MONEYSWITCH LIMITED
(Trading as Tyro Payments)
ABN 49 103 575 042
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2007
1
CORPORATE INFORMATION
MONEYSWITCH LIMITED
ABN 49 103 575 042
Directors
Robert A Ferguson (Chairperson)
Bradford L Banducci
William J Bartlett
Thomas J Girgensohn
Jost Stollmann
Company Secretary
Justin V Mitchell
Registered Office
Level 2, 125 York Street
Sydney, New South Wales, 2000
(02) 8907 1700
Solicitors
Sparke Helmore
Auditors
Ernst & Young
Internet Address
www.tyro.com
2
MONEYSWITCH LIMITED
ABN 49 103 575 042
CONTENTS
Directors’ Report
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Changes in Equity
Notes to and Forming Part of the Financial Statements
PAGE
4
18
19
20
21
22
22
Note 1 – Statement of Accounting Policies
33
Note 2 – Revenue and Expenses
35
Note 3 – Income Tax
35
Note 4 – Cash and Cash Equivalents
Note 5 – Trade and other Receivables
36
Note 6 – Investment Securities 36
Note 7 – Inventories 36
37
Note 8 – Property, Plant and Equipment
38
Note 9 – Share-based Payments
42
Note 10 – Payables
42
Note 11 – Provisions
42
Note 12 – Contributed Equity and Reserves
44
Note 13 – Financial Risk Management policies and objectives
47
Note 14 – Commitments and Contingencies
48
Note 15 – Capital Commitments
48
Note 16 – Controlled Entities
48
Note 17 – Subsequent Events
48
Note 18 – Financial Reporting by Segments
48
Note 19 – Auditor’s Remuneration
49
Note 20 – Related Party Disclosures
Directors’ Declaration
Independent Audit Report
55
56
3
MONEYSWITCH LIMITED
ABN 49 103 575 042
DIRECTORS’ REPORT
Your Directors submit their report for the year ended 30 June 2007.
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
Robert A Ferguson (Non-Executive Chairperson)
Non-Executive Director since 14 November 2005.
Rob began his career as a Research Analyst for a Sydney stockbroker. He joined Bankers
Trust Australia as a portfolio manager in 1972 when the company's turnover totalled $6
million and became Managing Director in 1985. Through his ongoing delivery of higher
investment performance, he and his team built BT Funds Management into the leader in the
retail mutual funds business. By the mid-1990s, Bankers Trust had $50 billion under
management. Following the sale of the funds management arm of Bankers Trust to Principal
Financial Group in 1999, Rob became Chairman of BT Funds Management until he resigned
the position in 2002.
During the past three years Rob has served as a Director of the following companies:
•
•
•
•
•
•
•
•
IMF (Australia) Pty Ltd*
IMG Investment Management Limited*
Lowy Institute for International Policy*
MoneySwitch Limited*
Pamlex Pty Ltd*
Shirf Pty Ltd*
The Sydney Institute*
The Sydney Writers Festival Limited*
* denotes current Directorship
Bradford L Banducci (Non-Executive Director)
Non-Executive Director since 14 December 2006.
Brad spent 15 years working for The Boston Consulting Group (BCG) in Australia, USA and
New Zealand. BCG is a leading global management consulting firm that specialises in
working with the global 2000 companies to grow and transform their businesses. Brad spent
the last 8 years as a global Vice President and Director of BCG. He was the leader of the
Sydney Office from 2001-2003 and Head of its Asia Pacific Corporate Strategy and Finance
Practice from 2003-2005. Brad was the Chief Financial Officer of MoneySwitch from August
2005 until October 2006.
4
MONEYSWITCH LIMITED
ABN 49 103 575 042
During the past three years, Brad has served as a Director of the following companies:
• MoneySwitch Limited*
• Boston Consulting Group Pty Limited (Ceased 1 Apr 2005)
*denotes current Directorship
Bill Bartlett FCA, CPA, FCMA, CA (SA) (Non-Executive Director)
Non-Executive Director since 21 February 2004
(cid:131) Expertise: Chartered Accountant, actuarial, insurance and financial services
Bill is a Fellow of the Institute of Chartered Accountants, with over 35 years experience in
accounting, and was a partner at Ernst & Young in Australia for 23 years, retiring on 30 June
2003. He is a director of the Bradman Foundation and Museum and MoneySwitch Limited.
During the past three years, Bill has served as a director of the following companies:
• Suncorp-Metway Limited *
• Reinsurance Group of America Inc (NYSE)*
• Peptech Limited*
• Abacus Property Group*
• GWA International Limited
• Retail Cube Limited (2004 – 2006)
*denotes current directorship
Denis A Calvert (Non-Executive Director)
Non-Executive Director since 14 April 2004 until 13 November 2006.
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 North America, 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
Richard Freemantle (Non-Executive Director)
Non-Executive Director from 20 June 2003 until 25 June 2007.
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 worked on a number of boards 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 companies in the past 3 years.
Dr Thomas J Girgensohn (Non-Executive Director)
Non-Executive Director since 9 March 2006.
Thomas Girgensohn brings to MoneySwitch Limited extensive experience in the consulting
sector in both Australia and internationally. He was previously a Managing Partner (Australia
and New Zealand) of the Boston Consulting Group and was also a former chairman of
Netcomm Ltd and TDG Logistics. Dr Girgensohn has a PhD in Business Administration from
the University of Munich, a Master of Business Administration from the University of
Saarbrucken and a Bachelor of Economics from the University of Bochum, all in Germany. Dr
Girgensohn is a current Fellow of the Australian Institute of Company Directors.
During the past three years Thomas has served as a Director of the following companies:
• Australian Co-operative Foods Limited*
• Beviron Pty Limited
• Compass Resources Ltd*
• MoneySwitch Limited*
• Stemcor Australia Pty Ltd*
* denotes current Directorship
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 and led the integration and expansion of GE
Capital IT Solutions across the continent as President of Europe. As Federal Shadow Minister
of Economy and Technology, he ran and managed his own 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.
6
MONEYSWITCH LIMITED
ABN 49 103 575 042
Paul A Wood (Non-Executive Director)
Director from 3 February 2003 until 25 June 2007.
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 was
in networking, technical and product management roles at IBM. Paul was Chief Executive
Officer of MoneySwitch Limited from 3 February 2003 until 5 April 2005 and Chief Technical
Officer from 5 April 2005 until 30 November 2006.
Paul has not held any other directorships of companies in the past 3 years.
COMPANY SECRETARY
Justin Mitchell
Company Secretary since 12 April 2007.
Justin is the Audit & Compliance Manager at MoneySwitch Limited. Justin has worked in the
financial services and banking industry for over ten years and has previously established an
Internal Audit function, developed Risk frameworks, implemented internal compliance
controls and developed and delivered enterprise wide risk training.
Justin has not held any directorships of companies in the past 3 years.
7
MONEYSWITCH LIMITED
ABN 49 103 575 042
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:
Person
Robert A Ferguson
Brad Banducci
William J Bartlett#
Dennis A Calvert%
Richard Freemantle*
Thomas J Girgensohn^
Jost Stollmann
Paul A Wood@
Ordinary
Shares
5,258,413
1,505,849
1,107,555
2,831,313
6,111,112
3,485,513
17,510,038
9,834,315
Options over
Ordinary
Shares
76,457
3,243,435
430,303
430,303
770,303
57,063
1,565,455
3,950,689
# Shares jointly held with Delwyn Bartlett.
%Includes ordinary shares and options held by Tamoda Pty Ltd being an associate of Denis A
Calvert.
* Includes Ordinary Shares held by Cazalla Developments Pty Ltd being an associate of Richard
Freemantle.
^ Includes Ordinary Shares and options held by Dacroft Pty Ltd being an associate of Thomas J
Girgensohn.
@Includes Ordinary Shares and options held by Pamela R Wood and Mark A Wood being
associates of Paul A Wood.
DIVIDENDS
No dividends have been declared or paid since the date of incorporation.
8
MONEYSWITCH LIMITED
ABN 49 103 575 042
CORPORATE INFORMATION
Corporate Structure
MoneySwitch Limited is an unlisted public company. It is incorporated and domiciled in Australia.
The registered office of MoneySwitch Limited is Level 2, 125 York Street, Sydney, New South
Wales, 2000.
Nature of operations and principal activities
MoneySwitch Limited principal activities are:
• Providing electronic transaction acquiring services to Australian businesses (merchants).
This includes the authorisation, clearing and settlement of credit card and pin based debit
card transactions. It also includes the provision of direct debit services.
• Developing the transaction switching and payment software and infrastructure required to
support the provision of credit and debit acquiring services.
There have been no significant changes in the nature of those activities during the year.
Employees
The company employed 34 employees as at 30 June 2007 (compared to 28 employees at 30 June
2006).
OPERATING AND FINANCIAL REVIEW
Overview
MoneySwitch Limited was founded on 3 February 2003 by Paul Wood, Peter Haig and Andrew
Rothwell. Paul Wood recently resigned from his non-executive Directorship on the 25 June 2007
whilst the remaining two founders have maintained their active association with MoneySwitch
Limited. Peter Haig is Vice President of Engineering and Andrew Rothwell is a Senior Software
Engineer.
Credit and Debit Acquiring Services
MoneySwitch Limited is a specialist financial institution focussed on providing credit and
debit acquiring services. As such, the Company has implemented the necessary
frameworks, policies, procedures and systems to comply with the stringent prudential and
regulatory requirements to perform electronic transaction processing, clearing and
settlement activities within the Australian banking sector.
Software development
MoneySwitch Limited’s focus is on using proven modern technology to provide extremely
reliable, secure, low cost and flexible acquiring services to merchants and value-added
resellers. As such, MoneySwitch Limited owns its own switching and payment software and
has continued to develop this for further competitive advantage over the course of the year.
General Release
MoneySwitch Limited completed a pilot program of its acquiring services over the later part
of 2006 and into the beginning of 2007. MoneySwitch Limited relaunched the business as
Tyro Payments in April 2007 reflecting the company’s focus on commercialisation of its
strong technology base as the company becomes an emerging operational business.
9
MONEYSWITCH LIMITED
ABN 49 103 575 042
Performance Indicators
The Board and Management monitor MoneySwitch Limited’s overall performance - from risk
management and overall business positioning through to the performance of the Company - against
software engineering development plans, business performance operating plans and financial
budgets.
The Board, together with Management, have identified key milestones and deadlines that are used
to monitor MoneySwitch Limited’s development. Directors receive reporting for review prior to each
Board and Committee meeting.
Operating Results for the Year
The Company reported an operating loss after providing for income tax of $6,299,373 (2006:
$4,386,098 loss). This result was in line with expectations given that the Company is still in the
development stage of its lifecycle prior to becoming an operational business.
2007
Revenues
Operating
Loss
2006
Revenues
Operating
Loss
MoneySwitch Limited
$502,2212
$6,229,373
$631,945
$4,386,098
Investments for Future Performance
The Company is investing significant human resources to develop its switching and payments
system architecture. It has also invested in the purchase of computer servers and networking and
security monitoring equipment to ensure sufficient scalability and performance of the production IT
infrastructure to meet the expected demand for acquiring services.
In parallel, the Company has been building the non-engineering capability of the business to support
the sales and operations functions after the general release of acquiring services.
Review of Financial Condition
Capital Structure
During the period, the Company issued 11,666,667 ordinary shares and raised $3,500.000
of additional capital. The capital was raised to ensure that MoneySwitch Limited was fully
compliant with the prudential capital requirements imposed on it by the Australian Prudential
Regulation Authority (APRA) and to fund on-going operations.
The capital raising was completed on 26 June 2007; 11,666,667 ordinary shares were
issued at $0.30 per share totalling $3,500,000.
As at 30 June 2007 the Company had accounts payable of $339,842.
10
MONEYSWITCH LIMITED
ABN 49 103 575 042
Cash from Operations
MoneySwitch Limited continued to operate at a loss for the 2006/7 financial year, in line with
the fact that the Company is emerging into the operational phase of its lifecycle.
The Company had interest income of $454,736 for the period.
Liquidity and Funding
The Company had cash-on-hand of $5,568,051 at the end of the period plus Government
Bonds of $1,806,048.
Under MoneySwitch Limited’s banking authority as a Specialist Credit Card Institution
(SCCI), the Company is required by APRA to 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).
The total Tier 1 capital held by MoneySwitch Limited as at 30 June 2007 was $8,614,081,
the company has always held sufficient capital to meet APRA’s Tier 1 capital requirements.
Risk Management
MoneySwitch Limited is prudentially supervised by the Australian Prudential Regulation Authority
(APRA) and is required to comply with prudential standards and provide quarterly capital adequacy
and liquidity reporting. The Company has undertaken substantive improvements to the risk
management frameworks, policies, procedures and systems required to ensure on-going
compliance with regulatory requirements and to satisfy both business needs and external
stakeholders.
Statement of Compliance
This report is based on the guidelines in The Group of 100 Incorporated Publication Guide to the
Review of Operations and Financial Condition.
Capital Resource
Although the Company has made operating losses in the prior 3 years, this is inline with
expectations given that MoneySwitch Limited was in the start-up phase of its business development.
MoneySwitch Limited has sufficient cash and any additional cash requirements will be met by
fundraising activities for the 2007/8 financial year to pay its debts as and when they become due
and payable. It is also able to manage and control its expenses. For these reasons the directors
believe the Company is a viable going concern as the next phase of the business plan, which is one
of an emerging operational business, approaches.
11
MONEYSWITCH LIMITED
ABN 49 103 575 042
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 19 September 2006 APRA approves MoneySwitch Limited to commence credit and debit card
acquiring for merchants under a pilot program and within certain parameters.
On 21 September 2006 the Board of Directors elects Rob Ferguson Chairperson.
On 11 November 2006 MoneySwitch Limited signed up its first merchant agreement with Sean and
Elizabeth Gallagher of Mowbray Cellars, Mowbray Cellars became the first merchant to use the
MoneySwitch new generation EFTPOS facility.
On 13 November 2006 Denis Calvert resigns as Non-Executive Director to avoid a perceived
conflict of interest.
On 30 November 2006 Paul Wood (co-founder of MoneySwitch Limited) leaves the Company as
Chief Technology Officer. He stays on as Non-Executive Director.
On 14 December 2006 Brad Banducci is appointed as Non-Executive Director of the Board and
Garry Duursma is appointed Vice President Sales and Marketing.
On 21 December 2006 Philippa Godwin, Deputy CEO of Medicare Australia, and Jost Stollmann,
CEO of MoneySwitch Limited, signed the EasyClaim Medicare Accreditation and Service Contract.
This follows the Government's decision and announcement by the Prime Minister on 13 August
2006 to introduce electronic Medicare claiming from doctor surgeries.
On 19 March 2007 APRA removes the pilot program parameters and approves MoneySwitch
Limited to provide banking services to the general public. Since this time MoneySwitch Limited has
signed up 145 merchants and deployed 212 terminals into production across the merchant portfolio.
On 20 April 2007 Toyota Financial Services and Tyro Payments signed a partner services
agreement for the marketing and deployment of a state-of-the-art acquiring solution into the network
of Toyota affiliated motor dealers.
On 24 April 2007 MoneySwitch Limited is the first Visa Member and first organisation in Australia to
be certified by VISA as PCI Compliant.
On 26 April 2007, MoneySwitch Limited changes its trading name to Tyro Payments and undertakes
a general release of its acquiring services to the public.
On 2 May 2007 HCM announced that they have formed a partnership with Tyro to launch the only
Medicare “EasyClaim” solution, integrated with Practice Management Software, on the market. The
solution also includes integrated EFTPOS.
On 25 June 2007 Paul Wood and Richard Freemantle resign as Non-Executive Directors.
On 15 July 2007 Moneytech and Tyro Payments signed a marketing agreement to offer merchant
customers Tyro’s state-of-the-art acquiring solution in conjunction with Moneytech’s commercial
credit card programme.
On 31 July 2007 a TiO (Territory Insurance Office) Media Release announced its strategic
partnership with Tyro to better service small business in the Northern Territory. The partnership will
provide small business with the opportunity to access credit card/EFTPOS terminals incorporating
the latest technology.
12
MONEYSWITCH LIMITED
ABN 49 103 575 042
On 26 June 2007 a further $3.5m capital was raised to meet APRA’s prudential requirements and to
fund the on-going operations of the business.
By the 30 June 2007 MoneySwitch Limited processed $6.3m by transaction value and this volume
continues to grow, as at 31 August 2007 the transaction value processed was $12.8m.
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 significantly affect the operation of the company, the results of these operations or
the state of affairs of the company in future financial years.
After the balance date the Remuneration Committee resolved in their meeting on 14 August 2007 to
award a discretionary bonus to the Officer Group in the form of option grants.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The directors predict that in the 2007/8 financial year MoneySwitch Limited will continue to grow the
acquiring business and continue to expand the functionality of electronic transaction acquiring
services. MoneySwitch Limited is expected to grow the revenue line of the business to meet the
expectations of an emerging operational business.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 21,168,538 un-issued 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, Need Data P/L exercised the option to acquire 216,410 fully paid ordinary
shares in MoneySwitch Limited at an exercise price of $0.10. One employee exercised the option to
acquire 142,100 fully paid ordinary shares in MoneySwitch Limited at an exercise price of $0.15 and
a further 7,379 fully paid ordinary shares at an exercise price of $0.55. A second employee
exercised the option to acquire 30,000 fully paid ordinary shares in MoneySwitch Limited at an
exercise price of $0.10. A third employee exercised the option to acquire 296,492 fully paid ordinary
shares in MoneySwitch Limited at an exercise price of $0.10. A fourth employee exercised the
option to acquire 181,819 fully paid ordinary shares in MoneySwitch Limited at an exercise price of
$0.55. A fifth employee exercised the option to acquire 181,819 fully paid ordinary shares in
MoneySwitch Limited at an exercise price of $0.55.
Since the end of the financial year, no further options have been exercised.
13
MONEYSWITCH LIMITED
ABN 49 103 575 042
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 relation to 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.
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 is as follows:
Directors’
Meetings
Committee Meetings
Number of meetings held:
11
Number of meetings attended:
Robert A Ferguson
Brad Banducci
William J Bartlett
Denis A Calvert
Richard Freemantle
Thomas J Girgensohn
Jost Stollmann
Paul A Wood
11
6+
8
4*
7
10
11
11#
Audit
3
Risk
7
Remuneration
1
3
-
3
-
-
3
3
3#
7
3+
4
4*
3
6
7
7#
1
1
1
-
-
1
1
1#
Directors meetings have been held every month except for the months of November 2006 and
January 2007.
Notes:
+
*
#
Brad Banducci missed one Directors meeting since his appointment to the Board on 14
December 2006 and has attended all meetings since his appointment to the Risk
Committee.
Denis A Calvert attended all meetings held prior to his resignation from the Board and Risk
Committee on 13 November 2006.
Paul A Wood attended all meetings held prior to his resignation from the Board, Audit
Committee and Risk Committee on 25 June 2007.
14
MONEYSWITCH LIMITED
ABN 49 103 575 042
Committee Membership
As at the date of this report, the Company had an Audit Committee, a Risk Committee and a
Remuneration Committee of the Board of Directors.
Members acting on the Committees of the Board during the year were:
Audit
Risk
Remuneration
Current
T Girgensohn (c)
W Bartlett
R Ferguson
During the year
P Wood*
Current
B Bartlett (c)
B Banducci
R Ferguson
During the year
D Calvert*
P Wood*
Current
R Ferguson (c)
B Banducci
T Girgensohn
Notes
(c)
*
*
Designates the chairperson of the committee.
P Wood was on the Audit Committee until he resigned on 25 June 2007 and the Risk
Committee between 14 December 2006 and until he resigned on 25 June 2007.
D Calvert was on the Risk Committee until he resigned on 13 November 2006.
15
MONEYSWITCH LIMITED
ABN 49 103 575 042
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The directors received the following declaration from the Auditor of MoneySwitch Limited.
16
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
Continuing Operations
Revenue
Cost of services
Gross profit
Engineering expenses
Operations expenses
Sales and marketing expenses
General and administrative expenses
Occupancy expenses
Share-based payments expense
Total operating expenses
Profit/(loss) from continuing operations before
income tax expense
Income tax expense
NOTE
30-Jun-07
30-Jun-06
$
$
2
2
2
3
502,221
631,945
299,979
178,926
202,242
453,019
2,346,107
1,210,986
449,516
1,422,758
135,574
936,674
1,713,431
469,288
10,187
1,168,884
84,504
1,392,823
6,501,615
4,839,117
(6,299,373)
(4,386,098)
-
-
Net profit/(loss)
(6,299,373)
(4,386,098)
The above Income Statement should be read in conjunction with the accompanying notes.
18
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
BALANCE SHEET
AS AT 30 JUNE 2007
ASSETS
Current Assets
Cash & cash equivalents
Trade and other receivables
Investment securities
Inventories
Total Current Assets
Non-current Assets
Property, plant and equipment
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
30-Jun-07
30-Jun-06
$
$
5,914,213
99,691
1,806,048
4,487
7,824,439
7,902,533
387,385
1,553,677
-
9,843,595
1,275,091
1,275,091
581,752
581,752
9,099,530
10,425,347
339,842
134,666
474,508
137,749
80,536
218,285
474,508
218,285
8,625,023
10,207,062
18,280,661
2,673,044
(12,328,682)
14,500,001
1,725,428
(6,018,367)
8,625,023
10,207,062
4
5
6
7
8
10
11
12
12
12
The above Balance Sheet should be read in conjunction with the accompanying notes.
19
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
Cash flows from operating activities
Receipt for research and development tax concession
Payments to suppliers and employees
Interest and fee income received
Net cash provided by/(used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from maturity of treasury bonds
Gross payments for purchase of treasury bonds
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Net cash flows from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
30-Jun-07
30-Jun-06
$
$
352,227
(5,302,855)
472,973
(4,477,655)
327,724
(3,354,542)
279,288
(2,747,530)
(1,025,823)
1,500
1,553,677
(1,820,679)
(1,291,325)
(600,824)
-
-
(1,553,677)
(2,154,501)
3,780,660
3,780,660
9,650,001
9,650,001
(1,988,320)
7,902,533
4,747,970
3,154,563
4
8
8
6
6
12
Cash and cash equivalents at end of period
4
5,914,213
7,902,533
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
20
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2007
Attributable to equity holders of MoneySwitch Limited
Issued
Capital
Retained
Earnings
$
$
Other
Reserves
(Note 12)
$
Total
Equity
$
At 1 July 2005
4,850,000
(1,632,269)
332,605
3,550,336
Profit/(loss) for the period
Issue of share capital
Exercise of options
Share-based payments
At 30 June 2006
Profit/(loss) for the period
Issue of share capital
Exercise of options
Share-based payments
Transfer to general reserve for
credit losses
12
12
12
12
12
12
12
-
9,400,001
250,000
-
(4,386,098)
-
-
-
-
-
-
1,392,823
(4,386,098)
9,400,001
250,000
1,392,823
14,500,001
(6,018,367)
1,725,428
10,207,062
-
3,500,000
280,660
-
(6,299,373)
-
-
-
-
-
-
936,674
(6,299,373)
3,500,000
280,660
936,674
(10,942)
10,942
-
At 30 June 2007
18,280,661
(12,328,682)
2,673,044
8,625,023
The above Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
21
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
1. STATEMENT OF ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of this financial report are set out
below:
The financial report covers the economic entity of MoneySwitch Limited. MoneySwitch Limited is an
unlisted public company, incorporated and domiciled in Australia.
(a) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with
the Corporations Act 2001 and Australian Accounting Standards.
Unless otherwise indicated, all amounts are expressed in Australian dollars. All amounts contained in
the financial report and directors' report have been rounded to the nearest dollar ($1).
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.
(b) Going concern
The directors consider the going concern assumption to be appropriate. MoneySwitch Limited completed
a pilot program of its acquiring services over the later part of 2006 and into the beginning of 2007.
The Company became operational in April 2007 with the launch of its acquiring services to the general public
under its new trading name, Tyro Payments. The Company is currently focusing on commercialisation of
its strong technology infrastructure and reaching the critical mass required to maintain its long-term
viability. The Company 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 2007/2008 financial year internally from existing shareholders
and/or externally from additional strategic investors as required.
(c) Statement of compliance
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS
ensures that the financial report, comprising the financial statements and notes thereto, complies
with International Financial Reporting Standards (“IFRS”).
Australian Accounting Standards that have recently been issued or amended but are not yet
effective have not been adopted for the annual reporting period ending 30 June 2007.
These are outlined in the following table:
22
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
Title
Affected standard(s)
AASB 2005-10
AASB 7
UIG 7
Amendments to Australian
Accounting Standards:
AASB 132, AASB 101
AASB 114, AASB 117
AASB 133, AASB 139
AASB 1, AASB 4
AASB 1023, AASB 1038
AASB 7
Applying the Restatement
Approach under AASB 129
Financial Reporting in
Hyperinflationary
Economies
UIG 8
Scope of AASB 2 Share based
Payment
Nature of change to
accounting policy
The amendments will result in
minimal impact on the financial
instruments disclosures in the
financial report.
Application
Date
1 January 2007
1 January 2007
1 January 2007
1 January 2007
No changes to accounting policy
required. However, amendment
may result in additional
disclosures on the Company's
financial report.
As the Company has no
investments in foreign
operations operating in
hyperinflationary economies,
these amendments would
not have any impact
on the Company's financial
report.
Unless the Company enters
into share-based payment
arrangements unrelated to
employee services in future
reporting periods, these
amendments are not expected
to have any impact on the
Company's financial report.
UIG 9
Reassessment of Embedded
Unless the Company enters
1 January 2007
Derivatives
into arrangements containing
embedded derivatives in
future reporting periods, these
amendments are not expected
to have any impact on the
Company's financial report.
*Application date is for the annual reporting periods beginning on or after the date shown in the above table.
23
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(d) Significant accounting judgments, estimates and assumptions
In applying the Company's accounting policies management continually evaluates judgments, estimates and
assumptions based on experience and other factors, including expectations of future events that may have an
impact on the Company. All judgments, estimates and assumptions made are believed to be reasonable
based on the most current set of circumstances available to management. Actual results may differ from the
judgments, estimates and assumptions. Significant judgments, estimates and assumptions made by
management in the preparation of these financial statements are outlined as follows:
Share-based payments transactions - The Company recognise the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments at the date on which they are granted.
The fair value is determined using the Black Scholes model, with the assumptions detailed in note 9.
(e) 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.
(i) Fees income
The Company derives fees income from the following sources:
- Merchant service fee income is generated from merchant customers for credit and debit card
acquiring services. Fees are charged to merchants depending on the type of transaction being
performed based on a percentage of transaction value or a fixed amount per transaction.
Fees related to payment transactions are recognised at the time transactions are processed.
Interchange fee is recognised as an expense instead of netting-off against merchant service fee
income in profit or loss.
- Revenue from gift-card transaction fees generated from merchants is based on a fixed fee per
transaction and is recognised when transactions are processed, pursuant to the respective
merchant service agreement.
(ii) Interest income
Interest income is recognised in the income statement on an accruals basis, using the effective
interest method. This method measures the amortised cost of a financial asset and allocates the
interest income over the relevant period using the effective interest which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to the net
carrying amount of the financial asset.
24
MONEYSWITCH LIMITED T/A TYRO PAYMENTS
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(f) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
(i) Company as a lessee
Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership
of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower,
at the present value of the minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the
lease term if there is no reasonable certainty that the Company will obtain ownership by the end of the
lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis
over the lease term. Lease incentives are recognised in the income statement as an integral part of the
total lease expense.
(ii) Company as a lessor
Leases in which the Company retains substantially all the risks and benefits of ownership of the leased asset
are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised as an expense over the lease term on the same
basis as rental income.
(g) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and
settlement account balances.
Settlement account balances result from timing differences in the Company's settlement process with
merchants. These timing differences are primarily due to the timing between the funds received from the
card issuers and settlement payments made to the merchants.
Settlement funds due from/due to other financial institutions are generally convertible into cash within two (2)
business days. Merchant payables are settled on the next business day following the transaction processing
date.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
25
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(h) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method, less an allowance for any
uncollectible amounts.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are
written off when identified. An allowance for doubtful debts is raised when there is objective evidence that the
Company will not be able to collect the debt
(i) Investment securities
Investment securities are securities purchased with the intent of being held to maturity.
The Company currently does not have any investments held for trading. All non-derivative financial
assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity
where management has the positive intention and ability to hold to maturity.
All investments are initially recognised at cost, being the fair value of the consideration given
including acquisition charges associated with the investment. Investments that are intended to be
held to maturity are subsequently measured at amortised cost, less provision for impairment in value.
Amortised cost is calculated by taking into account any discount or premium on acquisition,
over the period to maturity. For investments carried at amortised cost, gains and losses are
recognised in profit or loss when the investments are derecognised or impaired as well as through
the amortisation process.
Purchases and sale of investments are recognised on settlement date - the date on which the
Company receives or delivers the asset.
(j) Inventories
Inventories are supplies valued at the lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
(k) Income Taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts in the financial statements.
26
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(k) Income Taxes (cont'd)
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance sheet date. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary differences to recognise the
deferred tax asset or liability. An exemption is made for temporary differences arising from the
initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation
to temporary differences if they arose in a transaction, other than a business combination,
that at the time of the transaction did not affect either accounting profit or lessor taxable profit or loss.
Deferred tax assets relating to tax losses, unused tax credits and deductible temporary differences
are not carried forward as an asset unless it is probable that the future taxable amounts will be
available to utilise those temporary differences, losses and tax credits.
(l) Other Taxes
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 balance sheet.
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.
(m) 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 only when it is probable that future economic benefits
associated with the asset will flow to the Company and the cost of the item can be measured reliably.
All other expenditure is expensed as incurred.
27
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(n) 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.
Recoverable amount is the greater of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset.
Where a group of assets working together supports the generation of cash inflows, recoverable
amount is determined for the cash-generating unit to which the asset belongs, unless the asset's
value in use can be estimated to be close to its fair value.
(o) Property, plant and equipment
(i) 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 less accumulated depreciation
and any impairment in value. The Company recognises in the carrying amount of an item of
property, plant and equipment the cost of replacing parts when the cost is incurred and the
recognition criteria are met. When each major inspection is performed, its cost is recognised
in the carrying amount of the item of property, plant or equipment, as a replacement, provided that
the recognition criteria are satisfied.
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.
(ii) Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment, other than
freehold land.
Major depreciation periods are:
Plant and equipment:
- EFTPOS machines
- Furniture and office equipment
- Computer equipment
3 years
5 years
4 years
n/a
5 years
4 years
2006
2007
28
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(o) Property, plant and equipment (cont'd)
The assets' residual values, remaining useful lives and depreciation methods are reassessed and
adjusted, if appropriate, at each balance sheet date.
(iii) Impairment
The impairment testing for property, plant and equipment is conducted in accordance with the
Accounting Policy in Note 2(n).
(iv) Derecognition and disposal
An items of property, plant and equipment is derecognised on disposal or when no future economic
benefits are expected to arise from continued use of the asset. Gains and losses on disposals are
calculated as the difference between the net disposal proceeds and asset's carrying amount and
are included in the income statement in the year the item is derecognised.
(p) 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.
(q) Trade and other 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.
29
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(r) Provisions and contingencies
Provisions are recognised when the Company 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.
If the impact of the time value of money is material, provisions are discounted using a current pre-tax
rate that reflects the risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of times is recognised as a finance cost.
Contingent liabilities and contingent assets are not recognised in the balance sheet, but are
disclosed in the relevant notes to the financial statements. They may arise from uncertainty as to
the existence of a liability or asset, or represent an existing liability or asset in respect of which
settlement is not probable or the amount cannot be reliably measured. Where settlement becomes
probable, a liability or asset is recognised.
(s) Provision for losses on merchant accounts
The Company is contingently liable for processed credit card sales transactions in the event of a
dispute between the cardholder and a merchant. If a dispute is resolved in the cardholder’s favour,
the Company will credit or refund the amount to the cardholder and charge back the transaction
to the merchant. If the Company is unable to collect the amount from the merchant, the Company
will bear the loss for the amount credited or refunded to the cardholder.
Management evaluates the risk of such transactions and estimates its potential loss for chargebacks
based primarily on historical experience and other relevant factors. If there is objective evidence that an
impairment loss on merchant accounts has been incurred, a provision is maintained for merchant losses
necessary to absorb chargebacks and other losses for merchant transactions that have been previously
processed and on which revenues have been recorded.
The methodology and assumptions used for estimating chargeback provisions are reviewed regularly
to reduce any differences between uncollectible chargebacks that have not been specifically identified.
The provision for losses on merchant accounts is decreased by merchant losses (arising from
chargebacks) and is increased by provisions for merchant losses, net of any recoveries.
The provision for losses on merchant accounts is included within current liabilities.
No impairment loss on merchant accounts has been identified for the year ended 30 June 2007.
30
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(t) 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.
(u) Share-based payment transactions
Share-based compensation benefits are provided to employees (including directors) via the
MoneySwitch Stock Option Plans.
The cost of these equity-settled transactions with employees is measured by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is
determined internally using the Black-Scholes Option Valuation Model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until
vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of
awards that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is
formed based on the best available information at the reporting date. No adjustment is made for
the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date.
31
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
STATEMENT OF ACCOUNTING POLICIES (cont'd)
(v) Share-based payment transactions (cont'd)
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition.
There were no modifications to the terms of the outstanding options during the financial year.
(w) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(x) Foreign currency translation
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the balance sheet date.
(y) Derecognition of assets and liabilities
Assets and liabilities are derecognised in the balance sheet upon sale, maturity or settlement. Gains
and losses are recognised in profit or loss when the assets/liabilities are derecognised.
32
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
2. REVENUE AND EXPENSES
Profit or loss has been arrived at after charging (crediting) the following items:
Gross revenue
Merchant service fee
Debit card interchange fee
Other fee income
Interest income
R&D tax rebate
Cost of services
Interchange fees
Switching and settlement fees
Gift card processing expenses
Scheme fees
Other expenses
Engineering expenses
Employee benefits expense
Recruitment
Training
Depreciation
Other
Operations expenses
Communication and hosting
Employee benefits expense
Depreciation
Software and hardware maintenance
Other
30-Jun-07
30-Jun-06
$
$
33,669
1,201
12,615
454,736
-
502,221
23,139
1,979
29,872
243,117
1,872
299,979
2,172,415
108,945
23,948
36,081
4,718
2,346,107
319,803
499,707
267,821
91,123
32,532
1,210,986
-
-
-
279,718
352,227
631,945
-
-
-
178,926
-
178,926
1,521,311
104,299
10,974
-
76,847
1,713,431
255,454
105,320
61,320
46,804
390
469,288
33
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
2. REVENUE AND EXPENSES (cont'd)
Sales and marketing expenses
Marketing & branding
Employee benefits expense
Other expenses
General and administrative expenses
Interconnect & membership
Professional fees
Employee benefits expense
Recruitment
Provision for employee leave entitlement
Legal
Travel
Insurance
Bad debt write-offs
Depreciation
Other
Share-based payments expense
Equity-settled share options (Note 9)
30-Jun-07
30-Jun-06
$
$
236,766
188,552
24,198
449,516
10,187
-
-
10,187
350,083
228,739
395,867
44,339
54,130
103,785
49,643
27,008
71
27,082
142,011
1,422,758
509,708
153,421
262,639
1,445
57,137
52,375
32,583
23,209
-
14,791
61,576
1,168,884
936,674
936,674
1,392,823
1,392,823
34
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
30-Jun-07
30-Jun-06
$
$
3. INCOME TAX
Operating profit/(loss) for the year
(6,299,373)
(4,386,098)
Prima facie income tax expense/(benefit) on profit from continuing operations
Benefit of tax losses not brought to account
(1,889,812)
1,889,812
(1,315,829)
1,315,829
Tax effect of timing differences and current year tax losses
not brought to account: since not probable of recovery
This future income tax benefit will only be obtained if:
(a) future taxable 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/(benefit) attributable to operating profit/(loss)
-
-
The estimated potential future income tax benefit at period end
calculated at 30% in respect of tax losses not brought to account is:
2,728,539
838,727
4. CASH & CASH EQUIVALENTS
Call deposits
Exchange settlement balance
Due from other financial institutions
Due to other financial institutions
Due to merchants
Items in suspense
5,568,051
422,456
253,053
(115,392)
(213,955)
-
5,914,213
7,876,480
26,783
5,692
(730)
-
(5,692)
7,902,533
Call deposits earn interest at floating rates based on daily bank deposit rates. The Reserve Bank
(RBA) pays interest on balances held in Exchange settlement accounts at a rate 25 basis points
below the cash rate.
35
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
4. CASH & CASH EQUIVALENTS (cont'd)
Reconciliation of net profit after tax to net cash flows from operations
Operating profit for the year
Adjustments for:
Depreciation and amortisation
Provision for employee leave entitlements
Share-based payments expense
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in stocks
Increase/(decrease) in other payables
Net cash from operating activities
Disclosure of financing facilities - refer to note 12
Disclosure of non-cash financing and investing activities - refer to note 6 & 8
5. TRADE AND OTHER RECEIVABLES
Sundry debtors - Research & development tax rebate
Rental bond
Trade debtors
Interest receivable
GST recoverable
6. INVESTMENT SECURITIES
Held-to-maturity
Commonwealth government securities
7. INVENTORIES
EFTPOS paper rolls
36
30-Jun-07
30-Jun-06
$
$
(6,299,373)
(4,386,098)
330,984
54,130
936,674
105,081
57,137
1,392,823
302,325
(4,487)
202,093
(4,477,655)
(31,837)
-
115,364
(2,747,530)
-
-
1,196
54,831
43,664
99,691
352,227
23,010
-
12,148
-
387,385
1,806,048
1,806,048
1,553,677
1,553,677
4,487
4,487
-
-
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
8. PROPERTY, PLANT AND EQUIPMENT
Year ended 30 June 2007
At 1 July 2006,
net of accumulated depreciation
and impairment
Additions
Disposals
Depreciation charge for the year
At 30 June 2007,
net of accumulated depreciation
and impairment
At 1 July 2006,
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2007,
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 June 2006
At 1 July 2005,
net of accumulated depreciation
and impairment
Additions
Depreciation charge for the year
At 30 June 2006,
net of accumulated depreciation
and impairment
At 1 July 2005,
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2006,
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
Eftpos
Machines
($)
Furniture
and Office
Equipment ($)
Computer
Equipment
($)
Total
($)
-
595,125
-
(99,188)
50,694
65,242
(1,500)
(23,863)
531,058
365,456
-
(207,934)
581,752
1,025,823
(1,500)
(330,985)
495,938
90,573
688,580
1,275,091
-
-
-
595,125
(99,187)
495,938
83,169
(32,475)
50,694
146,912
(56,338)
90,574
649,008
(117,950)
531,058
732,177
(150,425)
581,752
1,014,463
(325,884)
688,579
1,756,500
(481,409)
1,275,091
Eftpos
Machines
($)
Furniture
and Office
Equipment ($)
Computer
Equipment
($)
Total
($)
25,794
38,073
(13,173)
60,215
562,751
(91,908)
86,009
600,824
(105,081)
50,694
531,058
581,752
45,096
(19,301)
25,795
83,170
(32,475)
50,695
86,256
(26,042)
60,214
131,352
(45,343)
86,009
649,007
(117,950)
531,057
732,177
(150,425)
581,752
-
-
-
-
-
-
-
-
-
-
37
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
9.SHARE-BASED PAYMENTS
(a) MoneySwitch Stock Option Plan
The MoneySwitch Stock Option Plan was established to grant options over ordinary shares in the
Company to employees or directors of the company or to external consultants who provide services
to the Company. The rules of the MoneySwitch Stock Plan provides that the Board has the authority,
in its discretion, and subject to such terms and conditions as it deems appropriate, to grant options
to employees and consultants (Including directors).
Options granted pursuant to the Stock Options Plan may be exercised, in whole or part, subject to
vesting terms and conditions indicated below:
Type
Linear vesting schedule
Terms and Conditions
Options granted will vest in proportion to the time that passes linearly
during the vesting schedule, subject to maintaining continuous
status as an employee or consultant with the Company during the
vesting schedule;
Service vesting schedule
The options with service vesting schedule 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.
Other relevant terms and conditions applicable to options granted under the MoneySwitch Stock
Option Plan include:
- All stock options granted under those plans had an exercise price equal to the fair value of the
underlying ordinary shares on the date of the grant.
- the term of each option grant shall be 10 years from the date of grant or such shorter term as
provided in the Stock Option Grant agreement. However, in the case of options granted to
an Optionee who, at the time the options is granted, owns stock representing more than 10% of
the voting power of all classes of stock of the Company, the term of the Option Grant shall be
5 years from the grant date or such shorter term as may be provided in the Stock Option Grant
agreement.
- each option entitles the holder to one ordinary share.
- All awards granted under the MoneySwitch Stock Option Plans are equity-settled.
38
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
9.SHARE BASED PAYMENTS (cont'd)
(b) Fair value of options
The weighted average fair value of the share options granted during the financial year is 28c
(2005/06: 24c).
The fair value of each option grant was estimated on the date of the grant using the Black-Scholes
Option Valuation Model. The following table lists the assumptions used in determining the fair value
of the options granted in the years ended 30 June 2007 and 30 June 2006:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
2007
0%
74%
5.86%
2006
0%
74%
5.34%
A zero dividend policy assumption is used for valuing all option grants. This is in line with the
Company's development status and growth strategy.
Expected volatility used is the historical volatility of the peer group. The expected volatility reflects the
assumption that the historical volatility is indicative of future trends, which may not necessarily be
the actual outcome.
The average expected life for 10 year options is assumed to be 8 years from the grant date.
For all other options with a contractual life of 5 years or less, the expected life is assumed to be total
years from grant date to expiration date.
The average share price at the date of exercise for the options exercised in 2006/07 is 55c
(2005/06: 45c).
The weighted average remaining contractual life for the share options outstanding as at
30 June 2007 was 3.47 years (2006: 4.4 years).
The following table summarises further details of the stock options outstanding at 30 June 2007:
Range of Exercise Prices
Contractual life
Vesting conditions
10c to 55c
10c to 45c
10c to 55c
10c to 55c
Total
10 years
5 years
5 years
10 years or less
5 year linear vesting
12 months service
12 months linear vesting
Fully vested at time of grant
No: of
Outstanding
Options
4,594,378
4,837,778
2,336,893
9,399,489
21,168,538
39
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
9.SHARE BASED PAYMENTS (cont'd)
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of
and movements in share option issued during the year:
30-Jun-07
No
30-Jun-07
WAEP
30-Jun-06
No
30-Jun-06
WAEP
Linear vesting schedule
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Fully vested at time of grant
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Service vesting schedule
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
5,302,988
2,698,177
(230,128)
(839,766)
6,931,271
4,664,578
6,000,299
4,317,379
(825,891)
(92,298)
9,399,489
6,126,762
4,837,778
-
-
-
4,837,778
4,837,778
Total outstanding at the end of the year
Total exercisable at the end of the year
21,168,538
15,629,118
26c
55c
13c
49c
35c
35c
26c
55c
30c
11c
39c
39c
13c
-
-
-
13c
13c
32c
32c
3,673,977
1,717,449
-
(88,438)
5,302,988
2,362,697
3,222,521
3,333,333
(555,555)
-
6,000,299
6,000,299
4,837,778
-
-
-
4,837,778
4,837,778
16,141,065
13,200,774
16c
47c
-
45c
26c
25c
10c
45c
45c
-
26c
26c
13c
-
-
-
13c
13c
22c
21c
The expense recognised in the income statement in relation to share-based payments is disclosed
in note 2.
40
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
9.SHARE BASED PAYMENTS (cont'd)
Share options granted under the MoneySwitch Stock Option Plan and outstanding at the end of the
year have the following exercise prices:
Expiry Date
Exercise Price
2007
No:
2006
No:
31-Mar-05
30-Jun-05
31-Dec-05
30-Jun-06
31-Dec-06
31-Mar-07
31-May-07
31-Dec-07
31-Dec-07
19-Apr-08
15-Jun-08
31-Dec-08
01-Apr-09
02-Jul-09
13-Oct-09
25-Oct-09
21-Nov-09
15-Dec-09
31-Dec-09
31-Dec-09
31-Jan-10
31-Jan-10
06-Feb-10
06-Feb-10
23-Feb-10
23-Mar-10
26-Mar-10
29-Mar-10
01-Jun-10
01-Jun-10
02-Jun-10
15-Jun-10
17-Aug-10
08-Feb-11
08-Mar-11
30-Jun-11
20-Sep-11
01-Apr-14
13-Apr-14
28-Jul-14
15-Sep-14
17-Nov-14
06-Feb-15
17-May-15
15-Jun-15
17-Aug-15
21-Oct-15
16-Nov-15
08-Feb-16
08-Mar-16
05-Apr-16
10-May-16
28-Jun-16
17-Jul-16
20-Sep-16
18-Oct-16
15-Feb-17
12-Apr-17
$0.15
$0.15
$0.45
$0.15
$0.10
$0.10
$0.55
$0.45
$0.55
$0.10
$0.45
$0.55
$0.10
$0.55
$0.45
$0.55
$0.15
$0.15
$0.45
$0.55
$0.45
$0.55
$0.15
$0.55
$0.55
$0.55
$0.55
$0.55
$0.45
$0.55
$0.45
$0.45
$0.45
$0.45
$0.45
$0.55
$0.55
$0.10
$0.10
$0.15
$0.15
$0.15
$0.15
$0.30
$0.45
$0.45
$0.45
$0.45
$0.45
$0.45
$0.55
$0.55
$0.55
$0.55
$0.55
$0.55
$0.55
$0.55
41
-
-
-
-
-
-
-
2,777,778
1,454,546
85,534
4,444
1,818,182
4,768,750
-
91,111
897
886,667
1,280,000
44,139
10,924
35,434
10,189
15,160
-
12,781
4,003
7,370
2,687
30,137
8,102
11,562
111,111
77,778
512,821
66,667
218,182
916,364
2,086,972
400,000
122,333
183,333
250,000
66,667
300,000
105,556
100,000
208,120
13,427
161,363
420,742
83,980
647,272
81,818
252,727
420,908
21,168,538
-
-
-
-
120,000
216,410
-
2,777,778
-
85,534
4,444
-
4,975,000
-
-
-
886,667
1,280,000
-
-
-
-
-
-
-
-
-
-
-
-
-
111,111
77,778
512,821
66,667
-
-
2,175,000
400,000
122,333
183,333
333,333
250,000
66,667
524,444
105,556
133,333
11,562
211,111
208,120
13,427
288,636
-
-
-
-
-
-
16,141,065
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
10. PAYABLES (CURRENT)
Bills payable
Other liabilities
11. PROVISIONS
Accrued annual leave
Balance at the beginning of the year
Additional provision recognised during the year
Balance at the end of the year
Current
Non-current
12. CONTRIBUTED EQUITY & RESERVES
(i) Ordinary Shares
Issued and fully paid
- 3,540,688 (2005/06:3,000,000) Ordinary shares paid at 10c each
- 10,475,433 (2005/06:10,333,333) Ordinary shares paid at 15c each
- 21,666,667 (2005/06:10,000,000) Ordinary shares paid at 30c each
- 8,111,112 Ordinary shares paid at 45c each
- 11,282,322 (2005/06:10,909,091) Ordinary shares paid at 55c each
30-Jun-07
30-Jun-06
$
$
144,733
195,109
339,842
74,102
63,647
137,749
80,536
54,130
134,666
134,666
-
134,666
23,399
57,137
80,536
80,536
-
80,536
354,069
1,571,315
6,500,000
3,650,001
6,205,276
18,280,661
300,000
1,550,000
3,000,000
3,650,001
6,000,000
14,500,001
Terms and conditions of contributed equity
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. Ordinary shares have no par value.
42
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
Movement in ordinary shares on issue
At 1 July 2005
Shares issued during the year:
- 28 November, 2005, equity raising at 45c each
- 19 December, 2005, equity raising at 45c each
- 31 March, 2006, equity raising at 55c each
- 06 April, 2006, equity raising at 55c each
At 1 July 2006
Shares issued during the year:
- 25 Sep, 2006 for cash on exercise of share options at 10c each
- 15 Nov, 2006 for cash on exercise of share options at 15c each
- 15 Nov, 2006 for cash on exercise of share options at 55c each
- 13 Dec, 2006 for cash on exercise of share options at 10c each
- 24 Apr, 2007 for cash on exercise of share options at 10c each
- 25 Sep, 2006 for cash on exercise of share options at 55c each
- 18 May, 2007 for cash on exercise of share options at 55c each
- 26 June, 2007, equity raising at 30c each
At 30 June 2007
(ii) Share-based payments reserve
Balance at the beginning of the year
Share-based payments during the year
Balance at the end of the year
No:
Shares
$
23,333,333
4,850,000
7,555,556
555,555
10,563,636
345,455
42,353,535
216,410
142,100
7,379
30,000
294,278
2,214
363,638
11,666,667
55,076,221
3,400,001
250,000
5,810,000
190,000
14,500,001
21,641
21,315
4,058
3,000
29,428
1,218
200,000
3,500,000
18,280,661
30-Jun-07
30-Jun-06
$
$
1,725,428
936,674
2,662,102
332,605
1,392,823
1,725,428
Nature and purpose of reserve
The share-based payments reserve is used to record the value of equity benefits provided to
employees and directors as part of their remuneration. Refer to note 9 for further details of these plans.
(iii) General reserve for credit losses
Balance at the beginning of the year
Transfer from retained earnings
Balance at the end of the year
-
10,942
10,942
-
-
-
Nature and purpose of reserve
The general reserve for credit losses has been created to satisfy APRA's prudential standards for ADIs to
maintain a general reserve for credit losses. The Company applies an internal methodology to estimate the
the credit risk of its merchant customers and the maximum expected losses based upon a number of
assumptions concerning the performance of merchants in relation to the Company's credit risk grading system.
43
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
(iv) Retained earnings
Movements in retained earnings were as follows:
Retained profits at the beginning of the financial year
Net Profit attributable to the shareholders of the entity
Transfer to general reserve for credit losses
Retained profits at the end of the financial year
30-Jun-07
30-Jun-06
$
$
(6,018,367)
(6,299,373)
(10,942)
(12,328,682)
(1,632,269)
(4,386,098)
-
(6,018,367)
13. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Risk management
The Board is responsible for approving and reviewing the risk management strategy and framework and
all risk management policies. The Board also ensures senior management has identified all risks and that
those risks are managed and controlled appropriately. Senior management is responsible for implementing
the Board approved risk management strategy and developing policies, controls, processes and procedures
to identify and manage risks in all of the company’s activities.
Risk controlling
Risk is controlled through a system that identifies key risks, establishes controls to manage those risks .
(with an emphasis on preventative control rather than detective control), and maintains a regular review
process to monitor the effectiveness of the controls. Business risks are controlled within tolerance levels
set by the Chief Executive Officer and approved by the Board. A set of control and compliance principles
provide prudent standards of control.
Internal audit
The Company has an effective program of internal control to ensure that at all times the risks to which the
company are exposed to in the normal course of its business are minimised. This program of internal control
and audit is reviewed and approved on a regular basis by the Audit Committee.
Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as
contracted. The Company's credit risk management principles define the framework and core values
which govern its credit risk taking activities and reflect the priorities established by the Board.
From these principles flow the development of the target market strategies, underwriting standards, and
credit procedures which define the operating processes. Portfolio-level counterparty limits are established
by the use of a credit risk grading system, which segments the Company's client portfolio into performing
and nonperforming sales. Credit risk grades are monitored on a regular basis. The operation of a
credit risk grading system coupled with ongoing monitoring, reporting and review controls allows
the Company to identify changes in credit quality at client and portfolio levels, and take necessary
corrective actions in a timely manner.
44
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
13. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
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 exposure to interest rate risk and the
weighted average effective interest rates on the interest-bearing financial assets and liabilities of the
Company are summarised in the table below. All other assets and liabilities disclosed on the
statement of financial position are non-interest bearing.
Liquidity risk
Liquidity risk is the risk that the Company will have insufficient liquidity to meet its obligations as
they fall due. This risk is managed by maintaining adequate cash resources for future expenditure
and other financial commitments. The Company's liquidity risk management policy aims to ensure that
enough high quality liquid assets are always available for the Company's cash flow and liquidity requirements.
At balance sheet date, the board of directors determined that there was sufficient cash resources available
to meet its anticipated expenditure and other financial liabilities.
Foreign Currency risk
All foreign-currency denominated receivables and payables are translated at the exchange rate as
at the balance sheet date. Amounts receivable and payable in foreign currency that are not
effectively hedged (or denominated in Australian dollars) and will be affected by future currency movements:
Bills payable
- Visa International
- Banksys
The Company's functional and presentation currency is the Australian dollar.
U.S. Dollar
Euro
30-Jun-07
30-Jun-06
$6,131
-
$24,180
€ 15,250
The interest rate applicable to each class of financial asset subject to interest rate risk are as follows:
30 June 2007
FINANCIAL ASSETS
Floating rate
Cash & cash equivalents
Fixed rate
Investment securities
< 1 year
Total
$
$
Weighted
average
interest
rate (%)
5,914,213
5,914,213
6.00%
1,806,048
1,806,048
6.00%
45
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
30 June 2006
FINANCIAL ASSETS
Floating rate
Cash & cash equivalents
Fixed rate
Investment securities
< 1 year
Total
$
$
Weighted
average
interest
rate (%)
7,902,533
7,902,533
5.06%
1,553,677
1,553,677
4.92%
Interest on financial assets classified as floating rate is repriced at intervals of less than one year.
Interest on financial assets classified as fixed rate is fixed until maturity of the asset. The other
financial assets and liabilities not included in the above tables are non-interest bearing and are
therefore not subject to interest rate risk.
Net fair values
The aggregate net fair values of financial assets and financial liabilities, both recognised and
unrecognised at the reporting date, are as follows:
Net fair values of financial assets are:
Financial Assets
Cash & cash equivalents
Trade and other receivables
Investment securities
Financial Liabilities
Payables
Provisions
Off balance sheet
Contingencies
Carrying value
Fair value
30-Jun-07
$
30-Jun-06
$
30-Jun-07
30-Jun-06
$
$
5,914,213
99,691
1,806,048
7,819,952
339,842
134,666
474,508
7,902,533
387,385
1,553,677
9,843,595
137,749
80,536
218,285
5,914,213
99,691
1,798,396
7,812,300
339,842
134,666
474,508
7,902,533
387,385
1,544,664
9,834,582
137,749
80,536
218,285
1,785,025
1,785,025
1,540,000
1,540,000
1,785,025
1,785,025
1,540,000
1,540,000
The net fair value of financial assets and financial liabilities is based upon market prices where a market
exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities
with similar risk profiles.
Contingencies
The Company has potential financial liabilities that may arise from certain contingencies disclosed in
note 14. No material losses are anticipated in respect of any of those contingencies and the
fair value disclosed above is the directors' estimate of amounts that would be payable by the
Company in the event of a default.
46
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
30-Jun-07
30-Jun-06
$
$
14. COMMITMENTS AND CONTINGENCIES
(a) Operating lease commitments - Company as lessee
Future minimum rentals payable under the non-cancellable operating leases as at 30 June 2007
are as follows:
- Within one year
- After one year but not more than four years
196,020
835,500
1,031,520
-
-
-
The operating lease commitments relates to the lease of the Company's registered office located at
125 York Street, Sydney. It is a non-cancellable lease with a term of 4 years ending 28 February 2011.
The lease agreement provides the Company with a right of renewal at which time all terms are renegotiated.
Lease payments are subject to annual increases of 4% p.a.
(b) Contingent liabilities -secured
(i) Irrecoverable standby letters of credit in favour of:
- MasterCard International
- Visa International
(ii) Bank Guarantee in favour of:
- Dukeville Pty Ltd, the lessor of 125 York Street, Sydney
1,400,000
140,000
1,400,000
140,000
245,025
1,785,025
-
1,540,000
(c) Assets pledged as security
The carrying amount of assets used to collateralise the Company's exposure to contingent liabilities is
as follows:
- Investment securities
1,806,048
1,806,048
1,553,677
1,553,677
The Company has provided irrevocable standby letters of credit of $1,540,000 to MasterCard International
and Visa International. These are one-year arrangements that are subject to automatic renewal on a
yearly basis. MasterCard International and Visa International, at their discretion, may
increase the required amounts of the standby letters of the credit upon written request to the
Company. The required amounts of the standby letters of credit are dependent on MasterCard
International's and Visa International's view of their risk exposure to the Company.
The standby letters of credit are issued by the Commonwealth Bank of Australia to
MasterCard International and Visa International on behalf of the Company and are fully secured by a
fixed charge over certain assets of the Company as detailed in note 14(c) above.
A bank guarantee is held with the Commonwealth Bank of Australia in relation to the
lease arrangement for the office premises. The amount represents 9 months' rent, and is refundable
on expiration of the lease agreement, subject to satisfactory vacation of the leased premises.
47
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
15. CAPITAL COMMITMENTS
The Company does not have any capital commitments as at the date of this report.
16. CONTROLLED ENTITIES
There are no controlled entities as at 30 June, 2007 nor were any acquired or sold during the period.
17. SUBSEQUENT EVENTS
After the balance date the Remuneration Committee resolved in their meeting on 14 August 2007 to award
a discretionary bonus to the Officer Group in the form of option grants.
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.
18. FINANCIAL REPORTING BY SEGMENTS
The Company operates predominantly in one geographical segment being Australia and within one
business segment being the provision of credit and debit card acquiring services to merchants.
19. 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
30-Jun-07
30-Jun-06
$
$
68,378
15,225
83,603
35,633
86,927
122,560
48
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
20. RELATED PARTY DISCLOSURES
The total cash remuneration paid to the Directors and Executives of the Company amounted to $695,349
(FY 2005/06: $132,233). The table below shows the details of compensation paid to key management
personnel including all monetary and non-monetary components.
Details of Key Management Personnel
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Robert Ferguson
Thomas Girgensohn
Bradford L Banducci
Executives
Peter J Haig
Bradford L Banducci
John Hallis
Mark Wood
Garry Duursma
Appointed Resigned
20/06/2003
5/04/2005
3/02/2003
14/04/2004
14/04/2004
14/11/2005
9/03/2006
14/12/2007
3/02/2003
8/08/2005
14/02/2006
1/04/2004
1/01/2007
26/06/2007
26/06/2007
13/11/2006
20/10/2006
31/08/2007
49
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
20. RELATED PARTY DISCLOSURES (cont'd)
Compensation of Key Management Personnel
For the year-ended 30 June 2007
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Rob Ferguson
Thomas Girgensohn
Bradford L Banducci
Executives
Peter J Haig
John Hallis
Mark Wood
Garry Duursma
For the year-ended 30 June 2006
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Rob Ferguson
Thomas Girgensohn
Executives
Peter J Haig
Bradford L Banducci
John Hallis
Short-term
Benefits
Salary &
fees ($)
Post
Employment
Super-
annuation ($)
Share-based
Payments
Options
($)
Total
($)
-
15,101
-
-
-
-
-
-
-
1,359
240,000
-
-
-
-
-
24,819
172,707
110,924
88,415
104,912
15,544
9,983
42,385
15,586
155,867
155,867
18,434
18,434
18,434
18,434
61,447
92,170
113,996
6,330
63,203
15,586
172,327
395,867
18,434
18,434
18,434
18,434
61,447
221,901
302,247
127,237
194,003
323,551
371,798
674,999
1,370,348
Short-term
Benefits
Salary &
fees ($)
Post
Employment
Super-
annuation ($)
Share-based
Payments
Options
($)
Total
($)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,727
77,603
77,603
7,727
7,727
9,511
5,656
7,727
77,603
77,603
7,727
7,727
9,511
5,656
33,315
98,918
-
-
33,315
-
-
98,918
46,128
735,549
73,727
1,048,958
178,361
735,549
73,727
1,181,191
50
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
20. RELATED PARTY DISCLOSURES (cont'd)
Shareholdings of Key Management Personnel & Related Parties
30 June 2007
Directors
Cazalla Developments Pty. Limited
Richard Freemantle
Jost Stollmann
Paul Wood
Pamela Wood
Mark Wood
Tamoda Pty Ltd
William and Delwyn Bartlett
Robert Alexander Ferguson
Dacroft Pty Ltd
Bradford Leon Banducci
Executives
Peter and Nola Haig
Garry John Duursma
Mackbron Pty Ltd
Stephen Mitchinson
Total
30 June 2006
Directors
Cazalla Developments Pty. Limited
Richard Freemantle
Jost Stollmann
Paul Wood
Pamela Wood
Mark Wood
Tamoda Pty Ltd
William and Delwyn Bartlett
Robert Alexander Ferguson
Dacroft Pty Ltd
Bradford Leon Banducci
Executives
Peter and Nola Haig
Mackbron Pty Ltd
Total
Outstanding
at start
of period
1-Jul-06
Shares
Issued
during the
year
On exercise Outstanding
of
options
at end
of period
30-Jun-07
5,000,000
1,111,112
-
-
11,680,999
6,456,333
4,499,084
4,499,085
666,667
2,831,313
924,222
2,949,495
1,818,182
1,186,868
-
1,472,222
-
181,818
-
38,821,067
169,479
-
-
-
183,333
2,194,341
1,352,674
318,981
600,000
317,091
198,486
58,136
11,848,854
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
1,111,112
18,137,332
4,668,563
4,499,085
666,667
2,831,313
1,107,555
5,143,836
3,170,856
1,505,849
2,072,222
317,091
380,304
58,136
50,669,921
Outstanding
at start
of period
1-Jul-05
Shares
Issued
during the
year
On exercise Outstanding
of
options
at end
of period
30-Jun-06
-
-
-
-
-
-
-
-
-
-
555,555
-
-
555,555
5,000,000
1,111,112
11,680,999
4,499,084
4,499,085
666,667
2,831,313
924,222
2,949,495
1,818,182
1,186,868
1,472,222
181,818
38,821,067
5,000,000
-
6,507,261
3,253,630
3,253,631
-
2,500,000
654,525
-
-
-
-
1,111,112
5,173,738
1,245,454
1,245,454
666,667
331,313
269,697
2,949,495
1,818,182
631,313
1,250,000
-
22,419,047
222,222
181,818
15,846,465
51
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
20. RELATED PARTY DISCLOSURES (cont'd)
Option Holdings of Key Management Personnel
30 June 2007
Linear/Service vesting schedule
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Rob Ferguson
Thomas Girgensohn
Bradford L Banducci
Executives
Peter J Haig
Mark Wood
John Hallis
Fully vested at time of grant
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
Bradford L Banducci
Executives
Peter J Haig
Mark Wood
John Hallis
Garry Duursma
Total
Outstanding
at start
of period
1-Jul-06
Granted
as
Remuneration
Options
exercised/
expired
during the year
Outstanding Exercisable
at end
of period
30-Jun-07
at end
of period
30-Jun-07
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
181,819
181,819
383,638
383,638
530,303
1,456,364
2,569,697
430,303
430,303
76,457
57,063
356,566
1,478,182
268,304
211,655
7,865,197
530,303
1,456,364
2,569,697
430,303
430,303
76,457
57,063
356,566
1,238,182
166,127
211,655
7,523,020
240,000
109,091
859,091
2,886,869
1,109,091
75,819
1,727,273
1,636,364
8,643,598
16,508,795
240,000
109,091
859,091
2,886,869
1,109,091
75,819
90,909
-
5,370,870
12,893,890
486,667
1,020,000
2,133,333
386,667
386,667
32,821
13,427
211,111
1,260,000
250,000
102,564
6,283,257
240,000
-
750,000
2,777,778
1,000,000
86,667
-
-
4,854,445
11,137,702
43,636
436,364
436,364
43,636
43,636
43,636
43,636
145,455
218,182
18,304
109,091
1,581,940
-
109,091
109,091
109,091
109,091
9,152
1,909,092
1,818,183
4,172,791
5,754,731
52
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
20. RELATED PARTY DISCLOSURES (cont'd)
Option Holdings of Key Management Personnel (cont'd)
Granted
as
Outstanding
at start
of period
1-Jul-05
Options
exercised
Remuneration during the
year
460,000
886,667
2,000,000
360,000
360,000
-
-
1,260,000
-
-
5,326,667
240,000
-
750,000
26,667
133,333
133,333
26,667
26,667
32,821
13,427
-
211,111
102,564
706,590
-
-
-
30 June 2006
Linear/Service vesting schedule
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
William J Bartlett
Denis A Calvert
Rob Ferguson
Thomas Girgensohn
Executives
Peter J Haig
Bradford L Banducci
John Hallis
Fully vested at time of grant
Directors
Richard Freemantle
Jost Stollmann
Paul A Wood
Executives
Peter J Haig
Bradford L Banducci
John Hallis
Total
Outstanding Exercisable
at end
of period
30-Jun-06
at end
of period
30-Jun-06
-
-
-
-
-
-
-
-
-
-
-
-
-
-
486,667
1,020,000
2,133,333
386,667
386,667
32,821
13,427
486,667
1,020,000
2,133,333
386,667
386,667
32,821
13,427
1,260,000
211,111
102,564
6,033,257
900,000
211,111
102,564
5,673,257
240,000
-
750,000
240,000
-
750,000
1,000,000
-
-
1,990,000
7,316,667
-
3,333,333
-
3,333,333
4,039,923
-
555,555
-
555,555
555,555
1,000,000
2,777,778
-
4,767,778
10,801,035
1,000,000
2,777,778
-
4,767,778
10,441,035
53
MONEYSWITCH LIMITED
(TRADING AS TYRO PAYMENTS)
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE, 2007
20. RELATED PARTY DISCLOSURES (cont'd)
Option Terms and Conditions
Stock option grants may be exercised, in whole or in part, subject to vesting terms and conditions
indicated below:
Type
Linear vesting schedule
Terms and Conditions
Options may be exercised linearly during the vesting
schedule as to the shares subject to options, with vesting
subject to maintaining continuous status as an employee
or consultant with the Company.
The options with service vesting schedule may be
exercised as to a set number of shares per agreed day
of consulting service, as defined in the specific option
grant.
Options may be exercised as to all shares from the vesting
commencement date.
Service vesting schedule
Fully vested at time of grant
Other transactions with directors
There were no other transactions with directors.
Transactions with other related parties
None during the year.
54