MONEYSWITCH LIMITED
ABN 49 103 575 042
ANNUAL FINANCIAL REPORT
for the year ended 30 June 2005
1
MONEYSWITCH LIMITED
ABN 49 103 575 042
CORPORATE INFORMATION
Directors
Richard Freemantle (Chairperson)
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Company Secretary
Mark A Wood
Registered Office
Level 5, 121 Walker Street
North Sydney, New South Wales, 2060
(02) 8907 1700
Solicitors
Sparke Helmore
Auditors
Ernst & Young
Internet Address
www.MoneySwitch.net
2
MONEYSWITCH LIMITED
ABN 49 103 575 042
CONTENTS
Directors’ Report
Statement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to and Forming Part of the Financial Statements
Note 1 – Statement of Accounting Policies
Note 2 – Revenue from Ordinary Activities
Note 3 – Expenses
Note 4 – Income Tax
Note 5 – Receivables
Note 6 – Property, Plant and Equipment
Note 7 – Other Assets
Note 8 – Payables
Note 9 – Provisions
Note 10 – Retained Profits
Note 11 – Contributed Equity
Note 12 – Controlled Entities
Note 13 – Contingent Liabilities
Note 14 – Financial Reporting by Segments
Note 15 – Subsequent Events
Note 16 – Notes to the Statement of Cash Flows
Note 17 – Auditor’s Remuneration
Note 18 – Additional Financial Instruments Disclosures
Note 19 – Capital Commitments
Note 20 – Directors Remuneration
Note 21 – Related Party Transactions
Note 22 – Impact of Adopting Australian Equivalents to IFRS
Directors’ Declaration
Independent Audit Report
PAGE
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MONEYSWITCH LIMITED
ABN 49 103 575 042
Your directors submit their report for the year ended 30 June 2005.
DIRECTORS
The names and details of the company’s directors in office during the financial year and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Richard Freemantle (Non-executive Chairperson)
Non-Executive Chairperson since 20 June 2003.
Richard has been involved in establishing and growing companies for more than 20 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.
In 1990 Richard established the first international subsidiary for Cisco Systems in Australia. As this
grew into one of Cisco's key international markets, Richard was promoted to build 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 US$3B in revenue.
Since retiring from Cisco, Richard has been involved in board positions on a number of technology
start-up companies, including as Chairperson for the successful public float of Eserv Global in 2002.
Richard has not held any other directorships of listed public companies in the past 3 years.
Jost Stollmann (Director and Chief Executive Officer)
Executive Director and Chief Executive Officer since 5 April 2005.
Jost founded and grew the German system and network integrator CompuNet Computer AG into a
US$1B company, sold it to GE Capital US and led the integration and expansion of GE Capital IT
Solutions as President Europe across the continent. As Federal Shadow Minister of Economy and
Technology, he ran and managed his election campaign, contributing significantly to the landslide
victory of the first German government of Chancellor Gerhard Schröder.
Jost has not held any other directorships of companies in the past 3 years.
4
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
Names, qualifications, experience and special responsibilities continued
Paul A Wood (Director and Chief Technology Officer)
Executive Director since 3 February 2003 and Chief Technology Officer since 5 April 2005.
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 networking software business that was purchased by Cisco Systems in 1996. Metaplex
developed products that allowed IBM networking systems to use Internet protocols. Metaplex was a
key contributor to Data Link Switch (DLSw) which is in service in most banks worldwide today.
Paul was the founder and Chief Executive Officer of Netlink, a venture capital based data
communications company that developed products in the mainframe networking area. Netlink was
sold to Cabletron Systems, a US public company. Paul’s initial experience is in networking, technical
and product management roles at IBM.
Paul was Chief Executive Officer of MoneySwitch from 3 February 2003 until 5 April 2005.
Paul has not held any other directorships of companies in the past 3 years.
William J Bartlett FCA, CPA, FCMA, CA (SA) (Non-executive Director)
Non-Executive Director since 14 April 2004.
Bill has had 35 years experience in accounting and was a partner of Ernst & Young in Australia for 23
years, retiring on 30 June 2003. He has extensive experience in the actuarial, insurance and financial
services sectors through membership of many industry and regulatory advisory bodies including the
Life Insurance Actuarial Standards Board since 1994.
During the past three years Bill has served as a director of the following listed companies:
• Peptech Limited *
• Retail Cube Limited *
• RGA Inc *
• Suncorp-Metway Limited *
* denotes current directorship
Denis A Calvert (Non-executive Director)
Non-Executive Director since 14 April 2004.
Denis Calvert has EFTPOS and acquiring skills, having been Executive Vice President for Global
Sales and Marketing of Verifone Inc, a major 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 also Chief Executive Officer of Tasq Technology Inc. which provides outsourced
EFTPOS technology and logistical support to more than 1.4M retail merchants. Denis is currently an
advisor to several EFTPOS manufacturers and payment processors.
During the past three years Denis has served as a director of the following company:
• Verifone Australia Pty Ltd
* denotes current directorship
5
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
COMPANY SECRETARY
Mark A Wood
Company Secretary since 29 July 2004.
Mark has a Bachelor of Business, Hospitality and Tourism from Macquarie University, and is currently
the Business Development Manager for MoneySwitch Limited.
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of MoneySwitch Limited
were:
Richard Freemantle*
Jost Stollmann%
Paul A Wood^
William J Bartlett#
Denis A Calvert+
Ordinary
Shares
Options over
Ordinary
Shares
5,000,000
6,507,261
6,507,261
654,525
2,500,000
700,000
886,667
2,750,000
360,000
360,000
* Includes Ordinary Shares held by Cazalla Developments Pty Ltd being an associate of Richard Freemantle.
% Jost Stollmann was issued 3,333,333 fully paid shares as a result of options exercised during the year.
Options were exercised at a price of $0.15 per share.
^ Includes Ordinary Shares held by Pamela R Wood being an associate of Paul A Wood.
# Shares jointly held with Delwyn Bartlett.
+ Includes Ordinary Shares held by Tamoda Pty Ltd being an associate of Denis A Calvert.
DIVIDENDS
No dividends have been declared or paid since the date of incorporation
6
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
CORPORATE INFORMATION
Corporate Structure
MoneySwitch Limited is an unlisted public company limited by shares that is incorporated and domiciled in
Australia. The registered office of MoneySwitch is Level 5, 121 Walker Street, North Sydney, New South
Wales, 2060.
Nature of operations and principal activities
The principal activities during the year were:
• development of credit and debit card acquiring services;
• development of software to assist with the provision of credit and debit card acquiring services.
There have been no significant changes in the nature of those activities during the year.
Employees
The company employed 17 employees as at 30 June 2005 (2004: 8 employees).
OPERATING AND FINANCIAL REVIEW
Overview
MoneySwitch Limited was founded on 3 February 2003 by Paul A Wood, Peter J Haig and Andrew R
Rothwell. All have maintained their association with MoneySwitch with Paul A Wood as Chief Technical
Officer, Peter J Haig as Vice President of Engineering and Andrew R Rothwell as a software manager.
Credit and Debit Card Acquiring Services
MoneySwitch is a specialist provider of credit and debit card acquiring services. As such, the
Company is developing the necessary relationships, policies, procedures, systems and approvals to
comply with the stringent prudential and regulatory requirements to perform financial processing,
clearing, settlement and reporting activities.
Software development
MoneySwitch’s focus is on using state-of-the-art technology to provide extremely reliable, low cost
and customised acquiring services to merchants and value-added resellers. MoneySwitch has
continued the software development during the year.
Performance Indicators
Management and the Board monitor MoneySwitch’s overall development and performance, from its
development as a company through to the performance of the Company against operating plans and financial
budgets.
The Board, together with management, have identified key milestones and deadlines that are used to monitor
MoneySwitch’s development. Key management monitors achievement of milestones and deadlines on a
regular basis. Directors receive status reports for review prior to each monthly board meeting allowing all
directors to actively monitor MoneySwitch’s development.
Dynamics of the Business
MoneySwitch’s development is highly dependent on the dealings with organisations which provide access to
the credit and debit card acquiring market. These organisations can practice significant discretion in their
dealings with MoneySwitch. MoneySwitch continues to develop the necessary relationships to enter the
market.
7
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
Operating Results for the Year
The loss of the Company after providing for income tax amounted to $961,241 (2004: $270,672 loss). This
result was in line with expectations given that the Company is in the development stage of its lifecycle.
2005
MoneySwitch Limited
Investments for Future Performance
The company has been actively working with Visa, MasterCard, and other credit and debit card participants to
build the relationships necessary for MoneySwitch to enter the card acquiring business.
Revenues
$389,586
Results
-$961,241
The directors have budgeted capital expenditure for the purchase of computer servers and networking
equipment to establish MoneySwitch’s production IT infrastructure.
Review of Financial Condition
Capital Structure
During the period, 16,333,333 ordinary shares were issued as the company raised an additional
$3,950,000 of capital for anticipated start-up costs and for initial prudential capital requirements.
The fundraising was completed in two tranches at different times – on 24 December 2004; 3,000,000
ordinary shares were issued at $0.15 per share totalling $450,000, and on 5 April 2005; 10,000,000
ordinary shares were issued at $0.30 per share totalling $3,000,000 and 3,333,333 options were
exercised at $0.15 per share totalling $500,000.
As at 30 June 2005, the company had no debt.
Cash from Operations
MoneySwitch continued to operate at a loss for the 2004/5 financial year, in line with its status as a
pre-revenue start-up company.
The company had interest income of $61,862 for the period. The company also claimed an R&D Tax
Concession through the Industry Research and Development (IR&D) Board and the Australian
Taxation Office of $327,724.
Liquidity and Funding
The company had cash of $3,154,563 at the end of the period.
Under the MoneySwitch’s Specialist Credit Card Institution (SCCI) authority, the company is required
by APRA to hold an amount of not less than $2 million in Tier 1 capital at all times before it
commences credit and/or debit card acquiring.
At all times after the Company commences credit and/or debit card acquiring, the Company must hold
Tier 1 capital in the greater of the following two amounts:
(a) $5 million; or
(b) 20% of the value of the risk weighted on- and off- balance sheet credit exposures of the
company (at the time of calculation);
MoneySwitch intends to raise additional capital before live operations commence to continue to meet
APRA capital requirements.
8
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
Risk Management
MoneySwitch is now prudentially supervised by the Australian Prudential Regulation Authority (APRA) and is
required to comply with prudential standards and provide ongoing reporting. The company has developed
policies, procedures and systems to ensure on-going compliance with the standards.
Statement of Compliance
The report is based on the guidelines in The Group of 100 Incorporated publication Guide to the Review of
Operations and Financial Condition.
EMPHASIS OF MATTER
Although the company has made losses in the prior 2 years, MoneySwitch is in the start-up phase of
operations and this was expected. MoneySwitch has sufficient cash for the 2005/6 financial year to pay its
debts as and when they become due and payable and is able to control its expenses. As such the directors
believe the company is a going concern. In order to continue to meets capital requirements imposed by
APRA, MoneySwitch will require additional funding to be raised during the year. Additional funding will likely
be raised in late 2005 internally from existing shareholders and/or externally from an additional strategic
investor(s) as needed. All past fundraising has been provided by directors and/or employees of MoneySwitch.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Jost Stollmann joined the company as Chief Executive Officer on 5 April 2005. Having also participated in the
April 2005 fundraising, Jost also became an executive director of the company. Jost has had a successful
entrepreneurial career as a company builder, and his position as Chief Executive Officer strengthens
MoneySwitch’s management and strategic capabilities.
At the time of Jost’s appointment, the founding Chief Executive Officer, Paul A Wood, took the role of Chief
Technical Officer with MoneySwitch. Paul continues to guide product and banking process development, as
well as working with major merchants on their strategic payment needs. Peter J Haig, a company founder and
Vice President of Engineering, resigned as a executive director at the time of Jost’s appointment in order to
ensure that there was a majority of non-executive directors on the board. Peter continues to manage the IT
systems development.
On 26 April 2005, MoneySwitch Limited was authorised by the Australian Prudential Regulation Authority
(APRA) to carry on banking business in Australia. MoneySwitch is authorised as an Authorised Deposit-
Taking Institution (ADI) whose banking activities are confined to credit and debit card acquiring as a Specialist
Credit Card Institution (SCCI). MoneySwitch cannot take money on deposit.
On the same date, shareholders of MoneySwitch obtained approval under the Financial Sector
(Shareholdings) Act 1998 to hold a stake in MoneySwitch (a Financial Sector company) of greater than 15%
each.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There has not arisen in the interval between the end of the 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 AND EXPECTED RESULTS
The directors foresee that in the 2005/6 financial year MoneySwitch will continue activities towards entering
the market for credit and debit card acquiring services for merchants.
9
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 12,007,631 unissued ordinary shares under options. Option holders
do not have any right, by virtue of the option, to participate in any share issue of the company.
Shares issued as a result of the exercise of options
During the financial year, employees and directors have exercised the option to acquire 3,333,333 fully paid
ordinary shares in MoneySwitch Limited at a weighted average exercise price of $0.15. Since the end of the
financial year, no further options have been exercised.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the company has not in respect of any person who is or has been an officer
or auditor of the company or of a related body corporate:
(a) 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.
During or since the financial year, the company has paid premiums in respect of a contract insuring all the
directors and officers of MoneySwitch Limited against legal costs incurred in defending proceedings for
conduct involving:
(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
10
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and
the number of meetings attended by each director were as follows:
Number of meetings held:
Number of meetings attended:
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Peter J Haig
Directors’
Meetings
Meetings of Committees
Audit Risk
10
9
^3
10
8
8
*7
2
—
—
2
2
2
—
1
—
—
1
1
1
—
Remuneration &
Options
0
0
—
0
—
0
—
Meetings of the committees of directors will be held more frequently now that MoneySwitch is a regulated
financial institution.
Notes:
*
^
Peter J Haig attended all directors’ meetings held prior to his resignation
Jost Stollmann attended all directors’ meetings held since his appointment to the board.
Committee Membership
As at the date of this report, the company had an Audit Committee, a Risk Committee and a Remuneration &
Options Committee of the board of directors.
Members acting on the committees of the board during the year were:
Risk
Audit
D Calvert (c)
W Bartlett (c)
B Bartlett
D Calvert
P Wood
P Wood
Remuneration & Options
R Freemantle (c)
D Calvert
P Wood
Notes
(c)
Designates the chairperson of the committee.
11
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The directors received the following declaration from the Auditor of MoneySwitch Limited
12
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT (cont’d)
NON-AUDIT SERVICES
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act. The nature and scope of each type of non-audit service provided
means that auditor independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Extended Assurance Services
$59,377
Signed in accordance with a resolution of the directors.
Jost Stollmann
Director
Sydney, 18 August 2005
13
MONEYSWITCH LIMITED
ABN 49 103 575 042
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2005
Revenue from Ordinary Activities
Depreciation of plant & equipment
Operating Expenses
General and administration
Marketing
Operations
Research & development
Profit/(loss) from ordinary activities before related
income tax expense
Income tax expense relating to ordinary activities
Net profit/(loss)
NOTE
2
3
3
3
3
3
4
10
30-Jun-05
$
30-Jun-04
$
389,586
109,545
389,586
109,545
(30,701)
(10,888)
(395,207)
(30,820)
(31,942)
(862,157)
(110,703)
-
-
(258,626)
(961,241)
(270,672)
-
-
(961,241)
(270,672)
The above Statement of Financial Performance should be read in conjunction with the accompanying notes.
14
MONEYSWITCH LIMITED
ABN 49 103 575 042
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2005
CURRENT ASSETS
Cash assets
Receivables
30-Jun-05
$
30-Jun-04
$
16
5
3,154,563
361,240
434,289
109,342
TOTAL CURRENT ASSETS
3,515,803
543,631
NON-CURRENT ASSETS
Other financial assets
Property, plant & equipment
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained profits/(loss)
TOTAL EQUITY
6
7
8
9
-
86,009
1,627
-
26,392
2,441
87,636
28,833
3,603,439
572,464
28,077
23,399
-
9,260
51,476
9,260
51,476
9,260
3,551,963
563,204
11
10
4,850,000
(1,298,037)
3,551,963
900,000
(336,796)
563,204
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
15
MONEYSWITCH LIMITED
ABN 49 103 575 042
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005
STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Receipt for research & development tax concession
Payments to suppliers and employees
Interest received
30-Jun-05
$
30-Jun-04
$
99,919
(1,289,471)
50,144
-
(355,868)
9,626
NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES
16(b)
(1,139,408)
(346,242)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
6
(90,318)
(20,906)
NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
(90,318)
(20,906)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
11
3,950,000
600,000
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
3,950,000
600,000
Net increase/(decrease) in cash held
Cash at the beginning of the year
2,720,274
434,289
232,852
201,437
Cash at the end of the year
16(a)
3,154,563
434,289
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
16
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
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 the
requirements of the Corporations Act 2001 including applicable Accounting Standards. Other mandatory
professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.
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.
The directors consider the going concern assumption to be appropriate. MoneySwitch Limited is in the
start-up phase of operations and has a history of raising sufficient capital to meet the company's
expenditure and prudential capital needs. MoneySwitch Limited is able to control its expenses. Should
current cash levels not be sufficient to meet the company's prudential capital requirements, the company
will seek to raise additional funding through capital raising in the 2005/2006 financial years internally from
existing shareholders and/or externally from additional strategic investor(s) as needed.
(b) Taxes
Income Taxes
Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense
and is calculated on the accounting profit after allowing for permanent differences. To the extent timing
differences occur between the time items are recognised in the financial statements and when items are
taken into account in determining taxable income, the net related taxation benefit or liability, calculated at
current rates is disclosed as a future income tax benefit or a provision for deferred income tax.
The net future income tax benefit relating to tax losses and timing differences is not carried forward
as an asset unless the benefit is virtually certain of being realised.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
- where the GST incurred on the purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
- receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to,
the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
17
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(c) Cash and cash Equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and
money market investments readily convertible to cash within 2 working days.
Bank overdrafts are carried at the principal amount. Interest is recognised as an expense as it accrues.
(d) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and
the revenue can be reliably measured. The following specific recognition criteria must also be met before
revenue is recognised:
Rendering of services
Where the contract outcome can be reliably measured, control of the right to be compensated for the
services and the stage of completion can be reliably measured. Stage of completion is measured
by reference to the labour hours incurred to date as a percentage of total estimated labour hours for
each contract.
Where the contract outcome cannot be reliably measured, revenue is recognised only to the extent
that costs have been incurred.
Interest Revenue
Control of the right to receive the interest payment.
(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 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 directly
attributable to the acquisition.
Expenditure is only recognised as an asset when the entity controls future economic benefits as a result
of the cost incurred, it is probable that those future economics benefits will eventuate, and the costs can be
measured reliably. Costs attributable to feasibility and alternative approach assessments are expensed as
incurred.
(g) Recoverable amount of non-current assets valued on cost basis
The carrying amount of non-current assets valued on the cost basis are reviewed to determine whether
they are in excess of their recoverable amount at balance date. If 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
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.
18
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
STATEMENT OF ACCOUNTING POLICIES (cont'd)
Cost versus fair value
Except where specifically stated, non-current assets are recorded at the lower of cost and recoverable
amount.
(h) Property, Plant and Equipment
Cost and Valuation
Freehold land and buildings on freehold land are measured on a fair value basis. At each reporting date,
the value of each asset in these classes is reviewed to ensure that it does not differ materially from the
asset's fair value at that date. Where necessary, the asset is revalued to reflect its fair value.
All other classes of property, plant and equipment are measured at cost.
Where assets have been revalued, the potential effect of the capital gains tax on disposal has not been
taken into account in the determination of the revalued carrying amount. Where it is expected that a
liability for capital gains tax will arise, this expected amount is disclosed by way of note.
Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment, other than
the low value pool and freehold land.
The low value pool is depreciated on a diminishing value basis, plant and equipment items under $1,000
are added to the pool and depreciated at 18.5% in the first year and 37% in subsequent years.
Freehold land is not depreciated.
Major depreciation periods are:
2005
2004
Plant and Equipment:
- Furniture and Office Equipment
- Computer Equipment
- Low Value Pool
5 years
4 years
18.50%
37.00%
5 years
4 years
18.50%
37.00%
Year
1
>2
(i) Research and Development Costs
Research and Development Costs are expensed as incurred, except where future benefits are expected,
beyond any reasonable doubt, to exceed those costs. Where research and development costs are deferred
such costs are amortised over future periods on a basis related to expected future benefits. Unamortised
costs are reviewed at each reporting date to determine the amount (if any) that is no longer recoverable and
any amount identified is written off.
(j) Receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollected
debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable.
Bad debts are written-off as incurred.
Receivables from related parties are recognised and carried at the nominal amount due. Interest is
taken up as income on an accrual basis.
19
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
STATEMENT OF ACCOUNTING POLICIES (cont'd)
Bills of exchange and promissory notes are measured at the lower of cost and net realisable value.
(k) Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received, whether or not billed to the entity.
Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is
recognised as an expense on an accrual basis.
Deferred cash settlements are recognised at the present value of the outstanding consideration payable on
the acquisition of an asset discounted at prevailing commercial borrowing rates.
(l) Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to
make a future sacrifice of economic benefits to other entities as a result of past transactions or other past
events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can
be made of the amount of the obligation.
(m) Employee Benefits
Provision is made for employee benefits accumulated as a result of employees rendering services
up to the reporting date. These benefits include wages and salaries, annual leave and long
service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee
benefits expected to be settled within the twelve months of the reporting date are measured at their nominal
amounts based on remuneration rates which are expected to be paid when the liability is settled.
Employee benefit expenses and revenues arising in respect of the following categories:
- wages and salaries, non-monetary benefits, annual leave, long service leave and
other leave benefits; and
- other types or employee benefits
are recognised against profits on a net basis in their respective categories.
The value of the equity-based compensation scheme described in the notes (note 21) and the directors
report is not being recognised as an employee benefits expense.
20
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(n) International Financial Reporting Standards (IFRS)
The Australian Accounting Standards Board (AASB) is adopting IFRS for application to reporting periods
beginning on or after 1 January 2005. The AASB will issue Australian equivalents to IFRS, and the Urgent
Issues Group will issue abstracts corresponding to IASB interpretations originated by the International
Financial Reporting Interpretations Committee or the Former Standing Interpretations Committee.
The adoption of Australian equivalents to IFRS will be first reflected in the entity's financial statements for
the year ending 30 June 2006.
Entities complying with Australian equivalents to IFRS for the first time will be required to restate their
comparatives financial statements to amounts reflecting the application of IFRS to that comparative period.
Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained
earnings as at 1 July 2004.
(o) Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with the current
year disclosures.
21
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
30-Jun-05
$
30-Jun-04
$
61,862
327,724
389,586
9,626
99,919
109,545
4,736
21,564
4,401
30,701
-
46,177
689,319
55,918
70,743
862,157
28,537
87,570
17,381
61,724
14,139
9,949
7,848
17,633
150,426
395,207
30,820
31,942
421
4,478
5,989
10,888
48,155
30,813
152,518
-
27,140
258,626
478
3,800
115
57,180
9,260
-
2,779
13,077
24,014
110,703
-
-
1,350,827
380,217
2. REVENUE FROM ORDINARY ACTIVITIES
Interest Income
Research & Development Rebate
3. EXPENSES
Operating Expenses
Depreciation of plant and equipment
- Furniture and office equipment
- Computer equipment
- Low value pool
Research and Development:
- Contractor fees
- Rent
- Salaries
- Superannuation
- Other research & development expenditure
Total Research and Development
General and Administration:
- Audit and accountancy fees
- Consulting and assurance fees
- Insurance
- Legal Fees
- Provision for employee benefits
- Recruitment expenses
- Rent
- Travelling
- Other expenses
Marketing
Operations
Total expenses
22
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
30-Jun-05
$
30-Jun-04
$
(961,241)
(270,672)
(288,372)
288,372
(81,202)
81,202
4. INCOME TAX
Operating profit for the year
Prima facie income tax expense on
profit from ordinary activities (30%)
Income tax losses carried forward
This future income tax benefit arising from tax losses is
not recognised at reporting date as realisation of the benefit
is not regarded as virtually certain.
This future income tax benefit will only be obtained if:
(a) future assessable income is derived of a nature and
amount sufficient to enable the benefit to be realised;
(b) the conditions for deductibility imposed by taxation
legislation continue to be complied with;
(c ) no changes in taxation legislation adversely affect
the entity in realising the benefit.
Income tax expense
-
-
5. RECEIVABLES
Sundry Debtors - Research & Development Tax Concession
Sundry debtors
GST refund due
Interest Receivable
Prepayments
$
$
327,724
20,998
-
11,718
800
361,240
99,919
8,613
810
-
-
109,342
The company has applied through AusIndustry for a Research and Development tax concession.
A registration number has been granted and the Application will be lodged with the Australian Taxation
Office.
23
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
6. PROPERTY, PLANT AND EQUIPMENT
Furniture and Office Equipment
Engineering at cost
Accumulated depreciation
Other at cost
Accumulated depreciation
30-Jun-05
$
30-Jun-04
$
5,518
(1,104)
4,414
18,161
(4,474)
13,687
-
-
-
2,105
(842)
1,263
Total furniture and office equipment
18,101
1,263
Computer Equipment
Engineering at cost
Accumulated Depreciation
Operations at cost
Accumulated depreciation
Other
Accumulated depreciation
Total computer equipment
Low Value Pool
Engineering at cost
Accumulated depreciation
Other at cost
Accumulated depreciation
Total low value pool
Total property, plant and equipment at cost
Accumulated depreciation
Total written down amount
24
31,863
(12,444)
19,419
37,593
(9,398)
28,195
16,800
(4,200)
12,600
17,912
(4,478)
13,434
-
-
-
-
-
-
60,214
13,434
12,585
(7,781)
4,804
8,832
(5,942)
2,890
12,186
(5,078)
7,108
8,832
(4,246)
4,586
7,694
11,694
131,352
(45,343)
86,009
41,035
(14,644)
26,391
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
6.PROPERTY, PLANT AND EQUIPMENT (cont'd)
Reconciliations
Reconciliations of the carrying amount for each class
of property are set out below:
30-Jun-05
$
30-Jun-04
$
Furniture and equipment
Carrying amount at beginning of year
Additions
Write-down in other assets
Carrying amount at end of year
Computer equipment
Carrying amount at beginning of year
Additions
Write-down in other assets
Carrying amount at end of year
Low Value Pool
Carrying amount at beginning of year
Additions
Write-down in other assets
Carrying amount at end of year
Total property, plant and equipment
Carrying amount at beginning of year
Additions
Write-down in other assets
Carrying amount at end of year
7. OTHER ASSETS
Non-current
Formation costs
Accumulated amortisation
8. PAYABLES
Current Liabilities
Trade creditors
Accruals
Accounting and Audit Fees
Payroll Tax on Options
9. PROVISIONS
1,263
21,574
(4,736)
18,101
13,434
68,344
(21,564)
60,214
11,695
400
(4,401)
7,694
1,684
-
(421)
1,263
-
17,912
(4,478)
13,434
14,690
2,994
(5,989)
11,695
26,392
90,318
(30,701)
86,009
16,374
20,906
(10,888)
26,392
2,441
(814)
1,627
3,255
(814)
2,441
-
20,450
7,627
28,077
-
-
-
-
Provision for Employee Benefits
23,399
9,260
25
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
10. RETAINED PROFITS
Retained profits at the beginning of the financial year
Net Profit attributable to the shareholders of the entity
Retained profits at the end of the financial year
11. CONTRIBUTED EQUITY
3,000,000 Ordinary shares paid at 10c each
10,333,333 Ordinary shares paid at 15c each
10,000,000 Ordinary shares paid at 30c each
Shares issued during the year:
24 December, 2004 - 3,000,000 Ordinary Shares at 15c each
5 April, 2005 - 3,333,333 Ordinary Shares at 15c each
5 April, 2005 - 10,000,000 Ordinary Shares at 30c each
30-Jun-05
$
30-Jun-04
$
(336,796)
(961,241)
(1,298,037)
(66,124)
(270,672)
(336,796)
300,000
1,550,000
3,000,000
300,000
600,000
-
4,850,000
900,000
450,000
500,000
3,000,000
3,950,000
Terms and conditions of contributed equity
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the
company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.
12. CONTROLLED ENTITIES
.
Particulars in relation to controlled entities
There are no controlled entities as at 30 June, 2005 nor were any acquired or sold during the period.
13. CONTINGENT LIABILITIES
There are no known contingent liabilities as at the date of this report.
14. FINANCIAL REPORTING BY SEGMENTS
The company operates in the financial services industry in Australia.
MoneySwitch Limited 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 settlement.
26
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
15. 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.
16. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of Cash
30-Jun-05
$
30-Jun-04
$
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 at Bank
3,154,563
3,154,563
434,289
434,289
(b) Reconciliation of operating profit from ordinary activities after income tax
to net cash provided by operating activities
Losses from ordinary activities after income tax
(961,241)
(270,672)
Non Cash items included in operating loss:
Depreciation
Amortisation
Provision for employee benefits
Change in assets and liabilities
Decrease/(Increase) in receivables
Decrease/(Increase) in other assets
Increase/(Decrease) in payables
Net cash flow from operating activities
30,701
814
14,139
10,888
813
9,260
(915,587)
(249,711)
(251,898)
-
28,077
(1,139,408)
(96,531)
-
-
(346,242)
27
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
17. AUDITOR'S REMUNERATION
Amounts received or due and receivable by Ernst & Young:
- an audit of the financial report of the entity
- other services in relation to the entity
Amounts received or due and receivable by Mitchell &
Partners:
- an audit of the financial report of the entity
- other services in relation to the entity
- Accounts and Tax Return
30-Jun-05
$
30-Jun-04
$
15,450
59,377
-
-
-
5,000
5,000
74,827
-
5,000
18. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES
Credit Risk
Credit Risk represents the loss that would be recognised if counterparties failed to perform as contracted.
Recognised financial instruments
The credit risk on financial assets, excluding investments, of the 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 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 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:
2005
Financial assets
Cash assets
Receivables
Other assets
Financial liabilities
Payables
Provisions
Note
16(a)
5
7
8
9
Weighted
average
interest
rate
5.17%
Floating Non-interest
rate
bearing
$
Total
3,154,563
-
-
3,154,563
-
361,240
1,627
362,867
3,154,563
361,240
1,627
3,517,430
-
-
-
28,077
23,399
51,476
28,077
23,399
51,476
28
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
18. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES (cont'd)
2004
Financial assets
Cash assets
Receivables
Other assets
Financial liabilities
Payables
Provisions
Note
16(a)
5
7
8
9
Weighted
average
interest
rate
4.30%
Floating Non-interest
rate
bearing
$
434,289
-
-
434,289
-
109,342
2,441
111,783
Total
434,289
109,342
2,441
546,072
-
-
-
-
9,260
9,260
-
9,260
9,260
Pre Establishment
There were no 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.
19. CAPITAL COMMITMENTS
The company does not have any capital commitments as at the date of this report.
20. DIRECTORS REMUNERATION
No cash remuneration is paid to the Directors of the Company other than Mr. Peter Haig, a former Director
who received salary and superannuation contributions amounting to $132,506 during the year.
29
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
21. RELATED PARTY TRANSACTIONS
The directors of MoneySwitch Limited during the year were:
Name
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Peter J Haig
Director remuneration for the year ended 30 June 2005
Appointed
20/06/2003
5/04/2005
3/02/2003
14/04/2004
14/04/2004
3/02/2003
Resigned
5/04/2005
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Peter J Haig
Total
Primary
Benefits
Salary &
fees ($)
-
-
-
-
-
121,565
121,565
Equity
Number of
Post
Employment
Super-
annuation ($) Options
-
-
-
-
-
10,941
10,941
160,000
4,220,000
800,000
160,000
160,000
-
5,500,000
The number of directors of the company whose aggregate cash income paid or payable, or otherwise made
available falls within each successive band of income (commencing at $0):
$0-$0
$130,000-$140,000
Shares Held by Directors and Related Parties
Cazalla Developments Pty. Limited
Jost Stollmann
Paul Wood
Pamela Wood
Tamoda Pty Ltd
William and Delwyn Bartlett
Peter and Nola Haig
Total
30-Jun-05
No.
30-Jun-04
No.
5
1
6
6
-
6
Outstanding
at start
of period
1-Jul-04
Shares
Issued
2005
Outstanding
at end
of period
30-Jun-05
2,333,333
-
1,166,666
1,166,667
1,000,000
333,334
500,000
6,500,000
2,666,667
6,507,261
2,086,964
2,086,964
1,500,000
321,191
750,000
15,919,047
5,000,000
6,507,261
3,253,630
3,253,631
2,500,000
654,525
1,250,000
22,419,047
30
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
21. RELATED PARTY TRANSACTIONS (cont'd)
Option Holdings of Directors
Outstanding Options
granted
2005
at start
of period
1-Jul-04
Options Outstanding Exercisable
at end
exercised
of period
2005
30-Jun-05
at end
of period
30-Jun-05
600,000
600,000
-
-
300,000
-
1,200,000
200,000
200,000
660,000
2,560,000
160,000
886,667
800,000
160,000
160,000
-
2,166,667
-
-
-
-
-
-
-
-
-
240,000
-
750,000
1,000,000
1,990,000
5,150,000
-
3,333,333
-
-
3,333,333
5,500,000
-
3,333,333
-
-
3,333,333
3,333,333
600,000
600,000
120,000
120,000
460,000
886,667
2,000,000
360,000
360,000
660,000
4,726,667
240,000
-
750,000
1,000,000
1,990,000
7,316,667
380,000
486,667
1,600,000
280,000
280,000
660,000
3,686,667
240,000
-
750,000
1,000,000
1,990,000
5,796,667
Linear vesting schedule
Peter J Haig
Service vesting schedule
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Peter J Haig
Fully vested at time of grant
Richard Freemantle
Jost Stollmann
Paul A Wood
Peter J Haig
Total
Option Terms and Conditions
Stock option grants may be exercised, in whole or in part, subject to vesting terms and conditions
indicated below:
Type
Terms and Conditions
Linear vesting schedule
Options may be exercised linearly as to the shares subject to
options over a period of 60 months, vesting subject to maintaining
continuous status as an employee or consultant.
Service vesting schedule
Options may be exercised as to a set number of shares per agreed
day of consulting service, as defined in the specific option grant.
Fully vested at time of grant
Options may be exercised as to all shares from the vesting
commencement date.
31
MONEYSWITCH LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2005
22. IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO IFRS
MoneySwitch Limited is in the process of transitioning its accounting policies and financial reporting from
current Australian Accounting Standards (AGAAP) to Australian equivalents of International
Financial Reporting Standards (AIFRS) which will be applicable for the financial year ended 30 June 2006.
The actual effects of the transition to AIFRS are dependent on the (a) ongoing work being undertaken by
the AIFRS project teams; (b) potential amendments to AIFRSs and Interpretations thereof being issued
by the standard-setters and IFRIC; and (c) emerging acceptance practice in the interpretation and
application of AIFRS and UIG Interpretations.
Under AASB 2 Share Based Payments, the company should recognise the fair value of options granted
to employees as remuneration and expense on a pro-rata basis over the vesting period in the income
statement with a corresponding adjustment to equity. Share-based payment costs are not recognised
under AGAAP. At reporting date MoneySwitch Limited were unable to quantify the dollar value of any
adjustments.
32
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of MoneySwitch Limited, I state that:
(1) In the opinion of the directors:
a.
the financial statements and notes of the company are in accordance with the Corporations
Act 2001, including:
i. giving a true and fair view of the company’s financial position as at 30 June 2005 and
of their performance for the year ended on that date; and
ii. complying with Accounting Standards and 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.
(2) This declaration has been made after receiving the declarations required to be made to the directors
in accordance with section 295A of the Corporations Act 2001 for the financial period ending 30 June
2005.
On behalf of the Board
Jost Stollmann
Director
Sydney, 18 August 2005
33
=JI EnNsr *YouNc
f Ernst & Young Centre
680 Ceorge Street
Sl,dney NSW 2000
A u s t r a l r a
CPO Box 2646
S y d n e y N S W 2 0 0 1
r T e l 6 1 2 9 2 , + B 5 5 5 5
Far 61 2 9218 5959
D X S y d n e y S t o c k
E x c h a n g e 1 0 1 7 2
Independent audit report to members of MoneySwitch Limited
Scope
The financial report and 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 for MoneySwitch Limited (the company), for the year ended 30 June 2005.
The directors of the company are responsible for preparing a financial report that gives a true and
fair view of the financial position and performance of the company, and that complies with
Accounting Standards in Australia, in accordance with the Corporations Act 2001. This includes
responsibility for the maintenance of adequate accounting records and internal controls that are
designed to prevent and detect fraud and error, and for the accounting policies and accounting
estimates inherent in the financial report.
Audit approach
We conducted an independent audit of the financial report in order to express an opinion on it 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 intemal 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, including compliance with Accounting
Standards in Australia, and other mandatory financial reporting requirements in Australia, a view
which is consistent with our understanding of the company's financial position, and of 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 intemal controls over financial reporting
when determining the nature and extent of our procedures, our audit was not designed to provide
assurance on internal controls.
We performed procedures to assess whether the substance of business transactions was accurately
reflected in the financial report. These and our other procedures did not include consideration or
judgement of the appropriateness or reasonableness of the business plans or strategies adopted by
the directors and management of the company.
Liability limited by the Accountants Scheme. approvcd
u n d e r t h e P r o f e s s i o n a l S t a n d a r d s A c t 1 9 9 4 ( N S W )
-=!l
EnNsraYouNc
Independence
f E r n s t & Y o u n g C e n t r e
6 8 0 C c ' o r g e S t r e e t
S r r i n e r N S W 2 0 0 0
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C I r ( ) B o r 2 6 4 6
S v r i n t ' r N S W 2 0 0 I
r Tcl U, ,. rr^O rrr?
I:.rr 61 2 9248 5959
DX Sydney Stock
Exchange 1 01 72
We are independent of the company, and have met the independence requirements of Australian
professional ethical pronouncements and the Corporotions Act 2001. We have given to the
directors of the company a written Auditor's Independence Declaration, a copy of which is included
in the Directors' Report. In addition to our audit of the financial report, we were engaged to
undertake the services disclosed in the notes to the financial statements. The provision of these
services has not impaired our independence.
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 financial position of MoneySwitch Limited at
30 June 2005 and ofits perfornance for the year ended on that date; and
complying with Accounting Standards in Australia and the Corporations
Regulations 2001; and
(iD
(b)
other mandatory financial reporting requirements in Australia.
{c ">l
Ernst & Y
, V u u
oung <,
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Andrew Price
Partner
Sydney
18 August 2005
Liability limited by the Accountants Scheme, approved
undcr the Prof'essional Standards Act 1994 (NSW)