FINDI LIMITED — Annual Report 2012

May 29, 2012

Transaction Solutions International Limited

ABN 98 057 335 672

- Appendix 4E Preliminary Final Report

1. The current reporting period is for the 12 months ended 31 March 2012 and the previous period is for the 9 months period ended 31 March 2011.

2. Results for announcement to the market.

	1 April 2011 to 31 March 2012	1 July 2010 to 31 March 2011	% Change
	$	$
2.1 Revenue from ordinary activities.	8,614,758	5,340,811	61.30%
2.2 Profit (loss) from ordinary activities after tax attributable to members.	(1,307,995)	(902,719)	(44.90)%
2.3 Net profit (loss) for the period attributable to members.	(1,307,995)	(902,719)	(44.90)%
2.4 Amount per security and franked amount per security of final and interimdividend.	No dividends have been paid or provided for during the year
2.5 Record date for determining entitlements to the dividends and payment date.	Not applicable
2.6 Brief explanation of any of the figures in 2.1 to 2.4 necessary to enable the figures to be understood.	The Group recorded positive earnings before depreciation charges for the year of $36,870 (2011: negative $72,801). TSI India, the operating division within the Group, recorded earnings before depreciation charges for the year of $1,030,362 (2011: $942,177). Depreciation charges increased from $829,918 to $1,344,865 as the Group continued to invest in the expansion of its ATM network. For further commentary on results for the year refer to note 17: Commentary on Results.

Transaction Solutions International Ltd Appendix 4E – 31 March 2012

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3. Consolidated Statement of Comprehensive Income

	1 April 2011 to 31 March 2012 $ 1 July 2010 to 31 March 2011 $
Notes
Revenue Revenue from services Finance income Other income	8,015,616 5,109,790 507,693 197,371 91,449 33,650
Site operating costs Employee benefits expense Other expenses	8,614,758 5,340,811 (6,208,489) (3,378,013) (1,421,638) (1,052,303) (837,521) (676,568)
Depreciation and amortisation expenses Restructuring expenses Share based payment expense	147,110 233,927 (1,344,865) (829,918) - (180,105) (110,240) (126,623)
Loss before tax Income tax expense	(1,307,995) (902,719) - -
Net loss	(1,307,995) (902,719)
Other comprehensive income/(expense) Foreign currency movement in translation of foreign operations Gain on acquisition of the legal parent recognised in merger reserve	(2,113,242) (1,972,489) - 24,828
Total comprehensive loss attributable to members	(3,421,237) (2,850,380)
Loss per share	Cents Cents
Basic loss per share Diluted loss per share	(0.08) (0.07) (0.08) (0.07)

Transaction Solutions International Ltd Appendix 4E – 31 March 2012

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4. Consolidated Statement of Financial Position

Notes	31 March 2012 $ 31 March 2011 $
ASSETS CURRENT ASSETS Cash and cash equivalent Trade and other receivables Current tax asset Prepayments	6,383,560 5,022,022 2,006,641 1,417,039 921,317 1,050,357 55,474 44,271
TOTAL CURRENT ASSETS	9,366,992 7,533,689
NON-CURRENT ASSETS Loans and receivables 10 Property, plant and equipment	1,416,415 1,430,510 9,702,222 7,662,445
TOTAL NON-CURRENT ASSETS	11,118,637 9,092,955
TOTAL ASSETS	20,485,629 16,626,644
LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions	1,538,553 959,497 101,122 78,575
TOTAL CURRENT LIABILITIES	1,639,675 1,038,072
TOTAL LIABILITIES	1,639,675 1,038,072
NET ASSETS	18,845,954 15,588,572
EQUITY Contributed equity Reserves Accumulated losses 11	32,185,790 25,617,411 (5,494,080) (3,491,078) (7,845,756) (6,537,761)
TOTAL EQUITY	18,845,954 15,588,572

Transaction Solutions International Ltd Appendix 4E – 31 March 2012

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5. Consolidated Statement of Cash Flows

		1 April 2011 to	1 July 2010 to
		31 March 2012	31 March 2011
	Notes	$	$
Cash flows from operating activities
Receipt from customers		8,083,152	5,177,325
Payment to suppliers and employees		(8,432,311)	(5,216,476)
Interest received		507,693	197,371
Income tax received/(paid)		129,040	(336,238)
Net cash provided by/(used in) operating
activities		287,574	(178,018)
Cash flows from investing activities
Acquisition of property, plant and equipment		(4,666,688)	(2,045,088)
Proceeds from sale of non-current assets		210	11,462
Placement of fixed deposits		(146,081)	(164,343)
Cash acquired in merger transaction		-	1,049,096
Net cash used in investing activities		(4,812,559)	(1,148,873)
Cash flows from financing activities
Proceeds from the issue of shares		7,000,000	3,132,000
Costs of share issue		(431,621)	(164,208)
Net cash from financing activities		6,568,379	2,967,792
Net increase in cash held		2,043,394	1,640,901
Cash at the beginning of the period		5,022,022	4,083,836
Effect of exchange rates on cash balances		(681,856)	(702,715)
Cash at the end of the period		6,383,560	5,022,022

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6. Consolidated Statement of Changes in Equity

Contributed equity Share based payment reserve	Foreign currency translation reserve	Merger reserve	Accumulated losses Total equity
$ $	$	$	$ $
Balance at 1 July 2010 21,777,336 -	(1,670,040)	-	(5,635,042) 14,472,254
Net loss for the period - - Other comprehensive loss for the period - -	- (1,972,489)	- 24,828	(902,719) (902,719) - (1,947,661)
Total comprehensive loss for the period - -	(1,972,489)	24,828	(902,719) (2,850,380)
Equity consideration paid on acquisition of legal parent 872,283 - Issue of equity shares 3,132,000 - Costs of raising equity (164,208) - Share-based payments - 126,623	- - - -	- - - -	- 872,283 - 3,132,000 - (164,208) - 126,623
Total transaction with equity holders 3,840,075 126,623	-	-	- 3,966,698
Balance at 31 March 2011 25,617,411 126,623	(3,642,529)	24,828	(6,537,761) 15,588,572
Net loss for the year - - Other comprehensive loss for the year - -	- (2,113,242)	- -	(1,307,995) (1,307,995) - (2,113,242)
Total comprehensive loss for the year - -	(2,113,242)	-	(1,307,995) (3,421,237)
Issue of equity shares 7,000,000 - Costs of raising equity (431,621) - Share-based payments - 110,240	- - -	- - -	- 7,000,000 - (431,621) - 110,240
Total transaction with equity holders 6,568,379 110,240	-	-	- 6,678,619
Balance at 31 March 2012 32,185,790 236,863	(5,755,771)	24,828	(7,845,756) 18,845,954

Transaction Solutions International Ltd Appendix 4E – 31 March 2012

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7. Significant Accounting Policies

a) Basis of consolidation

The consolidated financial statements comprise the financial statements of Transaction Solutions International Limited and its controlled entities at each date of the statement of financial position; and during the financial period ending at each reporting date. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to derive benefits from those activities.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All intra-group balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group.

Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the accounting parent has control.

b) Revenue

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

The Group’s revenue is generated by providing ATM and bill payment solutions on behalf of banks and certain large corporations in India. The Group is entitled to a service charge for each transaction processed through the payment terminals operated. Revenue arising from these operations is recognised upon completion of transaction processing at each terminal.

Interest

Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

c) Employee benefits

Employee benefits such as salary and wages are measured at the rate at which the Group expects to settle the liability; and recognised during the period over which the employee services are being rendered.

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

d) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses over the period of the lease on a straight line basis.

Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight lines basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

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e) Income tax

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

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.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

f) Other taxes

Revenues, expenses and assets are recognised net of the amount of indirect taxes except:

• where the taxes incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case those taxes are 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 taxes included.

The net amount of taxes recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the Cash Flow statement on a gross basis and the indirect tax 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 indirect taxes recoverable from, or payable to, the taxation authority.

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g) Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

The weighted average number of shares outstanding during the reporting period represents the equity structure of the legal parent, i.e. Transaction Solutions International Limited (“TSI Limited”).

In calculating the weighted average number of ordinary shares outstanding for the financial year ended 31 March 2011 has been computed applying the following:

• the number of ordinary shares outstanding from 1 July 2010 to 25 August 2010 is computed on the basis of the weighted average number of ordinary shares of TSI UK (accounting acquirer) outstanding during the period multiplied by the exchange ratio of 20.35 established in the merger agreement; and

• the number of ordinary shares outstanding from 26 August 2010 to 31 March 2011 is computed on the basis of the actual number of ordinary shares of TSI Limited (the accounting acquiree) outstanding during that period.

h) Financial instruments

Financial instruments are recognised when the Group becomes party to the contractual provisions of the instrument. The de-recognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party.

The financial instruments of the group comprise of (i) cash and cash equivalents; (ii) trade and other receivables; (iii) loans and receivables; and (iv) trade and other payables.

i) Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by use of valuation techniques. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of shares that will eventually vest.

j) Issued capital

Issued and paid up capital are recognised at the consideration received by the Group.

Expenses (including the tax effect) incurred directly in relation to the issue of the equity instruments are deducted from equity.

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k) Investment in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

When the Group transacts with an associate, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

When equity accounting is applied to investments previously accounted for as available for sale, the fair value of the original investment at the date of re-categorisation is the deemed cost of the investment in the associate. Previous revaluation gains or losses recognised in other comprehensive income are not reclassified to profit or loss.

8. Dividend Payments

No dividends or distributions have been paid or provided for during the year.

9.

Dividend Reinvestment Plans

There are no dividend or distribution reinvestment plans in operation.

10. Loans and receivables

Loans and receivables are represented by term deposits held with banks as security for the performance guarantees issued in relation to the ATM and bill payment machines installed by the Group.

11. Accumulated Losses

	31 March 2012	31 March 2011
	$	$
Accumulated losses
Balance at beginning of period	6,537,761	5,635,042
Loss for the period	1,307,995	902,719
Balance at end of the period	7,845,756	6,537,761

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12. Net Tangible Assets per Security

	31 March 2012	31 March 2011
	Cents	Cents
Net tangible assetsper security	1.06	1.14

13. Gain or Loss of Control over Entities

On 26 August 2010 the merger between Transaction Solutions International Limited, UK (“TSI UK”) and Transaction Solutions International Limited, Australia (“TSI Limited”) was completed. The remaining 82.40% of capital of TSI UK which TSI Limited did not already own was acquired through the issue of 1,026,185,807 shares at a deemed value of 2.25 cents per share.

This transaction has been accounted applying the reverse acquisition accounting principle noted in AASB 3: Business Combinations. Accordingly, TSI UK has been considered as the acquirer and TSI Limited has been considered as the acquiree. Accordingly, the consolidated financial statements represent the continuing operations of TSI UK (including the comparatives); and the effect of TSI Limited’s operations from 26 August 2010.

14. Joint Venture

Not applicable.

15. Other Significant Information

During the year the Company completed a share placement raising $6,900,000 through the issue of 230,000,000 ordinary shares at an issue price of 3 cents per share. An additional $100,000 was raised through a Share Purchase Plan at an issue price of 3 cents per share.

The Company elected to change the financial reporting date from 30 June to 31 March. Therefore the reporting period for the current year is 1 April 2011 to 31 March 2012. The prior year reporting period is for the period 1 July 2010 to 31 March 2011.

16. Foreign Entities – Controlled entity, TSI Limited, United Kingdom

The consolidated group includes TSI Limited, a UK incorporated public company and it’s controlled entity, TSI India Private Limited, an Indian incorporated company. The financial reports of the foreign entities in the Group have been prepared under International Financial Reporting Standards (IFRS).

17. Commentary on Results

The Group’s principal activity during the year was to continue its business of building recurring revenue through the deployment of ATMs on behalf of major banks in India. In addition the Group (“TSI”) has contracts to service the financial payments sector through automation of bill payment processes in a market that is migrating from paper based to electronic transactions.

The Group recorded positive earnings before depreciation charges for the year of $36,870 (2011: negative $72,801). TSI India, the operating division within the Group, recorded earnings before depreciation charges for the year of $1,030,362 (2011: $942,177)

The Group recorded an after tax loss for the year of $1,307,995 (period ended 31 March 2011: $902,719). The Group loss was incurred after a charge of $110,240 (2011: $126,823) for options issued to two directors and one employee to acquire shares in the Company during the year and depreciation and amortisation charges of $1,344,865 for the year (2011: $829,918) as the Group continued to invest in the expansion of its ATM network. The balance of the loss is attributable to costs associated with business development activities and other costs associated with the operation of a publicly listed company in Australia.

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17. Commentary on Results (continued)

At the end of the year the overseas assets of the Group are converted to Australian dollars at the prevailing rates of exchange. For accounting purposes a foreign currency translation reserve adjustment of $2,113,242 (2011: $1,972,489) was recognised against those assets as a result of movement in those exchange rates during the year.

TSI is an independent owner and operator of Bank ATM’s in India, having established an enviable working relationship and reputation with its clients who are predominantly major top tier banks.

The Group’s continued growth and success to date is in part due to its provision of end to end solutions to major banks and corporates in India. TSI owns, manages and operates its financial hardware and systems in return for a fee per transaction. It is the opinion of the Directors that this recurring revenue model assists TSI in producing a business model that is highly scalable.

TSI has agreements with a large number of national companies including major banks, utilities and corporates. It is these corporations (not consumers) who form TSI’s customer base, and from whom TSI receives its revenues.

During the last 12 months, transaction volumes and revenues continued to increase as is demonstrated in the following charts:

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----- Start of picture text -----

TSI India: Gross Revenue by Quarter
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12
INR
----- End of picture text -----

Chart 1: Gross revenues by quarter in Indian Rupee (INR), source: TSI Limited

Transaction Solutions International Ltd Appendix 4E – 31 March 2012

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17. Commentary on Results (continued)

==> picture [418 x 242] intentionally omitted <==

----- Start of picture text -----

TSI India: Transaction Volumes by Quarter
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12
----- End of picture text -----

Chart 2: Number of transactions by quarter, source: TSI Limited

18. Progress of Audit / Review

This Appendix 4E is based on a Financial Report that is in the process of being audited.

19. Audit Dispute or Qualification

None.

Transaction Solutions International Ltd Appendix 4E – 31 March 2012

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