For personal use only - ASX2010/09/17 · allowing individuals to flirt anonymously SMS Products Mobile, premium SMS billing based social networking and dating services Mobile Chat

Jumbuck Entertainment Ltd Annual Report 2010

For

per

sona

l use

onl

y

2010 Annual Report

This 2010 Annual Report is a summary of our activities and financial position.

In the 2010 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 2010 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.

Jumbuck Entertainment Ltd (Jumbuck) is a global provider of social media-based mobile phone applications. Headquartered in Melbourne, Australia, the business has offices in the USA, UK, Germany, Brazil and Norway. Jumbuck delivers its services through strong relationships with mobile carriers throughout Europe, The Americas and Asia.

1 What we do

2 2009/10 Highlights

5 Chairman’s Report

6 CEO Report

9 Corporate Governance Statement

13 Directors’ Report

27 Auditor’s Independence Declaration

28 Consolidated Income Statement

29 Consolidated Statement of Comprehensive Income

30 Consolidated Statement of Financial Position

31 Consolidated Statement of Changes in Equity

32 Consolidated Cash Flow Statement

33 Notes to the Financial Statements

72 Directors’ Declaration

73 Independent Auditor’s Report

75 Additional Investor Information

IBC Corporate DirectoryCo

nte

nts

For

per

sona

l use

onl

y

What we do

Jumbuck began in 2000 with the launch of one of the world’s first websites devoted to early

mobile technologies, along with the world’s first wireless chat room. Thanks to word-of-mouth

and viral marketing the chat rooms rapidly grew in popularity, generating very strong traffic

relative to carriers’ in-house offerings.

From these foundations Jumbuck grew the breadth and depth of its product offerings and distribution footprint to include:

• Active relationships with over 120 mobile phone carriers globally

• Three established groups of products focused on the popular chat and dating segments

• Extensive infrastructure, including a global distribution network, to manage and moderate international communities.

In addition to strong organic growth Jumbuck has grown by acquisition, including:

• wap3 Technologies, a German-based provider of mobile communities (2006)

• Plutolife, an Oslo-based operator of Chat and Dating services (2008)

• OZtion, an Australian-based online auction site (2008).

Other OZtion and CarBuddy are Australian web based products. AHA! is Jumbuck’s first product covering WAP, mWeb and web

Fast Flirting Jumbuck’s mobile flirting service

allowing individuals to flirt anonymously

SMS Products Mobile, premium SMS billing based

social networking and dating services

Mobile Chat Jumbuck’s mobile chat and social networking

services across geographies and languages

JUMBUCK ANNUAL REPORT 2010 1

For

per

sona

l use

onl

y

20

09

/10

Hig

hlig

hts

Amid challenging global economic

conditions and rapid change within

telecommunications and social media,

Jumbuck Entertainment Ltd (Jumbuck)

was cash flow positive in 2009/10 with

sales revenue of $12.8m and operating

EBITDA of $2.7m for the year.

While earnings were down on the

previous year, a business and portfolio

restructure commenced by new Chief

Executive Officer David Gibbs in January

2010 is positioning the company for

significant growth opportunities ahead.

The Company

• Has a strong balance sheet

• Continued to generate free cash flow from its operations during the year

• Has nil debt

• Disposed of Car Buddy, a non-core asset

Revenue from operations (ex interest)

$13.3m

Operating EBITDA

$2.7m

NPAT

($2.5m) after restructuring and other charges

Cash on hand

$6.5m as at 30 June 30 2010

Full year dividend

1.5 cents (0.5 cent interim, 1.0 cent final)

Carrier Relationships Corporate Events Offices

2000 Starts operations; QMM investment Australia

2001

2002 10 USA

2003 20 UK

2004 30ASX listing ASX: JMB

2005

2006 40 Acquires WAP3 Germany

2007 80 Acquires 19% stake in Mobile Active ASX: MBA

2008 100 Acquires Plutolife and OZtion Norway

2009 120Sells stake in Mobile Active ASX: MBA

2010 Sells CarBuddy and OZtion

2

For

per

sona

l use

onl

y

Business Model Transition

The industry within which Jumbuck Entertainment operates is undergoing massive change through the convergence of new mobile technology (particularly smart phones), explosive growth in social media and the emergence of application stores where consumers can purchase mobile phone applications easily and cheaply. Mobile data pricing models are also changing rapidly, leading to a steady decline in revenue from traditional “on-deck” subscription sources.

The “new” mobile application marketplace represents a major opportunity for Jumbuck Entertainment. To leverage this opportunity, however, the business needed to change two fundamental aspects of its operating model:

• A strategic realignment in products and organisational structure from pure B2B sales through carriers, to partnering with carriers and adding direct-to-consumer acquisition skills needed to compete in a social media environment

• A move from products optimised to drive data traffic for carriers to products optimised for generating revenue based on end-user activity – be that subscription, transaction or advertising.

Positioning Jumbuck to operate at the forefront of these developments required a significant restructuring of the organisation, realignment of product offerings and a shift in skill sets.

The implication of these changes is evident in the 2009/10 results which include the revenue impacts as the business works through this transition, along with a number of substantive, once-off adjustments to the costs driven by the restructuring and revision to product strategy required to compete moving forward.


For

per

sona

l use

onl

y

Your Company has completed a challenging year and continues to position itself to take advantage of the significant opportunities arising from the pervasiveness of mobile devices, and in particular the global growth of mobile content, mobile gaming and social networking.

“

“

4

For

per

sona

l use

onl

y

Chairman’s Report Message from the Chairman

Dear Shareholders,

The Board of Jumbuck Entertainment Ltd (“the Company”) is pleased to present to shareholders

the Annual Report of the Company and its subsidiaries for the financial year ended 30 June 2010.

Your Company has completed a challenging year and continues to position itself to take advantage of the significant opportunities arising from the pervasiveness of mobile devices, and in particular the global growth of mobile content, mobile gaming and social networking.

The Board acknowledges the strategic leadership of our new CEO, David Gibbs, as we prepare for our next phase of international growth. In doing so our immediate focus has been:

• Stabilising matters that have impacted short-term revenue performance

• Investing in growth focused activities including our Launchpad initiative, increased internal investment in research and development, and broader acquisition of skill sets

• Disposing of non-core assets.

We are pleased to inform shareholders that the Company policy of paying dividends, established last year, will be continued. The Company will pay a final dividend of 1.0 cent per share fully-franked for the 2010 financial year.

Finally, I would like to thank the board of directors, management and staff for their commitment and hard work throughout the year and we all look forward to growing the business in an exciting year ahead.

Kind regards

Harvey C Parker Chairman


For

per

sona

l use

onl

y

Dear Shareholders,

The Jumbuck Entertainment Ltd (Jumbuck) result for 2009/10 reflects the impact of a rapidly

changing industry on a business in transition.

Jumbuck Foundations – Rapid and Successful Growth

Jumbuck was one of the early movers in the mobile entertainment industry and rapidly built a successful international presence providing high quality chat and dating applications through carriers to their end users. This success was driven by strong relationships with mobile carriers and high quality, well-supported products that generated data traffic from the carriers’ end users. Throughout the mid 2000s this model prospered, but began to come under pressure during the Global Financial Crisis and the onset of rapid structural changes in the mobile entertainment industry.

CEO Report

The operating result for 2009/10 reflects a business in transition – in leadership, structure and product portfolio.

““

6

For

per

sona

l use

onl

y

A Business in Transition

The operating result for 2009/10 reflects a business in transition – in leadership, structure and product portfolio.

As I stepped into the role of CEO at the beginning of 2010 three things became clear:

• Our industry is changing and with it, our revenue models

• Consumer attitudes and behaviours are changing along with the explosion in social media uptake

• Our business is strategically positioned to leverage these opportunities, with a strong balance sheet, global distribution network and diverse skill sets.

Rapid Industry and Consumer Behaviour Change

The mobile entertainment industry is being reshaped by four converging trends and/or technologies:

• Smart phones with spiralling increases in capability

• Growth in social media

• The emergence of application stores

• Rapidly declining mobile data prices.

For Jumbuck this scenario presents short-term challenges – and a considerable medium to long-term opportunity. In a short space of time, the end user mobile customer has shifted away from accessing services purely through carriers and instead are exercising their freedom to go directly to social media or other brands through mobile web and applications that bypassed the carrier. This materially impacts our traditional product pricing models – as seen in the shift from carriers paying Jumbuck for traffic/data and instead moving to sharing end user revenues.

Against this backdrop, the Jumbuck leadership team is moving quickly and decisively to transition the company and prepare the foundations for future growth.

Strong Balance Sheet – Financial and Operating

Jumbuck is well positioned to make this transition. Through my initial strategic review of the business it was clear that Jumbuck has a strong set of competencies on which to build its future leadership position within the mobile entertainment industry. These include operating and financial assets:

• International distribution with high value in our carrier relationships and international product coverage

• Infrastructure for managing and moderating global communities

• A strong balance sheet position with no debt.

Transition Challenges

Although Jumbuck is a young company, it has a legacy of rapid growth and international expansion through acquisitions. Where once this structure was an operational advantage, by late 2009 it was hindering the company’s ability to respond effectively to the rapidly changing mobile communications and social media space.

Jumbuck had foreseen these changes and had taken some tangible steps towards understanding direct consumer acquisition. Steps included the 2008 acquisitions of the Plutolife business in Scandinavia and OZtion in Australia, as well as a review of Jumbuck product sets.

The reality remained, however, that due to the previous growth by acquisition strategy Jumbuck was effectively operating as three semi-independent product/geographic businesses under the umbrella of senior management. This “silo” structure was reinforced by post-acquisition obligations.

As the company attempted to react to rapid changes on multiple fronts – products, carriers, channels to market – the complexity of our global product/corporate structure became a drag on innovation and speed to market for new products and services.

Significant change to the organisation structure and skill sets was no longer an option – it was critical to our long-term profitability.


For

per

sona

l use

onl

y

CEO Report (continued)

Performance

The 2009/10 financial result clearly shows the impact of these changes.

Profit and Loss Highlights ($m) FY 2010 FY 2009

Total revenues (ex interest) 13.3 18.9

Operating EBITDA 2.7 7.9

NPAT (2.5) 4.1

The sales revenue position – $12.8m, down from $18.1m the previous year – reflects the decline in traffic and payments for data from carriers, without gaining any substantial traction on direct end-user acquisition to replace it.

The operating cost position reflects the decision to retain the business’ international presence and development capability, initiate the shift to a functional business structure (with shared infrastructure and centralised services), invest in repositioning our products, and building end user acquisition skills.

There are also a series of non-operating adjustments resulting from the changes, including the sale of CarBuddy as a non-core asset, impairment of OZtion, and a review of the carrying value of other assets.

Balance Sheet Highlights ($m) FY 2010 FY 2009

Cash 6.5 7.2

Other net working capital 2.9 2.1

Intangible assets 15.6 20.0

Total shareholder equity 24.5 29.4

The balance sheet remains strong, providing the resources to complement the internal changes with more aggressive acquisition of skills, and resources to support the ongoing innovation key to Jumbuck’s future growth.

The Year Ahead

Jumbuck is strongly positioned to compete successfully in the new mobile communication landscape. To do so, we must complete the organisational restructure started in 2009/10 to make ours a more agile and consumer-focused business with the right mix of products and pricing models in our core communities businesses.

In parallel, we will continue to invest in internal and external programs such as Launchpad to build our skills and drive the innovation needed to remain competitive in our exciting industry.

Dividend

The Jumbuck Board has agreed that the Company pay a final dividend to shareholders of 1.0 cent per share fully franked.

Thank You

I would like to thank the Chairman, Board of Directors, Jumbuck staff and contractors, customers and shareholders for their support during 2009/10. I look forward to realising the fruits of our combined efforts over the next 12 months.

David Gibbs Chief Executive Officer

25 August 2010

8

For

per

sona

l use

onl

y

Corporate Governance Statement

In March 2003, ASX published the ASX Best Practice Recommendations (ASXBPR) for listed companies to adhere. In 2007, the ASX Corporate Governance Council released revised “Corporate Governance Principles and Recommendations”. 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 recommendations 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.

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 ASX Recommendations, 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 ASX Recommendations. Details have been included at the end of this statement setting out the ASX Recommendations with which JMB has not complied in this reporting period.

Committees of the Board

To assist in the execution of its corporate governance responsibilities, the Board has established two committees, the Audit Committee and the Remuneration 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 JMB website at www.jumbuck.com.

Principle 1: Lay Solid Foundations for Management and Oversight

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:

• Selection of the CEO;

• 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 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.

Principle 2: Structure the Board to Add Value

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 six (6) Directors of which five (5) are independent Non-Executive Directors including the Chairman. David Gibbs is the only executive director.


For

per

sona

l use

onl

y

Corporate Governance Statement (continued)

The composition of the Board is determined by JMB 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 Chairman and CEO are different people;

• 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.

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 FY2010, the Board met 11 times.

The Board’s composition of 6 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.

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 action 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 ASX Recommendations Principle 2 and other facts, circumstances and information the Board considers relevant.

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.

Principle 3: Promote Ethical and Responsible Decision Making

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; and

• 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.

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.

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 JMB website at www.jumbuck.com.

10

For

per

sona

l use

onl

y

Principle 4: Safeguard Integrity in Financial Reporting

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), Harvey C Parker and 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.

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.

Principle 5: Make Timely and Balanced 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 JMB website at www.jumbuck.com.

Principle 6: Respect the Rights of Shareholders

The Board aims to ensure that shareholders are kept informed of all major developments affecting JMB. 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.


For

per

sona

l use

onl

y

Corporate Governance Statement (continued)

Principle 7: Recognise and Manage Risk

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.

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.

Principle 8: Remunerate Fairly and Responsibly

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.

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 Harvey C Parker (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 2010 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.

ASX Recommendations

Pursuant to the ASX Listing Rules, JMB advises that it does not comply with the following ASX Recommendations. 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 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.

12

For

per

sona

l use

onl

y

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 2010.

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:

• Harvey C Parker Chairman and Independent Non-Executive Director

• Hon Jeffrey G Kennett AC Independent Non-Executive Director

• Bruce R Bennie Independent Non-Executive Director

• Tom SP Kiing Independent Non-Executive Director

• Adrian P Risch CEO and Executive Director Retired as CEO and Executive Director 31 December 2009, appointed Non-Executive Director 1 January 2010

• David Gibbs CEO and Executive Director Appointed 13 April 2010

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.

Harvey C Parker Chairman (Non-Executive) Age: 66

Board member and Chairman since January 2009, Mr Parker is an experienced Chairman having been Chairman of Petroz NL, Datacom Investments Australia, Moore Australia, Intermoco and Emergency Communications Victoria. He was also a Non-Executive Director of the ASX listed technology services company Volante Group Limited. Mr Parker’s current roles are as Chairman of ASX listed DWS and Pacific Turbine, as well as Agline Pastoral. Mr Parker has experience as CEO of New Zealand Post and United Energy and as Group Managing Director of Commercial and Consumer at Telstra. Mr Parker is Chairman of the Audit Committee and a member of the Remuneration Committee.

Mr. Parker holds no interest in Jumbuck shares as at the date of this report.

Bruce R Bennie B.Ec Director (Non-Executive) Age: 45

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.

Hon Jeffrey G Kennett AC Director (Non-Executive) Age: 62

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, PFD Food Services Pty Ltd and Amtek Corporation Pty Ltd and Director of Equity Trustees Ltd. He is also Chairman of Beyondblue, the national depression initiative and President of Hawthorn Football Club. Mr Kennett is Chairman of the Remuneration Committee and a member of the Audit Committee.

Mr Kennett holds an interest in 650,276 shares in Jumbuck as at the date of this report.


For

per

sona

l use

onl

y

Directors’ Report (continued)

Tom SP Kiing Director (Non-Executive) Age: 32

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 10,883,093 shares in Jumbuck as at the date of this report.

Adrian P Risch Director (Non-Executive) Age: 32

Board member since the company floated in April 2004, Mr Risch is the founder of Jumbuck and was formerly appointed chief executive officer of the Company. He has extensive experience in dealing with international mobile operators and the delivery of the mobile content and applications. He is currently the CEO of a small mobile game developer and maintains an active interest in emerging technology.

Mr Risch and related interests hold 3,310,596 shares in Jumbuck as at the date of this report.

David Gibbs CEO and Executive Director Age: 52

Board member since April 2010. Mr Gibbs has extensive management experience in the IT and telecommunication space. After 11 years with McKinsey & Company he founded the successful online home loan broker eChoice.com.au in 1997 as a JV between GetSmart.com and Allen & Buckeridge. From 2005 onwards David has been instrumental in building a Web 2.0 consultancy firm deploying the Salesforce.com Software as a Service Platform, and has been involved in other web-related businesses.

Mr Gibbs holds an interest in 101,846 shares in Jumbuck as at the date of this report.

Jim Paulyshyn Company Secretary Age: 47

Mr Paulyshyn is a member of the Institute of Chartered Accountants in Australia and Canada and has had numerous executive, non-executive, and advisory board appointments with early stage technology companies, as well as significant experience in venture capital, mergers and acquisitions, and early stage commercialisation.

Mr Paulyshyn holds no interest in Jumbuck shares 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 Non-Executive Directors of related bodies corporate of the Company.

14

For

per

sona

l use

onl

y

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

As outlined in the Company’s half year reporting, a significant drop in revenue has been experienced. This trend has continued in the second half, with a significant impact on profitability.

Summary trading performance ($m) is as follows:

2010 2009

Sales (excluding interest)a 12.8 18.1

Other revenues (excluding interest)b 0.5 0.8

Total revenue (excluding interest) 13.3 18.9

EBITDAc (1.0) 7.3

Depreciation and amortisation 1.7 2.2

EBIT (2.7) 5.1

Interest revenue 0.1 0.3

NPBT (2.6) 5.4

Tax expense /(benefit) (0.1) 1.3

NPAT (2.5) 4.1

Notes:

a) Sales revenue by half -year has been as follows:

Half year, 31 December 2008 $9.9m

Half year, 30 June 2009 $8.2m

Half year, 31 December 2009 $6.9m

Half year, 30 June 2010 $5.9m

On a product basis, sales revenue has been as follows:

2010$m

2009$m

Mobile Chat 6.4 9.7

Fast Flirting 2.0 3.2

SMS products 3.4 4.1

Other 1.0 1.1

12.8 18.1

This year-on-year decline has been caused mainly by structural changes to the industry ecosystem, as detailed in the CEO Report. Following the recruitment of a new CEO the company has identified revised product, sales, and marketing strategies which are being implemented with a view to restoring growth in the revenue line.

b) Other revenues primarily consist of foreign exchange adjustments.


For

per

sona

l use

onl

y


c) EBITDA has decreased from $7.3m in 2009 to ($1.0m) in 2010. After allowing for major non-cash items, comparative Operating EBITDA has decreased from $7.9m to $2.7m, largely as a result of reduced Sales Revenues.

H1 2010

$’000H2 2010

$’000FY 2010

$’000FY 2009

$’000

Sales revenue (excluding interest) 6,868 5,917 12,785 18,118

Other revenue (excluding interest) 570 (60) 510 753

Total revenue (excluding interest) 7,438 5,857 13,295 18,871

Operating costs (4,905) (5,688) (10,593) (10,931)

Operating EBITDA 2,533 169 2,702 7,940

Loss on Carbuddy disposal - (158) (158) -

Loss on MobileActive disposal - - - (662)

Write down of capitalised development - (1,243) (1,243) -

Impairment of Oztion carrying value - (2,332) (2,332) -

EBITDA 2,533 (3,564) (1,031) 7,278

Depreciation and amortisation (753) (987) (1,740) (2,167)

EBIT 1,780 (4,551) (2,771) 5,111

Interest 71 79 150 263

NPBT 1,851 (4,472) (2,621) 5,374

Tax expense /(benefit) 386 (547) (161) 1,295

NPAT 1,465 (3,925) (2,460) 4,079

Additional comments are as follows:

• Operating costs were $10.6m (2009: $10.9m). At a high level, a decision was made to hold the broad operating cost base to support the communities business and international relationships;

• During 2010, Operating costs were higher during the second half year period. This included specific costs associated with CEO recruitment, additional bad debts, operational restructuring, and investment in product and brand positioning associated with a detailed review of the business. Coupled with the decrease in sales revenue, Operating EBITDA decreased from $2.5m in the first half to $0.2m in the second half;

• Carbuddy was determined to be a non-core asset, and was disposed of, resulting in a book loss of $0.2m;

• As part of the strategic review, capitalised developments costs were re-assessed, and were written down to be consistent with revised product strategies and emphasis;

• The carrying value of the tangible and intangible Oztion assets was assessed in conjunction with a review of actual growth rates experienced since making the acquisition. These have been slower than originally expected, and led to an impairment charge of $2.3m;

• The Cash Flow Statement for the year reflects Cash from Operations of $3.6m, which includes the contribution of the positive Operating EBITDA. Cash at 30 June 2010 was $6.5m (30 June 2009 $7.2m, 31 December 2009 $5.6m); and

• NPAT includes a favourable tax adjustment of $0.6m relating to the Mobileactive disposal.

Except for the matters disclosed, there are, at the date of this report, no other matters or circumstances which have arisen since 30 June 2010 that have significantly affected or may significantly affect:

a) The operations in future financial periods subsequent to the financial year ended 30 June 2010, 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.

A detailed review of operations and the results of those operations are set out in the Chairman’s Message and CEO’s letter 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 2010 that have significantly affected or may significantly affect:

a) the operations in future financial periods subsequent to the financial year ended 30 June 2010, 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.

16

For

per

sona

l use

onl

y

Dividends

On 25 August 2010, the Directors declared a dividend of 1.0 cent fully franked per ordinary shares for shareholders on record at 16 September 2010 and payable on 30 September 2010. This dividend has not been provided for in this financial report.

Share Issue

During the year 735,784 fully paid ordinary shares in Jumbuck were acquired and cancelled by the Company under a share buyback scheme.

Events Subsequent to Reporting Date

Final Dividend Declared


On 25 August 2010, the Company entered into an agreement for the sale of the operational and financial assets of Oztion Pty Ltd to carsales.com Limited. Completion of the sale of assets is expected to take place on 15 September 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 Letter, 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 Letter. 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.

Remuneration Report

This remuneration report outlines the remuneration arrangements for executives and employees of Jumbuck, including key management personnel in accordance with relevant accounting standards and Section 300A of the Corporations Act.


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:

- the remuneration, superannuation and incentive policies and arrangements for the Chief Executive Officer and for key management personnel;

- the remuneration arrangements for Non-Executive Directors on the Board (as listed below);

- the recruitment, retention and termination policies and procedures for key management personnel; and

- 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.


For

per

sona

l use

onl

y


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:

• Hon Jeffrey G Kennett AC Chairman and Independent Non-Executive Director

• Harvey C Parker Independent Non-Executive Director; and

• Mr Tom SP Kiing Independent Non-Executive Director

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 ASX Corporate Governance Council Recommendations, the structure of Non-Executive Directors and Key Management Personnel remuneration is separate and distinct.

Company Performance

The table below shows the performance results, share price and share buyback movements of the Company for the last 5 years.

2006 2007 2008 2009 2010

Revenue ($’000) 11,623 15,676 15,755 19,135 13,445

Earnings before interest and tax ($’000) 5,480 6,617 4,403 5,111 (2,771)

Net profit/(loss) before tax ($’000) 5,741 6,991 4,861 5,374 (2,621)

Net profit/(loss) after tax ($’000) 4,300 4,996 2,708 4,079 (2,460)

Share price at end of year ($) 2.37 1.41 0.59 0.39 0.19

Basic earnings per share (cents) 9.4 10.3 5.6 8.3 (5.0)

Diluted earnings per share (cents) 9.4 10.3 5.6 8.2 (5.0)

Dividend (cents per share) NIL NIL NIL 2.0 1.5

Dividend payout ratio NIL NIL NIL 24% (30%)

Share buyback (number of shares) - - 464,565 131,205 735,784

Share buyback ($) - - 319,797 61,413 280,996

18

For

per

sona

l use

onl

y

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 revenue;

• 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 revenue growth. It has been selected as the most appropriate measure of trading performance, and is calculated based on a percentage above a revenue threshold level. This allows the individual to be rewarded for growth in revenue. The percentage and threshold level can differ for each individual and are reviewed every year. The revenue thresholds are determined based on the ability of the Key Management Personnel to influence the Company’s earnings.

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.

As at 30 June 2010 there are a total of 1,125,000 (2009: 2,071,668) share options outstanding to employees.

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





• Adrian P Risch Non-Executive Director Retired as CEO and Executive Director 31 December 2009, appointed Non-Executive Director 1 January 2010

• David Gibbs Executive Director and CEO Appointed Executive Director 13 April 2010

Key management personnel

• Mr M Doughty COO, CFO and Company Secretary Retired as COO, CFO and Company Secretary 14 May 2010


For

per

sona

l use

onl

y


Executive Directors’ and CEO Remuneration

The following table summarises the remuneration arrangements for the CEO, COO, CFO and Company Secretary. Arrangements for Key Management Personnel and arrangements for Non-Executive Directors are shown on the following pages of this report.

Mr David Gibbs

Position CEO commenced 1 January 2010.

Term of employment agreement 1 January 2010 to 31 December 2014.

Notice period 4 months

Total employment cost (TEC)* $165,087 (2009:$NIL)

Short term incentive: Performance related

• There were no short term incentives paid during FY2010.

• The FY 2010 revenue threshold is $3.75M per quarter with percentage bonus of 2.5%.

Long term incentive N/A other than options as set out below

Other benefits: Non performance related

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).

Termination by executive 4 months notice.

Termination by Company 4 months notice.

Restraint None

Other N/A

Interest in shares 101,846 ordinary fully paid shares.

Options: Performance related

The following options will be granted subject to shareholder approval:

• 1,000,000 options at 40 cents per share, vesting 1 year after grant date, exercisable between 2 years and 2.5 years after grant date

• 1,000,000 options at 50 cents per share, vesting 2 years after grant date, exercisable between 3 years and 3.5 years after grant date

• 1,000,000 options at 55 cents per share, vesting 3 years after grant date, exercisable between 4 years and 4.5 years after grant date

Mr A P Risch

Position • CEO from 30 July 2007 until 31 December 2009.

• Consultant to company from 1 January 2010.

Term of employment agreement Consulting agreement from 1 January 2010 to 31 December 2010.

Notice period N/A

Total employment cost (TEC)* • CEO $195,154 (2009:$307,783)

• Consultancy $59,283 (2009:$NIL)


• CEO After announcing the intention to step down as CEO, he was not included within incentive scheme.

There were no short term incentives paid during FY2010. (2009: NIL).

• Consultancy agreement Commission of 3.5% on Jumbuck’s gross revenue from sales of services and products based around the Augmented Reality product.

Long term incentive N/A

Other benefits: Non performance related

N/A

Termination by executive N/A

Termination by Company N/A

Restraint As part of his contract, Mr. Risch is restricted from operating a competing mobile chatroom/dating service and from hiring Jumbuck employees.

Other N/A

Interest in shares 3,310,596 ordinary fully paid shares.


NIL

20

For

per

sona

l use

onl

y

Mr M Doughty

Position • COO commenced July 2009, previously as CFO from November 2006.

• Company Secretary since 2 May 2008.

• On 14 May 2010, Mr Doughty resigned as COO, CFO and Company Secretary.

Term of employment agreement 1 July 2008 to 30 June 2011

Notice period N/A

Total employment cost (TEC)* $295,169 (2009:$334,018)


• After ceasing as COO, he was not included within incentive scheme.

• During FY2010 a total of $8,900 was paid for the financial performance in FY2010. During FY2009 a total of $17,910 was paid for the financial performance in FY2008. No payment has been made during FY2010 for the FY2009 performance.

Long term incentive N/A

Other benefits: Non Performance related

N/A

Termination by executive N/A

Termination by Company N/A

Restraint None

Other N/A

Interest in shares 5,000 ordinary fully paid shares.


N/A

* A portion of TEC may be taken in the form of packaged benefits (such as a motor vehicle and parking), and is inclusive of fringe benefits tax and employer superannuation contributions.

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.


For

per

sona

l use

onl

y


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 FY2010. 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 FY2010.

No retirement benefits were paid or payable to executive Directors or key management personnel in FY2010.

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: FY 2010

2010

Short-term employee benefits

Post-employ-

ment benefits

Other long term

emplo-yee

benefits$

Termi-nation

benefits$

Share-based payment

Total$

Perfor-mance Bonus as a %

of total remun-eration

Equity-settled

Cash settled

$

Salary & fees**

$Bonus*

$

Non-mon-etary

$Other

$

Super-annuation

$

Shares & units

$

Options & rights

$

H C Parker 85,000 7,650 92,650

B R Bennie 55,000 4,950 59,950

Hon. J G Kennett 55,000 4,950 59,950

Tom SP Kiing 55,000 4,950 59,950

A P Risch 185,000 7,367 17,045 45,025 254,437

David Gibbs 151,518 13,569 165,087

M Doughty 233,147 8,900 3,000 21,784 28,338 295,169 3%

Total 819,665 8,900 - 10,367 74,898 45,025 - - 28,338 - 987,193

* The Bonus is part of the short term incentive scheme, and is known as the FY 2010 Executive Bonus Scheme (which excludes the CEO).

FY 2010 Executive Bonus Scheme

The maximum entitlement to a FY2010 Executive Bonus is determined by reference to the achievement of revenue above a threshold level of $7.3M for the first half of the year and $8.4M for the second half of the year with percentage bonus of 15% for revenue over the threshold. The payment of any amounts under FY 2010 Executive Bonus scheme was at the discretion of the Board. Incentive payments incurred during the period were $26,700.

Revenue is chosen as the basis for short term incentive calculation to align remuneration with the creation of shareholder value.

** Adrian Risch received $195,154 as CEO up until 31 December 2009. He received $59,283 for the period 1/1/10 up till 30 June 2010 as non executive director and consultant.

22

For

per

sona

l use

onl

y

Table A: FY 2009

2009

Short-term employee benefits

Post-employ-

ment benefits

Other long term

emplo-yee

benefits$

Termi-nation

benefits$

Share-based payment

Total$

Perfor-mance Bonus as a %

of total remun-eration

Equity-settled

Cash settled

$

Salary & fees**

$Bonus*

$

Non-mon-etary

$Other

$

Super-annuation

$

Shares & units

$

Options & rights

$

K V Campbell - 30,883 30,883

H C Parker 42,500 3,825 46,325

B R Bennie 60,346 5,433 65,779

Hon. J G Kennett 55,000 4,950 59,950

Tom SP Kiing 50,416 4,537 54,953

A P Risch 275,212 24,739 7,832 307,783

O P Hilton 66,667 6,000 79,500 (101,876) 50,291

M Doughty 234,856 17,910 22,750 68 58,434 334,018 5%

Total 784,997 17,910 - - 103,117 7,900 79,500 - (43,442) - 949,982

* 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 FY2008, payment was made on 4/9/08.

EBIT was chosen as the basis for short term incentive calculation for FY2008 to align remuneration with the creation of shareholder value.

FY 2009 Executive Bonus Scheme

The maximum entitlement to a FY2009 Executive Bonus was determined by reference to the achievement of Earnings Before Interest, Tax, Depreciation, Impairment, Foreign currency gains or losses and R&D capitalisation above a threshold level of $5.6M. The payment of any amounts under EBITDAI before Foreign Gain and Loss and R&D Capitalisation 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 Executive Bonus is made at the discretion of the Board, after each 6 month period using a pro rata of the $5.6M threshold. Therefore for the first half of FY2009 the threshold was $2.8M. No payment made for in FY2009 as the threshold was not met.

In 2009, EBITDAI before Foreign Gain and Loss and R&D Capitalisation was 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: 2010

2010Balance

01.07.09Options granted

Options exercised

Options expired

Options lapsed

Balance 30.06.10

Total vested

30.06.10Total

exercisable

Executives

Mark Doughty 400,000 - - - (400,000) - - -

Total 400,000 - - - (400,000) - - -

The Executive Directors do not hold any options and were not granted any options during the year.


For

per

sona

l use

onl

y


Table C: 2009

2009Balance


Options exercised

Options expired

Options lapsed

Balance 30.06.09

Total vested

30.06.09Total

exercisable

Executives

Mark Doughty 400,000 - - - - 400,000 133,333 133,333

Ms OP Hilton 333,334 - - - (333,334) - - -

Total 733,334 - - - (333,334) 400,000 133,333 133,333

The Executive Directors do not hold any options and were not granted any options during the year.

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 issued in FY 2006 using the Black-Scholes Option Pricing Model and using the Binomial method to value all subsequent share option issued. Both valuation methods take 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 2010 is as per below:

Issuing entity Grant date

Number of shares under share option

Class of shares

Fair value of option

Exercise price of option

(cents)Vesting

dateExpiry date

of option

2010

JMB 28/02/2008 375,000 Ordinary 108,000 71 30/09/2008 30/09/2010

JMB 28/02/2008 375,000 Ordinary 120,000 77 30/09/2009 30/09/2011

JMB 28/02/2008 375,000 Ordinary 92,138 83 30/09/2010 30/09/2012

Total 1,125,000 320,138

2009

JMB 05/05/2006 291,668 Ordinary - 248 30/09/2009 30/09/2012

JMB 01/06/2006 - Ordinary - 210 30/09/2007 01/06/2009

JMB 28/02/2008 526,666 Ordinary 151,680 71 30/09/2008 30/09/2010

JMB 28/02/2008 526,667 Ordinary 117,973 77 30/09/2009 30/09/2011

JMB 28/02/2008 526,667 Ordinary 73,944 83 30/09/2010 30/09/2012

JMB 12/09/2008 66,666 Ordinary 6,608 71 30/09/2009 30/09/2011

JMB 12/09/2008 66,667 Ordinary 4,688 77 30/09/2010 30/09/2012

JMB 12/09/2008 66,667 Ordinary 3,282 83 30/09/2011 30/09/2013

Total 2,071,668 358,175

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

There were no share options issued and valuation made during FY 2010. The FY 2009 valuation has been based on the following parameters: Grant date share price: $0.50, risk free rate: tranche 1 and 2 and tranche 3 of 5.63%, dividend yield: nil, expected volatility: tranche 1 of 52% and tranche 2 and 3 of 56%. It has been assumed that options would be exercised after the vesting date when they are two and a half times the exercise price.

24

For

per

sona

l use

onl

y

Non-Executive Director Remuneration

The following persons were Non-Executive Directors of the Company during or since the end of the financial year:





• Adrian P Risch Non-Executive Director Retired as CEO and Executive Director 31 December 2009, appointed 1 January 2010

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 2010)

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 2009/2010 year. No performance options or performance rights have been granted to Non-Executive Directors during or since the end of FY2010.

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.

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

Committee Meetings

Audit & Finance Committee


Governance Committee

Number eligible to

attendNumber

attended

Number eligible to

attendNumber

attended

Number eligible to

attendNumber

attended

Number eligible to

attendNumber

attended

Mr A P Risch 11 11 - - - - - -

Mr B R Bennie 11 11 - - - - - -

Mr D Gibbs 3 3 - - - - - -

Mr H C Parker 11 11 2 2 2 2 N/A* N/A*

Hon J G Kennett 11 10 2 2 2 2 N/A* N/A*

Mr T SP Kiing 11 10 2 2 2 2 N/A* N/A*

* Corporate governance matters were considered within board meetings during FY2010, as in previous years.


For

per

sona

l use

onl

y


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 Options

Mr H C Parker - -

Mr B R Bennie 208,889 -

Hon J G Kennett 650,276 -

Mr T Kiing 10,883,093 -

Mr A P Risch 3,310,596 -

Mr David Gibbs 101,846 -

Options

At 30 June the unissued ordinary shares of Jumbuck under option are:

Grant date Expiry date Exercise price (cents) Vesting date EPS hurdle 2010 2009

5/05/2006 30/09/2012 248 30/09/2009 13 cents in 2009 - 291,668

28/02/2008 30/09/2010 71 30/09/2008 None 375,000 526,666

28/02/2008 30/09/2011 77 30/09/2009 None 375,000 526,667

28/02/2008 30/09/2012 83 30/09/2010 None 375,000 526,667

12/09/2008 30/09/2011 71 30/09/2009 None - 66,666

12/09/2008 30/09/2012 77 30/09/2010 None - 66,667

12/09/2008 30/09/2013 83 30/09/2011 None - 66,667

1,125,000 2,071,668

No options have been issued between 30 June 2010 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 30 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.

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 2010.

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 27.

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 25th day of August 2010.

Harvey Parker Director

26

For

per

sona

l use

onl

y

Auditor’s Independence Declaration


For

per

sona

l use

onl

y

Consolidated Income Statement for the year ended 30 June 2010

Notes

Consolidated

2010$

2009$

Revenues from ordinary activities 2 13,444,914 19,134,860

Accounting and audit fees (131,208) (157,267)

Advertising and marketing (1,556,061) (850,744)

Bad and doubtful debts expense 3 (338,969) (349,400)

Consultants (614,257) (420,518)

Depreciation and amortisation expense 3 (1,739,839) (2,167,855)

Development costs written off 3 (1,243,497) -

Employee benefits expense 3 (3,315,187) (4,786,091)

Loss on disposal of plant and equipment 3 (2,535) (11,145)

Hosting expense (780,502) (984,827)

Insurance (119,720) (144,244)

Impairment of goodwill 3 (2,332,217) -

Legal fees (225,011) (219,758)

Loss on disposal of investment 3 - (662,008)

Loss on disposal of business 3 (157,754) -

Occupancy (534,288) (686,783)

Other expenses from ordinary activities (872,075) (419,838)

Product development (752,351) (404,502)

Overseas representative costs (1,095,789) (1,057,063)

Travel and accommodation (254,265) (438,997)

(Loss)/profit before income tax expense (2,620,611) 5,373,820

Income tax benefit/(expense) 4 160,616 (1,295,135)

(Loss)/profit for the year (2,459,995) 4,078,685

Earnings per share

Basic earnings per share (cents per share) 7 (5.0) 8.3

Diluted earnings per share (cents per share) 7 (5.0) 8.2

The accompanying notes form part of these financial statements.

28

For

per

sona

l use

onl

y

Consolidated Statement of Comprehensive Income for the year ended 30 June 2010

Notes

Consolidated

2010$

2009$


Other comprehensive income

Exchange difference arising on translation of foreign operations (1,060,470) 170,272

Loss on cash flow hedges - (12,570)

Related income tax component - 3,771

Total comprehensive income/(losses) (3,520,465) 4,240,158

Total comprehensive income/(losses) attributable to members of the parent entity (3,520,465) 4,240,158



For

per

sona

l use

onl

y

Consolidated Statement of Financial Position as at 30 June 2010

Notes

Consolidated

2010$

2009$

Current assets

Cash and cash equivalents 9 6,452,850 7,205,588

Trade and other receivables 10 3,079,452 4,283,564

Current tax assets 18 1,877,717 722,372

Other financial assets 14 129,890 632,147

Other current assets 11 76,022 194,704

Total current assets 11,615,931 13,038,375

Non-current assets

Plant and equipment 13 439,130 701,552

Intangible assets 15 15,628,692 19,972,079

Deferred tax asset 18 168,862 503,395

Total non-current assets 16,236,684 21,177,026

Total assets 27,852,615 34,215,401

Current liabilities

Trade and other payables 17 2,063,549 3,394,149

Finance lease liabilities 19 - 23,779

Current tax liabilities 18 2,332 19,197

Other current liabilities 20 14,633 64,171

Provisions 21 219,093 216,917

Total current liabilities 2,299,607 3,718,213

Non-current liabilities

Deferred tax liability 18 1,072,670 1,089,984

Provisions 21 18,021 11,048

Total non-current liabilities 1,090,691 1,101,032

Total liabilities 3,390,298 4,819,245

Net assets 24,462,317 29,396,156

Equity

Issued capital 22 9,649,537 9,930,533

Retained earnings 23 15,138,544 18,818,148

Reserves 24 (325,764) 647,475

Total equity 24,462,317 29,396,156


30

For

per

sona

l use

onl

y

Consolidated Statement of Changes in Equity for year ended 30 June 2010

Consolidated Notes

Share capital ordinary

$

Retained earnings

$

Foreign currency

translation reserve

$

Equity-settled

employee benefits reserve

$

Hedging reserve

$Total

$

Balance at 1 July 2008 9,034,446 14,739,463 (59,904) 461,192 - 24,175,197

Profit attributable to members of parent entity 23 - 4,078,685 - - - 4,078,685

Exchange differences arising on translation of foreign operations - - 170,272 - - 170,272

Loss on cash flow hedges 24 - - - - (8,799) (8,799)

Total comprehensive income for the year - 4,078,685 170,272 - (8,799) 4,240,158

Issue of fully paid ordinary shares to vendor of Oztion Pty Ltd 22 957,500 - - - - 957,500

Share buy-back (61,413) - - - - (61,413)

Recognition of share based payments 24 - - - 84,714 - 84,714

Balance at 30 June 2009 9,930,533 18,818,148 110,368 545,906 (8,799) 29,396,156

Loss attributable to members of parent entity 23 - (2,459,995) - - - (2,459,995)

Exchange differences arising on translation of foreign operations - - (1,060,470) - - (1,060,470)

Total comprehensive income for the year - (2,459,995) (1,060,470) - - (3,520,465)

Payment of dividends - (1,219,609) - - - (1,219,609)

Share buy-back 22 (280,996) - - - - (280,996)

Recognition of share based payments 24 - - - 87,231 - 87,231

Balance at 30 June 2010 9,649,537 15,138,544 (950,102) 633,137 (8,799) 24,462,317



For

per

sona

l use

onl

y

Consolidated Cash Flow Statement for the year ended 30 June 2010

Notes

Consolidated

2010$

2009$

Cash flows from operating activities

Receipts from customers 12,907,599 18,737,977

Payments to suppliers and employees (8,859,122) (11,671,070)

Interest received 251,118 169,025

Interest on obligations under finance lease (1,055) (3,070)

Income tax paid (694,022) (1,691,050)

Net cash provided by operating activities 27 3,604,518 5,541,812

Cash flows from investing activities

Purchase of plant and equipment (74,815) (266,321)

Payment for development expenses (2,057,960) (2,370,660)

Payment for acquisition of Plutolife 16 (1,873,358) (2,402,276)

Payment for acquisition of Oztion (63,930) (365,121)

Payment for foreign currency options - (198,485)

Proceeds from sale of investment - 507,539

Proceeds from sale of plant and equipments 751 2,380

Proceeds from sale of business 200,000 -

Proceeds from foreign currency option 1,036,440 58,517

Dividends received - 66,719

Net cash used in investing activities (2,832,872) (4,967,708)

Cash flows from financing activities

Payment for share buy-back costs 22 (280,996) (61,413)

Repayment of borrowings (23,779) (16,733)

Payment of dividends 23 (1,219,609) -

Net cash used in financing activities (1,524,384) (78,146)

Net (decrease)/increase in cash held (752,738) 495,958

Cash and cash equivalents at beginning of financial year 7,205,588 6,709,630

Cash and cash equivalents at end of financial year 9 6,452,850 7,205,588


32

For

per

sona

l use

onl

y

Notes to the Financial Statements for the year ended 30 June 2010

Note 1: Statement of Significant Accounting Policies

Statement of Compliance

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 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 25 August 2010.

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 ongoing 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 new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in these financial statements.

Standards affecting presentation and disclosure

AASB 101 Presentation of Financial Statements (as revised in September 2007), AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101 and AASB 2007-10 Further Amendments to Australian Accounting Standards arising from AASB 101

AASB 101(September 2007) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard has required the presentation of a third statement of financial position at 1 July 2008, because the entity has applied new accounting policies retrospectively (see below).

AASB 8 Operating Segments

AASB 8 is a disclosure Standard that has resulted in a redesignation of the Group’s reportable segments (see note 26).

AASB 2009-2 Amendments to Australian Accounting Standards – Improving Disclosures about Financial Instruments

The amendments to AASB 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments.


For

per

sona

l use

onl

y

Notes to the Financial Statements for the year ended 30 June 2010 (continued)

Note 1: Statement of Significant Accounting Policies (continued)

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.

a) Principles of Consolidation

A controlled entity is any entity Jumbuck Entertainment Ltd has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

A list of controlled entities is contained in Note 12 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 statements.

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 statement of financial position date.

Deferred tax is accounted for using the statement of financial position 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 recognised 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 entity is then subsequently assumed by the parent entity. The group entered into the tax consolidation regime from 1st June 2006 and notified the Australian Taxation Office that it had formed an income tax consolidated group to apply from 1st 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.

c) 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 Years of useful life

Plant and equipment 3-4 years

Furniture and fittings 8 years

Software 3-4 years

Leasehold improvements 8 years

Motor vehicles 5 years

34

For

per

sona

l use

onl

y

d) 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.

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 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 life 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’.


For

per

sona

l use

onl

y



f) Financial Assets (continued)

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each statement of financial position 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.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

g) Financial Liabilities

Financial liabilities are classified as other financial liabilities.

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

h) Derivative Financial Instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risk, including foreign exchange forward contracts and foreign currency options.

Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. The Group designates certain derivatives as hedges of foreign currency risk of firm commitments (cash flow hedges).

A derivative with a positive fair value is recognised as a financial asset; a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the [statement of comprehensive income/income statement] as the recognised hedged item. However,

36

For

per

sona

l use

onl

y

when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

i) Intangibles

Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

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 internally generated 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:

• 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 and 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.

Subsequent to initial recognition, deferred development costs which the product has been made available for commercial sale are reported at cost less accumulated amortisation and accumulated impairment loss.

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

j) 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.


For

per

sona

l use

onl

y



j) Foreign Currency Transactions and Balances (continued)

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.

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 statement of financial position. These differences are recognised in the income statement in the period in which the operation is disposed.

k) 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 year 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 28 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 and Binomial model. The expected life used in the models have 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.

l) 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 statement of financial position.

m) 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).

n) 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.

o) 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 statement of financial position 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.

38

For

per

sona

l use

onl

y

p) Comparative Figures

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year.

Standards and Interpretations adopted with no effect on financial statements

The following new and revised Standards and Interpretations have also been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements but may affect the accounting for future transactions or arrangements.

AASB 2008-7 Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

The amendments deal with the measurement of the cost of investments in subsidiaries, jointly controlled entities and associates when adopting A-IFRS for the first time and with the recognition of dividend income from subsidiaries in a parent’s separate financial statements.

AASB 2008-1 Amendments to Australian Accounting Standard - Share-based Payments: Vesting Conditions and Cancellations

The amendments clarify the definition of vesting conditions for the purposes of AASB 2, introduce the concept of ‘non-vesting’ conditions, and clarify the accounting treatment for cancellations.

AASB 123 Borrowing Costs (as revised in 2007) and AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123

The principal change to AASB 123 was to eliminate the option to expense all borrowing costs when incurred. This change has had no impact on these financial statements because it has always been the Group’s accounting policy to capitalise borrowing costs incurred on qualifying assets.

AASB 2008-8 Amendments to Australian Accounting Standards- Eligible Hedged Items

The amendments provide clarification on two aspects of hedge accounting: identifying inflation as a hedged risk or portion, and hedging with options.

AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

In addition to the changes affecting amounts reported in the financial statements described at 2.1 above, the amendments have led to a number of changes in the detail of the Group’s accounting policies - some of which are changes in terminology only, and some of which are substantive but have had no material effect on amounts reported.

AASB 2009-4 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

In addition to the amendments to AASB 5 and AASB 107 described earlier in this section, and the amendments to AASB 117 discussed in section 2.3 below, the amendments have led to a number of changes in the detail of the Group’s accounting policies - some of which are changes in terminology only, and some of which are substantive but have had no material effect on amounts reported. Except as noted in 2.3 below, the changes in AASB 2009-5 have been adopted in advance of their effective dates of 1 January 2010.

Standards and Interpretations in Issue Not Yet Adopted

At the date of authorisation of the financial statements, the following applicable Standards and Interpretations listed below were in issue but not yet effective. Initial application of the following standards and interpretations is not expected to have any material impact on the financial report of the Group:

Standard/Interpretation

Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

1 January 2010 30 June 2011

AASB 2009-8 Amendments to Australian Accounting Standards - Group Cash-Settled Share-based Payment Transactions


AASB 2009-10 Amendments to Australian Accounting Standards - Classification of Rights Issues

1 February 2010 30 June 2011

AASB 124 Related Party Disclosures (revised December 2009), AASB 2009-12 Amendments to Australian Accounting Standards


AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9


AASB 2009-14 Amendments to Australian Interpretation - Prepayments of a Minimum Funding Requirement


Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010 30 June 2011


For

per

sona

l use

onl

y



p) Comparative Figures (continued)

Critical Accounting Judgments and Key Sources of Estimation Uncertainty

In the application of the Group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate 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 are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Recoverability of development costs

During the year, the directors reconsidered the recoverability of the Group’s capitalised development costs. Consideration was given to the likelihood of future revenue generation.

The carrying amount of development costs as at 30 June 2010 is $2,225,130 after write off of development cost of $1,243,497.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

The carrying amount of goodwill at the end of the reporting period was $13,403,562 after an impairment loss of $2,332,217 was recognised during 2010.

Note 2: Revenue

Consolidated

2010$

2009$

Operating activities

Rendering of services 12,784,994 18,118,348

Gain/(loss) on foreign currency options 393,842 (51,029)

Gain on foreign currency options and forward contracts revaluation 140,340 500,378

Interest received 149,902 263,386

Export Market Development Grant (39,093) 221,033

Dividends, other entities - 66,719

Profit on disposal of investment - 16,025

Other income 14,929 -

Total revenue 13,444,914 19,134,860

40

For

per

sona

l use

onl

y

Note 3: Loss/(Profit) From Ordinary Activities

Consolidated

2010$

2009$

Loss/(Profit) from ordinary activities before income tax has been determined after:

Depreciation of non-current assets

Plant and equipment 210,463 223,218

Furniture and fittings 38,347 39,350

Software 20,046 123,396

Leasehold improvements 10,731 18,659

Motor vehicles 10,597 4,822

Total depreciation 290,184 409,445

Amortisation of intangibles

Development cost – Messaging 1,449,655 1,758,410

Total amortisation 1,449,655 1,758,410

Total depreciation and amortisation 1,739,839 2,167,855

Loss on disposal of plant and equipment 2,535 11,145

Development costs written off 1,243,497 -

Bad and doubtful debts

Trade debtors 338,969 349,400

Rental expense on operating leases

Minimum lease payments 360,848 442,416

Foreign currency translation losses/(gain) 392,672 (305,564)

Employee benefits expense

Employee options 87,231 84,714

Other employee benefits expense 3,227,956 4,701,377

Total employee benefits expense 3,315,187 4,786,091

Finance costs

Interest on obligations under finance leases 1,055 3,070

Other interest expenses 1,987 12,882

Total finance costs 3,042 15,952

Loss on disposal of investment - 662,008

Impairment of goodwill 2,332,217 -

Loss on disposal of business 157,754 -


For

per

sona

l use

onl

y


Note 4: Income Tax (Benefit)/Expense

Consolidated

2010$

2009$

a. The components of tax expense comprise:

Current tax (20,611) 1,228,357

Benefit arising from previously unrecognised tax losses that is used to reduce current tax expense - (172,593)

Deferred tax relating to the origination and reversal of temporary differences 387,770 264,175

Over provision from prior years (527,775) (24,804)

(160,616) 1,295,135

b. The prima facie tax on profit/(loss) before income tax is reconciled to income tax expense as follows:

Profit/(loss) before income tax (2,620,611) 5,373,820

Prima facie tax on profit/(loss) before income tax at 30% (786,183) 1,612,146

Tax effect of:

Add

Non-allowable legal fees 44,427 51,167

Non-allowable options expense 26,169 25,414

Impairment of goodwill 699,665 -

Write off of development cost 373,049 -

Over provision for income tax in prior year (527,775) (24,804)

Entertainment 1,229 2,494

Accounting loss on sale of business 47,326 198,602

Less

Net R & D allowable items (48,016) (227,513)

Benefit arising from previously unrecognised tax losses that is used to reduce current tax expense - (172,593)

Other jurisdictions (35,192) (43,025)

Others 44,685 (126,753)

Income tax attributable to entity (160,616) 1,295,135

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.

42

For

per

sona

l use

onl

y

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




• Adrian P Risch CEO and Executive Director Retired as CEO and Executive Director 31 December 2009, appointed Non Executive Director 1 January 2010)

• David Gibbs Executive Director and CEO Appointed 13 April 2010

Key Management Personnel

• M Doughty COO, CFO and Company Secretary Retired as COO, CFO and Company Secretary 14 May 2010

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

2010Balance


Options exercised

Options expired

Options lapsed*

Balance 30.06.10

Total vested

30.06.10Total

exercisable

Executives

M Doughty 400,000 - - - (400,000) - - -

Total 400,000 - - - (400,000) - - -

2009Balance


Options exercised

Options expired

Options lapsed*

Balance 30.06.09

Total vested

30.06.09Total

exercisable

Executives

M Doughty 400,000 - - - - 400,000 133,333 133,333

O P Hilton 333,334 - - - 333,334 - - -

Total 733,334 - - - 333,334 400,000 133,333 133,333

* Options lapsed as the vesting condition of continued employment was not met.


For

per

sona

l use

onl

y


Note 5: Key Management Personnel Remuneration (continued)

e. Shareholdings

Number of Shares held by Key Management Personnel:

2010Balance

01.07.09Received as

remunerationOptions

exercisedNet change

other*

No longer key management

personnelBalance

30.06.10

Directors

B R Bennie 208,889 - - - - 208,889

Hon J G Kennett 551,210 - - 99,066 - 650,276

T SP Kiing 7,083,093 - - 3,800,000 - 10,883,093

A P Risch 3,810,285 - - (499,689) - 3,310,596

David Gibbs - - - 101,846 - 101,846

Sub total 11,653,477 - - 3,501,223 - 15,154,700


M Doughty 5,000 - - - (5,000) -

Sub total 5,000 - - - (5,000) -

Total 11,658,477 - - 3,501,223 (5,000) 15,154,700

2009Balance

01.07.08Received as

remunerationOptions

exercisedNet change

other*

No longer key management

personnelBalance

30.06.09

Directors

B R Bennie 208,889 - - - - 208,889

K V Campbell (retired 29/10/08) 110,957 - - - (110,957) -

Hon J G Kennett 530,210 - - 21,000 - 551,210

T SP Kiing (appointed 29/7/08) **5,385,270 - - 1,697,823 - 7,083,093

A P Risch 2,660,000 - - 1,150,285 - 3,810,285

Sub total 8,895,326 - - 2,869,108 (110,957) 11,653,477


M Doughty 5,000 - - - - 5,000

Sub total 5,000 - - - - 5,000

Total 8,900,326 - - 2,869,108 (110,957) 11,658,477

* Net Change Other refers to shares purchased or sold during the financial year.

** The shares were obtained prior to the person being appointed as a Director.

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 (2009: NIL).

Consolidated

2010$

2009$

Short- term employee benefits:

Salary & fees 819,665 784,997

Bonus 8,900 17,910

Other 10,367 -

Post employment benefits 74,898 103,117

Other long term employee benefits 45,025 7.900

Termination benefits - 79,500

Share based payments 28,338 (43,442)

Total compensation 987,193 949,982

44

For

per

sona

l use

onl

y

Note 6: Auditors’ remuneration

Consolidated

2010$

2009$

Remuneration of the auditor of the parent entity for:

Auditing or reviewing the financial report 90,986 89,370

Other services - -

90,986 89,370

The auditor of the parent entity is Deloitte Touche Tomatsu (2009: Deloitte Touche Tomatsu).

Note 7: Earnings per share

Consolidated

2010 2009

Basic earnings per share (cents per share) (5.0) 8.3

Diluted earnings per share (cents per share) (5.0) 8.2

Consolidated

2010$

2009$

a. Reconciliation of earnings to net (loss)/profit

Net (loss)/profit (2,459,995) 4,078,685

Net profit attributable to outside equity interest - -

(Loss)/earnings used in the calculation of basic EPS (2,459,995) 4,078,685

(Loss)/earnings used in the calculation of dilutive EPS (2,459,995) 4,078,685

b. Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS 48,810,850 49,405,162

Shares deemed to be issued for no consideration in respect of the employee options - 156,414

Weighted average number of ordinary shares outstanding during the year used in calculation of dilutive EPS 48,810,850 49,561,576

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.

2010 2009

No. No.

1,125,000 2,071,668


For

per

sona

l use

onl

y


Note 8: Dividends

2010 2009

Cents per share

Total $

Cents per share

Total $

Recognised amounts

Fully paid ordinary shares

Final dividend

Fully franked at a 30% tax rate 2.0 975,686 - -

Interim dividend:

Fully franked at a 30% tax rate 0.5 243,921 - -

2.5 1,219,607 - -

Unrecognised amounts

Fully paid ordinary shares

Final dividend:

Fully franked at a 30% tax rate 1.0 487,843 2.0 990,402

Company

2010$

2009$

Adjusted franking account balance 6,366,820 5,258,000

Tax paid 571,012 1,631,509

Impact on franking account balance of dividends not recognised (209,076) (424,458)

6,728,756 6,465,051

Note 9: Cash and Cash Equivalents

Consolidated

2010$

2009$

Cash at bank 6,451,183 7,203,702

Cash on hand 1,667 1,886

6,452,850 7,205,588

The Group has a security deposit guarantee of $9,900 as at 30 June 2010 (2009: $8,800).

Note 10: Trade and Other Receivables

Current

Trade debtors 1,808,651 2,689,400

Allowance for doubtful debts (361,076) (302,590)

1,447,575 2,386,810

Other debtors 764,723 797,728

Accrued income 867,125 1,097,134

GST receivable 29 1,892

3,079,452 4,283,564

46

For

per

sona

l use

onl

y

Trade debtors are non-interest bearing and are generally on 7 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 $325,229 (2009: $302,590) has been recognised by the Group in the current year.

Before accepting new customers, the Group goes through a rigorous process of contract discussion and negotiation which includes management assessment on whether the customer is of sufficient viability before agreeing to set up a new service with that customer.

a) Allowance for Impairment Loss

Trade receivables are non-interest bearing and are generally on 7-60 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. A net impairment loss of $325,229 (2009: $308,105) has been recognised by the Group in the current year.

Movements in the provision for impairment loss were as follows:

Consolidated

2010$

2009$

Opening balance 302,590 18,891

Additional provision 325,229 348,063

Amount written off (266,743) (24,406)

Amount recovered - (39,958)

Closing balance 361,076 302,590

At 30 June, the ageing analysis of trade receivables is as follows:

As at 30 June 2010 As at 30 June 2009

ConsolidatedGross

$Allowance

$Gross

$Allowance

$

Current 1,017,683 - 1,733,955 -

31-60 days 116,305 - 61,042 -

61-90 days 265,584 (85,456) 290,325 -

91 days and over 409,079 (275,620) 604,078 (302,590)

Closing balance 1,808,651 (361,076) 2,689,400 (302,590)

Ageing of past due but not impaired:

Consolidated

2010$

2009$

1-30 days 198,000 39,822

31-60 days 48,359 70,676

61-90 days 109,847 206,289

91 days and over 49,687 390,590

405,893 707,377


For

per

sona

l use

onl

y


Note 11: Other Current Assets

Consolidated

2010$

2009$

Prepayments 76,022 194,704

Note 12: Controlled Entities

Controlled Entities Country of Incorporation

Percentage Owned

2010 2009

Parent Entity:

Jumbuck Entertainment Ltd 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 Entertainment Inc USA 100 100

Oztion Pty Ltd Australia 100 100

JMB Communications Pty Ltd Australia 100 100

Plutolife AS Norway 100 100

Plutolife LLC USA 100 100

Livethegame Asia-Pacific Pte Ltd Singapore - 75

Controlled Entities Purchased

2010

The Company has deregistered Livethegame Asia-Pacific Pte Ltd on 8 October 2009.

On the 9 June 2010, the Company has changed Carbuddy Pty Ltd’s name to JMB Communications Pty Ltd.

2009

On 1 July 2008, the Company acquired 100% of Plutolife AS and its subsidiaries. Two of its subsidiaries being Plutolife Publishing AS and NIX Publishing AS were merged into Plutolife AS on 30 June 2009. Plutolife AS is incorporated and domiciled in Norway. Its remaining subsidiaries being Plutolife LLC and Livethegame Asia-Pacific Pte Ltd were incorporated and domiciled in USA and Singapore respectively.

The Company has deregistered Jumbuck Share Plan Pty Ltd on 23 March 2009.

The acquisition of the above entities is disclosed in Note 16.

48

For

per

sona

l use

onl

y

Note 13: Plant and Equipment

Consolidated

2010$

2009$

Plant and equipment

At cost 1,159,542 1,245,112

Accumulated depreciation (936,082) (842,278)

223,460 402,834

Furniture and fittings

At cost 286,814 299,700


118,678 163,596

Software

At cost 404,353 439,338


11,033 25,352

Leasehold improvements

At cost 82,239 82,912


50,389 61,598

Motor vehicles

At cost 50,244 52,994


35,570 48,172

Total plant and equipment 439,130 701,552

a) Movements in Carrying Amounts

Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial year:

Year ended 30 June 2010

Plant and equipment

$

Furniture and fittings

$Software

$

Leasehold improvements

$

Motorvehicles

$Total

$

Consolidated

Balance at the beginning of year 402,834 163,596 25,352 61,598 48,172 701,552

Additions 58,414 9,765 6,636 - - 74,815

Disposals/Transfers (975) (12,426) (306) - (2,005) (15,712)

Depreciation expense (210,463) (38,347) (20,046) (10,731) (10,597) (290,184)

Net foreign exchange differences (26,350) (3,910) (604) (477) - (31,341)

Carrying amount at the end of year 223,460 118,678 11,033 50,389 35,570 439,130


Consolidated

Balance at the beginning of year 421,479 156,631 121,128 122,466 - 821,704

Additions 187,563 17,293 8,471 - 52,994 266,321

Acquisition through business combination 6,238 - 11,430 - - 17,668

Disposals/Transfers (328) 29,252 - (42,445) - (13,521)

Depreciation expense (223,218) (39,350) (123,396) (18,659) (4,822) (409,445)

Net foreign exchange differences 11,100 (230) 7,719 236 - 18,825

Carrying amount at the end of year 402,834 163,596 25,352 61,598 48,172 701,552

b) Impairment Losses

There have been no impairment losses for this financial year ended 30 June 2010 (2009: NIL).


For

per

sona

l use

onl

y


Note 14: Other Financial Assets

Consolidated

2010$

2009$

Current other financial assets

Foreign currency option - 640,946

Foreign currency forward contracts 129,890 (8,799)

129,890 632,147

Foreign Currency Options and Forward Contracts

The Company purchased a strip of foreign currency options and forward contracts in March 2009 to manage the risk of fluctuation in USD exchange rate. The fair value of the foreign currency forward contracts is $129,890. There are no outstanding foreign currency options as at reporting date. The details of the foreign currency forward contracts are as per below:

Foreign Currency Options

Face value 1 Face value 2 Expire date Strike price

USD250,000 USD125,000 14 Aug 2009 0.70

USD500,000 USD250,000 13 Nov 2009 0.70

USD500,000 USD250,000 12 March 2010 0.70

USD500,000 USD250,000 11 June 2010 0.70

USD250,000 USD125,000 14 Aug 2009 0.70

USD500,000 USD250,000 13 Nov 2009 0.70

USD500,000 USD250,000 12 March 2010 0.70

USD500,000 USD250,000 11 June 2010 0.70

Foreign Currency Forward Contracts

Purchase amount Value date Strike price

USD260,000 30 July 2010 0.7895

USD260,000 31 Aug 2010 0.7879

USD260,000 30 Sept 2010 0.7862

USD260,000 29 Oct 2010 0.7847

USD260,000 30 Nov 2010 0.783

USD260,000 30 Dec 2010 0.7813

50

For

per

sona

l use

onl

y

Note 15: Intangibles Assets

Consolidated NoteGoodwill

$

Development costs

$Total

$


Gross carrying value

Balance at 1 July 2008 11,813,801 5,640,536 17,454,337

Additions from internal developments - 2,370,660 2,370,660

Additions from acquisitions 4,683,790 - 4,683,790

Acquisition through business combination - 33,232 33,232

Derecognised on disposal of investment (96,500) - (96,500)

Effect of movement in foreign exchange rate 352,912 - 352,912

Balance at 30 June 2009 16,754,003 8,044,428 24,798,431

Accumulated amortisation and impairment

Balance at 1 July 2008 - (3,067,942) (3,067,942)

Amortisation expense - (1,758,410) (1,758,410)

Balance at 30 June 2009 - (4,826,352) (4,826,352)

Net book value

Balance at 1 July 2008 11,813,801 2,572,594 14,386,395

Balance at 30 June 2009 16,754,003 3,218,076 19,972,079


Gross carrying value

Balance at 1 July 2009 16,754,003 8,044,428 24,798,431

Additions from internal developments - 2,057,960 2,057,960

Additions from acquisitions 63,930 - 63,930

Effect of movement in foreign exchange rate (1,082,154) - (1,082,154)

Disposal of business 34 - (357,754) (357,754)

Written off - (1,243,497) (1,243,497)

Balance at 30 June 2010 15,735,779 8,501,137 24,236,916

Accumulated amortisation and impairment

Balance at 1 July 2009 - (4,826,352) (4,826,352)

Amortisation expense - (1,449,655) (1,449,655)

Impairment loss (2,332,217) - (2,332,217)

Balance at 30 June 2010 (2,332,217) (6,276,007) (8,608,224)

Net book value

Balance at 1 July 2009 16,754,003 3,218,076 19,972,079

Balance at 30 June 2010 13,403,562 2,225,130 15,628,692


For

per

sona

l use

onl

y


Note 15: Intangibles Assets (continued)

Goodwill relates to the acquisition of Plutolife AS and its subsidiaries, Oztion Pty Ltd and WAP 3 Community business in the prior financial years. 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 Plutolife AS and its subsidiaries, 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:

2010$

2009$

Mobile Chat 7,405,711 8,377,223

Fast Flirting 875,508 875,508

SMS Products 4,643,581 4,754,223

Australia web consumer services 478,762 2,747,049

Total 13,403,562 16,754,003

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.

Mobile Chat, Fast Flirting and SMS Products

The discounted cash flow method of calculation were used to confirm that the carrying value of assets in the books of the Company were not greater than its recoverable amount for the Mobile Chat, Fast Flirting and SMS products cash generating units. A 16.6% discount rate has been used when calculating the discounted net cash flows. These revenues and costs have been forecasted on the basis of historical data and the budgets set in long term business plans. The average growth rate and inflation rate used for revenue and costs are:

• Mobile Chat: an average of 2.2% growth and 2.7% of inflation rate,

• Fast Flirting: an average of 2.2% growth and 2.7% of inflation rate, and

• SMS Products: an average of 8.7% growth and 2.7% of inflation rate.

Australian web consumer services

At the end of the reporting period, the Group assessed the recoverable amount of goodwill, and determined that goodwill associated with Australian web consumer services was impaired by $2,332,217(2009: NIL). The recoverable amount of the Australian web consumer services was assessed by reference to the cash generating unit’s fair value less cost to sell.

For all 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.

Note 16: Acquisition of Business

Name of business acquired Principal activity Date of acquisition

Proportion of shares acquired Cost of acquisition

2010 NIL NIL NIL NIL NIL

2009 Plutolife AS and its subsidiary companies

Mobile data services provider

1 July 2008

100%

$4,275,634

52

For

per

sona

l use

onl

y

30 June 2009

On 1 July 2008 the Company acquired 100% of share capital of Norwegian based Plutolife AS and its subsidiary companies. The initial consideration was $2,046,036 in cash. An additional cash consideration of $1,309,000 was paid to the vendors of Plutolife AS on 6 August 2009. The acquisition cost incurred was $356,240.

In addition there was an earn out payable to two of the vendors who are involved in the active management of Plutolife AS. All earn out payments were made in cash and depended on the profitability of Plutolife from January 2009 to December 2009. The total earn out payments of $564,358 were paid in February 2010.

The acquisition net assets were ascribed the following valuations:

Net assets acquiredBook value

$

Fair value adjustments

$

Fair value acquisition

$

Current assets

Trade debtors 311,026 (68,751) 242,275

Prepayments and other receivables 314,423 (84,049) 230,374

Total current assets 625,449 (152,800) 472,649

Non-current assets

Other intangible assets 430,833 (397,601) 33,232

Fixed assets 16,065 - 16,065

Tax asset 469,091 - 469,091

Total non-current assets 915,989 (397,601) 518,388

Total assets 1,541,438 (550,401) 991,037

Current liabilities

Trade payables (178,476) - (178,476)

Accrued expenses (328,732) (187,022) (515,754)

Borrowings (227,000) - (227,000)

Total current liabilities (734,208) (187,022) (921,230)

Total liabilities (734,208) (187,022) (921,230)

Net assets 807,230 (737,423) 69,807

Goodwill on acquisition 4,205,827

Purchase consideration 4,275,634

Net cash flow on acquisition

Total purchase consideration 4,275,634

Less: Deferred consideration (1,873,358)

Consideration paid in cash 2,402,276

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.


For

per

sona

l use

onl

y


Note 17: Trade and Other Payables

Consolidated

2010$

2009$

Current

Unsecured liabilities

Trade payables 595,707 444,514

Other payables 1,457,850 2,939,643

Amounts payable to director related entities 9,992 9,992

2,063,549 3,394,149

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.

Note 18: Tax

a. Assets

Income tax receivable 1,877,717 722,372

b. Liabilities

Current

Income tax payable 2,332 19,197

c. Deferred tax balances

Deferred tax asset comprises:


Charge to income (334,533) (45,554)

Acquisition - 469,091


Deferred tax liability comprises:

Opening balance 1,089,984 848,410

Charged to income (17,314) 241,574

Closing balance 1,072,670 1,089,984

54

For

per

sona

l use

onl

y

Taxable and deductible temporary differences arise from the following:

i) Deferred tax liabilities

Consolidated

2010$

2009$

Opening balance 1,089,982 848,410

Development cost 182,491 164,202

Employee benefits 13,251 6,453

Bad debt provision (17,546) (80,975)

Plant and equipment (4,656) 12,967

Government grant (60,000) (12,000)

Foreign currency option revaluation (116,072) 150,113

Other (14,780) 814


ii) Deferred tax assets

Gross deferred tax assets


Overseas subsidiary losses carried forward (321,976) 441,794

Employee benefits 15,377 -

Others (27,934) (18,257)


c) Unrecognised temporary difference

At 30 June 2010, 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. (2009: NIL).


For

per

sona

l use

onl

y


Note 19: 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.

Minimum future lease payments

Present value of minimum future lease payments

Consolidated Consolidated

2010$

2009$

2010$

2009$

No later than 1 year - 24,785 - 23,779

Later than 1 year and not later than 5 years - - - -

Later than 5 years - - - -

Minimum future lease payments - 24,785 - 23,779

Less future finance charges - (1,006) - -

Present value of minimum lease payments - 23,779 - 23,779

Included in the statement of financial position as:

Current finance lease liabilities - 23,779

Non-current finance lease liabilities - -

- 23,779

Note 20: Other Current Liabilities

Consolidated

2010$

2009$

Billings in advance 14,633 64,171

Note 21: Provisions

Current

Employee entitlements 219,093 216,917

Non current

Employee entitlements 18,021 11,048

a. Aggregate employee benefits liability 237,114 227,965

No. No.

b. Number of employees at year-end

Casual employees 3 -

Full time employees 73 79

Total employees 76 79

56

For

per

sona

l use

onl

y

Note 22: Issued Capital

Note

Consolidated

2010$

2009$

48,784,291 (2009:49,520,075) Fully paid ordinary shares 22a 9,649,537 9,930,533

a. Ordinary shares

At the beginning of the reporting period 9,930,533 9,034,446

Issue of 1,631,175 fully paid ordinary shares to vendors of Oztion Pty Ltd on 04/08/08 - 957,500

39,989 shares cancelled under share buyback on 01/09/08 - (21,357)


10,000 shares cancelled under buyback on 08/10/08 - (5,011)





75,000 shares cancelled under share buyback on 06/07/09 (28,643) -



2,500 shares cancelled under share buyback on 14/07/09 (955) -




At reporting date 9,649,537 9,930,533

No. No.

No of shares at the beginning of reporting period 49,520,075 48,020,105

Issue of 1,631,175 fully paid ordinary shares to vendors of Oztion Pty Ltd on 04/08/08 - 1,631,175
















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.


For

per

sona

l use

onl

y


Note 22: Issued Capital (continued)

b) Options

2010No.

2009No.

No of options at the beginning of reporting period 2,071,668 2,785,002

200,000 options granted on 12/09/08 - 200,000

363,334 options lapsed due to employees leaving - (363,334)

550,000 options lapsed on 01/06/09 - (550,000)

291,668 options lapsed on 30/06/09 (291,668) -

655,000 options lapsed due to employees leaving (655,000) -


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 28.

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 28.

iii) At 30 June 2010, there were 1,125,000 unissued ordinary shares for which options were outstanding. (2009: 2,071,668).

2010

Grant dateExpiry

date

Exercise price

(Cents)Balance


Options exercised

Options lapsed*

Totalbalance

30.06.10

At 30 June 2010

TotalExerci-

sable

Notexerci-

sable

Directors

None - - - - - - - - - -

Employees, former employees and consultants

05/05/2006 30/09/2012 248 291,668 - - (291,668) - - - -

28/02/2008 30/09/2010 71 526,666 - - (151,666) 375,000 375,000 375,000 -

28/02/2008 30/09/2011 77 526,667 - - (151,667) 375,000 375,000 375,000 -

28/02/2008 30/09/2012 83 526,667 - - (151,667) 375,000 375,000 - 375,000

12/09/2008 30/09/2011 71 66,666 - - (66,666) - - - -

12/09/2008 30/09/2012 77 66,667 - - (66,667) - - - -

12/09/2008 30/09/2013 83 66,667 - - (66,667) - - - -

Total 2,071,668 - - (946,668) 1,125,000 1,125,000 750,000 375,000

58

For

per

sona

l use

onl

y

2009

Grant dateExpiry

date

Exercise price

(Cents)Balance


Options exercised

Options lapsed *

Total balance

30.06.09

At 30 June 2009

TotalExerci-

sable

Not exerci-

sable

Directors

None - - - - - - - - - -

Employees, former employees and consultants

05/05/2006 30/09/2012 248 625,002 - - (333,334) 291,668 291,668 - 291,668

01/06/2006 30/09/2009 210 550,000 - - (550,000) - - - -

28/02/2008 30/09/2010 71 536,666 - - (10,000) 526,666 526,666 526,666 -

28/02/2008 30/09/2011 77 536,667 - - (10,000) 526,667 526,667 - 526,667

28/02/2008 30/09/2012 83 536,667 - - (10,000) 526,667 526,667 - 526,667

12/09/2008 30/09/2011 71 - 66,666 - - 66,666 66,666 - 66,666

12/09/2008 30/09/2012 77 - 66,667 - - 66,667 66,667 - 66,667

12/09/2008 30/09/2013 83 - 66,667 - - 66,667 66,667 - 66,667

Total 2,785,002 200,000 - (913,334) 2,071,668 2,071,668 526,666 1,545,002

* Options lapsed due to not meeting KPI hurdle or employees leaving.

Note 23: Retained Earnings

Consolidated

2010$

2009$

Retained profits at the beginning of the financial year 18,818,148 14,739,463

Net (loss)/profit attributable to the members of the entity (2,459,995) 4,078,685

Payment of dividends (1,219,609) -

Retained profits at the end of the financial year 15,138,544 18,818,148


For

per

sona

l use

onl

y


Note 24: Reserves

Note

Consolidated

2010$

2009$

Employee equity settled benefits 633,137 545,906

Foreign currency translation (950,102) 110,368

Hedging reserve (8,799) (8,799)

(325,764) 647,475

Employee equity settled benefits reserve

Opening balance at beginning of the year 545,906 461,192

Share based payment a 87,231 84,714

Balance at end of the financial year 633,137 545,906

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 28 to the financial statements.

Foreign currency translation reserve

Opening balance at beginning of the year 110,368 (59,904)

Foreign currency translation (1,060,470) 170,272

Balance at end of the financial year (950,102) 110,368

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.

The functional currency of the economic entity’s foreign controlled entity are as follows:

• UAH (Ukrainian Hrymia) for Community Development and Support Ltd;

• EUR for Jumbuck Community Gmbh;

• USD for Jumbuck Entertainment Inc and Plutolife LLC; and

• NOK (Norwegian Kroner) for Plutolife AS.

Hedging reserve

Opening balance at beginning of the year (8,799) -

Loss on cash flow hedges - (12,570)

Income tax related to loss recognised in other comprehensive income - 3,771

Balance at end of the financial year (8,799) (8,799)

Note 25: Capital and Leasing Commitments

Operating lease commitments

Non-cancellable operating leases contracted for but not capitalised in the financial statements

Payable

Not later than 1 year 350,817 352,115

Later than 1 year but under 5 years 164,478 428,261

Total non capitalised commitment 515,295 780,376

Capital commitments - -

The Group has entered into commercial property leases. These non cancellable leases have remaining terms of between 1 and 3 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

60

For

per

sona

l use

onl

y

Note 26: Segment Reporting

The Group has adopted AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 with effect from 1 January 2009. AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor Standard (AASB 114 Segment Reporting) required an entity to identify two sets of segments (business and geographical), using a risks and rewards approach, with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. As a result, following the adoption of AASB 8, the identification of the Group’s reportable segments has changed.

In prior years, segment information reported externally was analysed on the basis of the types of service provided by the Group’s operating divisions (i.e. Global chat and dating service and Australian web and mobile web consumer services). However, information reported to the Group’s Chief Executive Officer for the purpose of resource allocation and assessment of performance is more specifically focused on each type of product. The Group’s reportable segments under AASB 8 are therefore as follows:

• Mobile Chat

• Fast Flirting

• SMS products

• Other

The Mobile Chat, Fast Flirting and SMS products relates to mobile chat and dating services.

‘Other’ is the aggregation of the Group’s other products that are not separately reportable. Included in ‘Other’ are the Australian auction business Oztion.com.au and its related car sales site carbuddy.com.au.

Revenue Segment profit

2010$

2009$

2010$

2009$

Mobile Chat 6,374,306 9,665,538 3,107,168 5,482,518

Fast Flirting 2,054,884 3,289,400 (760,418) 1,996,758

SMS products 3,399,105 4,075,129 552,384 261,464

Other 956,699 1,088,281 (2,815,176) 387,695

12,784,994 18,118,348 83,958 8,128,435

Central administration and directors’ salaries (2,706,072) (2,411,638)

Loss on sale of investment - (662,008)

Loss on disposal of plant and equipment (2,535) (11,145)

Loss on disposal of business (157,754) -

Finance cost (3,042) (15,952)

Other income 164,834 346,128

(Loss)/profit before income tax expenses (2,620,611) 5,373,820

Income tax (expense)/benefit 160,616 (1,295,135)



For

per

sona

l use

onl

y


Note 26: Segment Reporting (continued)

Segment Assets and Liabilities

Segment assets Segment liabilities

2010$

2009$

2010$

2009$

Mobile Chat 15,200,578 18,005,826 730,170 479,452

Fast Flirting 3,683,682 5,433,450 317,208 258,030

SMS products 5,496,939 5,738,855 518,769 2,385,320

Other 1,424,837 3,811,503 321,924 358,283

25,806,036 32,989,634 1,888,071 3,481,085

Unallocated 2,046,579 1,225,767 1,502,227 1,338,160

27,852,615 34,215,401 3,390,298 4,819,245

Depreciation and amortisation Additions to non-current assets

2010$

2009$

2010$

2009$

Mobile Chat 709,864 1,459,829 55,423 139,667

Fast Flirting 945,962 583,792 15,119 14,236

SMS products 2,388 50,246 345 891

Other 81,625 73,988 3,928 111,527

1,739,839 2,167,855 74,815 266,321

In addition to the depreciation and amortisation reported above, impairment losses of $2,332,217 were recognized in respect of goodwill attributable to the Australian auction business Oztion.com.au, related to the “other” reporting segment.

Geographical Information

Segment revenues from external parties Non-current assets

2010$

2009$

2010$

2009$

Geographical location:

Australia 1,257,151 1,540,424 3,021,089 6,419,838

Asia Pacific 320,954 464,011 - -

Europe 4,506,412 6,005,927 13,037,275 14,238,330

United States (US) 5,622,941 9,800,426 9,458 15,463

The Americas (Other than US) 1,038,427 528,496 - -

Middle East 16 97 - -

12,745,901 18,339,381 16,067,822 20,673,631

Unallocated 699,013 795,479 168,862 503,395

13,444,914 19,134,860 16,236,684 21,177,026

The Company’s business is located in Australia, with mobile data services being exported to other countries.

The Group’s revenue from its’ individual customer which amounts to more than 10% the Group’s revenue during the period is $2,371,650 (2009: $4,027,382). The revenue from the customer falls under both the Mobile Chat, Fast Flirting and SMS products operating segments.

The revenue reported above represents revenue generated from external customers. There were no intersegment sales during the period.

Segment profit represents the profit earned by each segment without allocation of central administration costs and directors’ salaries, investment revenue, finance costs and income tax expense. This is the measure reported to chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

62

For

per

sona

l use

onl

y

Note 27: Cash Flow Information

Consolidated

2010$

2009$

Reconciliation of cash flow from operations to profit before income tax

(Loss)/profit before income tax (2,620,611) 5,373,820

Cash flows excluded from profit from ordinary activities attributable to operating activities:

Non-cash flows in profit from ordinary activities

Amortisation of intangible assets 1,449,655 1,758,410

Depreciation 290,184 409,445

Dividend received - (66,719)

Development costs written off 1,243,497 -

Gain on foreign currency options revaluation (140,340) (500,378)

Impairment of goodwill 2,332,217 -

Loss on disposal of investment - 662,008

Loss on sale of plant and equipment 2,535 11,145

Loss on disposal of business 157,754 -

Share based payment expense 87,231 84,714

Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries

Decrease in trade and other debtors 297,893 230,985

Increase/(decrease) in trade creditors and accruals 753,475 (1,121,549)

Decrease in prepayments 118,682 40,475

Decrease in deferred tax asset 317,219 302,192

Increase in provisions 9,149 48,314

Cash flow from operations 4,298,540 7,232,862

Income tax paid (694,022) (1,691,050)

Net cash from operations 3,604,518 5,541,812

Note 28: 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.


For

per

sona

l use

onl

y


Note 28: Employee Benefits (continued)

Consolidated

2010No.

2009No.

Movement in the number of share options held by employees, former employees and consultants are as follows:

Opening balance 2,071,668 2,785,002

Granted during the year - 200,000

Exercised during the year - -

Lapsed during the year (946,668) (913,334)


The weighted average exercise price of options outstanding at 30 June 2010 is $0.77 (2009: $1.01).

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

2010No.

2009No.

5/05/2006 30/09/2012 248 111 30/09/2009 13 cents in 2009 - 291,668

28/02/2008 30/09/2010 71 29 30/09/2008 None 375,000 526,666

28/02/2008 30/09/2011 77 32 30/09/2009 None 375,000 526,667

28/02/2008 30/09/2012 83 35 30/09/2010 None 375,000 526,667

12/09/2008 30/09/2011 71 14 30/09/2009 None - 66,666

12/09/2008 30/09/2012 77 18 30/09/2010 None - 66,667

12/09/2008 30/09/2013 83 20 30/09/2011 None - 66,667

1,125,000 2,071,668

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 issued in FY 2006 using the Black-Scholes Option Pricing Model and using the Binomial method to value all subsequent share options issued. Both valuation methods take 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

There were no share options issued and valuation made during FY 2010. The FY 2009 valuation has been based on the following parameters: Grant date share price: $0.50, risk free rate: tranche 1 and 2 and tranche 3 of 5.63%, dividend yield: nil, expected volatility: tranche 1 of 52% and tranche 2 and 3 of 56%. It has been assumed that options would be exercised after the vesting date when they are two and a half times the exercise price.

64

For

per

sona

l use

onl

y

Note 29: Events Subsequent to Reporting Date

Final Dividend Declared


On 25 August 2010, the Company entered into an agreement for the sale of the operational and financial assets of Oztion Pty Ltd to carsales.com Limited. Completion of the sale of assets is expected to take place on 15th September 2010.

Note 30: Related Party Transactions

Consolidated

2010$

2009$

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 arm’s length were paid to D Gibbs Holding Pty Ltd (a company associated with Mr. Gibbs, director of Jumbuck Entertainment Ltd) for consulting services. 5,000 -

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 - 36,742

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:

Jumbuck Entertainment Ltd

Ordinary shares 15,154,700 11,653,477

Options over ordinary shares - -

Directors and their related entities:

a) Acquired 4,009,912 (2009: 2,869,108) ordinary shares and disposed 499,689 (2009:NIL) ordinary shares during the year.

b) No options were issued to directors and their related entities during the year.

Note 31: Financial Instruments

Capital Risk Management

The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, retained earnings and reserves as disclosed in notes 22, 23 and 24 respectively. Operating cash flows are used to maintain and expand the group’s assets, as well as to make the routine outflows of payables and tax.


For

per

sona

l use

onl

y


Note 31: Financial Instruments (continued)

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 holds the following financial instruments:

Consolidated

2010$

2009$

Financial assets

Cash and cash equivalents 6,452,850 7,205,588

Trade and other receivables 2,466,243 3,740,629

Foreign currency option - 640,946

Foreign currency forward contracts 129,890 -

Total financial assets 9,048,983 11,587,163

Financial liabilities

Trade and other payables (2,063,549) (3,394,149)

Total financial liabilities (2,063,549) (3,394,149)

Net exposure 6,985,434 8,193,014

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.

Sensitivity Analysis

The following sensitivity analysis is based on the interest rate risk exposures in existence at the statement of financial position date.

At 30 June 2010, 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:

Net profitHigher / (Lower)

Net assetsHigher / (Lower)

Year Ended 30 June As At 30 June

2010$

2009$

2010$

2009$

Consolidated

+ 1% (100 basis points) 45,152 50,426 45,152 50,426

- 0.5 % (50 basis points) (22,576) (25,213) (22,576) (25,213)

66

For

per

sona

l use

onl

y

Currency risk

At 30 June 2010 the Group had the following exposure to foreign currency that is not designated in cash flow hedges:

Consolidated

2010$

2009$

Financial assets

Cash and cash equivalents USD 784,161 1,601,275

EUR 157,181 342,874

GBP 652,001 57,641

NOK 129,836 248,251

Trade and other receivables USD 765,547 1,717,313

EUR 405,136 721,946

GBP 178,759 481,181

BRL 495,954 41,503

NOK 225,675 338,673

Foreign currency option USD - 640,946

Foreign currency forward contract USD 129,890 (8,799)


Trade and other payables USD (152,990) (2,120,971)

EUR (128,618) (89,660)

GBP (432,863) (182,190)

BRL (245,869) (51,298)

NOK (240,035) (238,957)

Net exposure 2,723,765 3,499,728

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 statement of financial position date.

At 30 June 2010, 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

Net profitHigher / (Lower)

Net assetsHigher / (Lower)

Year Ended 30 June As At 30 June

2010$

2009$

2010$

2009$

AUD/USD +10% 106,863 129,315 106,863 129,315

AUD/USD – 5% (53,431) (64,658) (53,431) (64,658)

AUD/Euro +10% 30,359 68,261 30,359 68,261

AUD/Euro – 5% (15,179) (34,131) (15,179) (34,131)

AUD/GBP + 10% 27,853 24,964 27,853 24,964

AUD/GBP – 5% (13,926) (12,482) (13,926) (12,482)

AUD/BRL +10% 17,506 (686) 17,506 (686)

AUD/BRL -5% (8,753) 343 (8,753) 343

AUD/NOK +10% 8,083 24,358 8,083 24,358

AUD/NOK -5% (4,042) (12,179) (4,042) (12,179)

In prior financial year, the Company has sold its 10% shareholding in WAP3 Germany for an amount of $113,128.


For

per

sona

l use

onl

y



Foreign Currency Options and Forward Contracts

The Company purchased a strip of foreign currency options and forward contracts in March 2009 to manage the risk of fluctuation in USD exchange rate. The fair value of the foreign currency forward contracts is $129,890. There are no outstanding foreign currency options as at reporting date. The details of the foreign currency forward contracts are as per below:

Foreign currency options

Face value 1 Face value 2 Expire date Strike price

USD250,000 USD125,000 14 Aug 2009 0.70

USD500,000 USD250,000 13 Nov 2009 0.70

USD500,000 USD250,000 12 March 2010 0.70

USD500,000 USD250,000 11 June 2010 0.70

USD250,000 USD125,000 14 Aug 2009 0.70

USD500,000 USD250,000 13 Nov 2009 0.70

USD500,000 USD250,000 12 March 2010 0.70

USD500,000 USD250,000 11 June 2010 0.70

Foreign currency forward contracts

Purchase amount Value date Strike price

USD260,000 30 July 2010 0.7895

USD260,000 31 Aug 2010 0.7879

USD260,000 30 Sept 2010 0.7862

USD260,000 29 Oct 2010 0.7847

USD260,000 30 Nov 2010 0.783

USD260,000 30 Dec 2010 0.7813

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 statement of financial position 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.

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 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.

68

For

per

sona

l use

onl

y


Weighted average

effective interest rate

Within 1 year$

1 to 5 years$

Over 5 years$

Total$

Consolidated

Financial assets

Cash and cash equivalents 3% 6,452,850 - - 6,452,850

Trade and other receivables 2,466,243 - - 2,466,243

Foreign currency contract 129,890 - - 129,890

9,048,983 - - 9,048,983


Trade and other payables (2,063,549) - - (2,063,549)

Net maturity 6,985,434 - - 6,985,434


Weighted average

effective interest rate Within 1 year 1 to 5 years Over 5 years Total

Consolidated

Financial assets

Cash 5% 7,205,588 - - 7,205,588

Trade and other receivables 3,740,629 - - 3,740,629

Foreign currency option 640,946 - - 640,946

11,587,163 - - 11,587,163


Trade and other payables (3,394,149) - - (3,394,149)

Borrowings 10% (23,779) - - (23,779)

Net maturity 8,169,235 - - 8,169,235

Fair value of financial instruments

The directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair values.

Valuation techniques and assumptions applied for the purposes of measuring fair value

The fair values of financial assets and financial liabilities are determined as follows.

• The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices.

• The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.

• The fair value of derivative instruments are calculated using quoted prices. Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts.


For

per

sona

l use

onl

y



Fair value measurements recognised in the Statement of Financial Position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to 2 based on the degree to which fair value is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets or identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

There were no transfers between Level 1 and 2 in the period.

Year ended 30 June 2010Level 1

$Level 2

$Total

$

Consolidated

Financial assets

Foreign currency forward contract - 129,890 129,890

Note 32: Contingent Liabilities

There are no contingent liabilities (2009: NIL).

Note 33: Parent Entity Disclosures

Financial Position

2010$

2009$

Assets

Current assets 10,485,674 11,577,652

Non-current assets 14,827,571 20,465,225

Total assets 25,313,245 32,042,877

Liabilities

Current liabilities 1,718,235 3,169,542

Non-current liabilities 907,733 976,214

Total liabilities 2,625,968 4,145,756

Equity

Issued capital 9,649,537 9,930,533

Retaining earnings 12,653,503 17,669,582

Equity-settled employee benefits reserve 393,036 305,805

Hedging reserve (8,799) (8,799)

Total equity 22,687,277 27,897,121

70

For

per

sona

l use

onl

y

Financial Performance

Year ended2010

$

Year ended2009

$

Profit/(loss) for the year (3,796,470) 3,091,526

Other comprehensive income - (8,799)

Total comprehensive income (3,796,470) 3,082,727

There are no contingent liabilities, guarantees entered in relation to the debts of its subsidiaries and commitments for the acquisition of property, plant and equipment by the parent entity during the year (2009: NIL).

Note 34: Disposal of Business

On 28 May 2010, the Group disposed of Jumbuck Communications Pty Ltd’s business which carries the car classified website business.

Consolidated

2010$

2009$

Consideration received

Consideration received in cash and cash equivalents 200,000 -

Analysis of assets and liabilities over which control was lost

Current assets

Development cost 357,754 -

Net assets disposed of 357,754 -

Loss on disposal of business

Consideration received 200,000 -

Net assets disposed of 357,754 -

Loss on disposal 157,754 -

Net cash inflows on disposal of business

Consideration received in cash and cash equivalents 200,000 -


For

per

sona

l use

onl

y

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) The attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to the financial statements;

c) 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 consolidated entity; and

d) The directors have been given the declarations required by s.295A of the Corporations Act 2001.

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.

Harvey C Parker Director

25 August 2010

72

For

per

sona

l use

onl

y

Independent Auditor’s Report to the Members of Jumbuck Entertainment Limited


For

per

sona

l use

onl

y

Independent Auditor’s Report to the Members of Jumbuck Entertainment Limited (continued)

74

For

per

sona

l use

onl

y

Additional Investor Information

Stock Exchange Listing

JMB is listed on ASX under the code JMB for ordinary shares.

Distributions

On 25 August 2010, JMB has declared a dividend of 1.0 cent fully franked per ordinary shares for shareholders on record at 16 September 2010 and payable on 30 September 2010. Total dividends of 2.5 cents were paid during the financial year (2.0 cents for 2009 final dividend and 0.5 cent for 2010 interim dividend).

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 850 505 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

Statement of Shareholders

JMB 20 largest ordinary shareholders and their holdings as at 25 August 2010:

Rank Name Units % of Units

1. SIEANA PTY LTD 10,883,093 22.31

2. QUAD HOLDINGS PTY LTD 4,228,334 8.67

3. MR ADRIAN PAULL RISCH 2,429,644 4.98

4. LJM INVESTMENT GROUP PTY LTD <LJM INVESTMENT A/C> 2,150,000 4.41

5. XS EQUITIES PTY LTD 2,000,000 4.10

6. MR KENNETH WILLIAM BREESE + MRS JENNIFER RUTH BREESE <BPD EXECUTIVE SUPERFUND A/C> 1,167,781 2.39

7. J P MORGAN NOMINEES AUSTRALIA LIMITED 1,028,941 2.11

8. MR KENNETH WILLIAM BREESE + MRS JENNIFER RUTH BREESE <BPD EXECUTIVE SUPERFUND A/C> 887,506 1.82

9. REPYSA HOLDINGS INC 757,358 1.55

10. EQUITAS NOMINEES PTY LIMITED <2874398 A/C> 621,000 1.27

11. JEFF KENNETT PTY LTD <JGK SUPER FUND A/C> 600,001 1.23

12. LUBEME SERVICES PTY LTD <DWYER SUPER FUND A/C> 600,000 1.23

13. CONNAUGHT CONSULTANTS (FINANCE) PTY LTD <SUPER FUND A/C> 580,000 1.19

14. RATIONAL CAPITAL MANAGEMENT PTY LTD 545,000 1.12

15. XS EQUITIES PTY LTD 515,209 1.06

16. MR GEORGE LOUCAS 502,510 1.03

17. MALTON PTY LTD 500,000 1.02

18. MR ADRIAN RISCH + MR JOO HYUN LEE <RISCH SUPER FUND A/C> 446,000 0.91

19. MR GUY RISCHMUELLER + MRS SHARON RISCHMUELLER <RISCHMUELLER SUPER FUND A/C> 430,285 0.88

20. MR PHILIP DRUCE <DRUCE FAMILY A/C> 401,779 0.82

Top 20 holders of ORDINARY FULLY PAID SHARES AS AT 25 AUG 2010 31,274,441 64.11

Balance of shareholders 17,509,850 35.89

Total of all issued shares as at 25 August 2010 48,784,291 100.00


For

per

sona

l use

onl

y

Additional Investor Information (continued)

As at the date of this Report, the following options were held over unissued shares:

Grant date Expiry date Exercise price (cents) Vesting date EPS hurdle Number under option

5/05/2006 30/09/2012 248 30/09/2009 13 cents in 2009 -

28/02/2008 30/09/2010 71 30/09/2008 None 375,000

28/02/2008 30/09/2011 77 30/09/2009 None 375,000

28/02/2008 30/09/2012 83 30/09/2010 None 375,000

12/09/2008 30/09/2011 71 30/09/2009 None -

12/09/2008 30/09/2012 77 30/09/2010 None -

12/09/2008 30/09/2013 83 30/09/2011 None -

Total 1,125,000

No. of fully paid ordinary shares as at 31 July 2010 Number of holders

1 - 1,000 169

1,001 - 5,000 417

5,001 - 10,000 175

10,001 - 100,000 227

100,001 and over 60

Total number of holders 1,048

Holders of less than a marketable parcel 0

Substantial Shareholders

ShareholderNo. of

securities held

% held as per substantial

shareholder notice

Sieana Pty Ltd 10,783,093 22.10

Quad Holdings Pty Ltd 4,676,221 9.74

LJM Investment Group Pty Ltd 5,120,701 10.66

Adrian Paull Risch 3,810,285 7.69

Kenneth William Breese & Jennifer Ruth Breese <BPD Executive Super Fund> 2,551,068 5.23

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.

76

For

per

sona

l use

onl

y

Designed and produced by motivo

Corporate Directory

Glossary

ASX Australian Stock Exchange

Auditor Auditor of JMB being Deloitte Touche Tohmatsu

Board Board of Directors of JMB

CEO Chief Executive Officer of JMB

COO Chief Operating Officer of JMB

CFO Chief Financial Officer of JMB

Company Jumbuck Entertainment Ltd ABN 69 092 817 171

Group Jumbuck Entertainment Ltd and its controlled entities

JMB Jumbuck Entertainment Ltd ABN 69 092 817 171

Jumbuck JMB

Ordinary Shares ordinary shares in JMB

pa per annum

FY financial year

Listed Entities Comprising JMB

Jumbuck Entertainment Ltd ABN 69 092 817 171

ASX Listing Code

JMB

Website

www.jumbuck.com

Directors of JMB

Harvey Parker Chairman David Gibbs CEO Bruce R Bennie Hon Jeffrey G Kennett Tom SP Kiing Adrian Risch

CEO of JMB

David Gibbs Email: [email protected]

Registered office

Level 5, 347 Flinders Lane Melbourne Victoria 3000 Australia Tel: +613 9620 3839 Fax: +613 9620 3840

Principal Place of Business


Other Offices Australia

Oztion Pty Limited Chelsea Australia

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 550 Bourke Street Melbourne Victoria 3000 Australia

Company Secretary of JMB

Angelo Tsagarakis Email: [email protected]

Other Offices Worldwide

Jumbuck Community GmbH Köln Germany

Community Development & Support Zhytomyr Ukraine

Jumbuck Entertainment Inc. San Rafael USA

Plutolife AS Oslo Norway

For

per

sona

l use

onl

y

Leve

l 5, 3

47

Flind

ers Lan

e

Me

lbo

urn

e V

icto

ria 30

00

A

ustralia

Tel: +

61

3 9

62

0 3

83

9

Fax: +6

13

96

20

38

40


For

per

sona

l use

onl

y

Documents

For personal use only - ASX2010/09/17 · allowing individuals to flirt anonymously SMS Products Mobile, premium SMS billing based social networking and dating services Mobile Chat