MONEYSWITCH LIMITED ABN 49 103 575 042 FINANCIAL STATEMENTS F OR T HE PERIOD END ED 30 JU NE 2OO3 MONEYSWITCH LIMITED ABN 49 103 575 042 FINANCIAL STATEMENTS F OR T HE PERIOD END ED 30 JU NE 2OO3 CONTENTS Directors' Report Auditors'Report Directors' Declaration Gonsol idated Statement of Fi nancial performance Gonsolidated Statement of Financial position Notes to & Forming Part of the Financial Statements Accountant's Compilation Report Revenue Statement MONEYSWITCH LIMITED ABN 49 103 575 042 DIRECTORS' REPORT The directors present their report for the period ended 30 June, 2003 and the auditois reoort thereon. DIRECTORS The names of directors at any time during or since the end of the year are: Name Paul Wood Peter Haig Andrew Rothwell Richard Freemanfle Occupation Managers Managers Managers Executive Appointed 3t02t2003 3t02t2003 3t02t2003 20t06t2003 PRINCIPAL ACTIVITIES The principal activities of the company during the financial year were: - the development of software and applications associated with credit card and associated financial transactions. REVIEW AND RESULTS OF OPERATIONS The loss of the company after providing for income tax amounted to $66,124. DIVIDENDS No dividends have been declared or paid since the date of incorooration. STATE OF AFFAIRS The Company was incorporated on 3 February, 2003 and continued its operations during the year, being the development of software associated with credit card and associated financial transactions. ENVIRONMENTAL The company operations are not subject to any environmental regulations. ISSUES EVENTS SUBSEQUENT TO BALAI,ICE SHEET DATE There has not arisen in the interval between end of financial year and the date of this report any item , transaction or event of a material or unusual nature, which in the opinion of the directors of the Company, will affect significantly the operation of the company, the results of these operations or the state of affairs of the company, in future financial years. LIKELY DEVELOPMENTS At the date of this report, the company is following the proposals of the Reserve Bank of Australia to open up the financial services industry and particularly credit card transactions to competition. ln the event that the regulators are unsuccessful in this regard the company will most likely be forced to change its strategies. MONEYSWITCH LIMITED ABN 49 103 575 042 DIRECTORS' REpORT (cont,d) MEETINGS OF DIRECTORS The number of directors' meetings and number of meetings attended by each of the directors of the Company during the financial year are: Paul Wood Peter Haig Andrew Rothwell Richard Freemantle Number held* Number attended* 2 2 2 0 z 2 2 0 * Number of meetings held during the time the director held office during the year INDEMN]FICATION AND INSURANCE OF OFFICERS The company has not, during or since the financial year, in respect of any person who is or has been an officer or auditor of the company or of a related body corporate: D indemnified or made any relevant agreement for indemnifying against a liability, including costs and expenses in successfully defending legal proceedings with the exception of the general indemnity provisions contained in the Company's Constitution; or E paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses to defend legal proceedings. Sisned in Sydney on tne /( day of A ,r; 2003 on behatf of the Board Director TNDEpENDENT AUDrr REpoRr Mitchell & Partners To the Members of MONEYSWITCH LIMITED C H A B T E R E D A C C O U N T A N T S SCOPE We have audited the financial report of MoneySwitch Limited ("the Company") for the financial period ended 30 June 2003, consisting of the statements of financial performance, statements of financial position, statements of cash flows, accompanying notes, and the directors declaration set out on pages 4 to 16. The financial report includes the financial statements of the company and any entity it controlled at the end of the year or from time to time during the financial year. The Company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the Company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable Assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards other mandatory professional reporting requirements in Australia and statutory requirements so as to present a view which is consistent with our understanding of the Company's and the consolidated entity's financial position, and performance as represented by theiesults of their operations and their cash flows. The audit opinion expressed in this report has been formed on the above basis. AUDIT OPINION In our opinion, the financial report of MoneySwitch Limited is in accordance with: (a) the Corporations Act 2001, including: D giving a true and fair view of the Company's financial position as at 30 June 2003 and of its performance of the year ended on that date; and ii) complyrng with Accounting Standards in Australia and the Corporations Regulations 2001; and b) other mandatory professional reporting requirements in Australia. Chartered Accountants ,/2 /J4/*-//),*U .... G Glenn Merchant - Partner Signed at Sydney on 2n O5'=n , 2043 r York Street Sydney rsw 2ooo Australia TETEPHO|E: 02 9257 3838 FACSIMILE: 02 9257 3OO8 reception@mitchelloartners.com.au @ an"rr"red Accountants b e y o n d a c c o u n t i n g Liability is limited by the Accountants Scheme, approved under the hofessional Slandards Act r994 (NSW) MONEYSWITCH LIMITED ABN 49 103 575 042 DIRECTORS' DECLARATION In the opinion of the directors of MoneySwitch Limited ("the Company"): (a) the financial statements and notes set out on pages 5 to 16 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company as at 30 June 2003 and of the performance, as represented by the results of the operations and the cash flows, for the year ended on that date; and (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Board of Directors. Dated at 9:"! tni' Zg day ot ./Vt 2oos f@* Director MONEYSWITCH LIMITED ABN 49 103 575 042 STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD ENDED 30 JUNE 2OO3 NOTE Revenue Write-down/provision in non-current assets Other expenses from ordinary activities Profit/(loss) from ordinary activities before related income tax expense Income tax expense relating to ordinary activities Net profiV (loss) attributable to members of parent entity 1 2 30.Jun-03 $ 3,054 3,054 0 -69,178 -66,124 0 -66,124 The above Statement of Financial Performance should be read in conjunction with the accompanying notes. MONEYSWITCH LIMITED ABN 49 103575042 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2OO3 NOTE CURRENT ASSETS Cash assets Receivables TOTAL CURRENT ASSETS NON.CURRENT ASSETS Property Other financial assets Other assets TOTAL NON.CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables TOTAL CURRENT LTABILITIES NON.CURRENT LIABILTTIES Non interesting bearing liabilities TOTAL NON.CURRENT LIABILTTIES TOTAL LIABILITIES NET ASSETS M E M B E R S ' E Q U I T Y lssued Capital Retained profits TOTAL SHAREHOLDERS' EQUITY 30-Jun-03 $ 201,437 1 2 , 8 1 1 214,248 16,374 0 3,254 19,628 233,876 0 233,876 300,000 -66,124 233,876 7 8 I 1 0 1 1 1 3 1 2 The above Statement of Financial Position should be read in conjunction with the accompanying notes. MONEYSWITCH LIMITED ABN 49 103 s75 042 STATEMENT OF CASH FLOWS AS AT 30 JUNE 2OO3 STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations Cash payments in the course of operations Interest received Net cash provided by operating activities 1 8 ( b ) CASH FLOWS FROM INVESTING ACTIVITIES Other assets acquisition Acquisition of fixed assets Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayments of borrowings Proceeds from issue of shares Net cash provided by financing activities Net increase/(decrease) Cash at the beginning of the year in cash held Cash at the end of the year 30Jun-03 $ 0 -77,422 3,054 -74,368 -4,067 -20,128 -24,195 10,000 -10,000 300,000 0 300^000 201,437 0 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 1 8 __?01,43? MONEYSWITCH LIMITED ABN 49 103 575 042 NOTES TO THE FINAI.IGIAL STATEMENTS FOR THE PERTOD ENDED 30 JUNE, 2OO3 1. STATEMENT OF ACCOUNTING POLICIES The significant policies which have been adopted in the preparation of this financial report are: (a) Basis of preparation The financial report is a general purpose report which has been prepared in accordance with Accounting Standards, Urgent lssues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report covers the economic entity of MoneySwitch Limited. MoneySwitch Limited is an unlisted public company, incorporated and domiciled in Australia. The financial report has been prepared on the basis of historical cost and, except where stated, does not take into account changing money values orfair values of non-current assets. These accounting policies have been consistently applied by each entity in the consolidated entity and, except where there is a change in accounting policy, are consistent with those of the prior year. (b) Income Tax The company adopts the liability method of tax-effect accounting whereby the income tax expense is calculated on the operating profit, adjusted for permanent differences. Timing differences which anse due to the different accounting periods in which items of revenue and expense are included in the determination of operating profit and taxable income, are brought to account as either provision for deferred income tax or as an asset described as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable. Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation, and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibilig imposed by the law. (c) Revenue recognition Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority. Exchanges of goods and services of the same nature and value without any cash consideration are not recognised as revenues Interest Revenue Interest revenue is recognised as it is received. (d) Goods & 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 taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as a current asset or liability in the statements of financial position. Cash flows are included in the statements of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activates which are recoverable from, or payable to, the taxation authority are classified as operating cash flows. MONEYSWITCH LIMITED ABN 49 103575042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE,2OO3 STATEMENT OF ACCOUNTING POLIC|ES (cont'd) (e) Revisions of accounting estimates Revisions to accounting estimates are recognised prospectively in current and future periods only. (f) Acquisition of assets All assets acquired including property, plant and equipment are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs direc1y attributable to the acouisition. Expenditure is only recognised as an asset when the entity controls future economic benefits as a result of the cost incurred, it is probably that those future economics benefits will eventuate, and the costs can be measured reliability. Costs attributable to feasibility and alternative approach assessments are expensed as incurreo. (g) Recoverable amount of non-current assets valued on cost basis The carrying amount off non-current assets valued on the cost basis are reviewed to determine whether they are in excess of their recoverable amount at balance date. lf the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower amount. The write-down is expensed in the reporting period in which it occurs. Where a group of assets working together supports the generation of cash inflows, recoverable amount is a assessed in relation to that group of assets. In assessing recoverable amounts of non-current assets the relevant cash flows have not been discounted to their present value, except where specifically stated. Cost versus fair value Except where specifically stated, non-current assets are recorded at the lower of cost and recoverable amount. (h) Receivables Receivables are recognised at cost and where some or all of the amount is not recoverable, a provision is made against the amount not likely to be recovered. (i) Payables Amounts are included in the financial statements as monies received or the value of the benefit provided. fi) Property Propertv. olant and equipment Property, plant and equipment is recognised at the lower of cost or recoverable amount. MONEYSWITCH LIMITED ABN 49 103 575042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE, 2OO3 2.REVENUE FROM ORDINARY ACTIVITIES Interest Other parties Sundry 3. PROFIT FROM ORDINARYACTIVITIES BEFORE INCOME TAX (a) Individuallv sionificant expenses included in profit from ordinary activities before income tax exoense W rite-d own/p rovi sion i n no n-c u rre nf assets 4. AUDITOR'S REMUN ERATION Audit Seruices: Auditors of the company - Mitchell & Partners Audit of the financial reDorts Olher Serylces: Auditors of the company - Mitchell & Partners Other assurance services 5. INGOME TA)( Operating profit for the year Prima facie income tax expense on profit from ordinary activities (30%) Income tax losses carried forward Income tax expense 30-lun-03 $ 3,054 0 3,054 0 0 -66,124 - 1 9 , 8 3 7 1 9 , 8 3 7 1 0 MONEYSWITCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE,2OO3 6. RECEIVABLES Current Trade debtors Sundry debtors GST refund due Non-current Amounts owing by related parties: Controlled entities Related entities 7.PROPERry Prooertv. olant & equioment Plant & equipment - at cost Accumulated Depreciation Furniture & equipment - at cost Accumulated Depreciation Low Value Pool - at cost Accumulated Depreciation Reconciliations Reconciliations of the carrying amount for each class of property are set out below: Propertv, olant & equioment Carrying amount at beginning of year Additions Write-down in arena costs and other assets Carrying amount at end of year 8. OTHER FINANCIAL ASSETS Non-current g.OTHER ASSETS Non-current Formation costs Accumulated amortisation 30.Jun-03 $ 9,466 3,345 ___12,811 0 0 0 8,661 1,602 7,059 2,105 421 1,684 9,363 1,732 7,631 16,374 0 20,129 -3,755 16,374 4,067 8 1 3 -3254- MONEYSWITCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE,2OO3 10. PAYABLES Trade creditors Accruals 1 1.NON INTEREST BEARING LIABILITIES NON CURRENT Loans 12. RETAINED PROFITS Retained profits at the beginning of the financial year Net Profit attributable to the members of the parent entity Retained profits at the end of the financial year (refer note) 13. CONTRIBUTED EQUITY The company has issued 3,000,000 ordinary shares paid to 10c each during the year 300,000 Ordinary shares paid at 10c each Shares issued durinq the vear: 3 February, 2003 - 1,000,000 Ordinary shares at 10c each 18 February, 2003 - 500,000 Ordinary shares at 10c each 21 February, 2003 - 400,000 Ordinary shares at 10c each 8 April, 2003 - 1,000,000 Ordinary shares at 10c each 19 May, 2003 - 1 00,000 Ordinary shares at 1 0c each 14. CONTROLLED ENTITIES Particulars in relation to controlled entities There are no controlled entities as at 30 June, 2003 nor were any acquired or sold during the period. 30r|un-03 $ 0 0 0 -66,124 -66,124 300,000 300.000 100,000 50,000 40,000 100,000 10,000 300,000 1 2 MONEYSWITCH LIMITED ABN 49 103 575042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE,2OO3 1 5. CONTINGENT LIABILITIES There are no known contingent liabilities as at the date of this report. 16. FINANCIAL REPORTING BY SEGMENTS The company operates in the financial services industry in Australia. The principal activity is the development of software for credit card transactions. 17. SUBSEQUENT EVENTS There has not arisen in the interval between end of financial year and the date of this report any item , transaction or event of a material or unusual nature, in the opinion of the directors of the Company, to affect significanfly the operation of the company, the results of these operations or the state of affairs of the company, in future financial years. 1 3 MONEYSWITCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE,2OO3 18. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconcillation of Cash cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash (b) Reconciliation of ooeratinq orofit from ordinarv activities after income tax to net cash provided bv ooeratino activities Profit from ordinary activities after income tax Non Cash items included in operating loss: Expenses paid by related entity Depreciation Amortisation Net Cash provided by operating activities before change in assets and liability Ghange in assets and liabilities Decrease/(lncrease) Decrease/(lncrease) lncrease/(Decrease) Net cash provided by operating activities in receivables in other assets in payables 30.Jun-03 $ 201,437 201,437 _66,1124 0 3,70b g13 -61,556 0 -12,812 0 -74,368 1 4 MONEYSWITCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANGIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE, 2OO3 19. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES Credit Risk Credit Risk represents the loss that would be recognised if counterparties failed to perform as contracted. Recoonised financial instruments The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statements of financial position, is the carrying amount, net of any provision for doubtful debts. Interest rate risk The consolidated entity's financial assets and liabilities are subject to interest rate risk. These will fluctuate in accordance with movements in the market interest rates. The consolidated entity's exposure to interest rate risk and the effective average interest rate from classes of financial assets and financial liabilities is set out below: 2003 Financial assets Cash assets Receivables Other assets Financial assets Payables Other Liabilities Weighted Floating Non-interest rate Total bearing $ Note average interest rate 17(al o I 1 0 1 1 4.30o/o 201,437 201/W 0 12,811 3,254 201,437 12,811 3,254 0 0 0 0 0 0 0 Pre Establishment There were no consolidated entity financial assets or liabilities prior to the formation of the company on 3 February, 2003. Net fair values of financial assets and liabilities For all financial assets and liabilities the fair net value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statements of financial position and in the notes to the financial statements. 20. CAPITAL COMMITMENTS The company does not have any capital commitments as at the date of this report. 21. DIRECTORS REMUNERATTON No remuneration is paid to the Directors of the Company 1 5 MONEYSWITCH LIMITED ABN 49 103575042 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE, 2OO3 22. RELATED PARTY TRANSACTIONS Directors The names of each person holding the position of director of MoneySwitch Limited during the financial period are P Wood, P Haig, A Rothwell and R Freemantre. All Directors were appointed during the financial period Transactions The company has not entered into any transactions with the directors during the period except for the issuing of shares to the directors or their associated parties. The issued capital has been issued solely to the Directors or their associated entities. Non-director related oarties There are no non director related parties. 1 6 MONEYSWITCH LIMITED ABN 49 103 575 042 Mitchell & Partners C H A R T E R E D A C C O U N T A N T S COMPILATION REPORT to the members of MONEYSWITCH LIMITED On the basis of information provided by the directors of MoneySwitch Limited we have compiled, in accordance with APS 9 "statement on Compilation of Financial Reports", the general purpose financial report for the period ended 30 June 2003 The directors are responsible for the information contained in the special pu{pose financial report and have determined that the accounting policies are consistent with the financial reporting requirements of MoneySwitch Limited and are appropriate to meet the needs of the members. Our procedures have been limited to the classification and summarisation of information to compile this special purpose financial report from the information provided to us by the directors and does not include verification or validation procedures. No audit or review has been performed and accordingly no assurance is expressed. Neither the firm nor any member or employee of the firm undertakes any responsibility or accepts liability in any way whatsoever to any person (other than the directors of MoneySwitch Limited) in respect of the special purpose financial report including any effors or omissions report however caused in the special purpose financial. MITCHELL & PARTNERS Chartered Accountants Glenn Merchant - Partner Signed at Sydney this Jq{\ day of A-3- st 2003 1 York Street Sydney Nsw 2ooo Australia TELEPHoNE: 02 9251 38)8 fAcsrMfrE: 02 9257 1oo8 rmrl: reception@mitchelloartners.com.au @ Cn"r,"red Accountants b e y o n d a c c o u n t i n g I tl ?-.4 EM[glcE ryy4 (NJw) Liability is limiledby ttre Accountants Scheme, approved 1rlgqr lhe_hofesional Standards Act MONEYSWITCH LIMITED ABN 49 103 575 042 INCOME AND EXPENDITURE STATEMENT FOR THE PERIOD ENDED 30 JUNE ,2003 Gompany 30-Jun-03 0 3,054 3,054 1 , 7 6 2 30,832 1 , 7 3 2 2,358 36,684 8 1 3 1 , 5 4 0 282 2,023 1 , 1 9 8 1 , 5 7 6 1 6 3 5,445 4,569 11,562 2,099 5 1 6 708 32,494 6 9 , 1 7 8 I N C O M E Other Income Interest Income - AMP TOTAL INCOME OVERHEAD EXPENDITURE Engineering Books & Subscriptions Contractor fees Depreciation Training Total Engineering General & Administration Amortisation of Formation expenses Accountancy fees Books & Subscriptions Depreciation Insurance Internet lnterest Legal fees Office supplies Rent Telephone Travelling Utilities Total General & Administration TOTAL EXPENSES PROFTn(LOSS) NET Loss for the year This Income & Expenditure Account does not form part of the audited accounts. 1 8
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