Tight cost management and special merger fees collected from shareholders and industry stakeholders pushed NPP Australia Limited to an improved bottom line for the year to the end of June.

Disclosures in the 2021 annual report filed to ASIC last Friday show the company posted net earnings of A$4.2 million – up $203,000 or 5 per cent on the previous year.

While operating income was largely flat at $45.6 million, the bottom line was enhanced by reductions in IT and administrative expenses.

NPP Australia absorbed most of the costs of funding its merger with Eftpos Australia and BPay during the financial year.

The merger, which was coordinated by a NPPA subsidiary - Industry Committee Administration Pty Ltd - bloated NPPA’s cost line by more than $5.7 million.

However, disclosures in the notes to the financial accounts show that most of the expenses incurred by the subsidiary were recouped through special fees levied on NPPA shareholders and companies such as Coles and Woolworths that participated in the merger process.

“Revenue recorded for the subsidiary throughout the reporting period consists of administration charges which are subject to a variable consideration in that fees received from members, for participation in the Industry Committee, are recognised as revenue over time in proportion to expenses incurred,” NPPA directors told shareholders in notes to the accounts.

The NPPA board did not appear to include disclosures of any contingent liabilities relating to allegations made by Sydney fintech Controlabill, during the ACCC’s merger process.

Submissions made to the ACCC’s public hearings included a series of letters that showed attempts by Controlabill in 2020 to assert against NPPA its rights to patents over a mandated payments process.

In a July 2020 letter from NPPA’s legal representative that was submitted to the ACCC by Controlabill, NPPA denied that it had infringed Controlabill’s patent for a mandated payment service (MPS).

“The NPP is a fundamentally different system, in both architecture and function, to that disclosed and claimed in the Patents,” NPPA’s lawyer told Controlabill in the letter.

“Our client also strongly rejects your suggestion that NPPA did not properly consider the intellectual property rights of third parties when developing the MPS.”