company or a related body corporate) that may arise from their position, except where the
liability arises out of conduct involving a lack of good faith or indemnification is otherwise not permitted under the Corporations Act.
The Company has executed deeds of indemnity in terms of Article 27 in favour of each Non-Executive Director of the Company and certain NonExecutive Directors of related bodies corporate of the Company.
Directors’ and officers’ insurance
The Company has paid insurance premiums for one year cover in respect of Directors’ and Officers’ liability insurance contracts, for Officers of the
Company and of its controlled entities. The insurance cover is on standard industry terms and provides cover for loss and liability for wrongful acts
in relation to the relevant person’s role as an Officer, except that cover is not provided for loss in relation to Officers gaining any profit or
advantage to which they were not legally entitled, or Officers committing any criminal, dishonest, fraudulent or malicious act or omission, or any
knowing or wilful violation of any statute or regulation. Cover is also only provided for fines and penalties in limited circumstances and up to a
small financial limit.
The insurance does not provide cover for the independent auditors of the Company or of a related body corporate of the Company.
In accordance with usual commercial practice, the insurance contract prohibits disclosure of details of the nature of the liabilities covered by the
insurance, the limit of indemnity and the amount of the premium paid under the contract.
Principal activities
The principal activities of the Group during the year were mobile data services provider to wireless mobile carriers.
In the opinion of the Directors there were no significant changes in the state of affairs of the Company (as the parent entity) that occurred during
the financial year not otherwise disclosed in this report.
Review of Operations
A detailed review of operations and the results of those operations are set out in the Chairman’s Message and CEO’s Report at the beginning of
this report.
Except for the matters disclosed, there are, at the date of this report, no other matters or circumstances which have arisen since 30 June 2008
that have significantly affected or may significantly affect:
(a)
the operations in future financial periods subsequent to the financial year ended 30 June 2008, of the Group constituted by the
Company and the entities it controls from time to time;
(b)
the results of those operations in future financial periods; or
(c)
the state of affairs, in future financial periods, of the Group.
Dividends
No dividends have been paid or declared since the start of FY2008 and Jumbuck does not propose to pay a dividend for this reporting period.
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Share Issue
During the year 464,565 fully paid ordinary shares in Jumbuck Entertainment Ltd were acquired and cancelled by the Company under a share
buyback scheme.
Events subsequent to reporting date
On 1 July 2008 the Company acquired 100% of the share capital of Norwegian based Plutolife AS and its subsidiary companies. The initial
consideration was $2,061,856 in cash. There is a further cash consideration payment of $1,134,020 due to the vendors of Plutolife AS on 1 July
2009.
In addition there is an earn out payable to three of the vendors who are involved in the active management of Plutolife AS. All earn out payments
are to be made in cash and depend on the revenue and profitability of Plutolife in the 18 months post acquisition.
The earn out payments are due in January 2010.
Future Developments
Other than comments on likely developments or expected results of certain of the operations of the Group which are included in the Chairman’s
Message and the CEO’s Report, in the opinion of the Directors, further information on likely developments in the operations of the Group and the
expected results of those operations in future financial periods have been omitted as the Directors believe it would be likely to result in
unreasonable prejudice to the Group’s interests if such further information were included in this report.
Business Strategies and Prospects
Information on the Group’s business strategies and its prospects for future financial years is included in the Chairman’s Message and the CEO’s
Report. In the opinion of the Directors, further information on the Group’s business strategies and its prospects for future financial years would, if
included in this report, be likely to result in unreasonable prejudice to the Group and has accordingly been omitted.
Environmental Issues
The Company takes a responsible approach in relation to the management of environmental matters. All significant environmental risks have been
reviewed and the Group has no legal obligation to take corrective action in respect of any environmental matter. The economic entity’s operations
are not subject to significant environmental regulation under the law of the Commonwealth and State.
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Remuneration Report
This remuneration report outlines the remuneration arrangements for executives and employees of Jumbuck Entertainment Ltd, including key
management personnel in accordance with relevant accounting standards and Section 300A of the Corporations Act.
Remuneration Committee
Role
The membership, responsibilities, authority and activities of the Remuneration Committee are set out in the Remuneration Committee charter,
which has been approved by the Board. A full copy of the charter is available on the Group’s website at www.jumbuck.com.
The responsibilities of the Remuneration Committee are to:
•
monitor, review and recommend to the Board, as necessary and appropriate:
o
the remuneration, superannuation and incentive policies and arrangements for the Chief Executive Officer and for key
management personnel;
o
the remuneration arrangements for Non-Executive Directors on the Board (as listed below);
o
the recruitment, retention and termination policies and procedures for key management personnel; and
o
key appointments and executive succession planning (including one or more reports and presentations to the Board each year);
•
oversee the Group’s general remuneration strategy; and
•
monitor the Group’s culture and reputation and review behavioural standards on a regular basis, and report and submit recommendations to
the Board.
The Remuneration Committee has delegated authority from the Board to consider and recommend to the Board:
•
changes to the factors regarding the measurement of short-term performance, which impact incentives and the general employee share
offer;
•
incentive pool amounts;
•
offers under existing share, performance option and performance rights plans, including setting the terms of issue and approving the issue of
securities in the Company in connection with such offers (within the total number of securities approved by the Board); and
•
fees payable to Non-Executive Directors of controlled entity boards.
Membership and meetings
The following outlines the member composition of the Remuneration Committee during the year:
Mr Kevin V Campbell AM (Chairman);
Hon Jeffrey G Kennett AC;
Mr Tom SP Kiing; and
(appointed 29 July 2008)
Mr Paul G Choiselat
(resigned 23 June 2008)
The Remuneration Committee met twice during the year. The number of meetings attended by each member during the year is set out in the
report of the Directors.
The Chief Executive Officer and the Chief Financial Officer attend the Remuneration Committee meetings by invitation and have assisted the
Remuneration Committee in its deliberations, except on matters associated with their own remuneration.
Advisers
External specialist remuneration advice is sought in respect of remuneration arrangements for Non-Executive Directors of the Board and key
management personnel of the Group. General reward advice is sought on an ad hoc basis.
Reward policy
The Company has an established policy for determining the nature and amount of emoluments of Board Members and Key Management
Personnel of the Company to align remuneration with the creation of shareholder value. The remuneration structure for the Key Management
Personnel seeks to emphasise payment for results.
Reward philosophy
The Company’s overall philosophy is to manage the remuneration to:
•
create an environment that will attract top talent, and where people can be motivated with energy and passion to deliver
superior performance;
•
recognise capabilities and promote opportunities for career and professional development;
•
provide rewards, benefits and conditions that are competitive within the markets in which the Group operates; and
•
provide fair and consistent rewards across the Group, which supports corporate principles.
In accordance with the ASXBPR, the structure of Non-Executive Directors and Key management personnel remuneration is separate and distinct.
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Remuneration Report (Cont.)
Company Performance
The table below shows the performance results and share price movement of the Company for the last 5 years.
2004
2,994
2005
7,293
2006
11,623
2007
15,676
2008
15,730
Earnings Before Interest and Tax
842
3,110
5,480
6,617
4,402
Net Profit/(Loss) before tax
842
3,175
5,741
6,991
4,860
Net Profit/(Loss) after tax ($’000)
898
2,702
4,300
4,996
2,708
Shares Price at start of year ($)
N/A
0.20
0.80
2.37
1.41
0.20*
0.80
2.37
1.41
0.59
Basic earnings per share
2.6
6.3
9.4
10.3
5.6
Diluted earnings per share
2.6
6.3
9.4
10.3
5.6
Dividends Paid
NIL
NIL
NIL
NIL
NIL
Revenue ($’000)
Share Price at end of year ($)
*Jumbuck Entertainment Ltd was de-merged from its then parent company Q Ltd and listed on the Australian Stock Exchange in August 2004.
The share price shown is the price at which shares were issued under the IPO of the Company.
Jumbuck Entertainment Ltd adopted the Australian equivalents to International Financial Reporting Standards with effect from 1 July 2004, which
resulted in various changes to its accounting policies from that date. The basic and diluted earnings per share for the year ended 30 June 2004
were calculated in accordance with Jumbuck Entertainment Ltd previous accounting policies as permitted under Australian accounting standards
as applicable at that time.
In addition, during 2008 Jumbuck Entertainment Limited repurchased 464,565 shares for $319,728. The shares were repurchased at the
prevailing market price on the date of the buy-back.
Executives and Executive Director Remuneration
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the
Company and so as to:
•
Reward executives for achievement of pre-determined key performance indicators such as EBIT;
•
Link reward with the strategic goals and performance of the Company, in particular growth; and
•
Ensure total remuneration is competitive by market standards.
The Remuneration for Key Management Personnel and staff is reviewed annually using a performance appraisal process.
The Remuneration Committee recommends to the Board increases in fixed remuneration each year based on the performance of individuals.
The remuneration structure is in two parts:
•
Fixed remuneration; and
•
Variable remuneration.
Fixed remuneration
Fixed remuneration comprises of payroll salary, superannuation and other benefits. Some individuals, however, have chosen to sacrifice part of
their salary to increase payments towards superannuation.
Variable Remuneration
Comprises of a short term incentive plan and long term incentive plan.
•
Short term incentive plan
Short-term incentives are used to differentiate rewards based on performance on a year by year basis. The principal performance indicator
of the short-term incentive plan is the Company’s financial performance. The financial performance measurement selected is EBIT growth. It
has been selected as the optimal measure of trading performance, and is calculated based on a percentage above an EBIT threshold level.
This allows the individual to be rewarded for growth in EBIT. The percentage and threshold level can differ for each individual and are
reviewed every year. The EBIT thresholds are determined based on the ability of the Key Management Personnel to influence the
Company’s earnings.
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ABN 69 092 817 171
2008 ANNUAL REPORT
•
Long term incentive plan
JMB has established an employee option plan. The plan is designed to provide a long-term incentive for employees, contractors and
Directors of Jumbuck and to reward sustained superior performance to align all interests more closely with those of Jumbuck shareholders.
It will allow them to participate in Jumbuck’s future growth and give them an incentive to increase profitability and returns to shareholders.
Full time employees, part-time employees, Directors and contractors of Jumbuck are eligible to participate.
The Remuneration Committee has acknowledged that an issue of options to any Director of the Company (and/or their associates) would
need the approval of shareholders. The entitlement of eligible participants is at the absolute discretion of the Directors. The exercise price of
each option offered pursuant to the option plan is at the discretion of the Directors.
The share options hold no voting or dividend rights, and are not transferable.
On 28 February 2008 1,640,000 share options were issued to employees. The exercise prices of the options issued are 71c, 77c and 83c
per share.
As at 30 June 2008 there are a total of 2,785,002 share options outstanding to employees.
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Director and executive details
The following persons acted as directors and executive of the company during or since the end of the financial year:
Directors
Kevin V Campbell AM
Paul G Choiselat
Bruce R Bennie
Tom SP Kiing
Adrian P Risch
Chairman and Non-Executive Director
Executive Managing Director (until 31 May 2008, Non-Executive Director 1 June 2008 to 23 June 2008,
Resigned 23 June 2008)
(appointed 29 July 2008)
Executive Director and CEO
(appointed CEO 30 July 2007)
Key management personnel
Ms C Chan
Ms O P Hilton
Mr M Doughty
Company Secretary (resigned 2 May 2008)
Chief Executive Officer (ceased 30 July 2007)
Chief Financial Officer (also appointed Company Secretary 2 May 2008)
Executive Directors’ and CEO Remuneration
The following table summarises the remuneration arrangements for executive Directors and the CEO. Arrangements for key management
personnel and arrangements for Non-Executive Directors are shown on the following pages of this report.
Term of
employment
agreement
Notice period
No contract in place
Mr A P Risch
CEO – commenced 30 July
2007
Managing Director, Europe June 2006 to July 2007
Role terminated in May 2008
Total
employment
cost (TEC)*
Short term
incentive:
Performance
Related
$296,374 (2007:$266,183)
$373,913 (2007:$263,073)
Given the performance of the
Company, variable
remuneration based on
achievement against the EBIT
scheme was paid.
Given the performance of the
Company, variable
achievement against the EBIT
scheme was paid.
During the year a total of
$134,403 was paid, of which
$53,743 was for the financial
performance in the current
financial year and $80,660 for
FY 2007.
$91,639 was paid, of which
$53,743 was for the financial
performance in the current
financial year and $37,896 for
FY 2007
$38,197 was paid, of
which $26,872 was for the
financial performance in
the current financial year
and $11,325 for FY 2007.
The equivalent amount paid in
FY 2007 was $156,275.
The equivalent amount paid in
FY 2007 was $72,765.
The FY 2008 EBIT
threshold is $5M with
percentage bonus of 2.5%.
The FY 2008 EBIT threshold
is $5M with percentage bonus
of 5%.
The FY 2008 EBIT threshold is
$5M with percentage bonus of
5%.
was $1M with percentage
bonus of 2.5%
N/A
was $2.4M with percentage
bonus of 1.5%
N/A
Position
Long term
incentive
Mr P G Choiselat
Managing Director from
October 2002 to May 2008
Ms O P Hilton
CEO to 30 July 2007
3 years from 1 May
2006. May be extended
by mutual agreement
Outside of Term, 3
months
$273,076
(2007:
$324,229)
After ceasing as CEO, is
not
included
within
incentive scheme
Mr M Doughty
CFO commenced
November 2006.
Also Company Secretary
from 2 May 2008
Ongoing contract
1 month
$290,013 (2007:$147,380)
7% of this amount relates
to share option cost.
Given the performance of
the Company, variable
achievement against the
EBIT scheme was paid.
The
FY 2007
EBIT
threshold
$2.4M
with
percentage bonus of 1.0%
from April 2007.
N/A other than options
as set out below
N/A other than options as
set out below
*
A portion of TEC may be taken in the form of packaged benefits (such as a motor vehicle and parking), and is
benefits tax and employer superannuation contributions
inclusive
of
fringe
22
ABN 69 092 817 171
2008 ANNUAL REPORT
Executive Directors’ and CEO Remuneration (Cont.)
Mr PG Choiselat
Executive
Directors
are
eligible to participate in other
benefits that are normally
provided
to
executives
employed by the Company
such
as
superannuation,
subject to any overriding
legislation prevailing at the
time
including
the
Corporations Act 2001 (Cth)
Mr AP Risch
Executive Directors are eligible
to participate in other benefits
that are normally provided to
executives employed by the
Company
such
as
superannuation, subject to any
overriding legislation prevailing
at the time including the
Corporations Act 2001 (Cth)
Termination
by executive
No agreement is currently in
place
place
Termination
by Company
place
place
Restraint
N/A
Other
Interest
in
shares
Options:
Performance
Related
N/A
No longer employed
place
N/A
2,660,000 ordinary fully paid
shares
Nil
Other
benefits:
Non
Performance
Related
Nil
Ms OP Hilton
Executive Directors and
executives are eligible to
participate
in
other
benefits
that
are
normally provided to
executives employed by
the Company such as
superannuation, subject
to
any
overriding
legislation prevailing at
the time including the
Corporations Act 2001
(Cth)
3 months notice after the
Term or one month after
breach by Company
3 months notice after the
Term or one month after
breach by executive or
payment in lieu
12 months after date of
expiry or termination
N/A
23,000 ordinary fully
paid shares
The following options
were granted on 5 May
2006:
333,333 options at $2.05
exercise price, vesting if
EPS of 11 cents per
share was met in FY
2007. EPS was not met.
Therefore, the share
options have lapsed.
333,333 options at $2.25
exercise price, vesting if
EPS of 12 cents per
share was met in FY
2008. EPS was not met.
Therefore the share
options have lapsed.
Mr M Doughty
Executive Directors and
executives are eligible to
participate
in
other
benefits that are normally
provided to executives
employed by the Company
such as superannuation,
subject to any overriding
legislation prevailing at the
time
including
the
Corporations Act 2001
(Cth)
1 month
1 month
1 month
N/A
Nil
The following options were
granted on 28 February
2008 with the vesting
condition of continued
employment:
133,333
options
at
71cents per share, vesting
on 30 September 2008.
133,333
options
at
77cents per share vesting
133,334
options
at
83cents per share vesting
333,334 options at $2.48
exercise price, vesting
on 30/09/09 if EPS of 13
cents per share is met in
FY 2009.
After ceasing as CEO,
no further options were
issued.
Each year, the Board agrees or determines reasonable performance measures and targets for use in assessing each executive Director’s
performance. After the end of each financial year, the Board reviews each executive Director’s performance by reference to these measures and
targets. STI targets (as a percentage of TEC) are determined annually by the Board for the coming year. TEC is base remuneration inclusive of
superannuation and benefits but excludes leave accrued not taken.
23
ABN 69 092 817 171
2008 ANNUAL REPORT
Key Management Personnel remuneration
The following tables show details of the nature and amount of each element of the remuneration paid or payable with respect to services provided
for the period as Key Management Personnel of the Group during FY2008. All Directors and key management personnel are paid in Australian
dollars.
No performance options or performance rights have been granted to executive Directors or Key Management Personnel since the end of FY2008.
No retirement benefits were paid or payable to executive Directors or key management personnel in FY2008.
The following table shows separately the full-year remuneration details of each of the Directors and other key management. Remuneration totals
in the table below will differ from those disclosed above if the executive ceased their position as an executive during the year.
Table A
Postemployment
Benefits
Short-term Employee Benefits
2008
Salary &
Fees
Bonus *
Nonmonetary
Other
Superannuation
Share-based Payment
Other Long
Term
Employee
Benefits
Equity-settled
TerminaOptions
tion
Shares & & Rights
Benefits
Units
**
Cash
Settled
Total
Performance
Bonus as a
% of total
remuneration
K V Campbell
28,750
77,525
106,275
B R Bennie
Hon. J G
Kennett
60,000
5,400
65,400
60,000
5,400
65,400
A P Risch
240,764
91,639
41,510
373,913
25%
P G Choiselat
149,875
134,403
12,096
296,374
45%
O P Hilton
195,200
50,528
27,348
273,076
19%
M Doughty
210,000
38,197
22,338
290,013
13%
C Chan
Total
19,478
69,031
1,013,620
69,031
314,767
0
0
191,617
0
0
0
19,478
0
1,539,482
* The Bonus is part of the short term incentive scheme, and is known as the EBIT Bonus scheme for FY2008. The maximum entitlement to a
FY2008 EBIT Bonus is determined by reference to the achievement of Earnings Before Interest and Tax (EBIT) above a threshold level of $5M.
The payment of any amounts under EBIT Bonus scheme is at the discretion of the Board and the amount paid may be any amount up to the
maximum amount (or nil). The calculation of the EBIT Bonus is made at the discretion of the Board, after each 6 month period using a pro rata of
the $5M threshold. Therefore for the first half of FY2008 the threshold was $2.5M, and first half of FY2008 bonus payments were made on
12/03/08. In respect of the second half of FY2007, payment was made on 17/8/07.
EBIT is chosen as the basis for short term incentive calculation to align remuneration with the creation of shareholder value.
** The options granted to M Doughty were granted on 28/02/08.
24
ABN 69 092 817 171
2008 ANNUAL REPORT
Key Management Personnel remuneration (Cont.)
Table B
Postemployment
Benefits
Short-term Employee Benefits
2007
Salary &
Fees
Bonus *
Nonmonetary
Other
Share-based Payment
Other Long
Term
Employee
Benefits
Superannuation
Equity-settled
Termination
Shares Options &
Benefits & Units
Rights **
Cash
Settled
Total
K V Campbell
55,000
10,400
65,400
B R Bennie
Hon. J G
Kennett
35,000
3,150
38,150
38,150
A P Risch
190,308
72,765
P G Choiselat
109,908
156,275
O P Hilton
195,200
97,020
32,009
M Doughty
125,000
11,130
11,250
38,150
263,073
28%
266,183
59%
324,229
30%
147,380
8%
C Chan
30,880
30,880
M A Chuah
63,078
63,078
T D Herbst
40,689
Total
845,063
Performance
Bonus as a %
of total
remuneration
40,689
337,190
0
0
94,959
0
0
0
0
0
1,277,212
* The Bonus is part of the short term incentive scheme, and is known as the EBIT Bonus scheme for FY2007. For FY2007 EBIT Bonus is earned
on the achievement of Earnings Before Interest and Tax (EBIT) above a threshold level. The threshold for all employees, with the exception of PG
Choiselat, was EBIT of $2.4M. PG Choiselat had a threshold of $1M. The maximum entitlement to a FY2007 EBIT Bonus is determined by
reference to the achievement of Earnings Before Interest and Tax (EBIT) above the threshold.
The calculation of the EBIT Bonus is made at the discretion of the Board, after each 6 month period using a pro rata of the threshold.
EBIT is chosen as the basis for short term incentive calculation to align remuneration with the creation of shareholder value.
Options over shares of Jumbuck Entertainment Limited held by Key Management Personnel
Table C- 2008
2008
Balance
01.07.07
Options
Granted
Options
Exercised
Executives
Mark Doughty
400,000
Ms OP Hilton
666,667
Total
666,667
400,000
* Options lapsed due to not meeting KPI hurdle.
Options
Expired
-
Options
Lapsed*
-
Balance
30.06.08
333,333
333,333
400,000
333,334
733,334
Total Vested
30.06.08
Total
Exercisa
ble
-
-
Total Vested
30.06.07
Total
Exercisa
ble
The Executive Directors do not hold any options and were not granted any options during the year.
Table C-2007
2007
Balance
01.07.06
Options
Granted
Non-Executive directors
Hon J G Kennett
222,222
Executives
Ms OP Hilton
1,000,000
Total
1,222,222
Options
Exercised
Options
Expired
Options
Lapsed*
Balance
30.06.07
-
222,222
-
-
-
-
-
-
222,222
-
333,333
333,333
666,667
666,667
-
-
* Options lapsed due to not meeting KPI hurdle
222,222 shares of Jumbuck Entertainment Ltd issued during the financial year 2007 relate to the exercise of 222,222 share options with an
exercise price of 60.75 cents per share. The options were granted on 24/5/04 with an expiration date of 18/12/06.
25
ABN 69 092 817 171
2008 ANNUAL REPORT
Valuation method of options
The Economic and Parent Entity have in respect of the equity based Options component of Director’s and Officer’s emoluments, valued those
Options using the Black-Scholes Option Pricing Model, which takes account of factors including the options exercise price, the current level and
volatility of the underlying share price, the risk free interest rate, expected dividends on the underlying share, current market price on the
underlying share and expected life of the option.
Details of total options on issue by Jumbuck Entertainment Ltd as at 30 June 2008 is as per below:
2008
Issuing
entity
JMB
JMB
JMB
JMB
JMB
Total
Grant date
05/05/2006
01/06/2006
28/02/2008
28/02/2008
28/02/2008
Number of
shares under
share option
625,002
550,000
536,666
536,667
536,667
2,785,002
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Fair value of
option
154,560
171,733
188,370
514,663
Exercise
price of
option (cents)
248
210
71
77
83
Vesting date
Expiry date of option
30/09/2009
30/09/2007
30/09/2008
30/09/2009
30/09/2010
30/09/2012
01/06/2009
30/09/2010
30/09/2011
30/09/2012
Vesting date
30/09/2008
30/09/2009
30/09/2007
Expiry date of option
30/09/2011
30/09/2012
01/06/2009
2007
Issuing
entity
JMB
JMB
JMB
Total
Grant date
05/05/2006
05/05/2006
01/06/2006
Number of
shares under
share option
683,331
683,338
550,000
1,916,669
Class of
shares
Ordinary
Ordinary
Ordinary
Fair value of
option
703,831
758,505
539,000
2,001,336
Exercise
price of
option (cents)
225
248
210
Conditions of the options:
Each option will convert into 1 ordinary share. The vesting of options will occur in tranches according to the vesting date in the above tables.
Options may be exercised on or after the vesting date but before the expiry date for each tranche. With the exception of the options granted on
01/06/06 the option holder must be an employee of the Company to satisfy the vesting conditions.
Inputs to valuation model of options:
The valuation of the share options issued during FY 2008 has been based on the following parameters: Grant date share price: $0.72, risk free
rate: 6.83%, dividend yield: nil, expected volatility: 58.5%. It has been assumed that options would be exercised after the vesting date when they
are two and a half times the exercise price.
26
ABN 69 092 817 171
2008 ANNUAL REPORT
Non-Executive Director remuneration
The following persons were Non-Executive Directors of the Company at 30 June 2008:
Name
Kevin V Campbell AM
Bruce R Bennie
Position
Chairman
Paul G Choiselat was a Non-Executive Director of the Company from 1 June 2008 to 23 June 2008, having been Managing Director until 31 May
2008.
Remuneration policy
The fees paid to Non-Executive Directors on the Board are based on advice and data from the Group’s remuneration specialists and from external
remuneration advisers. This advice takes into consideration the level of fees paid to Board members of other Australian corporations, the size and
complexity of the Group’s operations, the activities of the Group and the responsibilities and workload requirements of Board members.
Fees are established annually for the Chairman and Non-Executive Directors. The total fees paid by the Group to members of the Board, including
fees paid for their involvement on Board committees, are kept within the total approved by shareholders from time to time. Shareholders approved
a maximum fee pool of $400,000 per annum at the Company’s annual general meeting held on 30 October 2006. There are no retirement
allowance benefits to Non-Executive Directors.
All Directors have flexibility in relation to their remuneration, including the opportunity to set aside additional Company superannuation
contributions.
The appointment letters for the Non-Executive Directors set out the terms and conditions of their appointments. These terms and conditions are in
conjunction with, and subject to, the Company’s constitution and the charters and policies approved by the Board from time to time (refer to the
‘Corporate Governance’ section).
Non-Executive Director remuneration (current and former Non-Executive Directors at 30 June 2008)
Table A above shows details of the nature and amount of each element of the emoluments of each Non-Executive Director of the Company
relating to services provided in the 2007/2008 year. No performance options or performance rights have been granted to Non-Executive Directors
during or since the end of FY2008.
Each Non-Executive Director receives a fee for being a Director of the Company but no additional fees for sitting on or chairing committees. The
Non-Executive Directors also receive superannuation contributions, currently at 9%, and do not receive any other retirement benefits.
27
ABN 69 092 817 171
2008 ANNUAL REPORT
Meetings of Directors
The table below shows the number of Directors’ meetings held (including meetings of Board committees) and number of meetings attended by
each of the Directors of the Company during the year:
DIRECTORS’
MEETINGS
Number Eligible Number
to Attend
Attended
Mr K V Campbell
11
11
Mr B R Bennie
11
11
Mr P G Choiselat
10
10
Hon J G Kennett
11
10
Mr A P Risch
11
11
COMMITTEE MEETINGS
AUDIT & FINANCE
REMUNERATION COMMITTEE GOVERNANCE COMMITTEE
COMMITTEE
Number Eligible Number Number Eligible
Number Number Eligible Number
to Attend
Attended
to Attend
Attended
to Attend
Attended
2
2
2
2
N/A*
N/A*
2
2
2
2
N/A*
N/A*
2
2
2
2
N/A*
N/A*
-
* Corporate governance matters were considered within board meetings during FY2008, as in previous years.
Directors’ and executives’ interests
The tables below show the interests of each Director (as notified to the Australian Stock Exchange in accordance with section 205G(l) of the
Corporations Act) and executives in the issued ordinary shares of the Group as at the date of this report.
Fully Paid Ordinary Shares
110,957
208,889
530,210
5,385,270
2,660,000
5,000
Mr K V Campbell
Mr B R Bennie
Hon J G Kennett
Mr T Kiing
Mr A P Risch
Mr M Doughty
Options
400,000
Options
At 30 June the unissued ordinary shares of Jumbuck under option are:
Grant
Date
Expiry
Date
Exercise
Price
Vesting
Date
EPS hurdle
(cents)
2008
2007
5/05/2006
30/09/2011
225
30/09/2008
12 cents in 2008
-
683,331
5/05/2006
30/09/2012
248
30/09/2009
13 cents in 2009
625,002
683,338
1/06/2006
1/06/2009
210
30/09/2009
None
550,000
550,000
28/02/2008
30/09/2010
71
30/09/2008
None
536,666
-
28/02/2008
30/09/2011
77
30/09/2009
None
536,667
-
28/02/2008
30/09/2012
83
30/09/2010
None
536,667
-
2,785,002
1,916,669
No options have been issued between 30 June 2008 and the date of this report.
Directors’ Interests in Contracts
No material contracts involving Directors’ interests were entered into since the end of the previous financial year, or existed at the end of the year,
other than those transactions detailed in Note 29 of the Financial Statements.
Proceedings on behalf of the Company
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is
a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to
any such proceedings during the year.
28
ABN 69 092 817 171
2008 ANNUAL REPORT
Non-Audit Services
The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision of non-audit services during the year is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
services disclosed below did not compromise the external auditor’s independence for the following reasons:
•
all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure
they do not adversely
affect the integrity and objectivity of the auditor; and
•
the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute
of Chartered Accountants in Australia and CPA Australia’s Professional Statement F1: Professional Independence.
There were no non-audit services paid to the external auditors during the year ended 30 June 2008.
Audit Services
The statement by the Consolidated Entity’s external auditors to the members of Jumbuck in relation to the auditors’ compliance with the
independence requirements of the Corporations Act and the professional code of conduct for external auditors, forms part of this Directors’
Report, and is set out after this Director’s Report on page 30.
No person who was an Officer of the Company during the financial year was a Director or partner of the Group’s external auditor at a time when
the Group’s external auditors conducted an audit of the Group.
This report is made in accordance with a resolution of the Directors and is signed for and on behalf of the Directors.
Dated at Melbourne this 28th day of August 2008.
Adrian Risch
Director
29
ABN 69 092 817 171
2008 ANNUAL REPORT
INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
Notes
Revenues from ordinary activities
COMPANY
2007
2008
2007
$
$
$
$
15,729,891
15,676,391
14,891,550
14,500,585
Accounting and audit fees
(134,844)
(141,697)
(129,793)
(138,947)
Advertising and marketing
(92,647)
(218,304)
(78,892)
(173,536)
(3,744)
(208,336)
(3,112)
(208,336)
(119,048)
(111,025)
(81,068)
(81,370)
Bad and doubtful debts expense
2
CONSOLIDATED
2008
3
Consultants
Depreciation and amortisation expense
3
(1,423,266)
(1,088,086)
(1,277,134)
(978,530)
Employee benefits expense
3
(3,079,781)
(3,601,427)
(4,027,385)
(2,386,785)
(265,261)
(359,056)
(223,754)
(236,087)
(89,780)
(101,458)
(86,872)
(101,126)
(2,046,353)
-
(1,889,979)
-
Legal fees
(83,190)
(234,139)
(75,017)
(225,990)
Occupancy
(532,446)
(480,369)
(188,126)
(192,703)
Other expenses from ordinary activities
(782,525)
(749,552)
(673,088)
(732,535)
Product development
(426,362)
(120,357)
(190,711)
(97,315)
Representation – overseas
(1,532,966)
(870,052)
(1,324,341)
(1,415,517)
Travel and accommodation
(256,438)
(400,936)
(145,670)
(284,370)
Profit before income tax expense
4,861,239
6,991,598
4,496,608
7,247,439
(2,153,523)
(1,995,385)
(2,081,719)
(2,128,949)
2,707,716
4,996,213
2,414,889
5,118,490
Hosting expense
Insurance
Impairment of investment
Income tax expense
4
Profit for the year
Earnings per share
Basic earnings per share (cents per share)
7
5.6
10.3
Diluted earnings per share (cents per share)
7
5.6
10.3
The accompanying notes form part of these financial statements.
31
ABN 69 092 817 171
2008 ANNUAL REPORT
BALANCE SHEET AS AT 30 JUNE 2008
Notes
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
CURRENT ASSETS
Cash and cash equivalents
8
6,709,630
9,225,230
6,260,051
9,121,409
Trade and other receivables
9
4,263,860
4,298,443
14,119,086
13,134,226
Current tax assets
17
33,985
-
14,983
-
Other financial assets
13
51,629
-
51,629
-
Other current assets
10
TOTAL CURRENT ASSETS
269,354
75,333
245,815
55,921
11,328,458
13,599,006
20,691,564
22,311,555
398,063
NON-CURRENT ASSETS
Property, plant and equipment
12
821,704
722,989
409,510
Other financial assets
13
1,138,419
245,320
3,172,304
4
Intangible assets
14
14,386,395
11,004,543
2,561,258
1,744,779
Deferred tax asset
17
79,858
144,748
-
-
TOTAL NON-CURRENT ASSETS
16,426,377
12,117,600
6,143,072
2,142,846
TOTAL ASSETS
27,754,835
25,716,606
26,834,636
24,454,401
785,879
CURRENT LIABILITIES
Trade and other payables
16
2,154,139
853,929
1,883,517
Finance lease liabilities
18
16,734
-
-
-
Current tax liabilities
17
-
1,298,386
-
1,306,227
Other
19
356,927
1,418,588
110,608
60,572
Provisions
20
179,651
173,360
158,509
173,360
2,707,450
3,744,263
2,152,633
2,326,038
468,322
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liability
17
848,410
468,323
848,410
Finance lease liability
18
23,778
-
-
-
872,188
468,323
848,410
468,322
3,579,638
4,212,586
3,001,043
2,794,361
24,175,197
21,504,020
23,833,593
21,660,041
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
21
9,034,446
9,354,173
9,034,446
9,354,173
Retained earnings
22
14,739,463
12,031,747
14,578,055
12,163,167
Reserves
23
TOTAL EQUITY
401,288
118,100
221,092
142,701
24,175,197
21,504,020
23,833,593
21,660,041
32
ABN 69 092 817 171
2008 ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2008
Notes Share Capital
Ordinary
$
Retained
Earnings
$
Foreign
Currency
Equity-settled
Employee
Translation
Reserve
Benefits
Reserve
$
$
Total
$
CONSOLIDATED
Balance at 1 July 2006
222,222 options exercised during the year
21
9,219,173
7,035,534
(7,301)
279,101
16,526,607
135,000
-
-
-
135,000
Profit attributable to members of parent entity
22
-
4,996,213
-
-
4,996,213
Movement in reserves
23
-
-
(257,301)
103,601
(153,700)
9,354,173
12,031,747
(264,602)
382,702
21,504,120
Balance at 30 June 2007
22
-
2,707,716
-
-
2,707,716
Share buy-back
21
(319,727)
-
-
-
(319,727)
23
-
-
204,698
78,390
283,088
9,034,446
14,739,463
(59,904)
461,192
24,175,197
9,219,173
7,044,677
-
39,100
16,302,950
COMPANY
222,222 options exercised during the year
21
135,000
-
-
-
135,000
22
-
5,118,490
-
-
5,118,490
23
-
-
-
103,601
103,601
9,354,173
12,163,167
-
142,701
21,660,041
22
-
2,414,889
-
-
2,414,889
Share buy-back
21
(319,727)
-
-
-
(319,727)
23
-
-
-
78,390
78,390
9,034,446
14,578,056
-
221,091
23,833,593
33
ABN 69 092 817 171
2008 ANNUAL REPORT
CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
Notes
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
15,458,454
12,656,532
13,440,256
11,807,984
Payments to suppliers and employees
(7,004,579)
(6,749,504)
(6,268,451)
(6,020,727)
458,008
370,456
835,623
370,456
(338)
-
-
-
(149,800)
-
(149,800)
-
(3,621,086)
(1,458,130)
(3,099,553)
(1,458,130)
5,140,659
4,819,354
4,758,075
4,699,583
Interest received
Interest on obligations under finance lease
Purchase of foreign currency options
Income tax paid
Net cash provided by operating activities
26
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(300,838)
(277,318)
(190,733)
(133,950)
Payment for development expenses
(1,925,664)
(1,205,671)
(1,914,327)
(765,671)
Payment for acquisition of WAP 3 Community business
(1,353,892)
(358,945)
-
-
(1,016,010)
-
(1,158,381)
(3,003,635)
-
(3,003,635)
52,138
-
52,138
Payment for acquisition of Oztion
15
Payment for investment
Proceeds from sale of investment
Payment to subsidiary
Dividends received
Net cash used in investing activities
-
-
(1,084,766)
215,949
265,075
-
(477,488)
-
(7,331,952)
(1,576,859)
(7,299,706)
(1,377,109)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
21
-
135,000
-
135,000
Payment for share buy-back costs
21
(319,727)
-
(319,727)
-
(4,580)
-
-
-
(324,307)
135,000
(319,727)
135,000
(2,515,600)
3,377,495
(2,861,358)
3,457,474
9,225,230
5,861,118
9,121,409
5,663,935
-
(13,383)
-
-
6,709,630
9,225,230
6,260,051
9,121,409
Repayment of borrowings
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at beginning of financial year
Foreign Exchange impact on cash balances
Cash and cash equivalents at end of financial year
8
34
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards and Interpretations, the
Corporations Act 2001 and complies with other requirements of the law.
The financial report covers the economic entity of Jumbuck Entertainment Ltd and controlled entities, and Jumbuck Entertainment Ltd as an
individual parent entity. Jumbuck Entertainment Ltd is a public company, incorporated and domiciled in Australia.
The financial report includes the separate financial statements of the Company and the consolidated financial statements of the Group.
Accounting standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with A-IFRS ensures
that the financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the directors on 28 August 2008.
Basis of Preparation
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets, financial assets and
financial liabilities for which the fair value basis of accounting has been applied.
In the application of A-IFRS management is required to make judgements, estimates and assumptions about carrying values of assets and
financial instrument. Cost is based on the fair value of the consideration given in exchange for the assets. All amounts are presented in Australian
dollars, unless otherwise indicated.
Judgments made by management in the application of A-IFRS that have significant effects on the financial statements and estimates with a
significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. In the
application of the Group’s accounting policies, which are described below, management is required to make judgements, estimates and
assumptions about carrying values of assets and liabilities that are not readily available from other sources. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognised in the period in
which the estimates is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The
accounting policies have been consistently applied, unless otherwise stated.
Accounting Policies
a.
Principles of Consolidation
A controlled entity is any entity Jumbuck Entertainment Ltd has the power to control the financial and operating policies of so as to obtain
benefits from its activities.
A list of controlled entities is contained in Note 11 to the financial statements.
All inter-company balances and transactions between entities in the economic entity, including any recognised profits or losses, have been
eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those
policies applied by the parent entity.
Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from
the date control was obtained or until the date control ceased.
The investments in controlled entities are measured at cost in the parent entity’s financial report.
35
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
b.
b
.
Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is
calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. 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 is calculated at the tax rates that are expected to apply to the period when the asset is recognise or liability is settled. Deferred
tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax
is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which
deductible temporary differences can be recognised.
The amount of benefits brought to account or which may be recognised in the future is based on the assumption that no adverse change will
occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the
benefit to be recognised and comply with the conditions of deductibility imposed by the law.
Jumbuck Entertainment Ltd and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax
consolidation regime. Each entity in the group recognised its own current and deferred tax liabilities, except for any deferred tax assets
resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group
st
entity is then subsequently assumed by the parent entity. The group entered into the tax consolidation regime from 1 June 2006 and
st
notified the Australian Taxation Office that it had formed an income tax consolidated group to apply from 1 June 2006. The tax will be paid
by the parent entity as the group has not entered into a tax funding agreement. Jumbuck Entertainment Ltd is the designated parent entity
for tax consolidation purposes.
cc.
.
Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from
these assets.
Depreciation
The depreciable amount of all fixed assets including buildings and recognised lease assets, but excluding freehold land, is depreciated on a
straight line basis over their useful lives to the Company commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
Assets under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
The following estimated useful lives are used in the calculation of depreciation:
Class of Fixed Asset
Plant and equipment
Furniture and fittings
Software
Leasehold improvements
dd.
.
Years of useful life
4-5 years
8 years
2-3 years
8 years
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged on a straight line
basis as expenses in the periods in which they are incurred, except where another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised
as an expense in the period in which they are incurred.
36
ABN 69 092 817 171
2008 ANNUAL REPORT
e.
Impairment of Assets
At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired. An impairment of goodwill is not subsequently reversed.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of an
impairment loss is recognised in income.
f.
Financial Assets
Investments are recognised and derecognised on trade date when purchase or sale of an investment is under a contract whose terms
require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of
transaction costs.
Subsequent to initial recognition, investments in subsidiaries are measured at cost.
Other financial assets are classified into the following specific specified categories: financial assets ‘at fair value through profit or loss’, held
to maturity’ investments, ‘available for sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
Financial assets at fair value through profit and loss
Financial assets are classified as financial assets at fair value through profit or loss where the financial assets are a derivative that is not
designated and effective as a hedging instrument. Financial assets at fair value through profit and loss are stated as fair value, with any
resultant gain or loss recognised in profit or loss.
Available for sale financial assets
Certain shares held by the consolidated entity are classified as being available for sale and are stated at fair value less impairment. Gains
and losses arising from changes in fair value are recognised directly in fair value are recognised directly in the available for sale revaluation
reserve, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised
in the available for sale revaluation reserve is included in profit or loss for the period.
Loan and receivables
Trade receivables, loans and other receivables are recorded at amortised cost using the effective interest method less impairment.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected lie of the
financial asset, or where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit or
loss’.
37
ABN 69 092 817 171
2008 ANNUAL REPORT
f.
Financial Assets (Cont.)
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial
recognition of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried at
amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectable, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With exception of available-for-sale equity instruments, if, in subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss
is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
g.
Intangibles
Goodwill
Goodwill on consolidation is initially recorded at the amount by which the purchase price for a business or for an ownership interest in a
controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill is tested annually for impairment or more frequently where indications of impairment exist and carried at cost
less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
Research and Development Expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally generated intangible
asset can be recognised, development expenditure is recognised as an expense in the period as incurred.
Deferred development costs are amortised over the useful life of the product, once the product has been made available for commercial
sale. Research costs are charged to profit before income tax as they are incurred.
An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the
following are demonstrated:
•
•
•
•
•
•
h.
The technical feasibility of completing the intangible asset so that it will be available for use or sale;
The intention to complete the intangible asset or use or sell it;
The ability to use or sell the intangible asset;
How the intangible asset will generate probable future economic benefits;
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible
asset; and
The ability to measure reliably the expenditure attributable to the intangible asset during its development.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars which is Jumbuck Entertainment Ltd’s functional
and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to
be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate
at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is
directly recognised in equity, otherwise the exchange difference is recognised in the income statement.
38
ABN 69 092 817 171
2008 ANNUAL REPORT
h.
Foreign Currency Transactions and Balances (Cont.)
Group companies
The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are
translated as follows:
—
—
—
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in
the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.
i.
Employee Benefits
Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee
benefits expected to be settled within one have been measured at the amounts expected to be paid when the liability is settled. Employee
benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those
benefits.
Contributions made by the Company to employee superannuation funds are charged as expenses when incurred.
The company operates an ownership-based remuneration scheme through the Incentive Option Scheme, details of which are provided in
Note 27 to the financial statements. Other than minimal administration costs, which are expensed when incurred, the plan does not result in
any cash outflow from the Company.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s
best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting
period, based on the consolidated entity’s estimate of shares that will eventually vest.
j.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
k.
Revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying
amount.
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and services tax (GST).
Interest revenue is recognised on a time proportional basis taking into account the effective yield on the financial assets.
l.
m.
Government Grants
Government grants relating to income are recognised as income over the periods necessary to match them with the related costs which they
are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already
incurred for the purpose of giving immediate financial support to the consolidated entity with no future related costs are recognised as
income of the period in which it becomes receivable.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from
the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of
the expense. Receivables and payables in the balance sheet are shown inclusive of GST.
Cash flows are included in the Cash Flow statement on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.
39
ABN 69 092 817 171
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n.
Comparative Figures
Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current
financial year.
o.
Statement of Compliance
Standards and Interpretations issued not yet effective
At the date of authorisation of the financial report, the Standards and Interpretations listed below were in issue but not yet effective. Initial
application of the following Standard will not affect any of the amounts recognised in the financial report, but will change the disclosures presently
made in relation to the Group and the company’s financial report:
AASB Amendments
AASB 101 ‘Presentation of Financial Statements; (revised September 2007),
AASB 2007-8 ‘Amendments to Australian Accounting Standards arising from
AASB101’
AASB 8 ‘Operating Segments, AASB 2007-3 ‘Amendments to Australian
Accounting Standards arising from AASB 8’
Application date of standards
Effective for annual reporting periods beginning on or after 1
January 2009
January 2009
Initial application of the following Standards and Interpretations is not expected to have any material impact on the financial report of the Group and
the company:
AASB Amendments
AASB 123 ‘Borrowing Costs’ (revised) Programmes’, AASB 2007-6
‘Amendments to Australian Accounting Standards arising from AASB 123’
Application date of standards
January 2009
AASB 3 ‘Business Combinations’ and IAS 27 ‘AASB 127 Consolidated and
Separate Financial Statements’ and AASB 2008-3 Amendments to Australian
Accounting Standards arising from AASB 3 and AASB 127.
AASB 2008-1 ‘Amendments to Australian Accounting Standard – Share –based
Payments: Vesting Conditions and Cancellations’
AASB 2008-2 ‘Amendments to Australian Accounting Standard – Puttable
Financial Instruments and Obligations arising on Liquidation’
AASB 3 (business combinations occurring after the
beginning of annual reporting periods beginning 1 July
2009), AASB 127 and AASB 2008-3 (1 July 2009)
January 2009
January 2009
AASB interpretation 13 ‘AASB 13 ‘Customer Loyalty Programmes’
AASB interpretation 12 ‘Service Concession Arrangements’
AASB interpretation 14 ‘AASB 119-The limit on a Defined Benefit Asset,
Minimum Funding Requirements and their interaction’
IFRIC 15 ‘Agreements for the Construction of Real Estate’
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’
January 2008
January 2008
January 2008
January 2009
October 2008
n
.
40
ABN 69 092 817 171
2008 ANNUAL REPORT
Notes
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
NOTE 2: REVENUE
Operating activities
—
Rendering of services
14,971,786
14,832,864
13,975,804
13,989,058
—
Interest received from financial institutions
458,008
373,527
835,623
373,527
—
Dividends, other entities
219,973
332,000
-
-
—
Export Market Development Grant
Total Revenue
80,124
138,000
80,124
138,000
15,729,891
15,676,391
14,891,550
14,500,585
102,195
NOTE 3: PROFIT FROM ORDINARY ACTIVITIES
Profit from ordinary activities before income tax has been determined after:
Depreciation of non-current assets:
—
Plant and Equipment
157,794
152,405
97,989
—
Furniture and Fittings
27,530
9,315
21,232
8,062
—
Other Assets
120,060
99,637
40,374
41,544
—
Leasehold Improvements
20,034
32,020
19,691
32,020
325,418
293,377
179,286
183,821
Total depreciation
Amortisation of intangibles:
—
Development cost – Games
-
13,581
-
13,581
—
Development cost – Messaging
1,097,848
781,128
1,097,848
781,128
Total Amortisation
1,097,848
794,709
1,097,848
794,709
1,423,266
1,088,086
1,277,134
978,530
-
76,556
-
76,556
3,744
208,336
3,112
208,336
323,660
219,626
107,280
88,494
319,223
445,690
312,591
445,690
78,390
114,100
78,390
114,100
Total depreciation and amortisation
Loss on disposal of fixed assets
Bad and doubtful debts:
—
Trade debtors
Rental expense on operating leases
—
Minimum lease payments
Foreign currency translation losses
Employee benefits expense
—
Employee options
—
Other employee benefits expense
Total employee benefits expense
3,001,391
3,487,327
3,948,995
2,272,685
3,079,781
3,601,427
4,027,385
2,386,785
41
ABN 69 092 817 171
2008 ANNUAL REPORT
Notes
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
NOTE 3: PROFIT FROM ORDINARY ACTIVITIES (Cont.)
Finance costs
—
Interest on obligations under finance leases
—
Other interest expenses
338
-
-
-
2,993
-
2,993
-
3,331
-
2,993
-
Loss on disposal of investment
44,315
-
44,315
-
Gain on foreign currency option
25,219
-
25,219
-
Total finance costs
42
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
NOTE 4: INCOME TAX EXPENSE
a.
2007
2008
2007
$
$
$
$
The components of tax expense comprise:
Current tax
Deferred tax relating to the origination and reversal of
temporary differences
Under provision from prior years
b.
COMPANY
2008
1,377,355
2,040,027
1,361,993
2,028,844
436,531
(91,539)
380,089
53,208
339,637
46,897
339,637
46,897
2,153,523
1,995,385
2,081,719
2,128,949
The prima facie tax on profit before income tax is reconciled to income tax expense as follows:
Profit before income tax
4,861,239
6,991,598
4,496,608
7,247,439
Prima facie tax on profit before income tax at 30%
1,458,372
2,097,479
1,348,982
2,174,232
Tax effect of:
Add
—
Non-allowable legal fees
20,897
3,359
20,897
3,359
—
Non-allowable options expense
23,517
34,230
23,517
34,230
—
613,905
-
566,993
-
—
Under provision for income tax in prior year
339,637
46,781
339,637
46,897
—
Entertainment
1,614
-
1,614
-
(227,836)
(129,769)
(227,836)
(129,769)
Less
—
Net R & D allowable items
—
Dividend received not taxable
(65,992)
(60,000)
-
-
—
Others
(10,591)
3,305
7,915
-
2,153,523
1,995,385
2,081,719
2,128,949
Income tax attributable to entity
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits
under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period.
43
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 5: KEY MANAGEMENT PERSONNEL REMUNERATION
a. Names and positions held of Economic and Parent Entity key management personnel in office at any time during the financial year are:
Directors
Kevin V Campbell AM
Paul G Choiselat
Chairman and Non-Executive
Executive Managing Director ( until 31 May 2008, Non-Executive Director 1 June 2008 to 23 June 2008, Resigned 23
June 2008)
Hon Jeffrey G Kennett AC Non-Executive Director
Bruce R Bennie
Adrian P Risch
Executive Director and CEO (appointed CEO 30 July 2007)
C Chan
Company Secretary (resigned 2 May 2008)
O P Hilton
Chief Executive Officer (ceased 30 July 2007)
M Doughty
Chief Financial Officer (also appointed Company Secretary 2 May 2008)
b. Compensation Practices
Refer to Remuneration Report segment of the Directors’ Report.
c. Shares issued on Exercise of Compensation Options
No shares were issued under this category.
d. Options over shares of Jumbuck Entertainment Limited held by Key Management Personnel
2008
Executives
M Doughty
O P Hilton
Total
Balance
01.07.07
666,667
666,667
Options
Granted
Options
Exercised
400,000
400,000
Options
Expired
-
Options
Lapsed*
-
Balance
30.06.08
333,333
333,333
Total Vested
30.06.08
400,000
333,334
733,334
Total
Exercisable
-
-
* Options lapsed due to not meeting KPI hurdle
2007
Non-Executive directors
Hon J G Kennett
Executives
O P Hilton
Total
Balance
01.07.06
Options
Granted
Options
Exercised
Options
Expired
Options
Lapsed*
Balance
30.06.07
Total Vested
30.06.07
Total
Exercisable
222,222
-
222,222
-
-
-
-
-
1,000,000
1,222,222
-
222,222
-
333,333
333,333
666,667
666,667
-
-
222,222 shares of Jumbuck Entertainment Ltd issued during the financial year 2007 from share options exercised at 60.75 cents per share.
44
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 5: KEY MANAGEMENT PERSONNEL REMUNERATION (Cont.)
e. Shareholdings
Number of Shares held by Key Management Personnel:
2008
Balance
01.07.07
No longer key
management
personnel
Received as
Remuneration
Options
Exercised
Net Change
Other*
Balance
30.06.08
208,889
-
-
-
-
208,889
110,957
-
-
-
-
110,957
5,951,123
-
-
(3,559,447)
(2,391,676)
-
427,110
-
-
103,100
-
530,210
A P Risch
2,500,000
-
-
160,000
-
2,660,000
Sub total
9,198,079
-
-
(3,296,347)
(2,391,676)
3,510,056
(5,735)
-
Directors
B R Bennie
K V Campbell
P G Choiselat***(resigned 23/06/08)
Hon J G Kennett
C Chan (resigned 2/05/2008)
O P Hilton (ceased as CEO 30/07/2007)
5,735
-
-
23,000
-
-
-
(23,000)
-
-
-
-
5,000
-
5,000
M Doughty
Sub total
28,735
-
-
5,000
(28,735)
5,000
Total
9,226,814
-
-
(3,291,347)
(2,420,411)
3,515,056
2007
Balance
01.07.06
Received as
Remuneration
Options
Exercised
208,889
-
-
-
-
110,957
-
-
-
-
110,957
5,945,682
-
-
5,441
-
5,951,123
311,188
-
222,222
(106,300)
-
427,110
A P Risch
3,324,417
-
-
(824,417)
-
2,500,000
Sub total
9,901,133
-
222,222
(925,276)
-
9,198,079
Net Change
Other*
Resignation of
KMP
Balance
30.06.07
Directors
B R Bennie
K V Campbell
P G Choiselat
Hon J G Kennett
208,889
C Chan
**10,735
-
-
(5,000)
M A Chuah (resigned 1/12/2006)
100,000
-
-
(24,192)
(75,808)
-
-
-
23,000
O P Hilton
Sub total
Total
23,000
5,735
133,735
-
-
(29,192)
(75,808)
28,735
10,034,868
-
222,222
(954,468)
(75,808)
9,226,814
*
Net Change Other refers to shares purchased or sold during the financial year.
**
The shares were obtained prior to the person appointed as a Key Management Personnel.
At the date of the resignation of P G Choiselat, the right of ANZ to sell P G Choiselat’s interest in 3,559,447 shares was being
disputed by P G Choiselat in the Federal Court.
***
The compensation of the key management personnel of the consolidated and parent entity, is set out below:
There were no shares held nominally at reporting date (2007: NIL).
45
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 5: KEY MANAGEMENT PERSONEL REMUNERATION (Cont.)
CONSOLIDATED & COMPANY
2008
2007
$
$
Salary & fees
Bonus
Superannuation
Options & rights
1,013,620
314,767
191,617
19,478
845,063
337,190
94,959
-
Total Compensation
1,539,482
1,277,212
CONSOLIDATED
NOTE 6: AUDITORS’ REMUNERATION
COMPANY
2008
2007
2008
2007
$
$
$
$
Remuneration of the auditor of the parent entity for:
—
Auditing or reviewing the financial report
—
Other services
64,850
50,000
64,850
28,000
-
-
-
-
64,850
50,000
64,850
28,000
The auditor of the parent entity is Deloitte Touche Tomatsu (2007: Deloitte Touche Tomatsu).
CONSOLIDATED
NOTE 7: EARNINGS PER SHARE
2008
2007
$
$
a. Reconciliation of earnings to net profit
Net Profit
Net Profit attributable to outside equity interest
2,707,716
4,996,213
-
-
Earnings used in the calculation of basic EPS
2,707,716
4,996,213
Earnings used in the calculation of dilutive EPS
2,707,716
4,996,213
48,345,389
48,395,780
26,814
-
48,372,203
48,395,780
b. Weighted average number of ordinary shares outstanding during
the year used in calculation of basic EPS.
Shares deemed to be issued for no consideration in respect of the
employee options.
Weighted average number of ordinary shares outstanding during
the year used in calculation of dilutive EPS.
The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares for the
purpose of diluted earnings per share.
2008
2007
No.
No.
2,785,002
1,916,669
46
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
2008
NOTE 8: CASH AND CASH EQUIVALENTS
COMPANY
2007
$
2008
$
$
2007
$
6,708,106
9,224,564
6,259,000
9,121,256
1,524
666
1,051
153
6,709,630
9,225,230
6,260,051
9,121,409
3,081,603
3,522,510
2,903,362
3,447,394
(18,891)
(193,894)
(18,891)
(193,894)
3,062,712
3,328,616
2,884,471
3,253,500
Other debtors
446,911
225,757
432,851
186,314
Accrued income
739,795
735,249
702,598
692,755
GST receivable
14,442
8,821
26,283
8,821
-
-
10,072,883
8,992,836
4,263,860
4,298,443
14,119,086
13,134,226
Cash at bank
Cash on hand
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
Trade debtors
Allowance for doubtful debts
Loan receivable - Subsidiary companies
Trade debtors are non-interest bearing and are generally on 30 to 60 day terms.
The experience of the Group is that the business model of selling direct to mobile carriers allows very specific identification of problem debts. The
allowance for doubtful debts is made based upon a combination of factors of age of the debt and progress in discussions with carriers.
An allowance has been made for estimated irrecoverable trade receivable amounts. An allowance for doubtful debts of $18,891 (2007: $193,894)
has been recognised by the Group and $18,891 (2007: $193,894) by the Company in profit for the year.
Before accepting new customers, the Group goes through a rigorous process of contract discussion and negotiation which includes ensuring that
the customer is of sufficient viability before agreeing to set up a new service with that customer.
47
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 9: TRADE AND OTHER RECEIVABLES (Cont.)
(a)
Allowance for impairment loss
Trade receivables are non-interest bearing and are generally on 30-60 day terms. A provision for impairment loss is recognised when there is
objective evidence that an individual trade receivable is impaired. An impairment loss of $3,112 (2007: 193,894) has been recognised by the
Group and $3,112 (2007: $193,894) by the Company in the current year.
Movements in the provision for impairment loss were as follows:
Opening balance
Additional provision
Amount written off
Amount recovered
Closing balance
Consolidated
2008
2007
$
$
193,894
7,139
193,894
(178,115)
(4,027)
18,891
193,894
Company
2008
2007
$
$
193,894
7,139
193,894
(178,115)
(4,027)
18,891
193,894
At 30 June, the ageing analysis of trade receivables is as follows:
Consolidated
Current
31-60 days
61-90 days
91 days and over
Closing balance
Company
Current
31-60 days
61-90 days
91 days and over
Closing balance
As at 30 June 2008
Gross
Allowance
$
$
1,893,018
131,770
761,552
295,263
(18,891)
3,081,603
(18,891)
As at 30 June 2007
Gross
Allowance
$
$
2,149,281
(48,150)
204,779
(15,779)
592,407
(24,750)
576,043
(105,215)
3,522,510
(193,894)
As at 30 June 2008
Gross
Allowance
$
$
1,795,501
121,284
730,944
255,632
(18,891)
2,903,361
(18,891)
As at 30 June 2007
Gross
Allowance
$
$
2,074,165
(48,150)
204,779
(15,779)
592,407
(24,750)
576,042
(105,215)
3,447,393
(193,894)
As at 30 June 2008 consolidated entity had debts that were past due but not doubtful in the amount of $862,753 (2007: $674,534). These trade
receivables comprise trade receivables that have a good debt history and are considered recoverable.
NOTE 10: OTHER CURRENT ASSETS
CONSOLIDATED
Prepayments
COMPANY
2008
2007
2008
2007
$
$
$
$
245,815
55,921
269,354
75,333
48
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 11: CONTROLLED ENTITIES
Controlled Entities
Percentage
Owned
Country of Incorporation
2008
2007
-
-
Parent Entity:
Australia
Subsidiaries of Jumbuck Entertainment Ltd:
Jumbuck International Pty Ltd
Australia
100
100
Jumbuck Community GmbH
Germany
100
100
Community Development and Support Ltd
Ukraine
100
100
Jumbuck Share Plan Pty Ltd
Australia
100
100
Jumbuck Entertainment Inc
USA
100
100
Australia
100
-
Oztion Pty Ltd
Controlled Entities Purchased
Oztion Pty Ltd is incorporated and domiciled in Australia. The acquisition of Oztion Pty Ltd is disclosed in Note 15.
Jumbuck Entertainment Inc was incorporated in the prior financial year and domiciled in the USA.
CONSOLIDATED
NOTE 12: PLANT AND EQUIPMENT
COMPANY
2008
2007
2008
2007
$
$
$
$
Plant and equipment
At cost
1,095,002
775,298
642,279
558,019
Accumulated depreciation
(673,523)
(456,926)
(502,005)
(404,017)
421,479
318,372
140,274
154,002
Furniture and Fittings
At cost
232,654
178,484
173,049
150,076
(76,023)
(46,527)
(66,192)
(44,961)
156,631
131,957
106,857
105,115
Software
At Cost
420,790
384,937
192,102
187,844
(299,662)
(172,096)
(149,091)
(108,717)
121,128
212,841
43,011
79,127
At Cost
155,983
73,305
152,545
73,305
(33,517)
(13,486)
(33,177)
(13,486)
122,466
59,819
119,368
59,819
821,704
722,989
409,510
398,063
Leasehold improvements
Total Plant and Equipment
49
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 12: PLANT AND EQUIPMENT (Cont.)
a.
Movements in Carrying Amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial
year:
Year ended 30 June 2008
Plant and
Equipment
Furniture and
Fittings
Software
Leasehold
Improvements
Total
$
$
$
$
$
Balance at the beginning of year
318,372
131,957
212,841
59,819
722,989
Additions
162,481
34,022
12,301
82,681
291,486
Acquisition through business combination
105,323
13,387
5,834
-
124,544
(7,748)
4,219
3,529
-
-
(157,794)
(27,530)
(120,060)
(20,034)
(325,418)
845
575
6,683
-
8,103
421,479
156,631
121,128
122,466
821,704
Disposals/Transfers
Depreciation expense
Net foreign exchange differences
Carrying amount at the end of year
Plant and
Equipment
Furniture and
Fittings
Software
Leasehold
Improvements
Total
$
$
$
$
$
COMPANY
154,002
105,115
79,127
59,819
398,063
84,261
22,974
4,258
79,240
190,733
-
-
-
-
-
(97,989)
(21,232)
(40,374)
(19,691)
(179,286)
140,274
106,857
43,011
119,368
409,510
Additions
Disposals/Transfers
50
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 12: PLANT AND EQUIPMENT (Cont.)
a.
Movements in Carrying Amounts (Cont.)
Plant and
Equipment
Furniture and
Fittings
Software
Leasehold
Improvements
Total
$
$
$
$
$
319,727
44,407
230,983
220,487
Additions
151,050
29,438
81,495
15,335
277,318
-
67,427
-
(143,983)
(76,556)
(152,405)
(9,315)
(99,637)
(32,020)
(293,377)
318,372
131,957
212,841
59,819
722,989
Disposals/Transfers
815,604
Plant and
Equipment
Furniture and
Fittings
Software
Leasehold
Improvements
Total
$
$
$
$
$
COMPANY
Additions
Disposals/Transfers
b.
213,072
41,275
45,961
220,487
43,125
780
74,710
15,335
520,795
133,950
-
71,122
-
(143,983)
(72,861)
(102,195)
(8,062)
(41,544)
(32,020)
(183,821)
154,002
105,115
79,127
59,819
398,063
Impairment losses
There have been no impairment losses for this financial year ended 30 June 2008 (2007: NIL).
51
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
NOTE 13: OTHER FINANCIAL ASSETS
COMPANY
2008
2007
2008
2007
$
$
$
$
CURRENT OTHER FINANCIAL ASSETS
Foreign currency option
-
51,629
-
51,629
1,138,419
245,320
3,172,304
82,000
245,320
-
-
-
-
2,115,885
4
82,000
245,320
2,115,885
4
1,056,419
-
1,056,419
-
NON CURRENT OTHER FINANCIAL ASSETS
Available-for-sale financial assets
a.
b.
4
Investment in unlisted entities
—
Shares in other corporations – fair value
—
Shares in controlled entities - cost
Investment in listed entities carried at fair value
—
Shares in other entities
During the year, the Company purchased 26,410,477 Mobileactive Ltd shares. Mobileactive Ltd ( ASX: MBA) is listed on the ASX. The total cost
incurred for the purchase of Mobileactive Ltd investment was $2,946,398 which is an average share price of 11 cents per share. As at 30 June
2008, the quoted market share price is 4 cents. The Company has assessed the recoverable amount of the investment and determined that the
investment in Mobileactive Ltd is impaired based on the market quoted share price. The Company has recognised an impairment of $1,889,979
for investment in Mobileactive Ltd through the profit and loss as the amount is significant. The Company has also assessed the recoverable
amount for its investment in 10% in WAP 3 Germany shareholding and determined that the WAP 3 Germany investment is impaired. $156,374
impairment for WAP 3 Germany has been charged to the profit and loss.
The Company purchased a strip of foreign currency options during the year to manage the risk of fluctuation in USD exchange rate. The fair value
of the remaining foreign currency option outstanding as at reporting date is $51,629 with a face value of USD610,000 at a strike price of 0.8875.
The expiration of this option is on 10 July 2008.
52
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 14: INTANGIBLES
Goodwill
Note
Development
Costs
$
$
Total
$
CONSOLIDATED
Gross carrying value
Additions from Internal developments
Additions from acquisitions - Goodwill
Effect of movement in foreign currency exchange rate
8,128,333
1,414,847
(283,416)
2,509,202
1,205,671
-
10,637,535
1,205,671
1,414,847
(283,416)
9,259,764
3,714,873
12,974,637
Accumulated amortisation and impairment
Amortisation expense
-
(1,175,385)
(794,709)
(1,175,385)
(794,709)
-
(1,970,094)
(1,970,094)
Net book value
8,128,333
1,333,817
9,462,150
9,259,764
1,744,779
11,004,543
Additions from acquisitions
Effect of movement in foreign exchange rate
9,259,764
2,379,728
174,309
3,714,873
1,925,663
-
12,974,637
1,925,663
2,379,728
174,309
11,813,801
5,640,536
17,454,337
-
(1,970,094)
(1,970,094)
-
(1,097,848)
(1,097,848)
-
(3,067,942)
(3,067,942)
9,259,764
1,744,779
11,004,543
11,813,801
2,572,594
14,386,395
15
Net book value
53
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 14: INTANGIBLES (Cont.)
Goodwill
$
Development
$
Total
$
PARENT
-
2,509,202
2,509,202
-
1,205,671
1,205,671
-
3,714,873
3,714,873
-
(1,175,385)
(1,175,385)
-
(794,709)
(794,709)
-
(1,970,094)
(1,970,094)
-
1,333,817
1,333,817
-
1,744,779
1,744,779
-
3,714,873
3,714,873
-
1,914,327
1,914,327
-
5,629,200
5,629,200
-
(1,970,094)
(1,970,094)
-
(1,097,848)
(1,097,848)
-
(3,067,942)
(3,067,942)
-
1,744,779
1,744,779
-
2,561,258
2,561,258
Net book value
Net book value
For details of goodwill acquired refer to note 15.
54
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 14: INTANGIBLES (Cont.)
Goodwill relates to the acquisition of Oztion Pty Ltd during the year and WAP 3 Community business in the prior financial year. The goodwill
represents the excess of the acquisition price over the fair value of the net assets purchased. Goodwill represents the expected future economic
benefits arising from the integration of Oztion Pty Ltd and WAP 3 Community business with the business previously operated by Jumbuck
Entertainment Ltd. These synergies include new mobile applications for carriers and access to foreign markets and foreign language services. For the
purpose of impairment, goodwill has been allocated to the following cash generating units:
-
Chat and dating communities
Auction website
Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for these intangible assets are included under
depreciation and amortisation expense per the income statement. Goodwill has an indefinite life.
There were no impairment indications as at 30 June 2008 on intangible assets held by Jumbuck Entertainment Ltd (2007: NIL). The discounted cash
flow method of calculation was used to confirm that the carrying value of assets in the books of the Company was not greater than its recoverable
amount. These revenues and costs have been forecast on the basis of historical data and the budgets set in long term business plans. For chat and
dating communities, a 2.5% growth has been used for revenue and costs. A 15% discount rate has been used when calculating discounted net cash
flows. For auction website, an average of 4% growth rate has been used for revenue and costs. A 20% discount rate has been used when calculating
discounted net cash flows. For both cash generating units, management believes that any reasonably possible change in the key assumptions on
which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash
generating units.
55
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 15: ACQUISITION OF BUSINESS
Name of business acquired
Principal Activity
Date of acquisition
Proportion of shares
acquired
Cost of acquisition
2008
Oztion Pty Ltd
Trading website
02/06/2008
100%
-
-
2,115,881
2007
-
-
-
On 2 June 2008, the Company acquired the auction website business for the total consideration of $2,115,881. The acquisition net assets were
provisionally ascribed the following valuations:
Net assets acquired
Book value
Fair value adjustments
Fair value acquisition
$'000
$'000
$'000
Current assets
142,372
-
142,372
72,480
-
72,480
136,701
(12,158)
124,543
Non-current assets
Plant & equipment
Current liabilities
Trade & other payables
(276,811)
-
(276,811)
Provision for marketing expense
-
(281,000)
(281,000)
Provision for annual leave
-
(45,431)
(45,431)
74,742
(338,589)
(263,847)
Goodwill on acquisition
2,379,728
2,115,881
Net cash flow on acquisition
Total purchase consideration
2,115,881
Less: non-cash consideration
(957,500)
Consideration paid in cash
1,158,381
Less: cash and cash equivalent balances acquired
(142,371)
1,016,010
56
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 15: ACQUISITION OF BUSINESS (Cont.)
The initial accounting for the acquisition of Oztion Pty Ltd has only been provisionally determined at reporting date. Oztion Pty Ltd became wholly
owned on acquisition and has joined the company's tax consolidation group.
The Group has paid a premium for the acquiree as it believes the acquisition will create synergistic benefits to its existing operations.
Included in the net profit for the period is $6,711 loss attributable to Oztion Pty Ltd. Synergistic benefits had not been created given that Oztion Pty
Ltd was only acquired one month prior to the financial year end.
Had the business combination been effected at 1 July 2007, the revenue of the Group would be $16,293,801 and net profit $2,690,211. The
directors of the Group consider these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an
annualised basis and to provide a reference point for comparison in future periods.
NOTE 16: TRADE AND OTHER PAYABLES
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
CURRENT
Unsecured liabilities
Trade payables
414,338
113,694
407,406
113,694
Other payables
1,738,848
719,010
1,475,159
650,960
952
21,225
952
21,225
2,154,139
853,929
1,883,517
785,879
Amounts payable to director related entities
a)
Trade payables and amounts payable to director related entities
Trade payables are non-interest bearing and are normally settled within 30 to 60 days of recognition.
b)
Other payables
Other payables are non-interest bearing and have an average term of 3 months.
57
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
NOTE 17: TAX
a.
Liabilities
CURRENT
Income tax (receivable)/payable
(33,985)
1,298,386
(14,983)
1,306,227
Opening balance
144,748
-
-
-
Charge to income
(64,890)
144,748
-
-
79,858
144,748
-
-
Opening balance
468,322
415,114
468,322
415,114
Charged to income
380,088
53,209
380,088
53,208
Closing balance
848,410
468,323
848,410
468,322
b.
Deferred tax balances
Deferred tax asset comprises:
Closing balance
Deferred tax liability comprises:
58
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 17: TAX (Cont.)
Taxable and deductible temporary differences arise from the following:
CONSOLIDATED
i)
COMPANY
2008
2007
2008
2007
$
$
$
$
Deferred tax liabilities
Gross deferred tax liabilities
Opening balance
Bad debt provision
Capitalisation of development cost
Employee benefits
1,381,770
58,168
574,298
792,499
361,701
1,347,207
58,168
574,298
792,499
361,701
154,666
66,816
154,666
66,816
98,485
96,902
54,249
62,339
Government grant
38,690
48,675
38,690
48,675
Other
27,586
15,177
27,586
15,177
2,333,662
1,381,770
2,254,864
1,347,207
377,385
Closing balance
Gross deferred tax assets
Opening balance
913,448
377,385
878,885
Options expense
8,123
-
8,123
-
Bad debt provision
5,667
58,168
5,667
58,168
329,354
238,413
329,354
238,413
Employee benefits
73,075
69,324
73,075
69,324
98,021
89,709
53,786
55,146
Government grant
26,860
41,775
26,860
41,775
Other
30,703
38,673
30,703
38,674
1,485,252
913,447
1,406,454
878,885
848,410
468,323
848,410
468,322
Amortisation of development cost
Closing balance
Net deferred tax liability
ii)
Deferred tax assets
Gross deferred tax assets
Opening balance
144,748
-
-
-
Overseas subsidiary losses carried forward
(64,890)
144,748
-
-
79,858
144,748
-
-
Closing balance
c)
Unrecognised temporary difference
At 30 June 2008, there were no unrecognised temporary differences associated with the Group’s investments in subsidiaries as the Group has no
liability for additional taxation should unremitted earnings be remitted. (2007: NIL).
59
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 18: FINANCE LEASE LIABILITIES
Finance leases relates to server equipments with lease terms of 3 years. The Group has options to purchase the equipment for a nominal amount
at the conclusion of the lease agreements. The Group's obligation under lease under finance leases are secured by the lessor's title to the leased
assets.
Present value of minimum future lease
payments
Minimum future lease payments
Consolidated
Company
Consolidated
Company
2008
2007
2008
2007
2008
2007
2008
2007
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
No later than 1 year
19,805
-
-
-
16,734
-
-
-
Later than 1 year and not later than 5 years
24,785
-
-
-
23,778
-
-
-
-
-
-
-
-
-
-
-
44,590
-
-
-
40,512
-
-
-
-
-
-
-
-
-
-
-
44,590
-
-
-
40,512
-
-
-
Current finance lease liabilities
16,734
-
-
-
Non-current finance lease liabilities
23,778
-
-
-
40,512
-
-
-
Later than 5 years
Minimum future lease payments
Less future finance charges
Present value of minimum lease payments
Included in the balance sheet as:
CONSOLIDATED
2008
2007
$
COMPANY
$
2008
2007
$
$
NOTE 19: OTHER
CURRENT
Billings in Advance
Provision for WAP 3 earn out
Provision for marketing expenses
126,364
230,563
81,388
1,337,200
-
110,608
-
60,572
-
356,927
1,418,588
110,608
60,572
On 1 June 2006 the Company acquired the trading business and certain assets of WAP 3 Technologies GmbH. The purchase agreement for the WAP 3
Community business provide for deferred earned out payments tied to its performance until May 2007.
NOTE 20: PROVISIONS
CURRENT
Employee entitlements
179,651
173,360
158,509
173,360
a.
Aggregate employee benefits liability
179,651
173,360
158,509
173,360
b.
Number of employees at year-end
56
44
56
44
- Casual employees
- Full time employees
Total employees
72
78
17
19
128
122
73
63
60
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 21: ISSUED CAPITAL
CONSOLIDATED
Note
48,020,105 (2007:48,484,670) Fully paid ordinary
shares
21a
COMPANY
2008
2007
2008
2007
$
$
$
$
9,034,446
9,354,173
9,034,446
9,354,173
9,354,173
9,219,173
9,354,173
9,219,173
-
135,000
-
135,000
184,765 shares cancelled under share buyback on 05/03/08
(128,064)
-
(128,064)
-
(44,018)
-
(44,018)
-
(35,077)
-
(35,077)
-
(56,086)
-
(56,086)
-
(27,279)
-
(27,279)
-
(20,848)
-
(20,848)
-
(7,582)
-
(7,582)
-
(582)
-
(582)
-
300 shares cancelled under share buyback on 22/04/08
(191)
-
(191)
-
9,034,446
9,354,173
9,034,446
9,354,173
a. Ordinary shares
At the beginning of the reporting period
222,222 options exercised on 24/11/06
At reporting date
No.
No.
No.
No.
48,484,670
48,262,448
48,484,670
48,262,448
-
222,222
-
222,222
(184,765)
-
(184,765)
-
(62,800)
-
(62,800)
-
(50,000)
-
(50,000)
-
(84,130)
-
(84,130)
-
(38,945)
-
(38,945)
-
(30,000)
-
(30,000)
-
(12,625)
-
(12,625)
-
(1,000)
-
(1,000)
-
(300)
-
(300)
-
48,020,105
48,484,670
48,020,105
48,484,670
No of shares at the beginning of reporting period
300 shares cancelled under share buyback on 22/04/08
At reporting date
61
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 21: ISSUED CAPITAL (Cont.)
a.
Ordinary shares (Cont.)
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.
Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
b.
Options
No of options at the beginning of reporting period
2008
2007
No.
No.
1,916,669
2,822,222
-
(222,222)
1,640,000 options granted on 28/02/08
1,640,000
-
771,667 options lapsed on 30/06/08
(771,667)
(683,331)
At reporting date
2,785,002
1,916,669
i. For information relating to the Jumbuck Entertainment Ltd Incentive Option Scheme, including details of options issued, exercised and lapsed
during the financial year and the options outstanding at year-end, refer to Note 27.
ii. For information relating to share options issued to directors including details of options issued, exercised and lapsed during the financial year
and the options outstanding at year-end, refer to Note 27.
iii .At 30 June 2008, there were 2,785,002 unissued ordinary shares for which options were outstanding. (2007:1,916,669).
.
62
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 21: ISSUED CAPITAL (Cont.)
2008
Vested at 30 June 2008
Grant
Date
Expiry
Date
Exercise
Price
(cents)
Balance
01.07.07
Options
Granted
Options
Exercised
Total
Balance
30.06.08
Options
Lapsed
Total
Exercisable
Not
Exercisable
Directors
None
Employees, former employees and consultants
05/05/2006
30/09/2011
255
683,331
-
-
(683,331)
-
-
-
-
05/05/2006
30/09/2012
248
683,338
-
-
(58,336)
625,002
625,002
-
625,002
01/06/2006
30/09/2009
210
550,000
-
-
-
550,000
550,000
-
550,000
28/02/2008
30/09/2010
71
-
546,666
-
(10,000)
536,666
536,666
-
536,666
28/02/2008
30/09/2011
77
-
546,667
-
(10,000)
536,667
536,667
-
536,667
83
-
546,667
-
(10,000)
536,667
536,667
-
536,667
1,916,669
1,640,000
-
( 771,667)
2,785,002
2,785,002
-
2,785,002
28/02/2008
30/09/2012
Total
2007
Vested at 30 June 2007
Grant
Date
Expiry
Date
Exercise
Price
(cents)
Balance
01.07.06
Options
Granted
Options
Exercised
Total
Balance
30.06.07
Options
Lapsed
Total
Exercisable
Not
Exercisable
-
Directors
24/05/2004
18/12/2006
60.75
222,222
-
(222,222)
-
-
-
-
Employees, former employees and consultants
05/05/2006
30/09/2010
205
683,331
-
-
(683,331)
-
-
-
05/05/2006
30/09/2011
225
683,331
-
-
-
683,331
683,331
-
683,331
05/05/2006
30/09/2012
248
683,338
-
-
-
683,338
683,338
-
683,338
01/06/2006
01/06/2009
210
550,000
-
-
-
550,000
550,000
-
550,000
2,600,000
-
-
(683,331)
1,916,669
1,916,669
-
1,916,669
2,822,222
-
(222,222)
( 683,331)
1,916,669
1,916,669
-
1,916,669
Total
63
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
Note
NOTE 22: RETAINED EARNINGS
Retained profits at the beginning of the financial year
COMPANY
2008
2007
2008
2007
$
$
$
$
12,031,747
7,035,534
12,163,167
7,044,677
2,707,716
4,996,213
2,414,889
5,118,490
14,739,463
12,031,747
14,578,055
12,163,167
Employee equity settled benefits
461,192
382,702
221,091
142,701
Foreign currency translation
(59,904)
(264,602)
-
-
401,288
118,100
221,091
142,702
382,802
279,01
142,701
39,100
78,390
103,601
78,390
103,601
461,192
382,702
221,091
142,701
Net profit attributable to the members of the entity
Retained profits at the end of the financial year
NOTE 23: RESERVES
Employee equity settled benefits reserve
Opening balance at beginning of the year
Share based payment
a
Balance at end of the financial year
a. Employee equity settled benefits reserve arises on the grant of share options to directors and employees under the Jumbuck incentive
option scheme. Amounts are transferred out of the reserve and into issued capital when the options are exercised. Further information about
share based payments to employees is in note 27 to the financial statements.
Foreign currency translation reserve
Opening balance at beginning of the year
Foreign currency translation
Balance at end of the financial year
`
(264,602)
(7,301)
-
-
204,698
(257,301)
-
-
(59,904)
(264,602)
-
-
Exchange differences relating to the translation of foreign controlled entities into Australian dollars are brought to account by entries made
directly to the foreign currency translation reserve.
UAH (Ukrainian Hryrnia) is the functional currency of the economic entity’s foreign controlled entity, Community Development and Support
Ltd. The Euro is the functional currency of the economic entity’s foreign controlled entity, Jumbuck Community Gmbh and USD is the
functional currency of the economic entity’s foreign controlled entity, Jumbuck Entertainment Inc.
64
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
NOTE 24: CAPITAL AND LEASING COMMITMENTS
COMPANY
2008
2007
2008
2007
$
$
$
$
Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements
Payable
—
Not later than 1 year
221,032
217,585
92,128
88,290
—
Later than 1 year but under 5 years
410,840
496,475
290,138
353,160
631,872
714,060
382,266
441,450
-
-
-
-
Total non capitalised commitment
Capital commitments
The Group has entered into commercial property leases. These non cancellable leases have remaining terms of between 1 and 5 years. All
leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.
NOTE 25: SEGMENT REPORTING
Primary reporting — Business segment
The Company has only one business segment:
- Mobile Data Service Provider
Secondary reporting — Geographical segments
Segment Revenues from
External Parties
Carrying Amount
of Segment Assets
Acquisitions of
Non-Current Segment
Assets
2008
2007
2008
2007
2008
2007
$
$
$
$
$
$
Geographical location:
Australia
1,386,974
1,307,549
13,634,117
11,736,605
191,835
299,855
301,538
52,285
83,955
-
-
Europe
5,364,768
5,955,026
11,957,161
11,639,539
99,652
135,563
The Americas
8,678,139
8,112,050
1,997,245
2,111,595
-
7,805
155
228
184
163
-
-
15,729,891
15,676,391
27,640,992
25,571,858
291,487
277,368
Asia Pacific
Middle East
133,950
The Company’s business is located in Australia, with mobile data services being exported to other countries.
Accounting Policies
Segment assets include all assets used by a segment and consist principally of cash, receivables, inventories, intangibles and property, plant and
equipment, net of allowances and accumulated depreciation and amortisation. While most such assets can be directly attributed to individual
segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis.
Segment liabilities consist principally of accounts payable, employee entitlements, accrued expenses, provisions and borrowings. Segment assets
and liabilities do not include deferred income taxes and current taxes.
Intersegment Transfers:
There are no intersegment transfers.
65
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
COMPANY
2008
2007
2008
2007
$
$
$
$
NOTE 26: CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations to Profit before
Income Tax
Profit before income tax
4,861,239
6,991,598
4,496,607
7,274,249
325,419
1,097,848
(215,949)
78,391
2,046,353
44,315
(25,219)
293,377
794,709
68,505
(332,000)
-
179,286
1,097,848
78,391
1,889,979
44,315
(25,219)
183,821
794,709
68,505
-
(Increase)/decrease in trade and other debtors
34,583
(1,647,340)
(756,202)
(2,254,009)
Increase/(decrease) in trade creditors and accruals
77,235
(204,046)
1,209,314
(222,243)
(194,021)
(13,312)
(189,895)
(13,312)
444,977
-
380,088
-
(3,485,895)
(1,139,636)
(3,631,587)
(1,139,636)
Cash flows excluded from profit from ordinary activities attributable
to operating activities:
Non-cash flows in profit from ordinary activities
Depreciation
Amortisation of intangible assets
Loss on disposal of fixed assets
Dividend received
Loss on revaluation of share options
Loss on disposal of investment
Gain on foreign currency option
Changes in assets and liabilities, net of the effects of purchase and
disposal of subsidiaries
(Increase)/decrease in prepayments
(Increase)/decrease in deferred tax asset
Increase/(decrease) in provision for Income tax
Increase/(decrease) in provisions
Increase/(decrease) in finance lease liabilities
Cash flow from operations
6,291
7,499
(14,850)
7,499
45,092
-
-
-
5,140,659
4,819,354
4,758,075
4,699,583
66
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 27: EMPLOYEE BENEFITS
.
Jumbuck Entertainment Ltd has established an employee option plan called the Jumbuck Incentive Option Scheme (“Scheme”). The Scheme is
designed to provide a long-term incentive for employees and Directors of Jumbuck Entertainment Ltd. It allows them to participate in Jumbuck
Entertainment Ltd’s future growth and provides them with an incentive to increase profitability and returns to shareholders. Full time employees,
part-time employees, directors and contractors of Jumbuck Entertainment Ltd and controlled entities are eligible to participate in the Scheme.
Notwithstanding their eligibility to participate, the Directors have elected not to do so and instead submit recommendations for the grant of options
for shareholder approval pursuant to ASX Listing Rule 10.17.
The entitlement of eligible participants under the Scheme is at the absolute discretion of the Directors.
The exercise price of each option offered pursuant to the Scheme is also at the discretion of the Directors.
The total number of options which may be issued under the Scheme may not exceed 5% of the total number of issued shares in Jumbuck
Entertainment Ltd as at the time of the proposed offer or issue.
In addition to the share options issued under the Scheme, the Directors have chosen to issue 1,100,000 share options to four key senior
managers under section 708(12a) of the Corporations Act. These share options have the same exercise terms as the Scheme share options.
The options hold no voting or dividend rights, and are not transferable.
None of the directors held share options during the current or previous financial year.
CONSOLIDATED
2008
COMPANY
2007
2008
2007
Movement in the number of share options held by employees, former employees and consultants are as follows:
Opening balance
1,916,669
2,600,000
1,916,669
2,600,000
Granted during the year
1,640,000
-
1,640,000
-
-
-
-
-
Lapsed during the year
(771,667)
(683,331)
(771,667)
(683,331)
Closing Balance
2,785,002
1,916,669
2,785,002
1,916,669
Exercised during the year
The weighted average exercise price of options outstanding at 30 June 2008 is $1.42 (2007: $1.49).
Details of share options held by employees, former employees, consultants and former
directors outstanding as at end of year:
For those share options with an EPS hurdle, if the EPS hurdle is not met the share options lapse.
Grant Date
Expiry Date
Exercise
Price
(cents)
Fair Value
at Grant
Date
(cents)
Vesting
Date
EPS hurdle
CONSOLIDATED
2008
2007
COMPANY
2008
2007
5/05/2006
30/09/2011
225
103
30/09/2008
12 cents in 2008
-
683,331
683,331
683,331
5/05/2006
30/09/2012
248
111
30/09/2009
13 cents in 2009
625,002
683,338
683,338
683,338
1/06/2006
1/06/2009
210
98
30/09/2009
None
550,000
550,000
550,000
550,000
28/02/2008
30/09/2010
71
29
30/09/2008
None
536,666
-
-
-
28/02/2008
30/09/2011
77
32
30/09/2009
None
536,667
-
-
-
28/02/2008
30/09/2012
83
35
30/09/2010
None
536,667
-
-
-
2,785,002 1,916,669
1,916,669
1,916,669
67
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 27: EMPLOYEE BENEFITS (Cont.)
Valuation method of options
The Economic and Parent Entity have in respect of the equity based Options component of Director’s and Officer’s emoluments, valued those
Options using the Black-Scholes Option Pricing Model, which takes account of factors including the options exercise price, the current level and
volatility of the underlying share price, the risk free interest rate, expected dividends on the underlying share, current market price on the
underlying share and expected life of the option.
Conditions of the options:
Each option will convert into 1 ordinary share. The vesting of options will occur in tranches according to the vesting date in the above tables.
Options may be exercised on or after the vesting date but before the expiry date for each tranche. With the exception of the options granted on
01/06/06 the option holder must be an employee of the Company to satisfy the vesting conditions.
Inputs to valuation model of options:
The valuation of the share options issued during FY 2008 has been based on the following parameters: Grant date share price: $0.72, risk free
rate: 6.83%, dividend yield: nil, expected volatility: 58.5%. It has been assumed that options would be exercised after the vesting date when they
are two and a half times the exercise price.
NOTE 28: EVENTS SUBSEQUENT TO REPORTING DATE
On 1 July 2008 the Company acquired 100% of the share capital of Norwegian based Plutolife AS and its subsidiary companies. The initial
consideration was $2,061,856 in cash. There is a further cash consideration payment of $1,134,020 due to the vendors of Plutolife AS on 1 July
2009.
In addition there is an earn out payable to three of the vendors who are involved in the active management of Plutolife AS. All earn out
payments are to be made in cash and depend on the revenue and profitability of Plutolife in the 18 months post acquisition. The earn out
payments are due in January 2010.
The acquired net assets were provisionally ascribed the following valuations:
Book
Fair
Value
Value
$
$
Current assets
Trade debtors
Prepayments and other receivables
575,575
554,707
49,874
43,056
625,449
597,763
430,833
203,926
16,065
16,065
Tax asset
520,528
520,528
Total Non-current assets
967,426
740,519
1,592,875
1,338,282
Total current assets
Non current assets
Other intangible assets
Tangible fixed assets
Total assets
Current liabilities
Trade payables
(178,476)
(178,476)
Accrued expenses
(328,732)
(328,732)
Cash at bank
(227,000)
(227,000)
Total current liabilities
(734,208)
(734,208)
68
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 28: EVENTS SUBSEQUENT TO REPORTING DATE (Cont.)
Book
Fair
Value
Value
$
$
Non-current liabilities
Long-term debt
-
-
Total non current liabilities
-
-
Total liabilities
NET ASSETS
(734,208)
(734,208)
858,667
604,074
EQUITY
Share capital
114,516
Share premium
62,928
Uncovered loss
681,222
TOTAL EQUITY
858,666
Net Assets Acquired
604,073
Consideration Paid
3,603,093
Goodwill on acquisition
2,999,020
Consideration satisfied by:
Cash (including deferred payment)
Transaction costs incurred
3,195,876
407,216
3,603,093
The Company has paid a premium for the acquisition of Plutolife AS and its subsidiaries as it believes the acquisition will introduce additional
revenue and profitability to the Jumbuck group through cross marketing of products and wider geographical spread of revenues.
69
ABN 69 092 817 171
2008 ANNUAL REPORT
CONSOLIDATED
NOTE 29: RELATED PARTY TRANSACTIONS
COMPANY
2008
2007
2008
2007
$
$
$
$
Transactions between related parties are on normal commercial terms and
conditions no more favourable than those available to other parties unless
otherwise stated.
Transactions with related parties:
i. Director Related Entities:
Fees charged at arms length were paid to Q Ltd (a company associated with
Messrs Campbell, Bennie, Choiselat and Kennett, directors of Jumbuck
Entertainment Ltd) for printing services throughout the year.
-
21,774
-
21,774
403,846
417,476
403,846
417,476
3,510,056
9,198,079
3,510,056
9,198,079
-
-
-
-
Mr Choiselat, by virtue of being a Director of, and a shareholder in Beconwood
Securities Pty Ltd (formally a substantial shareholder in Jumbuck Entertainment
Ltd) had an interest in the fees and /or commercial benefits arising from the
following arrangements :Beconwood Securities Pty Ltd had an arrangement to supply certain facilities and
services to Jumbuck Entertainment Ltd, which were on normal commercial terms
and conditions no more favourable than those available to other parties. Total paid
to Beconwood Securities Pty Ltd.
ii. Share Transactions of Directors:
Directors and director related entities hold directly, indirectly or beneficially as at
the reporting date the following equity interests in members of the Company:
— ordinary shares
— options over ordinary shares
Directors and their related entities:
a)
Acquired 296,000 ordinary shares during the year
b)
No options were issued to directors and their related entities during the year.
During the year, the following transactions occurred between the Company and its other related parties:
a)
During the financial year, a loan totalling $333,244 was made from Jumbuck Entertainment Ltd to Jumbuck Entertainment Inc (2007:
$163,572). Service charges of $353,653 (2007: NIL) and interest income of $6,537 (2007: NIL) were charged from Jumbuck Entertainment
Limited to Jumbuck Entertainment Inc. Service charges from Jumbuck Entertainment Inc to Jumbuck Entertainment Limited during the year
were $689,124 (2007: NIL).
b)
A loan of $733,961 was made from Jumbuck Entertainment Ltd to Jumbuck Community Gmbh (2007: $132,321). A loan of $300,000 was
made from Jumbuck Entertainment Ltd to Jumbuck Community Gmbh through Jumbuck International Pty Ltd in previous financial year.
Service charges of $348,340 (2007:$198,359) and interest income of $372,133 (2007:$169,035) were charged from Jumbuck Entertainment
Limited to Jumbuck Community Gmbh. Service charges from Jumbuck Entertainment Limited to Jumbuck Community Gmbh during the year
were $1,170,620 (2007: $132,321).
c)
A loan of $97,109 was made from Jumbuck Entertainment Ltd to Oztion Pty Ltd (2007: NIL).
d)
During the financial year, service charges were made from Community Development and Support Ltd to Jumbuck Entertainment Ltd of
$875,944 (2007: $635,005).
The balances arising from transactions between the Company and its other related parties are outstanding at reporting date for current loans
totalling $10,072,883 are receivable from its other related party companies (2007: $8,992,836).
70
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 30: FINANCIAL INSTRUMENTS
Financial Risk Management Objectives and Policies
The Group's principal financial instruments comprise receivables, payables, cash and short-term deposits, finance lease and available for sale
financial assets. These activities expose the Group to a variety of financial risks: market risk (including currency risk, interest rate risk and price
risk), credit risk and liquidity risk.
The group do not have formal documented policies and procedures for the management of risk associated with financial instruments. However,
the Board has responsibility for managing the different types of risks to which the Group is exposed. These responsibilities include considering
risk and monitoring levels of exposure to interest rate risk, foreign exchange rate risk and by being aware of market forecasts for interest rate,
foreign exchange and commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk,
liquidity risk is monitored through general business budgets and forecasts.
The group and the parent entity hold the following financial instruments:
Consolidated
2008
2007
$
$
Company
2008
$
2007
$
Financial Assets
6,709,630
9,225,230
6,260,051
9,121,409
4,263,860
51,629
4,298,443
-
13,890,428
51,629
13,134,225
-
Total Financial Assets
1,138,419
245,320
3,172,304
4
12,163,538
13,768,993
23,374,412
22,255,638
Financial Liabilities
(2,154,139)
(853,929)
(1,883,517)
(785,879)
Total Financial Liabilities
(2,154,139)
(853,929)
(1,883,517)
(785,879)
Net exposure
10,009,399
12,915,064
21,490,895
21,469,759
Risk Exposures and Responses
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s cash and short term deposits held.
71
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 30: FINANCIAL INSTRUMENTS (Cont.)
Sensitivity Analysis
The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date.
At 30 June 2008, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity
would have been affected as follows:
Consolidated
+ 1% (100 basis points)
- 0.5 % (50 basis points)
Net Profit
Higher / (Lower)
Net Assets
Higher / (Lower)
Year Ended
30 June
As at
30 June
2008
2007
2008
2007
$
$
$
$
46,957
64,572
46,957
64,572
(23,478)
(32,286)
(23,487)
(32,286)
Parent
+ 1% (100 basis points)
46,684
64,927
46,684
64,927
- 0.5 % (50 basis points)
(3,717)
(3,732)
(3,717)
(3,732)
Currency risk
At 30 June 2008 the Group had the following exposure to foreign currency that is not designated in cash flow hedges:
Consolidated
2008
2007
$
Company
$
2008
2007
$
$
Financial assets
Cash
Financial liabilities
Net Exposure
USD
EURO
803,204
235,947
6,787
85,262
793,987
-
-
GBP
28,739
-
28,739
-
1,729,156
1,088,474
2,050,401
1,419,963
2,027,171
1,313,414
2,213,972
1,330,908
GBP
BRL
401,752
398,994
400,064
16,708
401,752
398,994
400,064
16,708
EURO
245,320
245,320
-
-
USD
51,629
-
51,629
-
USD
EURO
(50,817)
(44,028)
(33,473)
(63,602)
(35,409)
(21,189)
(33,473)
(13,809)
GBP
BRL
(30,527)
(140,723)
-
(25,327)
(83,890)
-
4,717,120
4,127,430
4,849,871
3,914,370
USD
EURO
72
ABN 69 092 817 171
2008 ANNUAL REPORT
There are balances in other currencies which are immaterial and have not been disclosed.
Sensitivity Analysis
The following sensitivity analysis is based on the foreign currency rate risk exposures in existence at the balance sheet date
At 30 June 2008, if the Australian dollar moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity
would have been affected as follows:
Consolidated
Company
Net Profit
Higher / (Lower)
Net Assets
Higher / (Lower)
Net Profit
Higher / (Lower)
Net Assets
Higher / (Lower)
Year Ended
30 June
As at
30 June
Year Ended
30 June
As at
30 June
2008
2007
2008
2007
2008
2007
2008
$
$
$
$
$
$
$
$
AUD/USD +10%
177,322
141,660
177,322
141,660
198,616
152,635
198,616
152,635
AUD/USD – 5%
(88,661)
(70,830)
(88,661)
(70,830)
(99,308)
(76,317)
(99,308)
(76,317)
89,628
100,914
106,800
118,086
90,456
92,197
90,456
92,197
(44,814)
(50,457)
(53,400)
(59,043)
(45,228)
(46,098)
(45,228)
(46,098)
27,997
28,004
27,997
28,004
28,361
28,004
28,361
28,004
AUD/GBP – 5%
(13,999)
(14,002)
(13,999)
(14,002)
(14,181)
(14,002)
(14,181)
(14,002)
AUD/BRL +10%
18,079
1,170
18,079
1,170
22,057
1,170
22,057
1,170
AUD/BRL -5%
(9,039)
(585)
(9,039)
(585)
(11,029)
(585)
(11,029)
(585)
AUD/Euro +10%
AUD/Euro – 5%
AUD/GBP + 10%
2007
The Company purchased a stripe of foreign currency options during the year to manage the risk of fluctuation in USD exchange rate. The fair
value of the remaining foreign currency option outstanding as at reporting date is $51,629 with a face value of USD610,000 at a strike price of
0.8875. The expiration of this option is on 10 July 2008.
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the
carrying amount of those assets, net of any allowance for doubtful debts, as disclosed in the balance sheet and notes to the financial report.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group's policy to securitise
its trade and other receivables. It is the Group's policy to consider the credit worthiness of all customers who wish to trade on credit terms.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant. There
are no significant concentrations of credit risk.
Price risk
The Group’s exposure to commodity and equity securities price risk is minimal.
73
ABN 69 092 817 171
2008 ANNUAL REPORT
Liquidity Risk
The Group manages liquidity risk by monitoring cash flow and maturity profiles of financial assets and liabilities.
Maturities of financial liabilities
The tables below analyse the Group’s and the parent entity's financial assets and liabilities, net and gross settled derivative financial instruments
into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows.
Consolidated
Financial assets
Cash
Borrowings
Weighted
Average Effective
Interest Rate
6%
10%
Net maturity
Company
Financial assets
Cash
6%
Finance lease liability
Net maturity
Within
1 Year
1 to 5 years
Over 5 years
Total
$
$
$
$
6,709,630
4,263,860
51,629
1,138,.419
12,163,538
-
-
6,709,630
4,263,860
51,629
1,301,739
12,163,538
(2,154,139)
(40,512)
-
-
(2,154,139)
(40,512)
9,968,887
-
-
9,968,887
6,260,051
13,890,428
51,629
3,172,304
23,374,412
-
-
6,260,051
13,890,428
51,629
3,172,304
23,374,412
(1,883,517)
21,490,895
-
-
(1,883,517)
21,490,895
1 to 5 years
Over 5 years
Total
$
$
$
9,225,230
4,298,443
245,320
-
-
9,225,230
4,298,443
245,320
(853,929)
-
-
(853,929)
Net maturity
12,915,064
-
-
12,915,064
Company
Financial assets
Cash
9,121,409
13,134,225
4
-
-
9,121,409
13,134,225
4
(785,879)
-
-
(785,879)
21,469,759
-
-
21,469,759
Consolidated
Financial assets
Cash
Net maturity
Within
1 Year
$
6%
74
ABN 69 092 817 171
2008 ANNUAL REPORT
NOTE 31: CONTINGENT LIABILITIES
There are no contingent liabilities. (2007: NIL)
75
ABN 69 092 817 171
2008 ANNUAL REPORT
DIRECTORS’ DECLARATION
The Directors declare that:
a.
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable;
b.
In the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act
2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of the company and the consolidated entity; and
The directors have been given the declarations required by s.295A of the Corporations Act 2001.
c.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors.
A Risch
Director
th
28 August 2008
76
ABN 69 092 817 171
2008 ANNUAL REPORT
Additional Investor Information
Stock Exchange Listing
JMB is listed on ASX under the code JMB for ordinary shares.
Distributions
No distributions or dividends have been paid by JMB for the year.
Registry
Computershare Investor Services Pty Limited is JMB’s security register manager and holds all shareholder records electronically.
Computershare is also responsible for the maintenance of shareholder records and the preparation of distribution payments.
Contact details for Computershare are set out on the last page of this Report.
Investor Support
If you have any queries regarding your investment, please contact Computershare toll free on 1300 137 328 or visit their website
at www.computershare.com.au. Please note there is a section of the website designed to provide shareholders with the forms
necessary to initiate changes of the details held at the registry. This service is available from 8.30am to 5.30pm (Melbourne time)
on all business days. Enquiries may also be e-mailed via JMB’s website (at www.jumbuck.com) or Computershare’s website (at
www.computershare.com.au).
Requests for changes to your holding details, distribution payment details, or general enquiries can all be directed to the
Computershare Shareholder Service Centre.
Annual Report
All shareholders are entitled to receive a copy of the Annual Report. If you do not require the Annual Report, or if you receive
more copies than you require, please notify Computershare at the address shown on the last page of this Report. The Annual
Report and Financial Statements can also be downloaded from the ASX Announcement area of our website at www.jumbuck.com
Annual General Meeting
JMB’s last Annual General Meeting was held on 25 October 2007. Shareholders endorsed the re-appointment of Adrian Risch
and Bruce Bennie, and were given an overview of the performance of the Company.
The next Annual General Meeting will be held on Wednesday 29 October 2008 at The Sebel Hotel Melbourne, 394 Collins Street,
Melbourne, Victoria 3000. The Notice of Meeting and Proxy Form are included with this Report.
Statement of Shareholders
JMB 20 largest ordinary shareholders and their holdings as at 5 August 2008:
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sieana Pty Ltd
Quad Holdings Pty Ltd
National Nominees Ltd
Mr Adrian Paull Risch
Invia Custodian Pty Ltd <Black A/C>
CTS Group Nominees Pty LtdD
XS Equities Pty Ltd
Beconwood Superannuation Pty Ltd <WSF A/C>
J P Morgan Nominees Australia Ltd
Repysa Holdings Inc
ANZ Nominees Ltd <Cash Income A/C>
Mr Kenneth William Breese & Mrs Jennifer Ruth Breese <BPD Executive Superfund A/C>
Kennadell Pty Ltd
Mr Stan Loucas
Jeff Kennett Pty Ltd < JGK Superfund A/C>
Denman Investments Limited
Mr Philip Druce <Druce Family A/C>
Mr Kelvin Kai Yin Yip & Mrs Nanae Katono
Lubeme Services Pty Ltd <Dwyer Super Fund A/C>
Cogent Nominees Pty Ltd
Top 20 holders of Ordinary Fully Paid Shares as at 5 August 2008
Balance of shareholders
Total shares on issue at 5 August 2008
No of shares held
5,385,270
4,408,334
3,349,424
2,495,333
2,364,863
2,330,745
2,000,000
1,937,642
1,695,589
1,038,358
1,020,293
887,506
655,557
502,510
479,935
479,165
445,148
445,148
424,200
410,527
32,755,547
16,895,733
49,651,280
% of Issued
Capital
10.85
8.88
6.75
5.03
4.76
4.69
4.03
3.90
3.41
2.09
2.05
1.79
1.32
1.01
0.97
0.97
0.90
0.90
0.85
0.83
65.98
34.02
100.00
79
ABN 69 092 817 171
2008 ANNUAL REPORT
Additional Investor Information (Cont.)
Statement of Shareholders (Cont.)
As at the date of this Report, the following options were held over unissued shares:
Grant Date
Exercise Price (cents)
Vesting Date
EPS hurdle
5/05/2006
Expiry Date
30/09/2011
225
30/09/2008
12 cents in 2008
Number Under Option
-
5/05/2006
30/09/2012
248
30/09/2009
13 cents in 2009
625,002
1/06/2006
1/06/2009
210
30/09/2009
None
550,000
28/02/2008
30/09/2010
71
30/09/2008
None
536,666
28/02/2008
30/09/2011
77
30/09/2009
None
536,667
28/02/2008
30/09/2012
83
30/09/2010
None
536,667
Total
No of fully paid ordinary
2,785,002
Number of holders
shares as at 31 July 2008
1 - 1,000
186
1,001 - 5,000
446
5,001 - 10,000
165
10,001 - 100,000
175
100,001 and over
53
1,025
Total number of holders
Holders of less than a marketable parcel
157
Substantial Shareholders
Shareholder
No of securities held
% held as per substantial
shareholder notice
Sieana Pty Ltd
5,385,270
11.21
Quad Holdings Pty Ltd
4,676,221
9.74
LJM Investment Group Pty Ltd
5,120,701
10.66
Acorn Capital Ltd
3,752,300
7.81
Adam Smith Asset Management
2,669,327
5.56
Adrian Paull Risch
2,660,000
5.48
*
Beconwood Securities Pty Ltd
2,391,676
* The position stated by Beconwood Securities Pty Ltd and Beconowood Ltd is that they are disputing the right of ANZ to sell
3,559,447 shares that were held by ANZ under a margin lending arrangement. Prior to this disposal Beconwood Securities Pty Ltd stated that it
was the holder of an interest in 5,951,123 shares in the Company (12.39%)
Voting Rights
Under the Company’s Constitution, each member present at a general meeting is entitled:
1. on a show of hands, to one vote; and
2. on a poll, to one vote for each share held or represented.
Options do not carry voting rights.
80
ABN 69 092 817 171
2008 ANNUAL REPORT
GLOSSARY
ASX
Auditor
Board
BPR
CEO
CFO
Company
Group
JMB
Jumbuck
Ordinary Shares
pa
Year
Australian Stock Exchange
Auditor of JMB being Deloitte Touche Tohmatsu
Board of Directors of JMB
Best Practice Recommendations of ASX Principles of Good Corporate Governance
Chief Executive Officer of JMB
Chief Financial Officer of JMB
Jumbuck Entertainment Ltd, ABN 69 092 817 171
Jumbuck Entertainment Ltd and its controlled entities
Jumbuck Entertainment Ltd, ABN 69 092 817 171
JMB
ordinary shares in JMB
per annum
financial year
81
ABN 69 092 817 171
2008 ANNUAL REPORT
Corporate Directory
Listed Entities Comprising JMB:
ABN 69 092 817 171
ASX Listing Code:
JMB
Website:
www.jumbuck.com
Directors of JMB:
Kevin V Campbell – Chairman
Adrian Risch - CEO
Bruce R Bennie
Hon Jeffrey G Kennett
Tom SP Kiing
Share Registry:
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford Victoria 3067
Australia
www.computershare.com.au
Auditors of JMB:
Deloitte Touche Tohmatsu
180 Lonsdale Street
MELBOURNE VIC 3000
CEO of JMB:
Adrian Risch
Company Secretary of JMB:
Mark Doughty
Registered office:
Level 5
347 Flinders Lane
Melbourne Victoria 3000
Australia
Tel:
+613 9620 3839
Fax:
+613 9620 3840
Other Offices Worldwide:
Principal Place of Business:
Level 5, 347 Flinders Lane
Melbourne Victoria 3000
Australia
Tel:
+613 9620 3839
Fax:
+613 9620 3840
Jumbuck Community GmbH
Martinstr 16-20
Köln 50667
Germany
Tel: +49 0 221 250 81710
Fax: +49 0 221 250 81720
Community Development & Support
Chapayeva 7
10029 Zhytomyr
Ukraine
Tel:
+380 412 480198
Fax:
+380 412 480198
Other Offices Australia:
Perth Western Australia 6009
Australia
Tel:
+618 6389 1803
Fax:
+618 6389 1804
Oztion Pty Limited
Suite 1 Level 2
11 Chesterville Road
Cheltenham
VIC 3192
Australia
Tel: +613 9583 0792
Fax: +613 9584 0119
Jumbuck Entertainment Inc.
700 Irwin Street, Suite 300
San Rafael, CA 94901
USA
Tel:
+1 415 721 2402
Fax:
+1 415 721 2410
Plutolife AS
Drammensveien 167
0277 Oslo
Norway
Phone: +47 229 25960
Fax: +47 229 25961
82

Jumbuck Entertainment Limited ABN 69 092 817 171 Appendix 4E

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