A painful repositioning away from a former core business and losses in Canada left Keycorp well in the red in 2007.The EBITDA profit was a loss, of $8.8 million. In 2006 the cash profit was $3.4 million.Most of the problem lies in payment solutions, which dropped $5.8 million. Keycorp used to make payment terminals and now it doesn't. Payments solutions, according to the management review, "completed its transformation to a service and solutions provider."Alongside solutions, Keycorp has two services division. The new bought business in Canada lost $2.8 million while the one in Australia made $5.2 million. The Canadian business is now said to be integrated with Keycorp's prior North American activities.Smartcards made a $1.3 million profit and now there's no access card from the federal government to look forward to.Revenue was static at $96 million. Gross margin fell to 31 per cent from 39 per cent. A new business model, and new accounting, help explain why.Management said a "decision taken in May 2007 to structure new managed payments service agreements contracts to give annuity income rather than an up-front revenue on sale of product" reduced revenue.Keycorp will now book income from leasing of terminals and devices on an annuity basis, rather than taking profit up front."The business of the consolidated entity changed significantly during the year" the company said in its annual report.Cash management remains a strain. Finance facilities of $15 million from Westpac were drawn to $12.7 million at June 2007. Keycorp recently extended the repayment date of this loan to September 2008.In March Keycorp staved off insolvency by turning to minority shareholder Telstra for a guarantee on $7.5 million of a then $10 million bank loan. Telstra owns 47.4 per cent of Keycorp.