Why this billionaire’s gift card company is still losing money after 10 years

Primrose Riordan and Nick Bonyhady

Jan 8, 2024 – 5.47pm

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Prezzee, the decade-old gift card company backed by shopping centre owner Shaun Bonett, has filed its accounts over a year late and revealed a near-$40 million loss.

Mr Bonett, who the Financial Review Rich List estimates has a fortune of $2.3 billion largely from real estate investments, acquired a majority stake in Prezzee through his private Precision Group vehicle in 2015.

Shaun Bonett is the chief executive of Precision Group and the major backer of Prezzee. Oscar Colman

The company sells gift cards for international retailers, including Amazon, Apple and David Jones, and has an app that allows customers to buy and store digital gift cards.

Accounts recently filed with the corporate regulator show Prezzee slumped to a $38.8 million loss in the 12 months to the end of June 2022, down from a $6 million loss for the previous reporting period. Prezzee reported a sharp increase in net liabilities from $427,000 at the end of the 2021 financial year to $39 million a year later.

“Although Prezzee recorded a loss in its income statement in 2022, its cash flow from operating activities in the cash-flow statement was positive,” the company said in a statement on Monday. “Prezzee’s operations continue to be cash-flow positive in the current financial year and the company continues to invest in its technology.”

Prezzee recorded cash receipts of $87 million in the year to the end of June 2022, compared to $37.9 million the year before. The company said one reason it operated at a loss was because Australian accounting standards prevent it from recognising gift card revenue on its profit and loss statement until a card was used.

“If I sell a $100 gift card, it’s $100 in cash and $100 in liabilities until the card is used. Before then, we can’t get it off our balance sheet as a liability,” the company said through a spokesman.

“When we sell more cards, we can’t recognise the revenue until the cards are used under Australian accounting standards. Although there is an increase in financial liabilities we will never have to pay that obligation, but it still sits on our balance sheet.”

Internal company data showed that unless a card was used in the first four months, it was unlikely to be used, a person familiar with the company said.

The company said it was late filing the accounts because it had changed its internal accounting to year-end, rather than the June 30 year commonly used in Australia, as much of its revenue is from the United States. It has previously considered a US listing.

The company also blamed a “secretarial oversight related to changing our year-end” for disclosing in filings that directors had not been able to pass a solvency resolution. Prezzee quietly laid off a slice of its workforce late last year.

“We’re addressing that. We’ll pass a solvency resolution before the 20th of January,” the company said in a statement.

Precision Group is a major shareholder in the gift card company. Prezzee declared an $8.3 million loan to Precision during the period.

“We are very confident in the future of the company, and we are already seeing the results of our rationalisation of operations,” the company said, after reporting it had $8 million in cash.

Mr Bonett is its executive chairman and former Morgan Stanley investment banker Craig Smith was appointed chief financial officer in September.

Primrose Riordan covers private companies and family offices from the AFR's Sydney newsroom. Primrose was previously South China correspondent for the Financial Times and covered foreign affairs and federal politics in Canberra. Connect with Primrose on Facebook and Twitter. Email Primrose at primrose.riordan@afr.com

Nick Bonyhady is a technology writer for the Australian Financial Review, based in Sydney. He is a former technology editor, industrial relations and politics reporter at the Sydney Morning Herald and Age. Connect with Nick on Twitter. Email Nick at nick.bonyhady@afr.com