MONEYSWITCH LIMITED ABN 49 103 57s 042 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2OO4 MONEYSWITCH LIMITED ABN 49 los 575 042 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2OO4 CONTENTS Directors' Report Auditors'Report Directors' Declaration Gonsol idated State ment of Fi na ncia I performa nce Gonsolidated Statement of Financial Position Notes to & Forming Part of the Financial Statements Accounta nt's Gompilation Report Revenue Statement MONEYSWTCH LIMITED A B N 4 9 1 0 3 5 7 5 A 4 2 DIRECTORS' REPORT The directors presenttheir reportforthe year ended 30 June, 2004 and the auditor's reportthereon. DIRECTORS The names of directors at any time during or since the end of the year are: Name Richard Freemantle Paul Wood Peter Haig William Bartlett Denis Calvert Andrew Rothwell Appointed 20t06t2003 3t02t2003 3t02t2003 14t04t2004 14t04t2004 3t02n003 Resigned 't4to4tno4 Richard Freemantle - Non-Executive Chairman Richard has been involved in establishing and growing data communications companies for more than twenty years. Starting in the early 1980s he created Network Solutions, which grew under his leadership to become Australia's largest and most successful network integration company. ln 1990 Richard established the first international subsidiary for Cisco Systems in Austalia. As this grew into one of Cisco's key intemational markets, he was promoted to establish Cisco's operations in Europe and then promoted to Senior Vice President and member of Cisco's senior management team. He returned to Australia to establish the Cisco Asia Pacific headquarters, growing the business to more than 4000 staff and $U53 Billion in revenue. Since retiring from Cisco, Richard has been involved in Board positions on a number of technology start up companies including ( as Chairman) the successful public float of Eserv Global in 20Q2. Paul Wood - Chlef Executive Officer Paul has been in the network technology business throughout his career, most recently at Cisco Systems in a business development role. He was the co-founder and Chief Executive Officer of Metaplex, a United States networking software business that was sold to Cisco Systems in 1996. Metaplex developed products that allowed IBM networking systems to use Internet protocols. lt was a key contributor to Data Link Switch (DLSw) that is in service in most banks worldwide today. Earlier, Paul was the founder and Chief Executive Officer of Netlink, a United States and Australian venture capital based data communications company that developed products in the mainframe networking area. Neflink was sold to Cabletron Systems, a United States public company. Paul's initial experience was in networking technical and product management roles at lBM. Peter Halg - Dlrector and Mce Presldent, Engineering Most recenfly Peter was the Chief lnformation Officer at the University Co-op Bookshop, a chain of 40 retail bookshops specialising in the education book market. Prior to the Co-op he consulted to Worldschool, an internet start-up specialising in online education. Peter's roles at Worldschool included Development Manager for outsourced applications development, before moving to the marketing department as a Marketing Analyst. He was a development manager at Cisco Systems responsible for the Australian development organisation as well as for project teams in the United States. He was co-founder of Metaplex Australia in the United States and Managing Director of Metaplex Australia, and Director of Engineering at Netlink in the United States and Austalia. His earliest roles were in lT applications and systems in the real estate, airlines, building and insurance industries. V\filliam Bartlet - Non-Executlve Director Bill has banking, financial and risk management skills, having been the partner at Emst & Young responsible for audit of banking and insurance businesses. He has been signing partner on a number of Australian insurance companies, as well as Chairman of the firm's worldwide insurance practice. Bill has been a member of the Life Insurance Actuarial Standards Board under the aegis of The Australian Prudential Regulatory Authority ( APRA) since 1994. He is currently a director of Suncorp Metway, Reinsurance Group of America, and of the St James Ethics Centre. Denls Calvert - Non- Executive Director Denis has EFTPOS and acquiring skills, having been Executive Vice President for Global Sales and Marketing of Verifone Inc, a major United States EFTPOS supplier. He was Division Head of Retail and Merchant Services for Citibank NA, responsible for the integration of all global merchant services operations. He was Chief Executive Office of Tasq Technology Inc. which provides outsourced EFTPOS technology and logistical support to more than 1.4 million retail merchants in the United States. Denis is cunently an advisor to several EFTPOS manufacturers and payment processors. PRINCIPAL ACTIVITIES MoneySwitch is entering tle market for the provision of credit and debit card services to merchants. As such, the company is developing the necessary policies, procedures, systems, relationships and approvals for financial transaction processing, clearing and setflement. REVIEWAND RESULTS OF OPERATIONS The loss of the company after providing for income tax amounted to $270,672 ($2003 loss of g66,124). This was in line with expectations given that the company is in the development stage of its lifecycle. DIVIDENDS No dividends have been declared or paid since the date of incorporation. STATE OF AFFAIRS Two additional directors have joined the board during the year, bringing with them experience and knowledge to diversify the variety of backgrounds comprising the Board. The company has a strong Board for entering the credit and debit card acquiring market. During the year the company raised additional capital to allow it to continue toward market entry. MoneySwitch has lodged an application with the Australian Prudential Regulation Authority ( APRA) to become authorized as a Specialist Credit Card lnstitution (SCCI) in the area of credit card acquiring. The company is working with Msa and Mastercard towards becoming members of those credit card associations. ENV]RONMENTAL The company operations are not subject to any environmental regulations. ISSUES EVENTS SUBSEQUENT TO BALANCE SHEET DATE There has not arisen in tle 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 signiftcantly the operation of the company, the results of these operations or the state of affairs of the company, in future financial years. LIKELY DEVELOPMENTS MoneySwitch will continue activities to enter tre market for credit and debit card acquiring merchant services. MONEYSWTCH LIMITED ABN 49 103575042 DTRECTORS' RE PORT (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: Richard Freemantle Paul Wood Peter Haig William BarUett Denis Calvert Andrew Rothwell Number held* 4 4 4 1 1 Number attended* 4 4 a 1 ,| * Number of meetings held during the time the director held office during the year INDEMNIFICATION 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 ofthe company or of a related body corporate: - 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 - paid or agreed to pay a premium in respect of a contact insuring against a liability for the costs or expenses to defend legal proceedings. & gt 2oo4 onbeharf of the Board sisned in sydney on the lftLo"y * 4 1 fn hJ*,,J Director tndependent Audit Report to the Members ]llil,j"],sJiil;r", Mitchell & Partners Scope The financiol report ond directors' responsibility The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors'declaration of MoneySwitch Limited for the year ended 30 June 2004. The directors of the Company are responsible for the preparation and true and fair presentation of the financial report in accrrdance with the Corporations Act 2001. This included responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and eror, and for the accounting policies and accounting estimates inherent in the financial report. Audif opprooch We conducted an independent audit in order to express an opinion to the members of the Company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, Australian Accounting Standards and other mandatory financial reporiing requirements in Australia, a view which is consistent with our understanding of the Company's financial position, and oi its performance as represented by the results of its operations and cash flows. we formed our audit opinion on the basis of these procedures, which included: ' examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and - assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors. While we considered the effectiveness of management's and extent of our procedures, our audit was not designed to provide assurance on internal controls. internal controls over financial reporting when determining the nature Independence ln conducting our audit, we followed applicable independence pronouncements and the Corporations Act 2001. requirements of Australian professional ethical Audit Opinion In our opinion, the financial report of Moneyswitch Limited is in accordance with: (a) the Corporations Act 2001, including: _ i) giving a true and fair view of the Company's financial position as at 30 June 2004 and of its performance for the year ended 30 June 2004; and ii) complying with Accounting Stiandards in Australia and the Corporations Regulations 2001; and b) other mandatory professional reporting requirements in Australia. MITCHELL & PARTNERS Chartered Accountants Merchant - Partner SignedatSydneyon l'+ A-grsf 2OO4 , surr r Level z r York Street Sydney r{sw 2ooo Australia TELEPHoilE: oz 9z5t 3838 FACSfMTf-E: 02 9257 )OO8 r e c e p t i o n @ m i t c h e [ [ p a r t n e r s . c o m . a u an"r,"red Accountants @ b e y o n d a c c o u n t i n g Liabiliff is limited by the Accountants Scheme, apDroved under the Professional StandarOs act 1994 NSW) MONEYSWTCH 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 8 to 21 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 2004 and of the performance, as represented by the results of the operations and the cash flows, forthe 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. Datedat 9,1clra.1ni' l7^ o^r", fiut*shooq /euqp4 Director MONEYSWTCH LIMITED ABN'49 103 575 042 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2OO4 NOTE Revenue Write-downlprovision in non-current assets Other expenses from ordinary activities ProfiU(loss) from ordinary activities before related income tax expense Income tax expense relating to ordinary activities 30Jun{4 $ 30Jun-03 $ 109,545 3,054 109,545 3,054 -10,888 -3,755 -369,329 -65,423 -270,672 -66,124 0 0 Net profiU (loss) atFibutable to members of parent entity 12 -270,672 -66,124 The above Statement of Financial Performance should be read in conjunction with the accompanying notes. MONEYSWTCH LIMITED ABN 49 103 575 042 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2OO4 NOTE CURRENTASSETS Cash assets Receivables TOTAL CURRENTASSETS NON.CURRENT ASSETS Property Other financial assets Other assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Non interesting bearing liabilities TOTAL NON-CURRENT LIABI LITIES TOTAL LIABILITIES NETASSETS M E M B E R S ' E O U I T Y lssued Capital Retained profits TOTAL SHAREHOLDERS' EQUIW 30Jun-04 $ 30Jun-03 $ 434,289 109,342 201,437 12,811 543,631 214.248 26,392 0 2,441 16,374 0 3,254 28,833 1 9 , 6 2 8 572,465 233,876 0 9,260 9,260 0 0 9,260 563,204 _:33,879- 900,000 -336,796 563,204 300,000 -66,124 233,876 7 8 9 1 0 't1 1 0 1 3 12 The above Statement of Financial Position should be read in conjunction with the accompanying notes. MONEYSWTCH LIMITED ABN 49 103575042 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 lnterest received 30Jun-04 $ 30Jun-03 $ 3,388 -359,256 9,626 0 -77,422 3,054 Net cash consumed by operating activities 19(b) -346,242 -74,368 CASH FLOWS FROM INVESTING ACTIVTTTES Other assets acquisition Acquisition of fixed assets Net cash consumed 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 atthe beginning of the year in cash held Cash at the end of the year -20,906 -4,067 -20,128 -20,906 -24,195 600,000 10,000 -10,000 300,000 0 600,000 300,000 232,852 201.437 201,437 0 19 _!U289_ ____A1,437_ The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 1 0 MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 1. STATEMENT OF ACCOUNTING POLICIES The significant policies which have been adopted in the preparation of tris 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 or fair values of non-current assets. These accounting policies have been consistentty 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 arise 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 defened income tax or as an asset described as fufure 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 broughtto 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 deductibility imposed by the law. (c) Revenue recognltion 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 lnterest Revenue Interest revenue is recognised as it is received. (d) Goods & Services Tax (GST) Revenues, expenses and assets are recognised net ofthe amount of GST, except where the amount of GST incuned 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. MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 STATEMENT OF ACCOUNTING POLICIES (cont'd) (e) Revisions of accounting estimates Revisions to accounting estimates are recognised prospectively in current and future years only. (f) Acquisition of assets All assets acquired including propefi, 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 directy attributable to the acquisition. Expendifure is only recognised as an asset when the entity controls fufure economic benefits as a result of the cost incuned, it is probably that those future economics benefits will eventuate, and the costs can be measured reliability. Costs atfibutable to feasibility and alternative approach assessments are expensed as incurred. (g) Recoverable amount of non+urrent assets valued on cost basis The carrying amount off nonrcunent 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. \Mtere a group of assets working together supports he 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. plant and equioment Property, plant and equipment is recognised at the lower of cost or recoverable amount. MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 2.REVENUE FROM ORDINARY ACTIVITIES lnterest Other parties Sundry Research & Development Rebate 3. PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX (a) Individuallv sionificant expenses included in profit from ordinarv activities before income tax exoense Wite4own/provision in non-cunent assets L e g a f F e e s Provision for employee benefits Contractors 4. AUDITOR'S REM UNEMTION Audit Services: Auditors of the company - Mitchell & Parhers Audit of the financial reports Other Services: Auditors of the company - Mitchell & Partners Other assurance services 5 . I N C O M E T A X Operating profit forthe year Prima facie income tax expense on profit ftom ordinary activities (300/o) Income tax losses carried forward Income tax expense 30Jun-04 30Jun{3 $ $ 9,626 0 9 9 , 9 1 9 3,054 0 _1_9e,545_ _______19!1 10,ggg 5 2 , 1 8 0 9,260 49,1 55 g]5S 5 , 4 4 5 O 30,932 ___125483_ ____40p32_ 3,500 0 3,500 0 0 0 -270,672 -66,124 a1,202 8'(cid:0)t,202 -19,837 19,837 0 0 1 3 MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 6. RECEIVABLES Current Sundry Debtors - Research & Development Tax Concession Sundry debtors GST refund due 30-fun-04 30Jun{3 $ $ 9 9 , 9 1 9 8 , 6 1 3 8 1 0 109,U2 9,466 3 , 3 4 5 1 2 , 8 1 1 The company has applied through Auslndustry for a Research and Development tax concession. A registation number has been granted and the Application will be lodged with the Australian Taxation Ofiice. Noncunent Amounts owing by related parties: Controlled entities Related entities T.PROPERTY Property. plant & eouipment Plant & equipment - at cost Accumulated Depreciation Fumiture & 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 & equipment Carrying amount at beginning of year Additions Write-down in other assets Carrying amount at end of year 8. OTHER FINANCIAL ASSETS Non-current g.OTHERASSETS Non-current Formation costs Accu mu lated amortisation 1 4 0 0 0 0 8 , 6 6 1 1 , 6 0 2 2,105 421 1,684 9,363 1 , 7 3 2 7,631 0 20,129 -3,755 16,374 29,396 8,853 20,543 2,105 842 1,263 9,535 4,948 4,587 26,392 16,374 20,906 - 1 0 , 8 8 8 ___26392 n U 3,254 8 1 3 2,441 : 4,067 8 1 3 3,254 MONEYSWITCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 10. PAYABLES Current Liabllities Trade creditors Accruals Non Current Llabilities There were no Non Current Liabilities at year end. 11. PROVTSTONS Provision for Employee Benefits 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 3,000,000 Ordinary shares paid at 10c each 4,000,000 Ordinary shares paid at 15c each Shares issued durino the vear: 29 April, 2004 - 333,334 Ordinary shares at 15c each 29 April, 2004 -1,333,333 Ordinary shares at 15c each 29 April, 2004 - 666,666 Ordinary shares at 15c each 30 April, 2004 - 666,667 Ordinary shares at 15c each 29 April, 2004 - 1,000,000 Ordinary shares at 15c each Shares issued durino the 2003 vear: 3 February, 2003 - 1 ,000,000 Ordinary shares at 10c each 1 8 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 - 100,000 Ordinary shares at 10c each I4. CONTROLLED ENTITIES Particulars in relation to controlled entities 30Jun-04 30Jun-03 $ $ 0 0 : 0 0 n U 9,260 -66,124 -270,672 -336,796 0 -66,124 $6,124 300,000 600,000 300,000 0 900.000 300.000 50,000 200,000 100,000 100,000 150,000 ____600,!!9_ 100,000 50,000 40,000 100,000 1 0 , 0 0 0 300,000 There are no controlled entities as at 30 June, 2004 nor were any acquired or sold during the period. 1 5 MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 1 5. CONTINGENT LIABILITIES There are no known contingent liabilities as at the date of this report. I6. STOCK OPTION GRANTS During the year the company issued the following share options.- 8,236,410 Options at 10c each Stock option orants issued throuoh the vear at Face value 2 Apfl,2004 - 3,151,410 Vested Options at 10c each 2 April, 20A4 - 2,525,000 Linear Options at 10c each 2 April, 2004 - 2,160,000 Service Options at 10c each '14 April, 2004 - 400,000 Service Options at 10c each Value of Stock Options at end of veal 120,000 Options 2 year exercise period 216,410 Options 3 year exercise period 4,975,000 Options 5 year exercise period 2,925,00A Options 10 year exercise period 823.641 315,141 252,500 216,000 40,000 Face Value 1 0 c 1 2 , 0 0 0 21,641 497,500 292.500 _823flt __qr3,6!_ Value o/o lssued Value 6 7 1 2 1 8 684 1 , 5 3 7 5 7 , 7 1 0 53,820 _____-113,751_ Value is based on calculation percentages as issued by the Australian Taxation Office There were no stock options granted during the 2003 year. Stock Option Rules Staff: Options covering 50% of Salary, vesting linearly over 5 years Directo rs/Con sultants: Number of options granted based on anticipated service to end of calendar year Grant specifies options per day of service Actual days performed (and options vested) are decided by board, and recorded every 3 months Exercise Period: Normally ten years from date of grant, subject to reduction on ceasing service or employment lf shares are not publicly traded, exercise period is 3 years after ceasing service lf shares are publicly traded, exercise period is 90 days 17. FINANCIAL REPORTING BY SEGMENTS The company operates in the financial services industry in Australia. MoneySwitch is entering the market for the provision of credit and debit card services to merchants. As such, the company is developing the necessary policies, procedures, systems, relationships and approvals for financial transaction processing, clearing and seftlement. 1 6 MONEYSWITCH LIMITED ABN 49 103575042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 18. 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 significantly the operation of the company, the results of these operations or the state of affairs of the company, in future financial years. 30-Jun-04 30Jun43 $ $ 19. NOTES TO THE STATEMENT OF CASH FLO\ IS (a) Reconciliation 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 434,289 434,289 201,437 201,437 (b) Reconciliation of operatino orofit from ordinarv activities after income tax to net cash orovided bv operatino activities Losses from ordinary activities after Income tax -270,672 $6,124 Non Gash items included ln operating loss: Expenses paid by related entity Depreciation Amortisation Provision for employee benefits Net Gash consumed by operating activifies before change in assets and liability Change in assets and liabilities Decrease/(lncrease) Decrease/(lncrease) Increase/(Decrease) Net cash consumed by operatlng acflvities in receivables in other assets in payables 1 0 , 8 8 8 8 1 3 9,260 3 , 7 5 5 8 1 3 - 2 4 9 , 7 1 1 - 6 1 , 5 5 6 -96,531 0 0 -346,242 - 1 2 , 8 1 2 -74,368 MONEYSWTCH LIMITED ABN 49 103575012 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 20. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES Credit Risk Credit Risk represents the loss that would be recognised if counterparties failed to perform as contracted. Recoonised fi nancial instru ments 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 t|e effective average interest rate from classes of financial assets and financial liabilities is set out below: 2004 Financial assets Cash assets Receivables Other assets Financial assets Payables Other Liabilities 2003 Year Financial assets Cash assets Receivables Other assets Financial assets Payables Other Liabilities Weighted Note average interest rate Floating rate Nonlnterest bearing $ Total 4.30o/o 434,289 434,289 0 109,342 2.441 111.783 434,289 109,342 2,441 _____546,w2 0 0 0 0 Weighted Note average lnterest rate Floating rate Non'interest bearing $ Total 4.30o/o 201,437 201 0 1 2 , 8 1 1 3.254 1 6 , 0 6 5 201,437 12,811 3,254 _____ 211,s02 0 0 0 n v o 1 9(a) A I 1 0 1 0 1 9(a) o 9 1 0 1 0 Pre Establishment There were no consolidated entity financial assets or liabilities prior to the formation of the company on 3 February,2003. 1 8 MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 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 liabiliiles are disclosed in the statements of financial position and in the notes to the financial statements. 21. CAPITAL COMMITMENTS The company does not have any capital commitments as at the date of this report. 22. DIRECTORS REMUNERATION No remuneration is paid to the Directors of the Company although Andrew Rothwell a former Director received salary and superannuation contributions amounting to $65,945 during the year. 23. 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 (resigned 1414104) R Freemantle, D calvert, w Barflett. D Calvert and W Bartlett were appointed during the year. Transactions The company has not entered into any transactions with the current directors during the period except for the issuing of shares and stock options to the directors or their associated parties. The shares capital has been issued solely to the Directors or their associated entities. A salary of $60,000 has been paid to Mr Andrew Rothwell during the year. The company has also paid superannuation contributions in respect of Mr Rothwell amounting to $5,445 during the year. Shares Held by Directors and Related Parties Paul Wood Pamela Wood Peter and Nola Haig Tomoda Pty Ltd William and Delwyn Bartlett Qazalla Developments Pty Ltd Andrew Rothwell lssued at 1 5 c 1 0 c 500,000 666,666 500,000 666,667 500.000 1,000,000 333,334 1,000,000 1,333,333 500,000 3.000.o0Ldooo^000 Value 150,000 150,000 50,000 150,000 50,000 300,000 50,000 900.000 1 9 MONEYSWTCH LIMITED ABN 49 103 575 042 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 Stock Options Granted to Directors during 2004 Year 10c Type Face Value Paul Wood 02 April 2004 Q2 Aprll2004 Peter Haig 02 April2004 02 April 2004 02 4pfl2004 Richard Freemantle 02 April2004 02 Apnl2004 Andrew Rothwell - former Director 02 April?0o4 02 Apil20o4 Denis Calvert 14 Apnl2004 William Bartlett 14 4pil2004 750,000 Vested 1,200,000 Service 1,000,000 Vested 600,000 Linear 660,000 Service 240,000 Vested 300,000 Service 825,000 Vested 600,000 Linear 200,000 Service 200,000 Service 6,575,000 75,000 120,000 100,000 60,000 66,000 24,000 30,000 82,500 60,000 20,000 20,000 657,500 2A MONEYSWITCH LIMITED ABN 49 10357sO42 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2OO4 Non-director related parties Current and former Staff and contractors have been issued stock option grants during year ended 30 June 2004 Stock Options Granted to current and former staff and contractors during the 2OO4year 10c Type FaceValue Russell Scrimshaw O2 Apnl2004 Nitin Patel 02 April2004 MarkWood O2 April2004 02 April2004 Sophie Katsibouba 02 April2004 A l a n M o A2 Apil2A04 Matthew Millis 02 April 2004 Arun Chalise 02 April2004 Need Data Pty Ltd 02 Apnl2004 50,000 Vested 20,000 Vested 20,000 Vested 250,000 Linear 30,000 Vested 275,000 Linear 450,000 Linear 350,000 Linear 216,410 Vested 5.000 2,000 2,000 25,000 3,000 27,500 45,000 35,000 21,641 1 S 6 1 / 1 0 : 1 6 6 . 1 4 1 2'l Mitchell & Partners MONEYSWITCH LIMITED ABN 49 103 575 042 COMPILATION REPORT to the members of MONEYSWITCH LIM|TED on the basis of information provided by the directors of Moneyswitch Limited we have compiled, in accordance with APS 9 "statement the general purpose financial report for the year ended 30 June 2004 on Compilation of Financial Reports", The directors are responsible for the information contained in the special purpose 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 enors or omissions report however caused in the special purpose financial. MITCHELL & PARTNERS Chartered Accountants / ) t#* n"*/"*,1 Gt.;;n;;;;irP;;;;; Signed at Sydney this jltth day of A-q \) -s$ 2004 surr r Levet z 1 York Street Sydney irsw 2ooo Australia TELEPHoNE: oz 9z5t 3838 FACSTM|LE: 02 9251 3OO8 arwl: reception@mitchellpartners.com.au Cft"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 Standards Act 1994 (NSW) MONEYSWITCH LIMITED ABN 49 t03 575 042 INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 30 JUNE ,2004 I N C O M E Other Income - R & D Rebate Interest lncome - AMP TOTAL INCOME OVERHEAD EXPENDITURE Engineering Salaries Rent Office Supplies Internet Telephone Insurance Books & Subscriptions Contractor fees Depreciation Training Total Engineering General & Administration Accountancy fees Amortisation of Formation expenses Auditors Remuneration Books & Subscriptions Consulting Depreciation Entertainment Insurance lnterest I nternet Provision for employee benefits Legal fees Office supplies Rent Salaries Telephone Travelling Utilities Total General & Adminlstrafion TOTAL EXPENSES NET PROF|n(LOSS) Company Company 30Jun-04 30Jun-03 9 9 , 9 1 9 9,626 ___10e,s45_ 0 3,054 3,054 152,518 3 0 , 8 1 3 9 , 1 6 4 2,261 2,405 1 , 2 7 7 1 , 6 6 3 4 8 , 1 5 5 7,824 10,371 266,451 478 8 1 3 3 , 5 0 0 4,209 3 , 8 0 0 3,064 488 1 1 5 0 204 9,260 5 7 , 1 8 0 826 2,779 1 3 , 7 5 6 2 1 7 13,077 0 113,767 380,218 -270,672 n v 0 0 0 0 0 1,762 30,832 1 , 7 3 2 2,358 36,684 1 , 5 4 0 8 1 3 282 0 2,023 0 1 , 1 9 8 1 6 3 1 , 5 7 6 0 5,445 4 , 5 6 9 11,562 0 2 , 0 9 9 5 1 6 708 29,859 66,543 {3,489 NET Operating Loss for the year -270,672 63,489 This Income & Expenditure Account does not form part of the audited accounts. z 5
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