TIDMPAYZ
RNS Number : 7482L
Payzone plc
16 January 2009
Payzone plc ("Payzone", the "Group" or the "Company")
Preliminary results for the year ended 30 September 2008
Payzone announces the Company's first preliminary results for the year ended 30
September 2008.
KEY POINTS
* Revenues of EUR1,081 million
* EBITDA (before special items) EUR41.6million
* Basic and diluted loss per share of EUR 67c
* EUR48.3 million raised by the issue of new equity and convertible preference
shares
* New banking arrangements in place
* Disposal of French, Italian and Spanish businesses agreed
* Synergies achieved through the consolidation of UK and German operations
Payzone CEO, Mike Maloney, said:
"Payzone has now found its feet, after what was a difficult period following the
bringing together of the alphyra and Cardpoint businesses. The Company has
successfully consolidated its operations in the UK and Germany and we have
rectified the operational inefficiencies in our UK ATM business.
"The economic conditions are challenging and we anticipate that this will remain
the case throughout the current financial period, limiting our visibility.
However, I believe that our strategic focus of developing the markets we see as
core to our growth, and exiting those that are not, will position us well for
the future."
Contacts
Payzone Tel: + 353 1 207 6000
Mike Maloney / Nigel Bell
Panmure Gordon (UK) Limited (NOMAD and Broker) Tel: +44 20 7459 3600
Hugh Morgan / Stuart Gledhill
Media Enquiries
Powerscourt Tel: +44 20 7250 1446
Paul Durman / Keith Brookbank
CHAIRMAN'S STATEMENT
Introduction
This is my first report on the full year results for Payzone plc and
reflects the year ended 30 September 2008. The Payzone Group was formed on 5
December 2007 following the "merger" of Cardpoint plc ("Cardpoint") and alphyra
Holdings Limited ("alphyra").
Combining these two businesses has brought together two transaction-led
operations, each amongst the leaders in their respective sub-sectors. Despite a
difficult start with various supplier, integration and management issues, we
believe that we are well advanced towards securing operational stability from
which to take the Group forward.
Since the "merger" we have restructured the Board and the operational management
team, realised cost synergies through the consolidation of operational
facilities in the UK and Germany, and continued the development of new products
and services for distribution across the Group's network. The Group's financial
position was enhanced by the issue of new ordinary and preference shares, along
with an amended banking facility agreed in June 2008, to help underpin growth.
Since the "merger" we have re-branded the services offered by the legacy alphyra
business as "Payzone" and the Cardpoint business as "Cashzone". The Payzone
service involves the deployment and management across Europe of a terminal
distribution network which processes a variety of electronic transaction
services. The main products on the network include mobile phone top-up, utility
top-up, bill payment solutions, electronic gift vouchers and Electronic Funds
Transfer (EFT) processing. The Cashzone business deploys branded independent
ATMs in the convenience sector in both the UK and Germany.
International Financial Reporting Standards
The results for the year to 30 September 2008 are presented under International
Financial Reporting Standards ("IFRS") as required under the AIM Rules for
Companies.
Under IFRS the "merger" is accounted for as a reverse acquisition of the legacy
alphyra Group by the Cardpoint Group. As Cardpoint has the power to govern the
financial and operating policies of Payzone, it is deemed to be the "acquirer"
of alphyra and Payzone. Therefore the results reported reflect twelve months
trading from the Cardpoint businesses and include results from the alphyra
businesses since 5 December 2007. Payzone has elected to present its financial
statements in euro.
The balance sheet presented is the consolidated position of Payzone, Cardpoint
and alphyra as at 30 September 2008.
The comparative figures presented are those of Cardpoint on a stand-alone basis
and where necessary relevant adjustments to IFRS have been made. These
predominately relate to goodwill and financial instruments. Note 41 of the
financial statements provide a reconciliation between the previously published
Cardpoint plc UK GAAP figures and the IFRS comparatives. All comparative figures
have been presented in euro.
Trading
Total revenue for the period, including revenue from the alphyra business from 5
December 2007, was EUR1,081 million. Revenue for the same period in 2007 was EUR131
million (which related to the Cardpoint ATM business only).
There have been a number of operational and market issues which have adversely
affected our UK business in the year to 30 September 2008. The operational
issues largely related to inefficiencies which led to a shortfall in available
cash within some of the ATMs. These cash availability issues were largely
resolved by June 2008. The ATM market also experienced new competition in the
period because of an increase in the number of "non-surcharging" ATMs in high
footfall locations. Since mid 2007 changes in UK legislation meant that
surcharging ATM's have also been required to advertise the fact that a fee will
be charged for cash withdrawals and this has impacted transaction volumes within
our surcharging units. There have been no material operational or market issues
with our German ATM business.
Trading and profitability - continued
Since the "merger" the "Payzone" (legacy Alphyra) business has performed well
despite increased competitive pressures in our key markets (Ireland and the UK).
Our Northern European businesses demonstrated growth in the period, in
particular in The Netherlands and Sweden where both mobile phone top-up and EFT
revenues continue to grow. Revenues from our German business declined due to a
number of one-off items recorded in 2007 which were not replicated in 2008. Our
Southern European businesses (Romania and Greece) continue to grow as the
markets expand and mature.
Group EBITDA before special items increased 21% to EUR41.6 million, including
EUR28.1 million being generated by the Payzone (legacy Alphyra) businesses in the
period from 5 December. Included within EBITDA is an IFRS 2 share option charge
of EUR3.8 million all of which relates to the acceleration of the vesting period
for certain Cardpoint employees as a result of the reverse acquisition of
alphyra.
A goodwill impairment review as at 31 March 2008 indicated an impairment of EUR143
million, and a charge was made in the interim accounts to write down the
carrying value of goodwill to its recoverable value. A further goodwill
impairment review was carried out as at 30 September 2008. The carrying value of
goodwill was calculated to exceed its recoverable amount by EUR6.1 million, and
this amount was written off as an additional impairment charge in the financial
year. The recoverable amount of goodwill was calculated based on its
value-in-use which employs a discounted cashflow model.
Losses before tax for the year were EUR28.4 million before impairment charges of
EUR149.2 million and other special administrative items of EUR30.5 million.
Finance costs include all debt interest costs for the year. Special finance
costs include costs of EUR2.8 million in relation to the termination of
Cardpoint's banking facilities (following the merger).
Since 5 December 2007 the Group's UK and German operations have benefited from
significant consolidation in operations. The Cardpoint UK operation, previously
based in Blackpool, has been combined with alphyra's UK operating base in
Northwich, Manchester. Similarly, we have consolidated the German Cardpoint and
Payzone businesses, formerly based in Frankfurt and Trier respectively and the
combined German business is now all located in Trier. As part of this
restructuring Paul Saxton the Chief Operating Officer, and Philip Lanigan the
Finance Director of Cardpoint, departed from the business. Of the EUR179.7 million
administrative expenses - special items, EUR30.5 million relates to restructuring
costs which were incurred in the period in relation to these consolidation
activities.
The Payzone Group has performed well in a challenging and changing market and
continues to be underpinned by merchant and operator contracts. Our terminal
estate, which includes electronic point of sale (EPOS) and ATMs, totalled
191,000 at the end of September. Our terminals are located at a variety of
convenience locations throughout the UK and Europe. In Ireland and the UK we
continue to expand our product offerings through new product launches such as
EFT, motorway tolling and prepaid utilities. In Northern Europe we are
increasing our market share through product enhancements and new merchant
contracts. Southern European growth is still largely driven by market share
growth through terminal estate expansion.
Disposals
On 8 October 2008 we announced the disposal of our French, Italian and Spanish
businesses for a total gross consideration of EUR20 million. This sales price was
split into two portions of which EUR13.2 million was payable in cash and EUR6.5
million by way of assignment of financial guarantees. Inter-company balances of
EUR4.2 million owed to Payzone were also written off as part of the transaction.
The purchaser was LCom, a 100% subsidiary of Proximania, which is a publicly
quoted French company specialising in airtime product distribution. The funds
were partially used to set against the Company's debt which was reduced by 6 %.
The disposal of these Payzone subsidiaries fits with our strategy of
concentrating focus in markets where Payzone has strong market presence as well
as offering growth potential for new services.
We continue to regularly examine all subsidiaries to determine their strategic
fit within the Payzone Group and to ensure that we allocate resources to the
markets where we anticipate the most optimal returns.
Growth
Our strategy for shareholder value continues to be that of growing transaction
volumes organically through improving the quality of deployment and offering a
broader range of products within our existing distribution network. We continue
to invest in our core businesses such as mobile phone top-ups and electronic
payments that have demonstrated robust profitability and which can drive growth,
enabling us to command a strong market position. Where subsidiaries do not
exhibit these core growth characteristics we will consider exiting, as has been
the case with our Spanish, French and Italian businesses. The Group will also
continue to explore opportunities to expand the network into territories that
offer the right market attributes.
Cashflow and borrowings
Payzone entered into a facility agreement on 5 December 2007 with the Royal Bank
of Scotland for facilities totalling EUR332 million of which EUR290 million were
drawn at 30 September 2008. This debt was used to refinance the existing debt
within alphyra and Cardpoint.
Following the operational and market issues referred to above, the Company
entered into discussions with its banking syndicate to increase the flexibility
under its facility agreement through a resetting of covenants. The original
facility agreement was amended to reflect the change to the Group's trading
forecasts. These changes took place in June 2008 and have added margin to our
term facilities.
On 21 February 2008 the Company completed a placement of 12,654,516 ordinary
shares (approximately 4.2% of the issued share capital) at a price of 47.75
pence per share, raising EUR8 million before expenses. The shares were placed with
existing shareholders, including Balderton Capital, and funds were used to fund
short term working capital requirements and to promote support from key trading
partners. The same shareholders that participated in the share placement also
made available to the Company further funds in the form of a shareholder loan.
This loan was partially drawn during April and May 2008.
On 16 June 2008 the Company completed the placing of 137,286,112 ordinary shares
at a price of 20 pence per share, raising GBP27.5 million (EUR34.8 million).
Payzone also raised EUR5.5 million from the issue of new Euro denominated Payzone
Convertible Preference Shares at a price of EUR1.00 each. These funds were used to
refinance the shareholder loan described above, meet working capital
requirements and to fund restructuring activities.
Dividend
The directors do not recommend the payment of a dividend.
Management structure
Since 5 December 2007 the Board has reviewed the management structure of the
Company and has made several changes to establish a more efficient and effective
operational structure. These changes included the departure of John Nagle and
John Williamson from their respective positions as Chief Executive Officer and
Chief Finance Officer on 10 March 2008.
The former Chief Executive Officer and Chief Finance Officer made a legal claim
against Payzone and the Board of Directors for wrongful dismissal. This claim
was settled in the Employment Appeals Tribunal on 16 October 2008. The cost of
this settlement had previously been provided for by the Company.
Bob Thian served as Chairman of Payzone until 14 April 2008 when he stepped down
and was replaced by myself.
On 1 February 2008 Jerome Misso was appointed as a non-executive director to
assist the Board with the various legal issues in relation to the departure of
John Nagle and John Williamson. Jerome is a partner of Balderton Capital
Limited, a significant shareholder in the Company. He retired from the Board on
14 April 2008.
Mike Maloney was appointed Chief Executive Officer on 11 April 2008 with Nigel
Bell assuming the role of interim Chief Financial Officer on that date.
On 30 September 2008 Payzone's Chief Operating Officer, Tim Murphy, agreed to
acquire the Group's Open Loop Gift business and he is expected to depart from
the Group by 31 January 2009.
Outlook
We remain focused on maintaining the financial stability of the Company
following a difficult start for the Payzone Group. The new management team has
made a significant contribution to the stability of the Group through
negotiating committed banking facilities and the introduction of new equity into
the business. We acknowledge that, despite the improved trading and financial
stability of the Group, there remain challenges in our key markets where the
macro economic environment has continued to deteriorate. As yet we have limited
visibility as to how the economic environment will affect our business in the
coming year although some early indications show reductions in mobile phone
top-up transaction volumes in Ireland and the UK. We have, consequently,
initiated various activities including cost cutting, pricing changes and
business rationalisation to mitigate potential downward pressures.
The financial statements presented have been prepared on a going concern basis
which assumes the continued support of our banking syndicate as detailed in Note
1 to the Financial Statements, the directors are satisfied that the Group has in
place the necessary conditions to allow the business to trade on a going concern
basis.
We are grateful to our shareholders for supporting the Company during a
difficult period and are especially grateful to our management and staff who
have also shown great commitment and dedication throughout this year.
Peter Smyth
16 January 2009
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Irish company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have prepared the group and
parent financial statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union. The financial statements are
required by law to give a true and fair view of the state of affairs of the
company and group and of the profit or loss of the group for that period. In
preparing these financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state that the financial statements comply with IFRS as adopted by the European
Union.
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business, in which case
there should be supporting assumptions or qualifications as necessary.
The directors confirm that they have complied with the above requirements in
preparing the financial statements.
The directors are responsible for keeping proper books of account that disclose
with reasonable accuracy at any time the financial position of the company and
group and to enable them to ensure that the financial statements comply with the
Companies Acts, 1963 to 2006 and, as regards the group financial statements
article 4 of the IAS Regulation. They are also responsible for safeguarding the
assets of the group and the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Company's
website. Legislation in the Republic of Ireland governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Books and records
The directors believe that they have complied with the requirements of Section
202 of the Companies Act, 1990, with regard to books of account by employing
accounting personnel with appropriate expertise and providing adequate resources
to the financial function. The books of account of the Company are maintained at
4 Heather Road, Sandyford Industrial Estate, Dublin 18.
Auditors
The auditors, PricewaterhouseCoopers will continue in office in accordance with
the provisions of Section 160(2) of the Companies Act, 1963.
On behalf of the Board
Peter Smyth
Mike Maloney
CONSOLIDATED INCOME STATEMENT
Year Ended 30 September 2008
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | 2008 | 2007 |
| | Notes | EUR'000 | EUR'000 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Continuing operations | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Revenue | 6 | 1,080,849 | 130,970 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cost of sales | 7 | (990,283) | (84,158) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Gross profit | | 90,566 | 46,812 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Administrative expenses - excluding amortisation of intangible assets | | | |
| and special items | | (73,378) | (33,177) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Administrative expenses - special items | 9 | (179,700) | (51,207) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Administrative expenses - amortisation of intangible assets | | (15,227) | (966) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Administrative expenses | | (268,305) | (85,350) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Operating loss | 11 | (177,739) | (38,538) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Finance income | | 1,384 | 396 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Finance costs - excluding special items | | (26,307) | (8,964) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Finance costs - special items | | (4,286) | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Finance costs | 12 | (30,593) | (8,964) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Share of losses of associate | 18 | (1,162) | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Loss before taxation | | (208,110) | (47,106) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Income tax credit/(expense) | 13 | 2,186 | (358) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Loss for the year from continuing operations | | (205,924) | (47,464) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Profit attributable to minority interest | 31 | 462 | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Attributable to equity holders of the parent | | (206,386) | (47,464) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Basic and diluted loss per share (cent per share) | 14 | | |
| | | (67c) | (41c) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
CONSOLIDATED BALANCE SHEET
As at 30 September 2008
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | 2008 | 2007 |
| Assets | Notes | EUR'000 | EUR'000 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Non-current assets | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Property, plant and equipment | 16 | 71,992 | 53,314 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Goodwill and intangible assets | 17 | 303,323 | 117,134 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Derivative financial instrument and available for sale financial | 19 | 697 | 304 |
| assets | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Deferred tax asset | 27 | 572 | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total non-current assets | | 376,584 | 170,752 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Current assets | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Inventories | 22 | 18,782 | 652 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Trade and other receivables | 21 | 91,636 | 7,822 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Restricted cash | 23 | 17,072 | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash and cash equivalents | 32 | 43,348 | 12,440 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total current assets | | 170,838 | 20,914 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Assets of disposal groups held for sale | 29 | 30,044 | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total assets | | 577,466 | 191,666 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Current liabilities | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Borrowings | 25 | (14,951) | (7,722) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Trade and other payables | 24 | (199,701) | (30,156) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Current tax liabilities | | (1,267) | (353) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Provisions | 28 | (7,833) | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total current liabilities | | (223,752) | (38,231) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Liabilities of disposal groups held for sale | 29 | (21,041) | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | (244,793) | (38,231) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Non-current liabilities | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Deferred tax liability | 27 | (16,914) | (1,143) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Borrowings | 25 | (278,462) | (109,768) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Provisions | 28 | (6,993) | (6,494) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total non-current liabilities | | (302,369) | (117,405) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total liabilities | | (547,162) | (155,636) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Net assets | | 30,304 | 36,030 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Equity | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Called up share capital | 30 | 6,003 | 8,296 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Share premium account | 30 | 346,840 | 132,617 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Other reserve | 31 | | 522 |
| | | - | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Reverse acquisition reserve | 31 | 12,036 | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Hedging reserve | 31 | 573 | 304 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Translation reserve | 31 | (27,881) | (526) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Retained (losses) | 31 | (307,884) | (105,338) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | 29,687 | 35,875 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Minority interest | 31 | 617 | 155 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Total equity | | 30,304 | 36,030 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
COMPANY BALANCE SHEET
As at 30 September 2008
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | 2008 |
| Assets | Notes | | EUR'000 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Non-current assets | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Investment in subsidiary undertakings | 20 | | 328,387 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Derivative financial instrument | 19 | | 573 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total non-current assets | | | 328,960 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Current assets | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Trade and other receivables | 21 | | 513 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Cash and cash equivalents | | | 17,039 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total current assets | | | 17,552 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total assets | | | 346,512 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Current liabilities | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Borrowings | 25 | | (13,167) |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Trade and other payables | 24 | | (10,869) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total current liabilities | | | (24,036) |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Non-current liabilities | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Borrowings | 25 | | (276,784) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total non-current liabilities | | | (276,784) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total liabilities | | | (300,820) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Net assets | | | 45,692 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Equity | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Called up share capital | 30 | | 6,003 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Share premium account | 30 | | 346,840 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Hedging reserve | 31 | | 573 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Retained (losses) | 31 | | (307,724) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total equity | | | 45,692 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
CONSOLIDATED CASH FLOW STATEMENT
Year Ended 30 September 2008
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | 2008 | 2007 |
| | Notes | EUR'000 | EUR'000 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash flow from operating activities | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash generated from operations | 33 | 9,937 | 17,985 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Income tax paid | | (738) | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Interest paid | | (26,315) | (9,124) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Net cash flow (used in)/from operating activities | | (17,116) | 8,861 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash flows from investing activities | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Acquisition of subsidiaries, net of cash acquired | | 10,982 | (2,441) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Acquisition of property, plant and equipment | | (16,771) | (15,554) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Acquisition of intangible assets | | (4,320) | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Funding of associate | | (1,100) | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Payments in relation to closure of business | | | (707) |
| | | - | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Proceeds from sale of subsidiaries, net of cash disposed of | | | 4,802 |
| | | - | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Proceeds from sale of property, plant and equipment | | 295 | 1,244 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Interest received | | 1,384 | 396 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Net cash flow (used in) investing activities | | (9,530) | (12,260) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash flows from financing activities | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Proceeds from issuance of ordinary shares | | 42,948 | 2,659 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Proceeds from issuance of preference shares | | 5,323 | |
| | | | - |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Repayment of borrowings | | (283,771) | (23,061) |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Proceeds from borrowings | | 295,000 | 24,701 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Net cash flow from financing activities | | 59,500 | 4,299 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Net increase in cash and cash equivalents | | 32,854 | 900 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash and cash equivalents at beginning of year | | 12,440 | 11,875 |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Exchange gains and losses on cash and cash equivalents | | (1,042) | (335) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
| Cash and cash equivalents at end of year | 32 | 44,252 | 12,440 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------------+---------------------+
COMPANY CASH FLOW STATEMENT
Period Ended 30 September 2008
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| | | | 2008 |
| | Notes | | EUR'000 |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Cash (outflow)/inflow from the operations | 33 | | (14,441) |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Income tax paid | | | (33) |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Interest paid | | | (21,797) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Net cash flow from operating activities | | | (36,271) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Cash flows from investing activities | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Payment of costs associated with acquisition of subsidiaries | | | (14,350) |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Interest received | | | 279 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Net cash flow (used in) investing activities | | | (14,071) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Cash flows from financing activities | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Proceeds from issuance of ordinary shares | | | 42,948 |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Proceeds from issuance of preference shares | | | 5,323 |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Provision of loans to subsidiaries | | | (264,409) |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Repayment of borrowings | | | (11,481) |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Proceeds from borrowings | | | 295,000 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Net cash flow from financing activities | | | 67,381 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Net increase in cash and cash equivalents | | | 17,039 |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Cash and cash equivalents at beginning of period | | | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
| Cash and cash equivalents at end of year | | | 17,039 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+----------------------+
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Year Ended 30 September 2008
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| | | 2008 | 2007 |
| | Note | EUR'000 | EUR'000 |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Exchange differences on translating foreign operations | | (27,355) | (526) |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Cash flow hedges | | 269 | (189) |
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Net (loss) recognised directly in equity | | (27,086) | (715) |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Loss for the year | | (205,924) | (47,464) |
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Total recognised income and expense for the year | | (233,010) | (48,179) |
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Attributable to: | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Equity holders of the parent | 31 | (233,472) | (48,179) |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Minority interest | | 462 | |
| | | | - |
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
| Total recognised income and expense for the year | | (233,010) | (48,179) |
| | | | |
+-----------------------------------------------------------------------+--------+--------------------+---------------------+
COMPANY STATEMENT OF RECOGNISED INCOME AND EXPENSE
Period Ended 30 September 2008
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | 2008 |
| | Note | | EUR'000 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Cash flow hedges | 19 | | 573 |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Net income recognised directly in equity | | | 573 |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Loss for the period | | | (307,724) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
| Total recognised income and expense for the period attributable to | | | |
| equity shareholders | | | (307,151) |
| | | | |
+-----------------------------------------------------------------------+--------+---------------+--------------------+
NOTES TO THE FINANCIAL STATEMENTS
1 Going concern
The financial statements have been prepared on a going concern basis. The
validity of this assumption is dependent on achieving operating profitability by
the Group for the years ended 30 September 2009 and 30 September 2010 and the
continued support of the Group's bankers.
During the year ended 30 September 2008 the Group incurred a loss (after
impairment charges) of EUR205,924,000 (2007: EUR47,464,000). At the year end the
group has cash and cash equivalents of EUR43,348,000 (2007: EUR12,440,000) and has
an unutilised revolving credit facility limit of EUR11 million.
The directors have reviewed the forecast trading results of the group for a
period of three years from the date of approval of these financial statements.
The directors recognise that there are significant external factors which could
negatively impact on trading performance and cash flow generation during that
period.
The business has seen and indeed anticipated in its planning, some softening
in demand for prepaid mobile phone top ups in some of its markets. In the
current economic climate this softening could accelerate. In addition the
business has seen some tightening of credit from suppliers which it has been
able to absorb. Further tightening of credit would put additional pressure on
cash flow. The depreciation in the value of sterling has had an impact given
that a large proportion of cash flow is generated in the UK.
However the directors believe that the Group operates robust business models
across its divisions, which are strongly cash generative. Furthermore the
directors are satisfied that management has already taken steps which they will
continue to do to allow the group to achieve operating profitability
notwithstanding the current economic climate. In addition the Group has further
various mechanisms and opportunities to ensure that it can react to changes in
the geographic territories in which it operates, these include:
* Redeploying profit generating assets
* Leveraging IT efficiencies across the Group
* Further reducing variable costs
The directors are satisfied that in view of the Group's ongoing discussions and
banking relationships, the expected trading and disposal program, along with the
associated cash flow performance, that the Group should have the necessary
resources to meet its current financial obligations. Accordingly, they believe
it is appropriate for the financial statements to be prepared on a going concern
basis.
2General information
The Group's main activity is the deployment of a network of Payzone owned
terminals and ATM machines.
The Company is a public limited liability company incorporated and domiciled in
the Republic of Ireland. The address of its registered office is 4 Heather Road,
Sandyford Industrial Estate, Dublin 18.
The Company has its primary listing on the AIM stock exchange in London.
Payzone plc was incorporated in September 2007. On 5 December 2007, it
acquired the share capital of Cardpoint plc ("Cardpoint") and alphyra Holdings
Limited ("alphyra"). Immediately prior to the acquisition Cardpoint plc had
been listed on AIM in the United Kingdom and prepared its financial statements
in accordance with accounting policies generally accepted in the United Kingdom
(UK GAAP). alphyra was a privately owned company which prepared its financial
statements in accordance with accounting policies generally accepted in Ireland
(Irish GAAP).
The acquisition of the entire issued share capital of alphyra by Payzone plc
represents a reorganisation of the alphyra group. The shareholders in alphyra
exchanged their shares for 174,680,273 newly issued shares in Payzone. Payzone
then became the ultimate legal parent in the group. The alphyra Group is deemed
to control the financial and operating policies of Payzone plc and therefore
this transaction represents a reverse acquisition of Payzone plc by the alphyra
Group. This transaction was a "common control" transaction and notwithstanding
the new legal parent, this transaction has been accounted for using the
principles of merger accounting and therefore did not result in the recognition
of goodwill of fair value adjustments to the net identifiable assets of Payzone
plc. Payzone was incorporated to effect this transaction and was a 'shell'
company on 5 December 2007.
Immediately thereafter, in consideration for the issue to Cardpoint's
shareholders of 115,867,928 ordinary shares, Payzone acquired the entire issued
and to be issued share capital of Cardpoint. Payzone then became the ultimate
legal parent of the combined Cardpoint and alphyra group. Notwithstanding the
new legal parent, this transaction has been accounted for as a reverse
acquisition. The financial statements are based on alphyra and Payzone having
been acquired by Cardpoint, as Cardpoint controls alphyra and is deemed to have
the power to govern the financial and operating policies of the entire group to
obtain benefits from its activities.
The financial statements for the year ended 30 September 2008 include
the separate financial statements of the legal parent, Payzone plc together with
the consolidated financial statements of Payzone plc.
As Payzone plc was incorporated on 13 September 2007 the separate financial
statements of Payzone plc cover the period from this date to 30 September 2008.
The consolidated financial statements are prepared on the basis of Cardpoint
acquiring the revised alphyra group on the 5 December 2007. The comparatives
for the purposes of the consolidated financial statements therefore represent
the results and financial position of Cardpoint plc for the year ended 30
September 2007.
3 Basis of preparation
These financial statements of Payzone plc have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and their interpretations
approved by the International Accounting Standards Board (IASB) as adopted by
the European Union (EU) and those parts of the Companies Acts, 1963 to 2006
applicable to companies reporting under IFRS.
As described in note 41, the transition date for implementation of IFRS by the
Group was 1 October 2006.Details of the adjustments recognised on transition to
IFRS are provided in note 41.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, events or actions, actual results ultimately may differ
from those estimates. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in note 5.
The following provides a brief outline of the likely impact on future financial
statements of relevant IFRS which are not yet effective and have not been early
adopted in these financial statements:
IFRS 8 - Operating segments (effective for accounting periods beginning on or
after 1 January 2009). IFRS 8 sets out the requirements for disclosure of
financial and descriptive information about an entity's operating segments and
also about the entity's products and services, the geographical areas in which
it operates, and its major customers. The IFRS replaces IAS 14 Segment
Reporting. The expected impact is still being assessed in detail by management,
but it appears likely that the manner, in which the segments are reported, will
change in a manner that is consistent with the internal reporting provided to
the chief operating decision-maker. The Group will apply IFRS 8 from 1 October
2009.
IAS 23 - (Amendment), Borrowing Costs (effective for annual periods beginning on
or after 1 January 2009). The Amendment to IAS 23 requires that an entity shall
capitalise borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost of that
asset. The previous version of IAS 23 allowed an option as to whether this
expenditure was capitalised or directly expensed. The group will apply IAS 23
(Amendment) from 1 October 2009 but does not expect this amendment to have a
major impact on the group.
IFRIC 12 Service Concession Arrangements (effective for annual periods beginning
on or after 1 January 2008). Service concessions are arrangements whereby a
government or other public sector entity grants contracts for the supply of
public services - such as roads, airports, prisons and energy and water supply
and distribution facilities - to private sector operators. As the group is not a
service concession operator IFRIC 12 is currently not relevant to the group's
activities.
IFRIC 13 Accounting for Customer Loyalty Programmes - (effective for annual
periods beginning on or after 1 July 2008). IFRIC 13 creates consistency in
accounting for customer loyalty plans. The interpretation is applicable to all
entities that grant awards as part of a sales transaction (including awards that
can be redeemed for goods or services not supplied by the entity). IFRIC 13 is
currently not relevant to the group's operations as it does not offer any
customer loyalty programmes.
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their interaction - IFRIC 14 provides some principles on the application of the
asset ceiling under IAS 19 defined benefit accounting. The interpretation is
effective for annual periods beginning on or after 1 January 2008, and is
currently not expected to have an impact on the group's accounts, as the group
does not operate any defined benefit pension plans.
IFRIC 16, Hedges of a Net Investment in a foreign operation (effective for
annual periods beginning on/after 1 October 2008). IAS 39 and IAS 21 provide
limited guidance on the application of their requirements for hedges of net
investment in foreign operations. With this interpretation the IFRIC has
provided practical guidance to help entities apply those standards consistently.
The group will apply IFRIC 16 from 1 October 2009, and as the group does not
use net investment hedging it is currently not applicable to the group.
IAS 1 (Revised) Presentation of Financial Statements - The main objective of the
amendment to IAS 1 was to aggregate information in the financial statements on
the basis of shared characteristics. The amendment also introduces a "Statement
of Comprehensive Income". The amendment is effective for annual periods
beginning on or after 1 January 2009, and will result in a revised layout of
some aspects of the group's financial statements when adopted from its effective
date.The group will apply IAS 1 (Revised) from 1 October 2009. It is likely that
both the income statement and statement of comprehensive income will be
presented as performance statements.
IFRS 2 'Vesting conditions and cancellations - Amendment to IFRS 2 Share-based
Payment', (effective for annual periods beginning on or after 1 January 2009).
The amendment addresses two matters. It clarifies that vesting conditions are
service conditions and performance conditions only. Other features of a
share-based payment are not vesting conditions. It also specifies that all
cancellations, whether by the entity or by other parties, should receive the
same accounting treatment. The group will apply IFRS 2 (Amendment) from 1
October 2009, and is currently considering the likely impact.
IAS 32 (Amendment) and IAS 1 (Amendment) 'Puttable financial instruments and
obligations arising on liquidation', (effective for annual periods beginning
on or after 1 January 2009). The amendments require some puttable
financial instruments and some financial instruments that impose on the entity
an obligation to deliver to another party a pro rata share of net assets of the
entity only on liquidation to be classified as equity. The group will apply the
IAS 32 and IAS 1 (Amendment) from 1 October 2009, but it is not likely to have
an impact on the group's accounts.
IFRS 3 (Revised), "Business combinations", (effective for annual
periods beginning on or after 1 July 2009). The standard continues to apply the
acquisition method to business combinations, with some significant changes.These
changes include a requirement that all payments to purchase a business are to be
recorded at fair value at the acquisition date, with some contingent payments
subsequently re-measured through income. Goodwill may be calculated based on the
parent's share of net assets or it may include goodwill related to non -
controlling interests. All transactions costs will be expensed. The group will
apply IFRS 3 (Revised) prospectively to all business combinations from 1 October
2009.
IAS 27 (Revised), 'Consolidated and separate financial statements', (effective
for annual periods beginning on or after 1 July 2009). IAS 27 (Revised) requires
the effect of all transactions with non-controlling interests to be recorded in
equity if there is no change in control. They will no longer result in goodwill
or gains and losses. The standard also specifies the accounting when control is
lost. Any remaining interest in the entity is re-measured to fair value and a
gain or loss is recognised in profit or loss. The group will apply IAS 27
(Revised) prospectively to transactions with non-controlling interests from 1
October 2009.
IFRIC 15 'Agreements for construction of real estates' (effective from 1
January 2009). The interpretation clarifies whether IAS 18, "Revenue" or IAS 11,
"Construction contracts" should be applied to particular transactions. It is
likely to result in IAS 18 being applied to a wider range of transactions.
IFRIC 15 is not relevant to the group's operations as all revenue transactions
are accounted for under IAS 18 and not IAS 11.
IFRIC 17 'Distributions of Non - cash assets to owners' (effective for annual
periods beginning on / after 1 July 2009). This interpretation applies to
transactions in which an entity distributes assets (other than cash) as
dividends to its owners acting in their capacity as owners. The IFRIC addresses
when an entity should recognise a dividend payable and how an entity should
measure the dividend payable. The group will apply IFRIC 17 from its effective
date. This is currently not relevant to the group's operations.
IFRS 1 (Revised), 'First-time Adoption of International Financial Reporting
Standards', (effective from 1 January 2009). The current IFRS 1 has been amended
many times to accommodate first time adoption requirements of new and amended
IFRSs, resulting in a more complex and less clear standard. This revised version
retains the substance of the original standard but with a changed structure. The
revised IFRS 1 is not applicable to the group as it has already adopted IFRS,
however it would be applicable to other entities in the group should they
transition to IFRS at a future date.
Amendments to IFRS 1 'First-time adoption of IFRS' and IAS 27 'Consolidated and
separate financial statements - cost of an investment in a subsidiary, jointly
controlled entity or associate', (effective for annual periods beginning on or
after 1 January 2009). First-time adopters are permitted to use a deemed cost
of either fair value or the carrying amount under previous accounting practice
to measure the initial cost of investments in subsidiaries, jointly
controlled entities and associates in their separate financial statements. The
amendment also removed the definition of the cost method from IAS 27 and
replaced it with a requirement to present dividends - as income in the separate
financial statements of the investor. The group will apply these amendments
from 1 October 2009 but they are currently not applicable to the group.
Improvements to IFRS, (most of the amendments effective for annual periods
beginning on or after 1 January 2009). The improvements to IFRS represent a
number of 'non-urgent' amendments to IFRSs that involve accounting changes for
presentation, recognition and measurement, and terminology or editorial changes
with minimal effect of accounting. The Group will apply these improvements from
their relative effective dates and is currently assessing the impact on
the Group's financial statements.
4 Accounting policies
The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been applied consistently to
all periods presented, unless stated otherwise.
Basis of consolidation
Payzone Plc is the legal parent and acts as a holding company. In respect of
the business combination effected during the year, Cardpoint plc is the
accounting acquirer. The group accounts consolidate the accounts of Payzone plc
and entities controlled directly and indirectly by Payzone plc (its
subsidiaries) drawn up to September each year. Control is achieved where the
group has the power to govern the financial and operating policies of an entity
in which it invests, so as to obtain benefits from its activities. This usually
accompanies a shareholding of more than one half of the voting rights.
The results of subsidiaries acquired or sold are consolidated for the periods
from or to the date on which control passed.
(a) Subsidiaries
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquired
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition are recognised at their fair value at the acquisition
date.
The excess of the cost of acquisition over the fair value of the group's share
of the identifiable net assets acquired is recorded as goodwill. Intercompany
transactions, balances and unrealised gains on transactions between group
companies are eliminated; unrealised losses are also eliminated unless cost
cannot be recovered and are also considered to be an indicator of impairment of
the transferred asset.
In cases of business combinations involving entities under common control, the
assets and liabilities of the acquired subsidiaries are initially included in
the consolidated financial statements at their book values at the date of
acquisition, applying "merger accounting" principles to the transaction.
(b)Associates
Associates are all entities over which the Group has significant influence but
not control, generally accompanying a shareholding of between 20% and 50% of the
voting rights. Investments in associates are accounted for by the equity method
of accounting and are initially recognised at cost, including any goodwill
attributable to the interest acquired.
The Groups' share of its associates' post-acquisition profits or losses is
recognised in the income statement, and its share of post-acquisition movements
in reserves is recognised in reserves. The cumulative post acquisition movements
are adjusted against the carrying amount of the investment.
When the Group's share of losses in an associate equals or exceeds its interest
in the associate, including any other unsecured receivables, the Group does not
recognise further losses, unless it has incurred obligations or made payments on
behalf of the associates.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Groups interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting polices of the associates have
been changed where necessary to ensure consistency with the accounting policies
adopted by the Group.
(c) Transactions with minority interests
The Group applies a policy of treating transactions with minority interests as
transactions with parties external to the Group. Disposals to minority interests
result in gains and losses for the Group that are recorded in the income
statement. Purchases from minority interests result in goodwill, being the
difference between any consideration paid and the relevant share acquired of the
carrying value of net assets of the subsidiary.
Property, plant and equipment
Property, plant and equipment are stated at historical cost being, expenditure
directly attributable to the acquisition of the asset, less accumulated
depreciation.
Subsequent costs are included in the asset's carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the group and the cost of the
item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
The charge for depreciation is calculated to write down the cost of property,
plant and equipment to their estimated residual values by equal annual
installments over their expected useful lives, which are as follows:
Terminals and ATMs 15% - 20%
Fixtures and fittings and equipment rates between
15% and 33.3%
Computer equipment rates between
20% and 33.3%
Property and leasehold renovations
12.5%
Motor vehicles
rates between 20% and 33.3%
Leased assets over the unexpired term of the lease or estimated useful life, if
shorter
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
The assets' carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated recoverable
amount.
Gains and losses on disposals are determined by comparing the proceeds with the
carrying amount and are recognised in the income statement.
Non current assets held for sale
Non current assets (and disposal groups) classified as held for sale are
measured at the lower of their carrying amount or their fair value less costs to
sell.
Non current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered principally through a sale transaction rather
than through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be committed to the
plan to sell and the sale should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
Investment in subsidiaries
Investments in subsidiaries held by the company are carried at cost less
impairment.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group's share of the net identifiable assets of the acquired
subsidiary/associate at the date of acquisition. Goodwill on acquisitions of
associates is included in "investments in associates" and is tested for
impairment as part of the overall balance. Separately recognised goodwill is
tested annually for impairment and carried at cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the
disposed of entity.
Goodwill is allocated to cash generating units for the purpose of impairment
testing. The allocation is made to those cash generating units or groups of cash
generating units that are expected to benefit from the business combination in
which the goodwill arose.
(b) Trademarks, licences and brands
Acquired trademarks, licences and brands are shown at historical cost.
Trademarks and licenses have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the straight line
method to allocate the cost of trademarks and brands over their estimated useful
lives (6 years).
(c) Computer software
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software. These costs are
amortised over their estimated useful lives (three to five years).
Costs associated maintaining computer software programmes and software are
recognised as an expense as incurred. Costs that are directly associated with
the development of identifiable and unique software products controlled by the
group, and that will probably generate economic benefits exceeding costs beyond
one year, are recognised as intangible assets. Costs include employee costs
incurred as a result of developing software and an appropriate portion of the
relevant overheads.
An intangible asset arising from development (or from the development phase of
an internal project) shall be recognised if, and only if, an entity can
demonstrate all of the following:
(a)The technical feasibility of completing the intangible asset so that it will
be available for use or sale.
(b)An intention to complete the intangible asset and use or sell it.
(c)An ability to use or sell the intangible asset.
(d)How the intangible asset will generate probable future economic benefits.
(e)The availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
(f) Its ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Other development expenditure that do not meet these criteria are recognised as
an expense as incurred.
Computer software development costs recognised as assets are amortised over
their estimated useful lives (not exceeding 6 years).
(d) Customer related intangible assets
Customer related intangible assets recognised as part of a business combination
are initially recognised at fair value and are subsequently carried at original
cost less accumulated amortisation.
Acquired customer and merchant related intangible assets are amortised on a
straight line basis over their estimated useful lives (not exceeding 6 years).
Impairment of non financial assets
Assets that have an indefinite useful life, for example goodwill, are not
subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the assets carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an
asset's fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash generating units). Non financial
assets other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.
Derivative financial instruments and hedge activities
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at their fair value.
The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged. The group designates certain derivatives as either:
(a) Hedges of the fair value of recognised assets or liabilities or a firm
commitment (fair value hedge);
(b) Hedges of a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction (cash flow hedge); or
(c) Hedges of a net investment in a foreign operation (net investment hedge).
The group documents at the inception of the transaction, the relationship
between hedging instruments and hedged items, as well as its risk management
objectives and strategy for undertaking various hedging transactions. The group
also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items.
The full fair value of a hedging derivative is classified as a non-current asset
or liability when the remaining maturity of the hedged item is more than 12
months and as a current asset or liability when the remaining maturity of the
hedged item is less than 12 months. Trading derivatives are classified as a
current asset or liability
Derivative financial instruments and hedge activities
The group has only a cashflow hedge in place which is accounted for as follows:
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in equity. The gain or
loss relating to the ineffective portion is recognised immediately in the income
statement.
Amounts accumulated in equity are recycled in the income statement in the
periods when the hedged item affects profit or loss (for example, when the
forecast interest payment that is hedged takes place). The gain or loss relating
to the effective portion of interest rate swaps hedging variable rate borrowings
is recognised in the income statement within 'finance costs'. However, when the
forecast transaction that is hedged results in the recognition of a
non-financial asset (for example, inventory or property, plant and equipment)
the gains and losses previously deferred in equity are transferred from equity
and included in the initial measurement of the cost of the asset. The deferred
amounts are ultimately recognised in cost of sales in case of inventory or in
depreciation in the case of property, plant and equipment.
When a hedging instrument expires or is sold, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined on a first-in first-out (FIFO) basis. Cost in the case of goods for
resale, is defined as the aggregate cost of acquiring such inventories from
third parties. Net realisable value is based on normal selling price, less
further costs expected to be incurred to disposal.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. A provision for impairment of trade receivables is established
when there is objective evidence that the group will not be able to collect all
amounts due according to the original terms of the receivables. Significant
financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments
(more than 30 days overdue) are considered indicators that the trade receivable
is impaired. The amount of the provision is the difference between the asset's
carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account, and the amount of the loss is
recognised in the income statement within administrative expenses. When a trade
receivable is uncollectible, it is written off against the allowance account for
trade receivables. Subsequent recoveries of amounts previously written off are
credited against administrative expenses in the income statement.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks and other short-term highly liquid investments with original maturities of
three months or less. Bank overdrafts are shown within current liabilities on
the balance sheet. For the purpose of the cash flow statement, cash and cash
equivalents comprise cash at bank and in hand and short-term deposits maturing
within 3 months which are subject to insignificant risk of changes in value;
less bank overdrafts.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost: any difference
between the proceeds (net of transaction cost) and the redemption value is
recognised in the income statement over the period of the borrowings using the
effective interest rate.
Borrowings are classified as current liabilities unless the group has an
unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Investment income earned on
the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are recognised in the income statement in the period
in which they are incurred.
Convertible Preference shares are classified as financial liabilities when the
group may be required to deliver cash or another financial asset in the event of
the occurrence or non-occurrence of uncertain future events that are beyond the
control of both the group and the preference shareholder, such as a change in
control.
Provisions
A provision is a liability of an uncertain timing or amount. A provision is
recognised when the group has a present obligation as a result of a past event,
it is probable that an outflow of resources will be required to settle the
obligation and a reliable estimate of the obligation can be made.
A provision for onerous contracts is recognised when the expected benefits to be
derived by the Group from a contract are lower than the unavoidable costs of
meeting its obligations under the contract (onerous contracts). A provision for
onerous contracts is recognised when for example, the group has entered a
binding lease for rental of premises that is no longer used by the group or a
binding agreement with a customer which is loss making and therefore a provision
is recognised for the unavoidable costs associated with that contract (ie. lower
of costs of fulfilling the contract and the costs of terminating the contract).
Provisions for restructuring costs and legal claims are recognised when: the
group has a present legal or constructive obligation as a result of past events;
it is probable that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated. Restructuring provisions
comprise lease termination penalties and employee termination payments.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations
may be small.
Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation discounted to their present value using a
pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the obligation. The increase in the provision due to
passage of time is recognised as interest expense.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Where any group company purchases the Company's equity share capital (treasury
shares), the consideration paid, including any directly attributable incremental
costs (net of income taxes), is deducted from equity attributable to the
Company's equity holders until the shares are cancelled or reissued. Where such
shares are subsequently reissued, any consideration received (net of any
directly attributable incremental transaction costs and the related income tax
effects) is included in equity attributable to the Company's equity holders.
Foreign currency
(a) Functional and presentation currency
Items included in the financial statements of each of the group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). Payzone plc's functional currency
is Euro. Cardpoint plc's functional currency is Sterling. The presentation
currency for these financial statements is Euro.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement, except
when deferred in equity as qualifying cash flow hedges and qualifying net
investment hedges.
(c) Group companies
The results and financial position of all the group entities that have a
functional currency different from the presentation currency are translated into
the presentation currency as follows:
* Assets and liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance sheet;
* Income and expenses for each income statement are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the rate on the dates of the transactions); and
* All resulting exchange differences are recognised as a separate component of
equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations, and of borrowings and other currency
instruments designated as hedges of such investments, are taken to equity. When
a foreign operation is partly disposed of or sold, exchange differences that
were recorded in equity are recognised in the income statement as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted
or substantively enacted at the balance sheet date in the countries where the
company's subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation
and establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Current and deferred income tax - continued
Deferred income tax is recognised in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
deferred income tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which the temporary differences
can be utilised.
Deferred income tax is provided on temporary differences arising on investments
in subsidiaries and associates, except where the timing of the reversal of the
temporary difference is controlled by the group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Leases
Assets held under finance leases, which confer rights and obligations similar to
those attached to owned assets, are capitalised as property, plant and equipment
or intangible assets and are depreciated over the shorter of the lease terms and
their useful lives. The capital elements of future lease obligations are
recorded as liabilities, while the interest elements are charged to the income
statement over the period of the leases to produce a constant rate of charge on
the remaining balance of liability.
All other leases are operating leases. Rentals under operating leases are
charged on a straight-line basis over the lease term, even if the payments are
not made on such a basis. Benefits received and receivable as an incentive to
sign an operating lease are similarly spread on a straight line basis over the
lease term, except where the period to the review date on which the rent is
first expected to be adjusted to the prevailing market rate is shorter than the
full lease term, in which case the shorter period is used.
Rentals received for terminals from retail agents under operating leases are
credited to income on a straight line basis over the lease term.
Employee benefits
(a) Pension obligations
The pension entitlements of employees arise under defined contribution plans.
Contributions to the group's defined contribution pension plans are charged to
the income statement as incurred.
(b) Bonus plans
The group recognises a liability and an expense where contractually obliged or
where there is a past practice that has created a constructive obligation of
making bonus payments.
(c) Share based compensation
The group operates an equity-settled, share-based compensation plan. The fair
value of the employee services received in exchange for the grant of the options
is recognised as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting conditions are
included in assumptions about the number of options that are expected to become
exercisable. At each balance sheet date, the entity revises it's estimates of
the number of options that are expected to become exercisable. It recognises the
impact of the revision of original estimates, if any, in the income statement,
with a corresponding adjustment to equity. The group accounts for the
cancellation or settlement of a share based payment award as an acceleration of
vesting, and recognises immediately the amount that otherwise would have been
recognised for services received over the remainder of the vesting period.
(c) Share based compensation - continued
The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are
exercised.
(d) Termination benefits
Termination benefits are payable when employment is terminated by the group
before the normal retirement date, or whenever an employee accepts voluntary
redundancy in exchange for these benefits. The group recognises termination
benefits when it is demonstrably committed to either: terminating the employment
of current employees according to a detailed formal plan without possibility of
withdrawal; or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than 12 months after
the balance sheet date are discounted to their present value.
Revenue
Revenue comprises the fair value of consideration receivable in respect of
services and prepaid credits for cellular phones, utilities sold to third
parties and ATM transactions exclusive of value added tax. Revenue of the group
is earned from prepaid cellular top-up and prepaid utilities sold to third
parties, installation and maintenance services, electronic payment services,
debit and credit card processing and ATM transactions. Revenue is recognised in
the period earned by rendering of services or sale of products.
Revenue from prepaid credits for cellular top up and utilities is recognised on
a gross basis where the group acts as a principal in relation to these
transactions, due to the fact that the group bears the majority of risk,
principally inventory risk, in relation to such transactions.
Where such inventory risk is not borne by the group only commission earned is
recorded as revenue. However in cases where the credit risk is maintained by
the group the receivable and corresponding liability are recognised.
Revenue in respect of maintenance contracts is deferred and recognised ratably
over the period of the contract.
Annual service charges consist of subscriber billings for service not yet
rendered. These are deferred and taken into income as earned. The maximum period
for which subscribers are billed in advance is generally one year.
Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that are
subject to risks and returns that are different from those segments operating in
other economic environments. Arising from the group's internal organisational
structure and its system of internal financial reporting, segmentation by
geographical location (geography) is regarded as being the predominant source
and nature of the risks and returns facing the group and is thus the primary
basis for segmentation under IAS 14 "Segment Reporting". Business segmentation
is the secondary segment reporting format.
Deferred revenues
Deferred revenue comprises service and maintenance charges billed in advance of
provision of services.
Cost of sales
Cost of sales includes agents' commission, the cost of mobile top-ups where
Payzone acts as principal in their purchase and sale, consumables,
communications, maintenance, depreciation and external processing charges levied
by banks. Other costs are allocated to administrative costs.
Finance income
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Finance costs
Finance costs comprise interest on borrowings, interest component of finance
leases, bank charges and amortised debt transaction costs.
Interest payable on borrowings and the interest expense component of finance
lease payments is calculated using the effective interest rate method.
Special items
Special items are material non recurring items that derive from events or
transactions that fall within the ordinary activities of the group and which
individually or, if of a similar type, in aggregate, are separately disclosed by
virtue of their size or incidence. Such items include non-current assets
impairment, restructuring costs, gains/losses on business disposals and
closures, costs incurred as a result of business combinations effected that do
not qualify for recognition as assets, share option charges arising from the
acceleration of vesting periods as a result of business combinations, borrowing
costs incurred as a result of a business combination that do not qualify to be
treated as a reduction of the liability.
Judgement is used by the group in assessing the particular items which
should be disclosed in the income statement and related notes as special items.
5 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, rarely equal the related actual
results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year together with critical judgements in respect of the
financial year are outlined below:
(a) Going concern
The group has prepared its accounts on a going concern basis. Further details
are described in note 1 supporting the adoption of this basis.
(b) Estimated impairment of goodwill
The group tests at least annually whether goodwill has suffered any impairment,
in accordance with the accounting policy stated in note 4. The recoverable
amounts of cash-generating units have been determined based on value-in-use
calculations, and these calculations require the use of estimates. Estimating a
"value in use" amount requires sufficient judgement to make an estimate of the
expected future cash flows from the cash generating unit and also to choose a
suitable discount rate in order to calculate the present value of those cash
flows. Please see note 10 for further detail.
(c) Capitalisation of development costs
Costs incurred on development projects are recognised as intangible assets when
the criteria in the development expenditure accounting policy in note 4 are
achieved. A degree of judgement is involved in assessing the achievement of the
criteria.
(d)Establishing useful lives for amortisation purposes of properly, plant
and equipment and intangible assets
The group has intangible assets (other than goodwill) of EUR66.6 million and
property, plant and equipment of EUR72 million as at 30 September 2008. The
amortisation charges and depreciation charges are dependent on the estimated
lives allocated to each type of intangible asset.
The directors regularly review these asset lives and change them as necessary
to reflect current thinking on remaining lives and the expected pattern of
consumption of the future economic benefits embodied in the asset. Changes in
asset lives can have a significant impact on depreciation and amortisation
charges for the period.
Details of the useful lives of the various classes of property, plant and
machinery and intangible assets are included in note 4.
If the allocated lives allocated to each type of amortised intangible asset were
increased/decreased by one year, the amortisation charges for the year would
have decreased/increased by EUR2.8m/(EUR4.2m).
(e) Fair value of business combinations
Goodwill only arises in business combinations. The amount of goodwill initially
recognised is the excess of the cost of an acquisition over the fair value of
the Group's share of the net identifiable assets of the acquired
subsidiary/associate at the date of acquisition.
The determination of the fair value of the assets and liabilities is based, to a
considerable extent, on management's judgement and estimates.
Allocation of the purchase price affects the results of the Group as finite
lived intangible assets are amortised, whereas indefinite lived intangible
assets, including goodwill, are not amortised and could result in differing
amortisation charges based on the allocation to indefinite lived and finite
lived intangible assets.
On acquisition, the identifiable intangible assets may include customer bases
and brands. The fair value of these assets is determined by discounting
estimated future net cash flows generated by the asset, assuming no active
market for the assets exist. The use of different assumptions for the
expectations of future cash flows and the discount rate would change the
valuation of the intangible assets, and consequently the level of recognised
goodwill. Please see note 15 for further detail.
(f) Cardpoint as acquirer
As described in note 2 the acquisition of the entire share capital of Cardpoint
and alphyra by Payzone plc has been accounted for as a reverse acquisition of
the combined Payzone and alphyra group by Cardpoint plc. The determination of
the acquirer in this transaction is seen as a critical judgement as any change
in this judgement can have a significant impact on the accounting for the
business combination. Management gave detailed consideration to the terms,
conditions, facts and circumstances surrounding the transaction together with
the guidance in IFRS 3 in relation to identifying the acquirer in a business
combination. Ultimately Cardpoint plc was seen as the acquirer as it was judged
to control alphyra due to its:
* power to govern the financial and operating policies of alphyra;
* power to appoint or remove the majority of the members of the board of directors
or equivalent governing body of the other entity; and
* power to cast the majority of votes at meetings of the board of directors.
(g)Determination of special items
Significant judgement is exercised in making such an assessment.
(h) Determination of functional currency
The group is headquartered in Ireland and has significant operations in the
UK and Europe and accordingly principally operates in two different currencies.
Reflecting its economic operating environment the group has determined that the
Euro is Payzone plc's functional currency for the preparation of the
consolidated financial statements however, the functional currency of the
accounting acquirer Cardpoint plc, is sterling. The group's presentation
currency is Euro.
6 Segmental reporting
(i) Segmental information
Segment information is presented in respect of the Group's business and
geographical segments. The primary basis for segmental reporting is geographic
segments being the dominant sources of the group's risk and rewards and being
the basis for the group's internal organisational and management structure and
its system of internal financial reporting. The secondary format for reporting
segmental information is business segments.
Segments results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis. Segment
capital expenditure is the total cost incurred during the period to acquire
segment assets that are expected to be used for more than one period other than
through business combinations.
Geographical segments
The group operates in three principal geographical regions being the UK and
Ireland, Northern Europe, Southern and Central Europe. In presenting
information on the basis of geographic segments, segment revenue is based on the
geographical location of the Group's subsidiaries. Segment assets are based on
the geographical location of the assets.
As a result of the business combination, discussed in note 15, the number of
primary segments increased from 2 to 3 in the year ended 30 September 2008.
+------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | Southern | |
| | UK and | Northern | and | Total |
| | | | Central | |
| | Ireland | Europe | Europe | 2008 |
| | 2008 | 2008 | 2008 | EUR'000 |
| | EUR'000 | EUR'000 | EUR'000 | |
+------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Revenue | 380,947 | 523,160 | 176,742 | 1,080,849 |
| | | | | |
+------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Operating (loss) | (77,456) | (83,019) | (17,264) | (177,739) |
| | | | | |
+------------------------------------+--------------------+--------------------+--------------------+--------------------+
+------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
| | UK and | Northern | Total |
| | | | |
| | Ireland | Europe | 2007 |
| | 2007 | 2007 | EUR'000 |
| | EUR'000 | EUR'000 | |
+------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+
| Revenue | 114,058 | 16,912 | 130,970 |
+------------------------------------------------+--------------------+--------------------+--------------------+
| Operating profit/(loss) | | | |
| | (38,753) | 215 | (38,538) |
| | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+
Other segment items included in the income statement are as follows:
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| | UK | | Southern and | |
| | and | Northern | Central Europe | Total |
| | | | 2008 | |
| | Ireland | Europe | EUR'000 | 2008 |
| | 2008 | 2008 | | EUR'000 |
| | EUR'000 | EUR'000 | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Depreciation (note 16) | 15,659 | 7,120 | 1,620 | 24,399 |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Amortisation (note 17) | 8,620 | 5,184 | 1,423 | 15,227 |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Impairment of goodwill (note 10) | 49,341 | 83,079 | 16,753 | 149,173 |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Administrative expenses (excluding | | | | |
| goodwill impairment and special items) | 27,705 | 1,869 | 953 | 30,527 |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Share of losses of associate | (1,162) | | | (1,162) |
| | | - | - | |
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| 6 Segmental reporting - continued | | UK | | |
| | | and | Northern | Total |
| (i) Segmental information - continued | | | | |
| | | Ireland | Europe | 2007 |
| | | 2007 | 2007 | EUR'000 |
| | | EUR'000 | EUR'000 | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Depreciation (note 16) | | 9,256 | 2,087 | 11,343 |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Amortisation (note 17) | | 966 | | 966 |
| | | | - | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Impairment of goodwill (note 10) | | 49,140 | | 49,140 |
| | | | - | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| Administrative expenses (excluding | | | | |
| goodwill impairment and special items) | | 2,067 | | 2,067 |
| | | | - | |
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+---------------------+
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | UK | | Southern and | |
| | and | Northern | Central Europe | Total |
| | | | 2008 | |
| | Ireland | Europe | EUR'000 | 2008 |
| | 2008 | 2008 | | EUR'000 |
| | EUR'000 | EUR'000 | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Segment assets | 375,246 | 133,646 | 67,305 | 576,197 |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Unallocated assets | | | | 1,269 |
| | - | - | - | |
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Total assets | | | | 577,466 |
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Segments liabilities | 147,048 | 50,065 | 38,705 | 235,818 |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Unallocated liabilities | | | | 311,344 |
| | - | - | - | |
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Total liabilities | | | | 547,162 |
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Capital expenditure | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Property, plant and equipment | 29,271 | 15,079 | 6,896 | 51,246 |
| (note 16) | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
| Intangible assets (note 17) | 224,407 | 117,967 | 48,320 | 390,694 |
| | | | | |
+------------------------------------------------+--------------------+--------------------+--------------------+--------------------+
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| | | UK | | |
| | | and | Northern | Total |
| | | | | |
| | | Ireland | Europe | 2007 |
| | | 2007 | 2007 | EUR'000 |
| | | EUR'000 | EUR'000 | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Segment assets | | 132,346 | 59,016 | 191,362 |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Unallocated assets | | | | 304 |
| | | - | - | |
| | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Total assets | | | | 191,666 |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Segment liabilities | | 25,347 | 11,303 | 36,650 |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Unallocated liabilities | | | | 118,986 |
| | | - | - | |
| | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Total liabilities | | | | 155,636 |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Capital expenditure | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Property, plant and equipment | | 21,420 | 4,071 | 25,491 |
| (note 16) | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
| Intangible assets (note 17) | | 22,237 | | 22,237 |
| | | | - | |
| | | | | |
+------------------------------------------------+---------------+--------------------+--------------------+-----------------------+
Unallocated liabilities comprise of interest bearing loans and borrowings,
corporation tax payable and deferred tax liabilities. Unallocated assets
comprise deferred tax assets, derivative financial instruments and available for
sale financial assets.
6 Segmental reporting - continued
(i) Segmental information - continued
The group analyses its business into the following business segments:
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | Prepaid credit | Utility | Financial | ATM | Unallocated | Total |
| | 2008 | 2008 | services | 2008 | 2008 | 2008 |
| | EUR000 | EUR000 | 2008 | EUR000 | EUR000 | EUR000 |
| | | | EUR000 | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Group revenue | 920,934 | 10,716 | 46,128 | 101,936 | 1,135 | 1,080,849 |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Total assets | | | | | 577,466 | 577,466 |
| | - | - | - | - | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Capital expenditure | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Property, plant and equipment | | | | | 51,246 | 51,246 |
| (note 16) | - | - | - | - | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Intangible assets (note 17) | | | | | 390,694 | 390,694 |
| | - | - | - | - | | |
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | Prepaid credit | Utility | Financial | ATM | Unallocated | Total |
| | 2007 | 2007 | services | 2007 | 2007 | 2007 |
| | EUR000 | EUR000 | 2007 | EUR000 | EUR000 | EUR000 |
| | | | EUR000 | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Group revenue | | | | 130,970 | | 130,970 |
| | - | - | - | | - | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Total assets | | | | 191,666 | | 191,666 |
| | - | - | - | | - | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Capital expenditure | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Property, plant and equipment | | | | 25,491 | | 25,491 |
| (note 16) | - | - | - | | - | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| Intangible assets (note 17) | | | | 22,237 | | 22,237 |
| | - | - | - | | - | |
| | | | | | | |
+---------------------------------+------------------+-------------------+-------------------+-------------------+-------------------+-------------------+
The group's assets mainly consist of terminals, ATMs and software and are
geographically dispersed across all segments. Following the "merger" of alphyra
and Cardpoint, the assets generate revenue across all business segments and
provide a mix of products and are therefore not distinguishable between the
business segments.
+-----------------------------------------------------------+------------+------------+
| 7 Cost of sales | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Commission payable to retail agents | 106,778 | 28,429 |
+-----------------------------------------------------------+------------+------------+
| Cost of mobile top ups where the | 788,577 | 1,283 |
| group acts as principal | | |
+-----------------------------------------------------------+------------+------------+
| Other | 94,928 | 54,446 |
| | | |
+-----------------------------------------------------------+------------+------------+
| Total cost of sales | 990,283 | 84,158 |
| | | |
+-----------------------------------------------------------+------------+------------+
+-----------------------------------------------------------+------------+------------+
| 8 Employee information | Group |
+-----------------------------------------------------------+-------------------------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Average number of persons employed | | |
+-----------------------------------------------------------+------------+------------+
| Sales and marketing | 218 | 36 |
| | | |
+-----------------------------------------------------------+------------+------------+
| Operations and administration | 603 | 121 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | 821 | 157 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Staff costs during the year (including | | |
| directors) | | |
+-----------------------------------------------------------+------------+------------+
| Wages and salaries | 26,130 | 7,753 |
+-----------------------------------------------------------+------------+------------+
| Social security costs | 3,827 | 737 |
+-----------------------------------------------------------+------------+------------+
| Pension costs (note 26) | 695 | 146 |
+-----------------------------------------------------------+------------+------------+
| Share based payment cost | 3,840 | 2,406 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | 34,492 | 11,042 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| | | 2008 |
| | | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Directors' remuneration | | |
+-----------------------------------------------------------+------------+------------+
| Salaries | | 403 |
+-----------------------------------------------------------+------------+------------+
| Pension | | 33 |
+-----------------------------------------------------------+------------+------------+
| Directors' fees | | 434 |
+-----------------------------------------------------------+------------+------------+
| Compensation for loss of offices | | 1,625 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | | 2,495 |
| | | |
+-----------------------------------------------------------+------------+------------+
Directors' remuneration disclosed for 2008 relates to remuneration paid to
directors of Payzone plc for the period from date of incorporation, being 13
September 2007 to 30 September 2008.
+------------------------------------------------+------------+------------+------------+
| 9 Administrative expenses | | 2008 | 2007 |
| - special items | | EUR'000 | EUR'000 |
+------------------------------------------------+------------+------------+------------+
| | | | |
+------------------------------------------------+------------+------------+------------+
| Restructuring | | 20,774 | - |
| (a) | | | |
+------------------------------------------------+------------+------------+------------+
| Legal action with former | | 4,092 | - |
| directors (b) | | | |
+------------------------------------------------+------------+------------+------------+
| Share option charge | | 2,015 | - |
| (c) | | | |
+------------------------------------------------+------------+------------+------------+
| Goodwill impairment (see | | 149,173 | 49,140 |
| note 10) | | | |
+------------------------------------------------+------------+------------+------------+
| Loss on disposal of | | 3,646 | 2,067 |
| subsidiaries (d) | | | |
+------------------------------------------------+------------+------------+------------+
| | | 179,700 | 51,207 |
| | | | |
+------------------------------------------------+------------+------------+------------+
(a)Restructuring costs
Restructuring costs relate to the costs incurred in the closure of Cardpoint
offices in Blackpool and Frankfurt. Costs also include rebranding, consultancy,
and redundancy costs in relation to the integration of both businesses since 5
December.
The costs include the write down of certain assets which did not meet the
criteria of fair value adjustments on the reverse acquisition of alphyra by
Cardpoint.
(b)Legal action with former directors
On the 16 October 2008 the company settled with the two former directors who had
taken legal action against the company in relation to a legal unfair dismissal
and removal from office. Costs of EUR4.1 million were incurred in respect of
settlements, legal and related costs.
(c) Share option charge
The share option charges result from the acceleration of the vesting period of
Cardpoint share options as a result of the reverse acquisition of alphyra by
Cardpoint.
(d)Loss on disposal of subsidiaries
The group will dispose of its businesses in Spain, France and Italy. The group
has provided for a loss on disposal of EUR3.6 million, including disposal costs,
to write the carrying value of the disposal groups to their recoverable amount.
The assets and liabilities of these businesses were treated as held for resale
under IFRS 5 at year end.
During, the group disposed of its interest in G2 Integrated Solutions Limited
("G2IS"), generating a profit on disposal of EUR0.7 million. Additionally, the
group disposed of its interest in Cardpoint Merchant Services Limited CMS,
generating a loss on disposal of EUR0.6 million. The company was sold for a
consideration of EUR1.03 million.A decision was taken in January 2007, to close
the loss making Netherlands business, generating a loss on closure of EUR2.16
million.
10 Goodwill impairment
The Group tests for impairment annually and also if there is an indication that
assets might be impaired. The Group identified the falling share price,
difficult trading conditions in each segment (as discussed below in more detail
below) and the weakening of Sterling against the Euro, as indicators of
impairment and performed an impairment review across all Cash Generating
Units (CGUs).
The recoverable amount of the CGUs is determined based on a value in use
computation. Where the value in use exceeds the carrying value of the CGU the
asset is not impaired; where the carrying amount exceeds the value in use an
impairment loss is recognised. Estimates used in this process are key judgmental
estimates in the financial statements.
The CGUs represent the lowest level within the group at which goodwill is
monitored for internal management purposes and are not larger than the primary
and secondary segments determined in accordance with IAS 14"Segment Reporting".
The goodwill impairment losses recognised in the income statement as a special
item are as follows:
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Reportable segment | | |
+-----------------------------------------------------------+------------+------------+
| UK and Ireland | 49,341 | 49,140 |
+-----------------------------------------------------------+------------+------------+
| Northern Europe | 83,079 | - |
+-----------------------------------------------------------+------------+------------+
| Southern and Central Europe | 16,753 | - |
| | | |
+-----------------------------------------------------------+------------+------------+
| | 149,173 | 49,140 |
| | | |
+-----------------------------------------------------------+------------+------------+
UK and Ireland
During the year ended 30 September 2008, the goodwill in relation to the group's
operations in the UK and Ireland was impaired by EUR49.3 million following a test
for impairment triggered by the weakening in the value of sterling against the
euro and competitive pressures on prepaid cellular top up transactions.
The impairment loss for the year ended 30 September 2007 of EUR49.1 million in the
UK was made following a test from impairment triggered by a revision of budgeted
performance of some of the group's estates of ATMs.
Northern Europe
During the year ended 30 September 2008 the goodwill in relation to the group's
operations in Northern Europe were impaired by EUR83.1 million, following a test
for impairment triggered by tougher market conditions in the German operations.
Southern Europe
During the year ended 30 September 2008 the goodwill in relation to the group's
operations in Southern and Eastern Europe was impaired by EUR16.8 million,
following a test for impairment triggered by deterioration in revenues in Spain.
Cash generating units
The following cash generating units being the lowest level of asset for which
there are separately identifiable cash flows, have carrying amounts of goodwill
that are, considered significant in comparison with the group's total goodwill
balance:
+-----------------------------------------------------------+------------+-------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+-------------+
| | | |
+-----------------------------------------------------------+------------+-------------+
| UK | 156,329 | 77,989 |
+-----------------------------------------------------------+------------+-------------+
| Ireland | 24,051 | - |
+-----------------------------------------------------------+------------+-------------+
| Northern Europe: | | |
+-----------------------------------------------------------+------------+-------------+
| - Germany | 24,127 | 35,039 |
+-----------------------------------------------------------+------------+-------------+
| - Other CGUs | 16,087 | - |
+-----------------------------------------------------------+------------+-------------+
| Southern and Eastern Europe CGUs | 24,910 | - |
| | | |
+-----------------------------------------------------------+------------+-------------+
| | 245,504 | 113,028 |
| | | |
+-----------------------------------------------------------+------------+-------------+
Key assumptions used in the value in use calculations
The group prepares and internally approves formal three year management plans
for its businesses. For the year ended 30 September 2008, the group used these
plans for its value in use calculations. The plans included cash flow
projections for the trading entities which are expected to have growth rates in
excess of the long term average growth rates, beyond an initial three year
period for the markets in which they operate.
The key assumptions used in determining the value in use are:
+-------------------------------+-------------------------------------------------------------+
| | How determined |
| Assumption | |
+-------------------------------+-------------------------------------------------------------+
| | |
+-------------------------------+-------------------------------------------------------------+
| Cashflows | Managements' estimates of future profitability and working |
| | capital investment is based on historical performance, |
| | together with management's expectation of future trends |
| | affecting the industry and other developments and |
| | initiatives in the business and management's plans for the |
| | future. |
+-------------------------------+-------------------------------------------------------------+
| | |
+-------------------------------+-------------------------------------------------------------+
| | The cash flow forecast for capital expenditure is based on |
| Budgeted | past experience and includes the ongoing capital |
| capital | expenditure required to provide distribution service. |
| expenditure | Capital expenditure includes cash outflows for the purchase |
| | of terminals, ATMs, computer software and computer |
| | equipment in the ordinary course of business. |
+-------------------------------+-------------------------------------------------------------+
| | |
+-------------------------------+-------------------------------------------------------------+
| Long | For the year ended 30 September 2008, these calculations |
| term | are based on financial projections approved by management |
| growth | for a period of 3 years and assuming growth rates of 5% for |
| rate | a further 2 years and between 2% and 3% for the remaining |
| | period. |
| | |
+-------------------------------+-------------------------------------------------------------+
| | |
+-------------------------------+-------------------------------------------------------------+
| | The discount rate applied to the cash flows of each of the |
| Pre-tax | group's CGUs is based on the weighted average cost of |
| discount | capital. Such rates ranged from 11.8% - 12.3%. |
| rate | |
+-------------------------------+-------------------------------------------------------------+
Applying the above techniques, an impairment of goodwill of EUR149.2 million
(2007: EUR49.1 million) has been recognised.
Sensitivity to changes in assumptions
Key assumptions include management's estimates of future profitability, discount
rate, capital expenditure requirements and working capital investment. Forecasts
are generally based on historical performance together with management's
expectation of future trends affecting the industry and other developments and
initiatives in the business and management's plans for the future.
If the pre tax discount rates increased by 100 basis points (ie. 12.8% - 13.3%)
and long term growth rates decreased by 100 basis points (ie. 1% - 2%) the
goodwill impairment charge would increase by EUR60 million.
+-----------------------------------------------------------+-------------+------------+
| 11 Operating loss | Group |
+-----------------------------------------------------------+--------------------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+-------------+------------+
| Operating loss is after charging/(crediting): | | |
+-----------------------------------------------------------+-------------+------------+
| | | |
+-----------------------------------------------------------+-------------+------------+
| Depreciation on property, plant and equipment | 24,399 | 11,343 |
+-----------------------------------------------------------+-------------+------------+
| (Gain)/loss on disposal of property, plant and equipment | (86) | 410 |
+-----------------------------------------------------------+-------------+------------+
| Amortisation of intangible assets | 15,227 | 966 |
+-----------------------------------------------------------+-------------+------------+
| Goodwill impairment | 149,173 | 49,140 |
+-----------------------------------------------------------+-------------+------------+
| Rentals under operating leases: | | |
+-----------------------------------------------------------+-------------+------------+
| - land and buildings | 1,016 | 433 |
+-----------------------------------------------------------+-------------+------------+
| - plant and machinery | 787 | 583 |
+-----------------------------------------------------------+-------------+------------+
| Auditors remuneration | 730 | 144 |
+-----------------------------------------------------------+-------------+------------+
| Research and development | - | - |
+-----------------------------------------------------------+-------------+------------+
| Foreign exchange gain | (3,600) | - |
+-----------------------------------------------------------+-------------+------------+
| Charges in respect of equity settled share based payments | 3,840 | 2,406 |
| | | |
+-----------------------------------------------------------+-------------+------------+
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| 12 Finance costs | | 2008 | 2007 |
| | | EUR'000 | EUR'000 |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| Excluding special items: | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| Interest on bank loans, overdrafts and preference shares | | 25,624 | 8,964 |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| Bank charges | | 683 | |
| | | | - |
| | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| | | 26,307 | 8,964 |
| | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| Special items: | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| Bank arrangement fees | | 3,853 | |
| | | | - |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| Early termination of derivative financial instrument | | 433 | |
| | | | - |
| | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
| | | 4,286 | |
| | | | - |
| | | | |
+----------------------------------------------------------------+---------------+--------------------+--------------------+
Special items include fees in relation to the early termination of Cardpoint's
banking arrangements, which include penalties on the early termination of
derivative financial instruments. The costs also include fees incurred in
relation to the renegotiation of the group's facility agreement including
related, consultancy and legal fees.
+-----------------------------------------------------------+------------+------------+
| 13 Income tax credit/(expense) | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Current tax | 943 | 358 |
+-----------------------------------------------------------+------------+------------+
| Deferred tax liability (note 27 (i)) | (3,226) | - |
+-----------------------------------------------------------+------------+------------+
| Decrease in deferred tax asset (note 27 (ii)) | 97 | - |
| | | |
+-----------------------------------------------------------+------------+------------+
| Income tax (credit)/expense | (2,186) | 358 |
| | | |
+-----------------------------------------------------------+------------+------------+
Notwithstanding that Payzone Plc is Irish tax resident, the majority of the
group's operations are in the United Kingdom. The tax charge on the group's
(loss) before tax differs from the theoretical amount that would arise using the
United Kingdom domestic tax rate applicable to results of the consolidated
companies as follows:
+-------------------------------------------------------------------------------+---------------------+---------------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| | | |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| (Loss) before income tax | (208,110) | (47,106) |
| | | |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| (Loss) multiplied by the standard corporation tax rate of 29% in the | | |
| United Kingdom (2007: UK corporation tax of 30%) | (60,352) | (14,132) |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| | | |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| Effects of: | | |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| Expenses not deductible for tax purposes | 52,550 | 9,356 |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| Utilisation of previously unrecognised tax losses | (182) | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| Differences in effective tax- rates on overseas earnings | (187) | (1,668) |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| Tax losses for which no deferred income tax asset was recognised | 5,985 | 6,802 |
| | | |
+-------------------------------------------------------------------------------+---------------------+---------------------+
| | (2,186) | 358 |
| | | |
+-------------------------------------------------------------------------------+---------------------+---------------------+
14 Earnings per share
Basic and diluted
Basic earnings per share are calculated by dividing the loss attributable to
equity holders of the company by the weighted average number of ordinary shares
in issue during the year.
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | 2008 | 2007 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Loss attributable to equity holders of the company (EUR'000) | (206,386) | (47,464) |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Weighted average number of ordinary shares in issue ('000) | 306,798 | 115,868 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Basic and diluted loss per share (cent per share) * | | |
| | (67c) | (41c) |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
* None of the group's contingently issuable shares were dilutive as they
would have decreased the loss per share in all periods.
The group has followed the guidance in Appendix B to IFRS 3 in calculating the
weighted average number of ordinary shares outstanding (the denominator) during
the period in which the reverse acquisition occurs. As a result for the purposes
of the calculation of the weighted average number of ordinary shares outstanding
during the period;
* the number of ordinary shares outstanding from 1 October 2007 to 5 December 2007
is 115,867,928. i.e. the number of ordinary shares issued by Payzone plc on 5
December 2007 to the former owners of Cardpoint plc; and
* the number of ordinary shares outstanding from 5 December 2007 to 30 September
2008 is the actual number of ordinary shares of Payzone plc that were
outstanding during that period.
For the purposes of the comparative EPS calculation the weighted average number
of ordinary shares outstanding for during the year ended 30 September 2007 has
been deemed to be 115,867,928 i.e. the number of ordinary shares issued by
Payzone plc to the former owners of Cardpoint plc on 5 December 2007.
15 Business combinations
On 5 December 2007, Payzone plc acquired 100% of the share capital of alphyra
holdings Limited and 100% of Cardpoint plc. As described in note 2 the
acquisition of 100% of the share capital of alphyra represents a "common"
control transaction that is outside of the scope of IFRS 3 and has not resulted
in the recognition of fair value adjustments or goodwill in the consolidated
balance sheet of Payzone plc. The acquisition of 100% of Cardpoint was accounted
for as a reverse acquisition of the combined Payzone and alphyra group by
Cardpoint plc based on the guidance in IFRS 3. alphyra is engaged in the
deployment of a network of terminals which process a variety of electronic
transaction services, such as mobile phone top-up, utility top-up and EFT
processing, operating in a number of countries across Europe. The acquired
business contributed revenues of EUR978 million and net loss of EUR7.9 million to
the group for the period from 5 December 2007 to 30 September 2008. If the
acquisition had occurred on 1 October 2007, group revenue would have been EUR1.119
billion and net loss after tax for the group would have been EUR209.4 million.
These amounts have been calculated using the group's accounting policies and by
adjusting the results of the subsidiary to reflect the additional depreciation
and amortisation that would have been charged assuming the fair value
adjustments to property, plant and equipment and intangible assets had applied
from 1 October 2007, together with the consequential tax effects.
Details of net liabilities acquired and goodwill are as follows:
+-----------------------------------------------------------+------------+-------------+
| | | EUR'000 |
+-----------------------------------------------------------+------------+-------------+
| | | |
+-----------------------------------------------------------+------------+-------------+
| Purchase consideration: | | |
+-----------------------------------------------------------+------------+-------------+
| | | |
+-----------------------------------------------------------+------------+-------------+
| Fair values of shares issued to | | 186,982 |
| acquire the alphyra group | | |
+-----------------------------------------------------------+------------+-------------+
| Directs costs relating to the | | 17,165 |
| acquisition | | |
+-----------------------------------------------------------+------------+-------------+
| Total purchase consideration | | 204,147 |
+-----------------------------------------------------------+------------+-------------+
| Fair value of net liabilities | | 105,431 |
| acquired | | |
+-----------------------------------------------------------+------------+-------------+
| Goodwill | | 309,578 |
| | | |
+-----------------------------------------------------------+------------+-------------+
The goodwill is attributable to the workforce of the acquired business, non
contractual customer relationships that did not qualify for separate recognition
as intangible assets, geographical spread and market presence of alphyra and the
significant synergies that were expected to arise after the acquisition of
alphyra.
15 Business combinations - continued
The fair value of the shares issued was based on the quoted market price on 5
December 2007.
Provisional fair values were reported in the Payzone's Interim Report. These
have been finalised following a detailed review in the intervening period.
The assets and liabilities as of 5 December 2007 arising from the acquisition
are as follows:
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | Fair | Fair |
| | Carrying | value | value |
| | | | |
| | amount | adjustment | |
| | | | EUR'000 |
| | EUR'000 | EUR'000 | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Cash and cash equivalents | 10,982 | | 10,982 |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Property, plant and equipment | 35,329 | (854) | 34,475 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Customer relationships (included in intangibles) | | 30,625 | 30,625 |
| | - | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Brand (included in intangibles) | | 3,119 | 3,119 |
| | - | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Software (included in intangibles) | 7,601 | 35,451 | 43,052 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Deferred tax assets | 1,457 | | 1,457 |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Available for sale financial asset | 124 | | 124 |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Investment in associate company | 62 | | 62 |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Inventories | 28,338 | (1,008) | 27,330 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Trade and other receivables | 83,854 | | 83,854 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Borrowings | (159,405) | | (159,405) |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Trade and other payables | (150,083) | | (150,083) |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Provision | (9,603) | (2,306) | (11,909) |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Deferred tax liabilities | (599) | (18,515) | (19,114) |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Net liabilities | (151,943) | 46,512 | (105,431) |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Purchase consideration settled in cash | | | |
| | | | - |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Cash and cash equivalent in subsidiary acquired | | | 10,982 |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Cash flow on acquisition | | | 10,982 |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| 16 Property, plant and equipment | | | | | | |
| | Terminals | Furniture, | Computer | Property | Motor | Total |
| | and | fittings | | and leasehold | | |
| | ATMs | and | equipment | | vehicles | |
| | | | | renovations | | |
| | | equipment | | | | EUR'000 |
| | EUR'000 | | EUR'000 | EUR'000 | EUR'000 | |
| | | EUR'000 | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Group | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Cost | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| At 1 October 2007 | 77,579 | 1,230 | 2,105 | 407 | 236 | 81,557 |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Acquired on acquisition of subsidiary (note 15) | 22,910 | 3,778 | 4,995 | 2,379 | 413 | 34,475 |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Additions | 10,864 | 238 | 5,289 | 5 | 375 | 16,771 |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Transfer to assets held for sale | (7,507) | (460) | (1,195) | (364) | | (9,526) |
| | | | | | - | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Exchange difference | 195 | (6) | (210) | (97) | (24) | (142) |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Disposals | (1,021) | (16) | (3,055) | (12) | (104) | (4,208) |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| At 30 September 2008 | 103,020 | 4,764 | 7,929 | 2,318 | 896 | 118,927 |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Accumulated depreciation | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| At 1 October 2007 | (25,095) | (1,072) | (1,769) | (130) | (177) | (28,243) |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Charge for the year | (19,129) | (463) | (4,488) | (178) | (141) | (24,399) |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Disposals | 827 | 4 | 3,052 | 12 | 104 | 3,999 |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Transfer to assets held for sale | 6,395 | 227 | 1,049 | 263 | | 7,934 |
| | | | | | - | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Exchange difference | (6,162) | (20) | 8 | (43) | (9) | (6,226) |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| At 30 September 2008 | (43,164) | (1,324) | (2,148) | (76) | (223) | (46,935) |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| Net book value | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
| At 30 September 2008 | 59,856 | 3,440 | 5,781 | 2,242 | 673 | 71,992 |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+----------------------+----------------------+----------------------+----------------------+---------------------+
The net book value of assets held under finance leases is EUR3,442 (2007: EURNil).
The cost from ATMs that are rented out under operating leases is EURNil (2007:
EURNil) and the accumulated depreciation EURNil (2007: EURNil).
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| 16 Property, plant and equipment - continued | | | | | | |
| | Terminals | Furniture, | Computer | Property | Motor | Total |
| | and | fittings | | and leasehold | | |
| | ATMs | and | equipment | | vehicles | |
| | | | | renovations | | |
| | | equipment | | | | EUR'000 |
| | EUR'000 | | EUR'000 | EUR'000 | EUR'000 | |
| | | EUR'000 | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Group | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Cost | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| At 1 October 2006 | 63,893 | 1,108 | 2,426 | 158 | 275 | 67,860 |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Acquired on acquisition of subsidiary | 10,533 | | | | 33 | 10,566 |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Additions | 13,987 | 225 | 459 | 254 | | 14,925 |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Disposals of subsidiaries | (5,896) | (71) | (712) | | | (6,679) |
| | | | | - | - | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Disposals | (4,021) | | | | (63) | (4,084) |
| | | - | - | - | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Exchange difference | (1,832) | (32) | (70) | (5) | (7) | (1,946) |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| At 30 September 2007 | 76,664 | 1,230 | 2,103 | 407 | 238 | 80,642 |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Accumulated depreciation | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| At 1 October 2006 | (20,029) | (733) | (2,007) | (44) | (91) | (22,904) |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Charge for the year | (10,303) | (339) | (466) | (86) | (149) | (11,343) |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Disposals | 1,851 | | | | 63 | 1,914 |
| | | - | - | - | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Disposal of subsidiaries | 3,386 | | 704 | | | 4,090 |
| | | - | | - | - | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Exchange difference | 819 | 32 | 55 | 4 | 5 | 915 |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| At 30 September 2007 | (24,276) | (1,040) | (1,714) | (126) | (171) | (27,328) |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| Net book value | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
| At 30 September 2007 | 52,388 | 190 | 389 | 281 | 66 | 53,314 |
| | | | | | | |
+--------------------------------------------------------------------------------------+--------------------+---------------------+---------------------+----------------------+----------------------+--------------------+
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| 17 Goodwill and intangible assets | | | | | |
| | | | Customers | | |
| | Goodwill | Software | relationship/ | Brand | Total |
| | | | contracts | | |
| | EUR'000 | EUR'000 | with | EUR'000 | |
| | | | | | EUR'000 |
| | | | merchants | | |
| | | | | | |
| | | | EUR'000 | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Cost | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 1 October 2007 | 113,028 | | 5,042 | | 118,070 |
| | | - | | - | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Arising on acquisition of subsidiaries | 309,578 | 43,052 | 30,625 | 3,119 | 386,374 |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Additions | | 4,320 | | | 4,320 |
| | - | | - | - | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Exchange difference | (27,929) | (101) | (491) | | (28,521) |
| | | | | - | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Transfer to assets held for sale | (8,815) | (2,240) | (1,194) | (122) | (12,371) |
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 30 September 2008 | 385,862 | 45,031 | 33,982 | 2,997 | 467,872 |
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Amortisation and impairment | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 1 October 2007 | | | (936) | | (936) |
| | - | - | | - | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Impairment loss for the year (note 10) | (149,173) | | | | (149,173) |
| | | - | - | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Charge for the year | | (8,005) | (6,789) | (433) | (15,227) |
| | - | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Exchange difference | | 29 | 67 | | 96 |
| | - | | | - | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Transfer to assets held for sale | | 509 | 166 | 16 | 691 |
| | - | | | | |
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 30 September 2008 | (149,173) | (7,467) | (7,492) | (417) | (164,549) |
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Carrying amount | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 30 September 2008 | 236,689 | 37,564 | 26,490 | 2,580 | 303,323 |
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 30 September 2007 | 113,028 | | 4,106 | | 117,134 |
| | | - | | - | |
| | | | | | |
+-----------------------------------------------------------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| 17 Goodwill and intangible assets - continued | | Contracts | |
| | Goodwill | with | Total |
| | | | |
| | EUR'000 | merchants | |
| | | | EUR'000 |
| | | EUR'000 | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Cost | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 1 October 2006 | 223,609 | | 223,609 |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Arising on business combination | 17,033 | 5,204 | 22,237 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Disposals | (2,780) | | (2,780) |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Exchange difference | (6,850) | (162) | (7,012) |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 30 September 2007 | 231,012 | 5,042 | 236,054 |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Amortisation and impairment | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 1 October 2006 | (74,473) | | (74,473) |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Impairment | (49,140) | | (49,140) |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Amortisation | | (966) | (966) |
| | - | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Disposals | 2,043 | | 2,043 |
| | | - | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Exchange difference | 3,586 | 30 | 3,616 |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 30 September 2007 | (117,984) | (936) | (118,920) |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Carrying amount | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 30 September 2007 | 113,028 | 4,106 | 117,134 |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
18 Investment in associate
(i) Investment in associate undertakings
+----------------------------------------------+--------------+-----------------+----------------------+
| Name | Percentage | Principal | Registered Office |
| | Shareholding | Activities | and |
| | | | Country of |
| | | | Incorporation |
+----------------------------------------------+--------------+-----------------+----------------------+
| | | | |
+----------------------------------------------+--------------+-----------------+----------------------+
| alphyra | 49.1% | Money Transfer | Ireland |
| Rietumu | | | |
| Payment | | | |
| Services | | | |
| Limited | | | |
+----------------------------------------------+--------------+-----------------+----------------------+
On the 1 July 2008, the company was called upon to reinvest further sums into
Rietumu by the shareholders. Both Payzone and Invik Banque SA invested EUR1.1m,
bringing their respective ownerships to 49.1%.
Rietumu was acquired as part of the acquisition of alphyra and has been
accounted for as an associate. The investment does not meet the requirement to
be accounted for as a joint venture under IAS 31 "Interest in Joint Ventures".
* Payzone only has one board member with equal voting right to the other three
board members
* Payzone has no input or participation into the operating or financial decisions
of the company other than attendance monthly board meetings
* Payzone voting rights are in direct proportion to shareholding percentages. It
has no additional rights and none are proposed for the future
* There are no contractual agreements between Payzone and the other shareholders
in relation to operations, strategy or finance of Rietumu.
The accounting year end for alphyra Rietumu Payment Services is to the year end
31 December 2008. Payzone have accounted for alphyra Rietumu Payment Services
Limited for the 12 months to 30 September 2008 in these financial statements.
The movement in investment in associate undertakings is set out below:
+-----------------------------------------------------------+-------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+-------------+------------+
| | | |
+-----------------------------------------------------------+-------------+------------+
| At 1 October 2007 | - | - |
+-----------------------------------------------------------+-------------+------------+
| Acquired on acquisition of | 62 | - |
| subsidiaries | | |
+-----------------------------------------------------------+-------------+------------+
| Investment in associate | 1,100 | |
+-----------------------------------------------------------+-------------+------------+
| Share of loss | (1,162) | - |
| | | |
+-----------------------------------------------------------+-------------+------------+
| At 30 September 2008 | - | - |
| | | |
+-----------------------------------------------------------+-------------+------------+
The group's share of the results of its associate which is unlisted, and its
aggregated assets (including goodwill) and liabilities are as follows:
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Group share of revenue | 165 | - |
| | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Non-current assets | 114 | - |
+-----------------------------------------------------------+------------+------------+
| Cash and cash equivalents | 206 | - |
+-----------------------------------------------------------+------------+------------+
| Other current assets | 315 | - |
+-----------------------------------------------------------+------------+------------+
| Non-current liabilities | (542) | - |
+-----------------------------------------------------------+------------+------------+
| Current liabilities | (305) | - |
| | | |
+-----------------------------------------------------------+------------+------------+
| Share of net (liabilities) | (212) | - |
| | | |
+-----------------------------------------------------------+------------+------------+
+-------------------------------------------------------------------------------+--------------------+--------------------+
| 19 Derivative financial instruments and available for sale financial assets | | |
| | Group | Company |
| | | |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| 30 September 2008 | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Assets as per balance sheet | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Derivative financial instruments - Cash Flow Hedge | 573 | 573 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Available for sale financial asset - unquoted (acquired on acquisition) | 124 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Total assets | 697 | 573 |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Liabilities as per balance sheet | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Derivative financial instruments - Cash Flow Hedge | | |
| | - | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Total | | |
| | - | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| 30 September 2007 | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Assets as per balance sheet | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Derivative financial instruments - Cash Flow Hedge | 304 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Total | 304 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Liabilities as per balance sheet | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Derivative financial instruments - Cash Flow Hedge | | |
| | - | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Total | | |
| | - | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
The derivative financial instruments represent an interest rate swap and an
interest rate collar. The notional principal amounts of the outstanding
contracts at 30 September 2008 were EUR115.56 million (2007: EUR53.8 million). At 30
September 2008 the fixed interest rate was 4.4% (2007: 2.25%) and the main
floating rate was EURIBOR (2007; LIBOR).
+-----------------------------------------------------------+------------+------------+
| 20Investment in subsidiary undertakings | |
| - company | |
+-----------------------------------------------------------+-------------------------+
| | | 2008 |
| | | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| Investment carried at cost: | | |
+-----------------------------------------------------------+------------+------------+
| Opening balance | | - |
+-----------------------------------------------------------+------------+------------+
| Acquired in the period | | 328,387 |
+-----------------------------------------------------------+------------+------------+
| Impairment | | - |
| | | |
+-----------------------------------------------------------+------------+------------+
| Balance at 30 September 2008 | | 328,387 |
| | | |
+-----------------------------------------------------------+------------+------------+
The group's bank borrowings are secured on the share capital of subsidiary
companies (note 25).
(i)Group undertakings
The exemption permitted by the European Communities (Companies: Group Accounts)
Regulations 1992 in relation to disclosing details of subsidiary undertakings
has been availed of. To avoid a statement of excessive length, non trading
subsidiary undertakings have not been disclosed. A full list of subsidiary
undertakings will be annexed to the annual return of the company.
+-------------------------------------------------+-----+---------------------------------------------+
| Principal subsidiary | | |
| undertakings | | |
+-------------------------------------------------+-----+---------------------------------------------+
| | | |
+-------------------------------------------------+-----+---------------------------------------------+
| Name | | Principal activity |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Holdings Limited |(1) | Investment holding company |
+-------------------------------------------------+-----+---------------------------------------------+
| | | |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Group Limited |(1) | Investment holding company, licensor of |
| | | proprietary software and technology and |
| | | provision of management, marketing and |
| | | other services. |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Ireland Limited |(1) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | telecom minutes. |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Electronic Limited |(1) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | telecom minutes. |
+-------------------------------------------------+-----+---------------------------------------------+
| Agentpiece Limited |(2) | Investment holding company |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra UK Limited |(2) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | phone minutes and utility top ups |
+-------------------------------------------------+-----+---------------------------------------------+
| Triton Payment Services |(2) | Supply and maintenance of electronic |
| Limited | | payment terminals and reseller of mobile |
| | | telecom minutes. |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Payment Services |(2) | Cash collection and management of trust |
| Limited | | accounts |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Benelux BV |(3) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | phone minutes |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Nordic AB |(4) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | phone minutes |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra France SAS |(5) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | phone minutes |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Deutschland GmbH |(6) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | phone minutes |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Payment Services |(7) | Supply and maintenance of electronic |
| SAU | | payment terminals and reseller of mobile |
| | | phone minutes |
+-------------------------------------------------+-----+---------------------------------------------+
| alphyra Polska Sp. z.o.o. |(8) | Supply and maintenance of electronic |
| | | payment terminals and reseller of mobile |
| | | phone minutes |
+-------------------------------------------------+-----+---------------------------------------------+
| Cardpoint Group plc |(2) | Intermediate holding company |
+-------------------------------------------------+-----+---------------------------------------------+
| Cardpoint |(2) | Ownership and operation of an independent |
| Services | | estate of ATMs |
| Limited | | |
+-------------------------------------------------+-----+---------------------------------------------+
| Cardpoint |(2) | Ownership and operation of an independent |
| Remote | | estate of ATMs |
| Limited | | |
+-------------------------------------------------+-----+---------------------------------------------+
| Cardpoint GmbH |(6) | Ownership and operation of an independent |
| | | estate of ATMs |
+-------------------------------------------------+-----+---------------------------------------------+
| Cardpoint Technical |(2) | Maintenance and repair of ATMs |
| Services Limited | | |
+-------------------------------------------------+-----+---------------------------------------------+
| Moneybox Limited |(2) | Intermediate holding company |
+-------------------------------------------------+-----+---------------------------------------------+
| Moneybox |(2) | Intermediate holding company |
| Holdings | | |
| Limited | | |
+-------------------------------------------------+-----+---------------------------------------------+
| Moneybox Corporation |(2) | Ownership and operation of an independent |
| Limited | | estate of ATMs |
+-------------------------------------------------+-----+---------------------------------------------+
| Moneybox |(3) | Ownership and operation of an independent |
| Netherlands | | estate of ATMs |
| BV | | |
+-------------------------------------------------+-----+---------------------------------------------+
| Moneybox |(6) | Ownership and operation of an independent |
| Deutschland | | estate of ATMs |
| GmbH | | |
+-------------------------------------------------+-----+---------------------------------------------+
| G2 Limited |(2) | Intermediate holding company |
+-------------------------------------------------+-----+---------------------------------------------+
| Transacsys Limited |(2) | Intermediate holding company |
+-------------------------------------------------+-----+---------------------------------------------+
| Travelex |(2) | Ownership and operation of an independent |
| ATMs | | estate of ATMs |
| Limited | | |
+-------------------------------------------------+-----+---------------------------------------------+
20 Investment in subsidiary undertakings - continued
(i)Group undertakings - continued
Country of incorporation and operation
+------+-----------------------------------------------------------------------+
| (1) | Incorporated in the Republic of Ireland |
+------+-----------------------------------------------------------------------+
| (2) | Incorporated in the United Kingdom |
+------+-----------------------------------------------------------------------+
| (3) | Incorporated in the Netherlands |
+------+-----------------------------------------------------------------------+
| (4) | Incorporated in Sweden |
+------+-----------------------------------------------------------------------+
| (5) | Incorporated in France |
+------+-----------------------------------------------------------------------+
| (6) | Incorporated in Germany |
+------+-----------------------------------------------------------------------+
| (7) | Incorporated in Spain |
+------+-----------------------------------------------------------------------+
| (8) | Incorporated in Poland |
+------+-----------------------------------------------------------------------+
All subsidiaries listed are wholly owned with the exception of Moneybox
Netherlands BV (51%) and Transacsys Limited (94%).
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| 21 Trade and other receivables | Group | |
| | | Company |
+----------------------------------------------------------------+------------------------------------------+--------------------+
| | 2008 | 2007 | 2008 |
| | EUR'000 | EUR'000 | EUR'000 |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| Trade receivables | 86,031 | 3,431 | |
| | | | - |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| Less provision for impairment of trade receivables | (5,433) | | |
| | | - | - |
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| Trade receivable net | 80,598 | 3,431 | |
| | | | - |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| Prepayments and accrued income | 7,596 | 1,474 | 107 |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| VAT receivables | | | 406 |
| | - | - | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| Other debtors | 3,442 | 2,917 | |
| | | | - |
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| | 91,636 | 7,822 | 513 |
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
All receivables are due within twelve months from the balance sheet date.
The fair value of trade and other receivables approximate to the values
shown above.
Included in receivables is an amount of EUR28 million, which is collectable by the
group in its capacity as agent and payable to mobile phone operators.
The contractual terms of receivables vary from 7 - 30 days. Management regard
receivables due within 30 days as current. As of 30 September 2008, trade
receivable of EUR18,953,000, (2007: EURNil) were past due. These relate to a number
of independent customers from whom there is no history of default. The ageing
analysis of these trade receivables is shown below:
21 Trade and other receivables - continued
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Group | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| 1 - 3 months overdue | 12,538 | |
| | | - |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| 3 to 6 months overdue | 135 | |
| | | - |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Over 6 months overdue | 6,280 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | 18,953 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
As of 30 September 2008, trade receivable of EUR5,432,623, (2007: EURNil) were
impaired, and these were provided for in full. The individually impaired
receivables are assessed to be so, based on their age profile, and in some cases
on a dispute as to the customer's contractual obligation to pay. All of those
receivables were aged between 3 and 12 months.
Movements on the group provision for impairment of trade receivables are as
follows:
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Group | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| At 30 September 2007 | | |
| | - | - |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Amounts used during the year | (380) | |
| | | - |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Amounts recovered during the year | (772) | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Exchange adjustment | (15) | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Transfer to assets held for sale | (1,353) | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Provision for receivables impairment | 4,876 | |
| | | - |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Acquired on acquisition of subsidiaries | 3,077 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| At 30 September 2008 | 5,433 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
The other classes within trade and other receivables do not contain impaired
assets. The maximum exposure to credit risk at the reporting date is the
carrying value of each receivable mentioned above.
Company
The company holds an amount of EUR264 million in relation to receivables due from
subsidiary undertakings. The full amount of these receivables are considered
impaired and have been fully provided for in the company's financial statements
at 30 September 2008.
+-----------------------------------------------------------+-------------+------------+
| 22 Inventories | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+-------------+------------+
| | | |
+-----------------------------------------------------------+-------------+------------+
| Goods for resale | 22,476 | 652 |
+-----------------------------------------------------------+-------------+------------+
| Less: inventory provision | (3,694) | - |
| | | |
+-----------------------------------------------------------+-------------+------------+
| Goods for resale - net | 18,782 | 652 |
| | | |
+-----------------------------------------------------------+-------------+------------+
There is no material difference between the replacement cost of inventory and
the balance sheet amounts. Inventories include credit card and prepaid terminals
held for resale of EUR2.7 million (2007: EURNil).
23 Restricted cash
The restricted cash balance relates to balances held in trust in respect of
certain creditors. This cash is held in a separate trust account and can only be
used to make payments in respect of the related creditor balances. The related
creditors are included in trade payables.
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| 24 Trade and other payables | Group | |
| | | Company |
+----------------------------------------------------------------+-----------------------------------------+--------------------+
| | 2008 | 2007 | 2008 |
| | EUR'000 | EUR'000 | EUR'000 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Amounts owed in respect of client cash (i) | 17,072 | | |
| | | - | - |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Other trade payables | 144,552 | 14,107 | 1,692 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Trade payables | 161,624 | 14,107 | 1,692 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Social security and other taxes | 1,225 | 285 | |
| | | | - |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Amounts owed to subsidiary undertakings | | | 619 |
| | - | - | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Accruals and deferred income | 35,388 | 8,672 | 8,558 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Other payables | 1,464 | 7,092 | |
| | | | - |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | 199,701 | 30,156 | 10,869 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
(i)Client cash relates to monies collected on behalf of clients where the
group has title to the funds. An equivalent balance is included within cash and
cash equivalents.
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | Group | |
| | | Company |
+----------------------------------------------------------------+-----------------------------------------+--------------------+
| Social security and other tax | 2008 | 2007 | 2008 |
| | EUR'000 | EUR'000 | EUR'000 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| PAYE and PRSI | 966 | 285 | |
| | | | - |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| VAT payable | 259 | | |
| | | - | - |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | 1,225 | 285 | |
| | | | - |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
The fair value of trade and other payables approximate to the values shown
above.
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| 25 Borrowings | Group | |
| | | Company |
+----------------------------------------------------------------+-----------------------------------------+--------------------+
| | 2008 | 2007 | 2008 |
| | EUR'000 | EUR'000 | EUR'000 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Non-current liability | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Preference shares | 5,429 | | 5,429 |
| | | - | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Bank borrowings | 271,355 | 109,768 | 271,355 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Obligations under finance leases | 1,678 | | |
| | | - | - |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | 278,462 | 109,768 | 276,784 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Current liability | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Bank overdrafts | 250 | 1,043 | |
| | | | - |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Bank borrowings | 13,167 | 6,679 | 13,167 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Obligations under finance leases | 1,534 | | |
| | | - | - |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | 14,951 | 7,722 | 13,167 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Total borrowings | 293,413 | 117,490 | 289,951 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
25 Borrowings - continued
Preference shares
On 22 May 2008, Payzone plc issued 5,500,000 convertible preference shares at EUR1
each. The key terms of the Convertible Preference Shares are as follows:
Dividend:
7% annual PIK dividend is payable through the issue of 0.07 additional
new Convertible Preference Shares on an annual basis for each New Convertible
Preference Share then held.
Holder Conversion:
The preference shareholder may convert their holdings into Ordinary Shares from
40 days following the date of issue and thereafter at any time at a fixed
conversion rate (which is subject to adjustment for anti-dilution only).
Payzone Forced Conversion:
The company has the right to require the preference shareholders to convert the
Convertible Preference Shares at any time after the third anniversary plus 14
days of the date of issue into Ordinary Shares if, for a period of 20 out of 30
consecutive active dealing days, the share price of an Ordinary Share converted
to Euros at the prevailing exchange rate, equals or exceeds 125% of the
prevailing conversion price, at the fixed conversion rate (which is subject to
adjustment for anti-dilution only).
Payzone Optional Redemption:
The company has the right to redeem all (but not some only) of the Convertible
Preference Shares at any time after the tenth anniversary of the date of issue
of the initial New Convertible Preference Shares at the issue price.
Change of Control:
In the event of change in control, a preference shareholder may elect to redeem
their holding of New Convertible Preference Shares at 125% of their issue price,
or convert their holding into Ordinary Shares at a fixed conversion ratio. If a
preference shareholder does not so redeem or convert their Convertible
Preference Shares on a change of control, the company is entitled to redeem the
Convertible Preference Shares at 125% of the issue price.
Maturity:
The Convertible Preference Shares are perpetual, subject to the conversion and
redemption rights.
In accordance with IAS 32, the full amount of the preference shares (net of
transaction costs incurred) has been classified as a financial liability because
the company does not have the unconditional right to avoid delivering cash (on
the occurrence of a change in control).
The finance cost on the preference shares is calculated using the effective
interest rate method, applying the effective interest rate of 8.2%.
25 Borrowings - continued
Bank borrowings
The Group has entered into a senior multicurrency term and revolving facilities
agreement with The Royal Bank of Scotland plc for EUR332 million on the 5 December
2007. Following trading difficulties as highlighted in the company's interim
statement and a breach of banking covenants as at 31 March 2008 which resulted
in the debt becoming repayable on demand as at that date, the company entered
into discussions with its banking syndicate to increase the flexibility under
its facility arrangement through a resetting of covenants. These discussions
have led to changes to the commercial terms of the original facility agreement.
These changes took place in June 2008, and have reduced the facility to
EUR320 million and have added margins to the term facilities. At 30 September
2008, the group has drawn down EUR295 million of this facility. The latest
repayment date in respect of this facility is 30 September 2013. All facilities
are secured by debenture giving Royal Bank of Scotland plc security over certain
assets of the Group.
Interest is paid at EURIBOR, the mandatory cost rate and a margin between
3%-3.5%. The Group entered into a 3 year hedging agreement to protect itself
from interest rate fluctuations. Further details of the swap are detailed in
notes 19 and 41 to the financial statements.
Unamortised issue costs of EUR6,549,271(2007: EURNil) have been netted against
outstanding bank loans and are being amortised to the income statement on an
effective interest rate basis.
The fair values of the bank borrowings, denominated in Euro, approximate to
the values shown above.
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Maturity profile of bank borrowings | Group | |
| | | Company |
+----------------------------------------------------------------+-----------------------------------------+--------------------+
| | 2008 | 2007 | 2008 |
| | EUR'000 | EUR'000 | EUR'000 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Bank borrowings are repayable as follows: | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Bank overdraft | 250 | 1,043 | |
| | | | - |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| Within one year | 13,167 | 6,679 | 13,167 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| After one but within two years | 19,168 | 8,880 | 19,168 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| After two but within five years | 54,659 | 49,028 | 54,659 |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| After five years | 197,528 | 51,860 | 197,528 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
| | 284,772 | 117,490 | 284,522 |
| | | | |
+----------------------------------------------------------------+--------------------+--------------------+--------------------+
Bank overdraft
The group's bank overdraft facilities are part of the overall facility from
Royal Bank of Scotland plc which is secured by certain assets of Group. The
fair value of the bank overdrafts approximates to the values shown above. The
overdraft was subject to per annum interest charges ranging from 6% to 12%
during 2008.
Finance leases
Finance leases relate to motor vehicles and office equipment with lease terms of
between 3 and 5 years. The Group has options to purchase the equipment for a
nominal amount at the conclusion of the lease agreements. The Group's
obligations under finance leases are secured by the lessors' title to the leased
assets.
The fair value of the finance lease liabilities is approximately equal to their
carrying amount.
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| | Minimum lease payment | Present value of minimum |
| | | lease payments |
+------------------------------------------------+------------------------------------------+-----------------------------------------+
| | 2008 | 2007 | 2008 | 2007 |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| | | | | |
| | EUR'000 | EUR'000 | EUR'000 | EUR'000 |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| Not later than 1 year | 1,667 | | 1,534 | |
| | | - | | - |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| Later than 1 year and not later | | | | |
| than 5 years | 1,738 | | 1,678 | |
| | | - | | - |
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| | 3,405 | | 3,212 | |
| | | - | | - |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| Less future finance charges | (193) | | | |
| | | - | - | - |
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
| Present value of minimum lease | | | | |
| payments | 3,212 | | 3,212 | |
| | | - | | - |
| | | | | |
+------------------------------------------------+---------------------+--------------------+--------------------+--------------------+
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| | | Present value of minimum |
| | | lease payments |
+------------------------------------------------+-------------------------------+-----------------------------------------+
| | | | 2008 | 2007 |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| | | | | |
| | | | EUR'000 | EUR'000 |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| | | | | |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| Included in the financial | | | | |
| statements as: | | | | |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| Current borrowings | | | 1,534 | |
| | | | | - |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| Non-current borrowings | | | 1,678 | |
| | | | | - |
| | | | | |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
| | | | 3,212 | |
| | | | | - |
| | | | | |
+------------------------------------------------+---------------+---------------+--------------------+--------------------+
26Pension cost
The group administers a defined contribution scheme for the benefit of its
employees. Employees make contributions to the plan and the group has the
discretion to match these contributions. Contributions are charged to the Income
Statement in the period they are incurred.
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Income statement charge: | | |
+-----------------------------------------------------------+------------+------------+
| - pension costs | 695 | 146 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | 695 | 146 |
| | | |
+-----------------------------------------------------------+------------+------------+
The charge of EUR695,000 (2007: EUR146,000) was included in administrative expenses.
There is an accrual of EUR11,000 for pension contributions at the balance sheet
date (2007: EUR36,000).
+-------------------------------------------------------------------------------+---------------------+--------------------+
| 27 Deferred income tax | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| (i)Deferred tax liabilities | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| At 1 October 2007 | 1,143 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Exchange differences | (117) | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Acquisition of subsidiary (note 15) | 19,114 | 1,143 |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Income statement credit (note 13) | (3,226) | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| At 30 September 2008 | 16,914 | 1,143 |
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
The deferred tax arising on the acquisition of the alphyra group (note 15) is
mainly as a consequence of fair value adjustments on acquisition to recognise
intangible assets in that business.
+-------------------------------------------------------------------------------+----------------------+--------------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| (ii) Deferred tax asset | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| At 1 October 2007 | | |
| | - | - |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Acquired on acquisition of subsidiary | 1,457 | |
| | | - |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Income statement charge (note 13) | (97) | |
| | | - |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| Transfer to assets held for sale | (788) | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
| At 30 September 2008 | 572 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+----------------------+--------------------+
The deferred tax asset arises on temporary differences between net book values
and tax written down values of certain assets.
The group has losses forward of EUR58 million arising from trading losses and
accelerated depreciation in the UK subsidiaries. No deferred tax asset has been
recognised in respect of such losses.
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| 28 Provisions for other | Onerous lease | | | | |
| liabilities and charges | | Deferred | Onerous | Other | Total |
| | | | | | |
| | | contingent | contract | | |
| | | consideration | | | |
| | EUR'000 | | | | |
| | | claims | | EUR'000 | EUR'000 |
| | | | EUR'000 | | |
| | | EUR'000 | | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| | | | | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 30 September 2007 | | | 6,494 | | 6,494 |
| | - | - | | - | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Charged/(credited) to the | | | | | |
| income statement: | | | | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| - additional | 345 | | | 2,900 | 3,245 |
| provisions | | | - | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| - unused amounts | | | | | |
| reversed | | | (512) | | (512) |
| | - | - | | - | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| - unwinding of | | 856 | | | 856 |
| discount | - | | - | - | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Used during year | | (4,577) | (1,465) | (360) | (6,402) |
| | - | | | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Provisions acquired | | | | | |
| through business combinations | | 11,649 | | 260 | 11,909 |
| | - | | - | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| Exchange differences | | | (764) | | (764) |
| | - | - | | - | |
| | | | | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
| At 30 September 2008 | 345 | 7,928 | 3,753 | 2,800 | 14,826 |
| | | | | | |
+---------------------------------+--------------------+---------------------+---------------------+---------------------+---------------------+
28 Provisions for other liabilities and charges - continued
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Analysis of total provisions: | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Non-current | 6,993 | 6,494 |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| Current | 7,833 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
| | 14,826 | 6,494 |
| | | |
+-------------------------------------------------------------------------------+--------------------+--------------------+
(a)Onerous lease
The onerous lease provision is in respect of vacation of the Blackpool offices
following the restructuring in the United Kingdom.
(b) Deferred Contingent Consideration
Total deferred acquisition consideration amounts to EUR7,928,000 (2007: EURnil) and
represents provision for the net present value of the amounts expected to be
payable in respect of acquisitions which are subject to earn out arrangements.
(c)Onerous contract
In the year ended 30 September 2007, following the acquisition of Travelex, a
fair value provision of EUR6,494,000 was provided for onerous contract losses
associated with a customer contract.
During the year EUR1,465,000 of the provision was utilised while a further
EUR512,000 was released to the income statement on the basis that the losses are
expected to be less than originally anticipated.
(d) Other
Other represents provisions for various legal cases and professional fees. No
disclosure is being made in relation to these as to do so may be prejudicial to
the outcome.
29Assets and liabilities of disposal groups held for sale
At the year end, the group had entered into an agreement to dispose of its
French, Italian and Spanish businesses (the disposal groups). This deal
completed on 31 October 2008 subject to competition approval in France. The
sale is part of a change in strategic focus for the Group as management made the
decision to concentrate on the key business markets in which Payzone operate and
which will continue to offer significant growth to the Group.
The total proceeds for the disposal groups is EUR20 million, of which
EUR13.2 million will be received in cash and EUR6.7 million by way of assignment of
financial guarantees. As part of the transaction inter-company balances of EUR4.3
million owed to Payzone plc are to be written off.
The disposal groups have been treated as "held for sale" in the financial
statements in accordance with IFRS 5 "Non-Current assets held for sale and
discontinued operations". The disposal groups are part of the Northern and
Southern Europe segments as disclosed in the Segmental Reporting information in
note 6. On initial reclassification of these operations as held for sale, the
Group has recognised impairment losses of EUR2.9 million.
29Assets and liabilities of disposal groups held for sale - continued
The major classes of assets and liabilities comprising the operations classified
as held for sale at the balance sheet date are as follows:
+-------------------------------------------------------------------------------+---------------------+--------------------+
| | Group |
+-------------------------------------------------------------------------------+------------------------------------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Property, plant and equipment | 1,592 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Intangible assets | 2,865 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Goodwill | 8,815 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Inventories | 953 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Trade and other receivables | 16,245 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Cash and cash equivalents | 1,659 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Current tax asset | 62 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Deferred tax | 788 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Impairment provision | (2,935) | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Assets of a disposal group held for sale | 30,044 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Bank overdraft | 755 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Borrowings | 76 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Trade and other payables | 14,677 | |
| | | - |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Provisions | 5,533 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
| Liabilities of a disposal group held for sale | 21,041 | |
| | | - |
| | | |
+-------------------------------------------------------------------------------+---------------------+--------------------+
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| 30 Share capital | | | |
| | Share | Share | Total |
| | | | |
| Group | capital | premium | 2008 |
| | 2008 | 2008 | EUR'000 |
| | EUR'000 | EUR'000 | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| (a) Share capital and share premium | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 1 October 2007 | 8,296 | 132,617 | 140,913 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Ordinary shares issued in Cardpoint plc | 244 | 868 | 1,112 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Ordinary shares issued in Payzone plc | 6,003 | 347,954 | 353,957 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Transfer to reverse acquisition reserve (Note 31) | (8,540) | (133,485) | (142,025) |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| Share Issue costs | | (1,114) | (1,114) |
| | - | | |
| | | | |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
| At 30 September 2008 | 6,003 | 346,840 | 352,843 |
+----------------------------------------------------------------+---------------------+---------------------+---------------------+
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| | | | |
| | Share | Share | Total |
| | | | |
| | capital | premium | 2007 |
| | 2007 | 2007 | EUR'000 |
| | EUR'000 | EUR'000 | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| At 1 October 2006 | 7,786 | 130,468 | 138,254 |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| Ordinary shares issued in Cardpoint plc | 510 | 2,149 | 2,659 |
| | | | |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
| At 30 September 2007 | 8,296 | 132,617 | 140,913 |
+----------------------------------------------------------------+---------------------+--------------------+--------------------+
30 Share capital - continued
(a) Share capital and share premium - continued
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
| Company | Number | | | |
| | of | Share | Share | Total |
| | | | | |
| | Shares | capital | premium | 2008 |
| | 2008 | 2008 | 2008 | EUR'000 |
| | | EUR'000 | EUR'000 | |
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
| | | | | |
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
| At 13 September 2007 | | | | |
| | - | - | - | - |
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
| Ordinary shares issued in Payzone | 440,692,735 | 6,003 | 347,954 | 353,957 |
| plc | | | | |
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
| Share Issue costs | | | (1,114) | (1,114) |
| | - | | | |
| | | | | |
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
| At 30 September 2008 | 440,692,735 | 6,003 | 346,840 | 352,843 |
+------------------------------------------------+--------------------+--------------------+---------------------+---------------------+
The total authorised number of ordinary shares is 1,000,000,000 ordinary shares
of GBP0.01 each, 12,000,000 deferred shares of EUR0.01 each, 10,000,000 'A' shares
of EUR0.01 each and 12,000,000 convertible preference shares of EUR0.01 each. All
issued shares are fully paid up.
The ordinary shares may be issued with such preferential, qualified and other
special rights, privileges or condition, whether in regard to dividend, voting,
return of capital or otherwise, as the company may from time to time direct by
Ordinary Resolution. No such special rights have been issued in respect of
these shares to date.
(b)Share options
At 1 October 2007 Cardpoint plc operated seven share incentive arrangements as
follows:
(a) the Cardpoint Employee Share Option Schemes, comprising the Cardpoint plc
Company Share Option Schemes, comprising the Cardpoint plc Company share
ownership plan, as approved by HMRC, and the Cardpoint plc Unapproved Employee
Share Option Scheme.
(b) the Cardpoint plc Unapproved Employee Share Option Scheme 2002;
(c) the EMI option agreements
(d) individual Share Option Awards to Philip Lanigan and Paul Saxton,
governed by the rules of the Cardpoint plc unapproved Employee share option
scheme.
(e)an Option Agreement and a Subscription Agreement with Bob Thian
(f) the Cardpoint plc Long Term Incentive Plan (LTIP) and
(g)LTIP Individual Award to Rudolf Tale - Yadzi.
At 1 October 2007, there were unexercised options, awards and subscriptions
rights outstanding under the Cardpoint Incentive Schemes to subscribe for an
aggregate of 8.7m Cardpoint ordinary shares.
Vesting conditions attaching to the schemes are based on service condition for
all schemes and performance conditions (e.g. EPS targets) for some schemes.
As a result of the reverse acquisition, options and subscription rights became
exercisable in full. As an alternative to exercising their options the
participants were offered the opportunity to roll over their options into
equivalent rights in the Cardpoint Incentive Schemes relating to Payzone shares
(Rollover Option). The value of the Payzone shares and the total exercise price
of Rollover Option immediately after the exchange were equal to the value of the
Cardpoint shares and the exercise price of the option under the relevant
Cardpoint Incentive Schemes immediately before the exchange.
30 Share capital - continued
(b)Share options - continued
The movements on the various share incentive schemes are set out below:
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| | | | EMI | | Option | Long | (LTIP) | Total |
| | Cardpoint | Cardpoint | | Individual | agreement | Term | | |
| | | | | Option | and | | Individual | |
| | Employee | Employee | | awards | Subscription | Incentive | Award | |
| | Share | Share | | (Philip | Agreement | Plan | (Rudolf | |
| | Option | Option | | Lanigan | (Bob Thian) | (LTIP) | Tale - | |
| | Scheme | Scheme | | and | | | Yadzi) | |
| | (CSOP | 2002 | | Paul | | | | |
| | and | | | Saxton) | | | | |
| | | | | | | | | |
| | unapproved) | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| | | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| As at 1 October | 1,783,049 | 100,000 | 131,951 | 2,000,000 | 2,400,000 | 1,828,285 | 500,000 | 8,743,285 |
| 2007 | | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| Exercised prior to | (810,000) | (100,000) | - | - | (2,400,000) | (165,364) | - | (3,475,364) |
| 5 December 2007 | | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| Exercised on 6 | - | - | - | - | - | (203,906) | - | (203,906) |
| December 2007 | | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| Lapsed | (223,049) | - | (6,951) | (2,000,000) | - | (264,082) | - | (2,494,082) |
| | | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
| As at 30 September | 750,000 | - | 125,000 | - | - | 1,194,933 | 500,000 | 2,569,933 |
| 2008 | | | | | | | | |
+------------------------------------------+---------------+-------------+-------------+---------------+---------------+---------------+-------------+---------------+
30 Share capital - continued
(b)Share options - continued
At 30 September 2008, the following share options which had been granted by
Cardpoint plc, at market value, to certain employees and shareholders were
rolled over into Payzone plc options and remained outstanding:
+------------------------------------+----------------+--------------------------------+
| Number of shares | Option price | Exercise period |
| | per share | |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| Unapproved | GBP | |
| Scheme options | | |
+------------------------------------+----------------+--------------------------------+
| 130,000 | 0.93 | 22 December 2003 to 22 |
| | | December 2013 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| 190,000 | 1.25 | 26 May 2004 to 26 May 2017 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| 185,000 | 1.15 | 30 December 2004 to 30 |
| | | December 2017 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| 20,680 | 0.71 | 28 December 2005 to 28 |
| | | December 2018 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| EMI Scheme | | |
| options | | |
+------------------------------------+----------------+--------------------------------+
| 85,000 | 0.59 | 10 July 2003 to 10 July 2016 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| 40,000 | 0.93 | 22 December 2003 to 22 |
| | | December 2016 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| CSOP Options | | |
+------------------------------------+----------------+--------------------------------+
| 224,320 | 0.71 | 28 December 2005 to 28 |
| | | December 2018 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| LTIPS | | |
+------------------------------------+----------------+--------------------------------+
| 1,659,046 | 0.92 | 24 May 2007 to 24 May 2020 |
+------------------------------------+----------------+--------------------------------+
| | | |
+------------------------------------+----------------+--------------------------------+
| 35,887 | 0.05 | 29 March 2006 to 29 March 2019 |
+------------------------------------+----------------+--------------------------------+
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| | 2008 | 2007 |
+------------------------------------------------+----------------------------------------+----------------------------------------+
| | Number | | Number | |
| | of | Weighted | of | Weighted |
| | | | | |
| | options | average | options | average |
| | | exercise | | exercise |
| | | price | | price |
| | | | | |
| | | pence | | pence |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| | | | | |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Outstanding on 1 October | 8,743,285 | 61.15 | 6,537,125 | 34.94 |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Granted | | | 6,164,852 | 67.95 |
| | - | - | | |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Lapsed | (2,494,082) | 89.29 | (525,352) | 104.79 |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Exercised prior to 5 December | (3,475,364) | 22.87 | (3,433,340) | 16.77 |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Exercised on 6 December | (203,906) | 5.00 | | |
| | | | - | - |
| | | | | |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Outstanding on 30 September | 2,569,933 | 92.17 | 8,743,285 | 61.15 |
| | | | | |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| | | | | |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
| Exercisable on 30 September | 1,621,840 | 92.70 | 885,000 | 80.32 |
| | | | | |
+------------------------------------------------+-------------------+--------------------+-------------------+--------------------+
Options were exercised prior to the merger and immediately after the merger was
completed and the average share price for the year was 32.58 pence.
The options outstanding at 30 September 2008 have a weighted average remaining
contractual life of 1.66 years. The exercise price of these options ranged from
5.00 pence to 1.25 pound.
30 Share capital - continued
(b)Share options - continued
Risk-free rate
The risk-free rate is the yield to maturity on the date of grant of a UK Gilt
Strip, with term to maturity equal to the expected life of the option.
Expected life
It was assumed that options would be exercised within a two year period
following the date when they first vest.
Share based payments
The fair values of share options granted were charged to the income statement
over the relevant vesting period, adjusted to reflect actual and expected
vesting levels.
30 Share capital - continued
Share based payments - continued
A summary of the fair value and pricing model inputs for all the share option
awards that fall under the IFRS 2 accounting charge is set out below:
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | Original | Share | Exercise | Fair | Vesting | Expected | Risk | |
| Date | number | Price | price | value on | period | life | free | Volatility |
| of | granted | on grant | pence | grant | years | years | rate | % |
| grant | | date | | date | | | % | |
| | | pence | | pence | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Unapproved scheme options | | | | | | | |
+-----------------------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 623,049 | 93.50 | 93.50 | 42.76 | 3 | 5 | 4.67 | 44.96 |
| 22 | | | | | | | | |
| Dec | | | | | | | | |
| 2003 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 425,000 | 125.00 | 125.00 | 66.46 | 3 | 5 | 5.16 | 44.09 |
| 26 | | | | | | | | |
| May | | | | | | | | |
| 2004 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 400,000 | 115.50 | 115.50 | 50.86 | 3 | 5 | 4.53 | 42.80 |
| 30 | | | | | | | | |
| Dec | | | | | | | | |
| 2004 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 21,360 | 71.75 | 71.75 | 35.24 | 3 | 5 | 4.15 | 51.11 |
| 28 | | | | | | | | |
| Dec | | | | | | | | |
| 2005 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| EMI scheme options | | | | | | | |
+-----------------------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 456,132 | 62.50 | 59.50 | 30.60 | 3 | 5 | 3.82 | 49.47 |
| 10 | | | | | | | | |
| Jul | | | | | | | | |
| 2003 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 211,951 | 93.50 | 93.50 | 42.76 | 3 | 5 | 4.67 | 44.96 |
| 22 | | | | | | | | |
| Dec | | | | | | | | |
| 2003 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| CSOP options | | | | | | | |
+-----------------------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 313,640 | 71.75 | 71.75 | 35.24 | 3 | 5 | 4.15 | 51.11 |
| 21 | | | | | | | | |
| Dec | | | | | | | | |
| 2005 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
| LTPS | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 1,577,821 | 92.00 | 5.00 | 63.15 | 3 | 3 | 4.47 | 49.86 |
| 29 | | | | | | | | |
| Mar | | | | | | | | |
| 2006* | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 1,764,852 | 94.00 | 92.25 | 36.20 | 3 | 3 | 5.40 | 48.03 |
| 24 | | | | | | | | |
| May | | | | | | | | |
| 2007 | | | | | | | | |
+-------------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
Awards with only service conditions attaching have been valued using the
Black-Scholes pricing model.
Expected volatility
The volatility of the Cardpoint's share price on each date of grant was
calculated as the average of the standard deviations of daily continuously
compounded returns on the Company's stock, calculated back from the date of
grant to 7 June 2002, which was the date of admission to trading on AIM.
* The above awards are based upon achievement of total shareholder return
("TSR") performance targets over a three year period set against the TSR
achieved by a comparator group of companies. As a result, the Monte Carlo
pricing model was deemed to be the most appropriate pricing model to be used to
calculate the fair values under these awards. All other awards are not subject
to any performance measure and the Black-Scholes pricing model has been used for
these awards.
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| 31 Other reserves | Other | | | | | Minority | Total |
| | reserve | Reverse | Hedging | Translation | Retained | Interest | EUR'000 |
| | EUR'000 | | | reserve | losses | EUR'000 | |
| | | acquisition | reserve | EUR'000 | EUR'000 | | |
| | | reserve | EUR'000 | | | | |
| | | EUR'000 | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| (a) Group | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Balance at 1 October 2006 | 522 | - | 493 | - | (60,286) | 155 | (59,116) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Cash flow hedge: | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - Fair value gains in year | - | - | 304 | - | - | - | 304 |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - Transfer to finance costs | - | - | (493) | - | - | - | (493) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Loss for the year | - | - | - | - | (47,464) | - | (47,464) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Credit for equity settled | - | - | - | - | 2,412 | - | 2,412 |
| share based payments | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Exchange differences on | - | - | - | (526) | - | - | (526) |
| translating foreign operations | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Balance at 30 September 2007 | 522 | - | 304 | (526) | (105,338) | 155 | (104,883) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Transfer to reverse | (522) | 136,064 | | 6,483 | | | 142,025 |
| acquisition reserve | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Loss for the financial year | - | - | | - | (206,386) | 462 | (205,924) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Exchange differences on | - | - | (35) | (33,838) | | | (33,873) |
| translating foreign operations | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Credit for equity settled | | | | | 3,840 | - | 3,840 |
| share based payments | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Issue of shares - Payzone plc | - | (124,028) | | - | | | (124,028) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Cash flow hedge: | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - Fair value gains in year | - | - | 608 | - | - | - | 608 |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - Transfers to finance costs | - | - | (304) | - | - | - | (304) |
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Balance at 30 September 2008 | - | 12,036 | 573 | (27,881) | (307,884) | 617 | (322,539) |
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| (b) Company | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Balance at 13 September 2007 | | | - | | - | | - |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Loss for the financial year | | | - | | (307,724) | | (307,724) |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Cash flow hedge - fair value | | | 573 | | - | | 573 |
| fairs in the period | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Balance at 30 September 2008 | | | 573 | | (307,724) | | (307,151) |
| | | | | | | | |
+------------------------------------------------------+------------+---------------+------------+--------------+---------------+------------+---------------+
31 Other reserves - continued
Reverse acquisition reserve
The reverse acquisition reserve arises on the difference between the fair value
of shares issued by Payzone plc to acquire Cardpoint plc less the book value of
the net assets of Cardpoint plc at 5 December 2007, in accordance with IFRS 3.
Hedging reserve
The hedging reserve represents hedging gains and losses recognised on the
effective portion of cash flow hedges.The cumulative deferred gain or loss on
the hedge is recognised in profit or loss when the hedged transaction impacts
the profit or loss, or is included as a basis adjustment to the
non-financial hedged item, consistent with the applicable accounting policy.
Translation reserve
Exchange differences relating to the translation from the functional currencies
of the Group's foreign subsidiaries into the presentation currency are brought
to account by entries made directly to the foreign currency translation reserve.
+-----------------------------------------------------------+------------+------------+
| 32Cash and cash equivalents | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Cash and cash equivalents | 43,348 | 12,440 |
+-----------------------------------------------------------+------------+------------+
| Cash held in disposal group held for | 1,659 | - |
| sale (note 29) | | |
+-----------------------------------------------------------+------------+------------+
| Bank overdraft held in disposal | (755) | - |
| group held for sale (note 29) | | |
+-----------------------------------------------------------+------------+------------+
| | 44,252 | 12,440 |
| | | |
+-----------------------------------------------------------+------------+------------+
+------------------------------------------------+-------------+--------------+------------+
| 33 Notes to the cash flow | Group | |
| statement | | Company |
+------------------------------------------------+----------------------------+------------+
| | 2008 | 2007 | 2008 |
| | EUR'000 | EUR'000 | EUR'000 |
+------------------------------------------------+-------------+--------------+------------+
| | | | |
+------------------------------------------------+-------------+--------------+------------+
| Loss before taxation | (208,110) | (47,106) | (307,690) |
+------------------------------------------------+-------------+--------------+------------+
| Adjustments for: | | | |
+------------------------------------------------+-------------+--------------+------------+
| Depreciation of | 24,399 | 11,343 | - |
| property, plant and | | | |
| equipment | | | |
+------------------------------------------------+-------------+--------------+------------+
| Amortisation of | 15,227 | 966 | - |
| intangible assets | | | |
+------------------------------------------------+-------------+--------------+------------+
| Goodwill impairment | 149,173 | 49,140 | - |
| (note 10) | | | |
+------------------------------------------------+-------------+--------------+------------+
| Impairment of | - | - | 263,896 |
| intercompany | | | |
| receivables/investments | | | |
+------------------------------------------------+-------------+--------------+------------+
| Share of losses for | 1,162 | - | - |
| associate (note 18) | | | |
+------------------------------------------------+-------------+--------------+------------+
| Finance income | (1,384) | (396) | (279) |
+------------------------------------------------+-------------+--------------+------------+
| Finance costs (note 12) | 30,593 | 8,964 | 24,816 |
+------------------------------------------------+-------------+--------------+------------+
| Profit/(loss) on sale of | (86) | 410 | - |
| property, plant and | | | |
| equipment (note 11) | | | |
+------------------------------------------------+-------------+--------------+------------+
| Loss on business | - | 2,067 | - |
| closures and disposals (note | | | |
| 9) | | | |
+------------------------------------------------+-------------+--------------+------------+
| Share based payment expense | 3,840 | 2,412 | - |
| (note 31) | | | |
+------------------------------------------------+-------------+--------------+------------+
| | | | |
+------------------------------------------------+-------------+--------------+------------+
| Operating cash flows | 14,814 | 27,800 | (19,257) |
| before movements in working | | | |
| capital | | | |
+------------------------------------------------+-------------+--------------+------------+
| | | | |
+------------------------------------------------+-------------+--------------+------------+
| Decrease/(increase) in | 8,247 | (80) | - |
| inventories | | | |
+------------------------------------------------+-------------+--------------+------------+
| (Increase)/decrease in | (15,376) | 1,994 | - |
| receivables | | | |
+------------------------------------------------+-------------+--------------+------------+
| Increase in payables | (2,640) | (10,859) | 4,816 |
+------------------------------------------------+-------------+--------------+------------+
| Increase in provisions | 4,892 | (870) | |
| | | | |
+------------------------------------------------+-------------+--------------+------------+
| Cash flow from operating | 9,937 | 17,985 | (14,441) |
| activities | | | |
+------------------------------------------------+-------------+--------------+------------+
34 Contingencies
The group had provided guarantees to mobile phone operators totalling EUR7.5
million at 30 September 2008, of which EUR6.5 million was released subsequent jto
yea end as a result of the sale of some subsidiaries (note 39).
35 Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet
incurred is as follows:
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Property, plant and equipment | 395 | - |
| | | |
+-----------------------------------------------------------+------------+------------+
(b) Operating lease commitments - group company as lessee
The group leases various retail outlets, offices and warehouses under
non-cancellable operating lease agreements. The lease terms are between 5 and
10 years, and the majority of lease agreements are renewable at the end of the
lease period at market rate.
The group also leases various plant and machinery under cancellable operating
lease agreements. The group is required to give a six-month notice for the
termination of these agreements. The lease expenditure charged to the income
statement during the year is disclosed in note 10.
The future aggregate minimum lease payments under non-cancellable operating
leases are as follows:
+-------------------------------------+------------+------------+------------+------------+
| | 2008 | 2007 |
+-------------------------------------+-------------------------+-------------------------+
| | Land | Other | Land | Other |
| | and | EUR'000 | and | EUR'000 |
| | | | | |
| | buildings | | buildings | |
| | EUR'000 | | EUR'000 | |
+-------------------------------------+------------+------------+------------+------------+
| | | | | |
+-------------------------------------+------------+------------+------------+------------+
| Leases which | | | | |
| expire: | | | | |
+-------------------------------------+------------+------------+------------+------------+
| Within one | 720 | 696 | 3 | 23 |
| year | | | | |
+-------------------------------------+------------+------------+------------+------------+
| Between one | 2,157 | 787 | 339 | 20 |
| and five years | | | | |
+-------------------------------------+------------+------------+------------+------------+
| Greater than | 850 | - | - | - |
| five year | | | | |
+-------------------------------------+------------+------------+------------+------------+
| | 3,727 | 1,483 | 342 | 43 |
| | | | | |
+-------------------------------------+------------+------------+------------+------------+
36 Related parties
The relationship between the parent company and subsidiaries are outlined in
note 20. Key management personnel are considered to be the board of directors
and senior management of the parent company.In 2007 key management were
considered to be the board of directors.
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Key management compensation is as follows: | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Short term employee benefits | 1,439 | 1,072 |
+-----------------------------------------------------------+------------+------------+
| Post employment benefits | 40 | 39 |
+-----------------------------------------------------------+------------+------------+
| Termination benefits | 1,625 | 2,071 |
+-----------------------------------------------------------+------------+------------+
| Share based payments | 2,651 | 998 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | 5,755 | 4,180 |
| | | |
+-----------------------------------------------------------+------------+------------+
Mike Maloney, the CEO of the group is the brother of Barry Maloney, a senior
partner with Balderton Capital, the group's largest shareholder.
On 30 September 2008 the company entered into an agreement to dispose of its
Open Loop Gift business. The business was sold to Branded Payment Solutions
Limited, a company controlled by Tim Murphy, the group's outgoing COO for
EUR420,000 payable in 2010 - 2013 with a further contingent elements. The terms of
the sale provide that the group commit to payment of certain expenses related to
the business up to 31 January 2009.
37 Loss for financial year attributable to Group Shareholders
The company is availing of the exemption set out in Section 148 (8) of the
Companies Act 1963 and Section 7 (1A) of the Companies (Amendment) Act, 1986
from presenting its individual income statement to the annual general meeting
and from filing it with the Register of Companies. The loss on ordinary
activities after tax in the holding company amounted to EUR307.7 million.
38 Section 17 Guarantee
Under Section 17 Companies (Amendment) Act 1986, certain subsidiaries have
availed of the exemption from filing their financial statements. Payzone plc has
guaranteed the liabilities as defined by Section 5 (c), of the Companies
Amendment Act 1986, for these subsidiaries for the year ended 30 September 2008.
The following companies have availed of the exemption: Payzone Group Limited,
Payzone Ireland Limited, Payzone Group Holdings Limited, Payzone Electronics
Limited, Payzone M-Payments Limited, Independent Network Services Limited
Payzone Holland Holdings Limited, Triton Holland Holdings Limited and Top-up
Club Limited.
39 Subsequent events
Post balance sheet events
At the year end, the group had entered into an agreement to dispose of its
French, Italian and Spanish businesses with LCom, a French company specialising
in Airtime product distribution. This deal completed on 20 October 2008, subject
to competition approval in France.The total proceeds for the three businesses
are EUR20 million, of which EUR13.2m is receivable in cash and EUR6.5million by way of
assignment of financial guarantees. As part of the transaction inter - company
balances of EUR4.2 million owed to Payzone plc are to be written off.
The legal claim by the former Chief Executive Officer and Chief Financial
Officer for wrongful dismissal was settled in October 2008.
40 Financial risk management
40.1 Financial risk factors
The group and company's activities expose it to a variety of financial risks:
market risk (including currency risk, and interest rate risk), credit risk and
liquidity risk. The overall risk management program seeks to minimise potential
adverse effects on the group and company's financial performance. Management
and control of these risks is primarily through its regular operating and
financing activities. The policies for managing each of these risks are
summarised below;
(a) Market risk
(i)Foreign exchange risk
Foreign exchange transaction risk arises from future commercial transactions or
recognised assets or liabilities denominated in a currency that is not the
entity's functional currency. The group seeks to mitigate its foreign exchange
risk by the purchase of goods, and services in the respective local currencies,
and by the matching of foreign currency revenues and expenses.
The group operates internationally and is exposed to foreign exchange
translation risk arising from various currency exposures, primarily with respect
to the UK Pound (Approximately 66% of the Group's EBITDA is denominated in
sterling). The group also has foreign operations in Sweden, Poland and Romania,
whose net assets are exposed to foreign currency translation risk. The effects
of currency fluctuations on the translation of net assets values into Euro are
reflected in the group's consolidated equity position.
At 30 September 2008, if the Euro had strengthened by 10% against the UK pound
with all other variables held constant, post-tax profit and equity for the year
would have been (EUR1,920,187) (2007: EURNil/EURNil) higher, mainly as a result of
foreign exchange losses/gains on translation of UK pound-denominated cash
balances and trade receivables.
The company is not exposed to foreign currency transaction risk.
At 30 September 2008, if the Euro had weakened by 10% against the UK pound with
all other variables held constant, post-tax profit and equity for the year would
have been (EUR2,346,895) (2007: EURNil/EURNil) (lower), mainly as a result of foreign
exchange losses on translation of UK pound-denominated cash balances and trade
receivables.
(ii)Interest rate risk
There are no significant interest-bearing assets maintained by the group or
company on an ongoing basis. The group's income and operating cash flows are
substantially independent of changes in the market interest rates. During 2007
and 2008 the group and company's interest rate risk arose primarily from loans
and bank overdrafts which, being at variable rates, exposed the group to cash
flow interest rate risk.
The risk is managed on its floating rate borrowings by the use of an interest
rate swap contract.
+-----------------------------------------------------------+------------+------------+
| Company and Group: | 1 % | 1 % |
| | increase | decrease |
| | in | in |
| | market | market |
| | | |
| | interest | interest |
| | rate | rate |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Year ended 30 September 2008 | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Profit and loss | (1,426) | 1,426 |
+-----------------------------------------------------------+------------+------------+
| Equity | (2,851) | 2,851 |
| | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Year ended 30 September 2007 | | |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Profit and loss | (745) | 745 |
+-----------------------------------------------------------+------------+------------+
| Equity | (609) | 609 |
| | | |
+-----------------------------------------------------------+------------+------------+
The group entered into a 3 year hedging agreement on entering into the EUR320
million facility agreement with The Royal Bank of Scotland. Of the total
facility, EUR196.6 million was hedged and this hedge is split between a SWAP of
EUR117.9 million and a Cap of EUR78.7 million.Under interest rate swap contracts,
the Group agrees to exchange the difference between fixed and floating rate
interest amounts calculated on agreed notional principal amounts. Such contracts
enable the Group to mitigate the risk of changing interest rates on the cash
flow exposures on the issued variable rate debt. The fair value of interest rate
swaps at the reporting date is determined as the present value of estimated
future cash flows.
The interest rate swaps settle on a quarterly basis. The floating rate on the
interest rate swaps is the 3 month Euribor. The Group will settle the difference
between the fixed and floating interest rate on a net basis. All interest rate
swap contracts exchanging floating rate interest amounts for fixed rate interest
amounts are designated as cash flow hedges in order to reduce the Group's cash
flow exposure resulting from variable interest rates on borrowings. The interest
rate swaps and the interest payments on the loan occur simultaneously and the
amount deferred in equity is recognised in profit or loss over the period that
the floating rate interest payments on debt impact profit or loss.
Interest rate swap contracts exchanging floating rate interest for fixed rate
interest are designated and effective as cash flow hedges in respect of interest
rates. During the period, the hedge was 100% percent effective in hedging cash
flow exposure to interest rate movements.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks, as
well as credit exposures to customers, including outstanding receivables and
committed transactions.The credit quality of banks is assessed having regard to
its financial position and past experience. For customers, the group's
credit policies and practices are designed to limit credit exposure - collection
activities are managed on a daily basis and credit levels and ageing are
regularly monitored. Management does not expect any significant losses of
receivables or other financial assets that have not been provided for as shown
in note 21. There are no significant concentrations of risk within trade and
other receivables.
(c) Liquidity risks
Liquidity risk is the risk that the group will not be able to meet its financial
obligations as they fall due. Ultimate responsibility for liquidity risk
management rests with the board of directors, which has built an appropriate
liquidity risk management framework for the management of the Group's short,
medium and long-term funding and liquidity management requirements.The group and
company manages liquidity risk by maintaining adequate credit facilities in
place and headroom on its banking facilities and, by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities.The group's and company's liquidity risk arose from the
repayment of short term and other obligations as they fall due. The group and
company minimises liquidity risk by ensuring that sufficient cash balances and
committed banking lines of credit are available to meet repayment and other
liabilities as they fall due.
Having consideration for the disclosures in Note 1, the following table sets out
details of the maturity of the Group's financial liabilities into the relevant
maturity groupings on the remaining period at the balance sheet date to
contractual maturity date:
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Group | | | Within | 1 - 2 | 2 - 5 | More |
| | Carrying | Contractual | one | years | years | than |
| | Amount | cashflows | year | EUR'000 | EUR'000 | 5 |
| | EUR'000 | EUR'000 | EUR'000 | | | years |
| | | | | | | EUR'000 |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| 30 September 2008 | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Bank credit lines & facilities | 284,772 | 392,249 | 35,370 | 39,602 | 91,079 | 226,198 |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Finance lease liabilities | 3,212 | 3,404 | 1,667 | 1,737 | - | - |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Accounts payable | 161,624 | 161,624 | 161,624 | - | - | - |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Other liabilities | 38,077 | 38,077 | 38,077 | - | - | - |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Preference shares | 5,429 | 6,738 | - | - | 6,738 | - |
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| | 493,114 | 602,092 | 236,738 | 41,339 | 97,817 | 226,198 |
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| 30 September 2007 | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Bank credit lines & facilities | 117,490 | 117,490 | 117,490 | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| Accounts payable | 30,156 | 30,156 | 30,156 | | | |
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
| | 147,646 | 147,646 | 147,646 | | | |
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+-------------+------------+------------+------------+
41 Financial risk management - continued
40.1 Financial risk factors - continued
(c) Liquidity risks - continued
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| Company | | | Within | 1 - 2 | 2 - 5 | More |
| | Carrying | Contractual | one | years | years | than |
| | amount | cashflows | year | EUR'000 | EUR'000 | 5 |
| | EUR'000 | EUR'000 | EUR'000 | | | years |
| | | | | | | EUR'000 |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| 30 September 2008 | | | | | | |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| Bank credit lines & facilities | 284,522 | 391,999 | 35,120 | 39,602 | 91,079 | 226,198 |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| Preference shares | 5,429 | 6,738 | - | - | 6,738 | - |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| Accounts payable | 1,692 | 1,692 | 1,692 | - | - | - |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| Other liabilities | 9,177 | 8,770 | 8,770 | - | - | - |
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
| | 300,820 | 409,199 | 45,582 | 39,602 | 97,817 | 226,198 |
| | | | | | | |
+------------------------------------------------------------------+-------------+-------------+------------+------------+------------+-------------+
40 Financial risk management - continued
40.2Capital risk management
The group's objectives when managing capital are to safeguard the group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may, issue new
shares or sell assets to reduce debt.
The capital structure of the Group consists of debt, which includes the
borrowings disclosed in note 25, cash and cash equivalents and equity
attributable to equity holders of the parent, comprising issued capital,
reserves and retained earnings as disclosed in notes 30 and 31 respectively.
The Group's risk management committee reviews the capital structure on a
semi-annual basis. As part of this review, the committee considers the cost of
capital and the risks associated with each class of capital. The gearing ratio
at the year end was as follows:
+-----------------------------------------------------------+--------------+--------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-----------------------------------------------------------+--------------+--------------+
| | | |
+-----------------------------------------------------------+--------------+--------------+
| Debt (note 25) | 284,772 | 117,490 |
+-----------------------------------------------------------+--------------+--------------+
| Cash | (43,348) | (12,440) |
| | | |
+-----------------------------------------------------------+--------------+--------------+
| Net debt | 241,424 | 105,050 |
| | | |
+-----------------------------------------------------------+--------------+--------------+
| | | |
+-----------------------------------------------------------+--------------+--------------+
| Equity | 30,304 | 36,030 |
| | | |
+-----------------------------------------------------------+--------------+--------------+
| | | |
+-----------------------------------------------------------+--------------+--------------+
| Net debt to equity ratio | 8.0% | 2.9% |
+-----------------------------------------------------------+--------------+--------------+
41 Transition to IFRS
IFRS 1 - Transition
From 1 October 2007, in accordance with AIM rules, the group is required to
present its annual consolidated financial statements in accordance with IFRS
adopted for use in the EU.
The rules for first time adoption of IFRS are set out in IFRS 1 "First time
adoption of International Financial Reporting Standards". The group's
transition to IFRS was 1 October 2006.
IFRS 1 states that an entity should use the same accounting policies in its
opening IFRS balance sheet at 1 October 2006 and throughout all periods
presented in it's first IFRS financial statements. In preparing these financial
statements, the group has applied the mandatory exceptions and certain of the
optional exemptions from full retrospective application of IFRS. Details in
relation to these exemptions and the group's transition to IFRS are set out in
this note.
The note also sets out details of the impact of the change to IFRS on
the financial statements and for September 2007, and includes applicable
reconciliations between IFRS and UK GAAP for the year to 30 September 2007 and
as at 1 October 2006, and 30 September 2007.
The group has applied the provisions of IFRS 1 in arriving at appropriate
opening balances for its first set of IFRS financial statements. The
significant decisions taken in respect of availing, or otherwise, of the
optional exemptions available are as follows:
(a)Business Combinations
The group has availed of this exemption and has not applied IFRS 3 "Business
combinations" retrospectively to business combinations prior to the date of
transition. Goodwill arising on acquisitions prior to 1 October 2006 is not
amortised from the transition date but is subject to annual impairment testing
or more frequently if events or circumstances indicate that goodwill may be
impaired.
(b)Fair value as deemed cost
The group has not availed of this exemption and as a consequence the carrying
value of the group's property, plant and equipment at the date of transition is
stated as its historical carrying value (being historical cost less accumulated
depreciation and impairment) as permitted by IFRS 1. The group has elected
not to apply a policy of revaluation going forward.
(c)Share based payment transactions
IFRS 2 need not be applied to grants before 7 November 2002, or to grants after
7 November 2002 but which had vested before the transition date. The group has
availed of this exemption and has only applied IFRS 2 to those options that were
outstanding and that had not vested on 1 October 2006.
(d) Currency translation reserve
The Group has availed of the IFRS 1 exemption allowing it to deem all cumulative
translation differences that have arisen up to transition date to be equal to
zero. These translation differences will therefore remain written off against
revenue reserves and will no longer be separately disclosed in the notes to the
accounts and will not be included in the gain or loss on disposal of any foreign
entities within the group.
Mandatory exceptions
Derecognition of financial assets and liabilities
This exception in relation to derecognition of financial assets and liabilities
is not applicable to the group.
Hedge accounting
The exception in relation to hedge accounting permitted under IFRS1 is not
applicable to the group.
Estimates
The group's estimates at the date of transition to IFRS are consistent with
estimates made for the same date under UK GAAP.
Assets classified as held for sale and discontinued operations
At the date of transition the group has no non-current assets (or disposal
groups) that meet the criteria to be classified as held for sale or operations
that meet the criteria to be classified as discontinued.
A description of the main/significant differences between UK GAAP and IFRS
accounting policies is set out below.
41 Transition to IFRS - continued
IFRS principal adjustments
A summary of the IFRS accounting policies is provided in note 3 of the financial
statements. The resultant adjustments by standard are set out below:
(a)Goodwill - IFRS 3 "Business combinations"
(i) Goodwill amortisation
UK GAAP
Accounting for business combinations under UK GAAP is dealt with by FRS 6
"Acquisitions & Mergers" and FRS 7 "Fair values in acquisition". Under FRS 10
"Goodwill and intangible assets", purchased goodwill and intangible assets are
amortised to the income statement on a systematic basis over their useful
economic lives where they are regarded as having a finite useful economic life.
Under UK GAAP, there is a rebuttable presumption that the useful economic lives
of purchased goodwill and intangible assets are limited to period of 20 years or
less. In accordance with UK GAAP, the goodwill arising from the purchase of
subsidiary undertakings was capitalised and amortised on a straight-line basis
over its expected useful life. The group's practice under UK GAAP was to
amortise goodwill over a 5 year period.
IFRS
IFRS 3 prohibits the amortisation of purchased goodwill. The standard requires
goodwill to be carried at cost.Goodwill is the excess of the cost of an
acquisition over the fair value of the group's share of the net
identifiable assets of the acquired subsidiary/associate at the date of
acquisition. Recognised goodwill is tested annually for impairment and is
carried at cost less accumulated impairment losses. Impairment reviews are
required to be performed on an annual basis and when there are indications that
the carrying value may not be recoverable.
Impact
Under the transitional arrangements of IFRS 1, the group has taken the option of
applying IFRS 3 prospectively from the transition date to IFRS. The group has
chosen this option rather than to restate previous business combinations.The
impact of IFRS 3 and associated transitional arrangements on the group are as
follows;
* the accounting for all business combinations before 1 October 2006 is frozen at
the transition date; and
* goodwill is no longer amortised.
In accordance with IFRS 1, regardless of whether there is any indication that
goodwill may be impaired, a first-time adopter shall test goodwill for
impairment at the date of transition to IFRS.
At 1 October 2006 and 30 September 2007 impairment reviews were performed on the
carrying value of goodwill under IFRS.
The impact on the 30 September 2007 income statement under IFRS is the
reinstatement of goodwill previously amortised under UK GAAP of EUR45.251 million,
and the recognition of an impairment charge of EUR45.251 million. As an impairment
charge of EUR3.889m had been recorded under UK GAAP, the total impairment charge
for the year of EUR49.14 million was reclassified to administrative expenses -
special items in accordance with the group's accounting policy for special
items.
41 Transition to IFRS - continued
(a)Goodwill - IFRS 3 "Business combinations" - continued
(ii) Fair value adjustment
Certain assets and liabilities acquired in business combinations effected prior
to 30 September 2007 and subject to the measurement rules of UK GAAP were
accounted for using provisional fair values in the UK GAAP balance sheet as at
30 September 2007 which is used as a base for deriving the IFRS balance sheet
for the same date. Since the period for finalising such fair values crossed the
30 September 2007 date, the Group has deemed it appropriate to reflect the
finalisation of these fair values (which would have been reflected in the UK
GAAP financial statements for the year ended 30 September 2008) in the IFRS
balance sheet at 30 September 2007. This results in an adjustment to increase
goodwill by EUR3.431 million together an increase in provisions of EUR3.431 million.
(b)Deferred tax and current tax - IAS 12 - "Income taxes"
UK GAAP
FRS 19 requires deferred tax to be accounted for on the basis of timing
differences. Timing differences are differences between an entity's taxable
profits and its results as stated in the financial statements due to the
inclusion of gains and losses in tax assessments in periods different from those
in which they are recognised in financial statements.
IFRS
IAS 12 requires that deferred tax be accounted for on the basis of taxable or
deductible temporary differences. Temporary differences are differences between
the carrying value of an asset or liability in the consolidated balance sheet
and the tax base of the asset or liability. Under IAS 12, deferred tax is
recognised directly in equity if the tax relates to items that are credited or
charged directly to equity.
Impact
The transition to IFRS does not give rise to any restatement of tax balance as
at 1 October 2006. At 30 September 2007 a deferred taxation liability of EUR1.143
million was recognised in respect of the intangible assets acquired as part of
the Travelex acquisition in April 2007. A corresponding entry was made to
goodwill.
(c)IAS 39 "Financial instruments: Recognition and Measurement"
UK GAAP
Under UK GAAP, only accrued interest under interest rate swaps was recognised on
the balance sheet.
IFRS
Under IAS 39, the fair value of interest rate swaps is recognised on the balance
sheet. The group's interest rate swaps have been designated as cash flow hedges,
and the movement in fair value of the effective portion of the swaps from one
period to another is taken to the hedging reserve and will cumulatively net out
to zero when the swaps term out.
Impact
The impact on the balance sheet at the transition date of 1 October 2006 was the
recognition of a financial asset of EUR493,000 and a corresponding adjustment to
the hedging reserve. The financial asset recognised as at 30 September 2007 was
EUR304,000. The corresponding entries were to the hedging reserve.
(d) Currency translation reserve
Currency translation differences on foreign currency net investments have been
written off under UK GAAP to revenue reserves.
Under IAS 21, translation differences are recorded in a separate currency
translation reserve. On disposal of a foreign operation, the cumulative
translation differences relating to that operation are transferred to the income
statement as part of the profit and loss on disposal.
The Group has availed of the IFRS 1 exemption allowing it to deem all cumulative
translation differences that have arisen up to transition date to be equal to
zero. These translation differences will therefore remain written off against
revenue reserves and will no longer be separately disclosed in the notes to the
accounts.
41 Transition to IFRS - continued
RECONCILIATION OF CONSOLIDATED BALANCE SHEET BETWEEN UK GAAP AND IFRS
As at 30 September 2007
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| | UK GAAP | IFRS 3 | IAS 39 | IAS 12 | IFRS |
| | EUR'000 | | | | EUR'000 |
| | | Business | Financial | Deferred | |
| | | | | | |
| | | Combinations | Instruments | Taxation | |
| | | EUR'000 | EUR'000 | EUR'000 | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Non-current | | | | | |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Property, | 53,314 | - | - | - | 53,314 |
| plant and | | | | | |
| equipment | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Intangible | 112,560 | 3,431 | - | 1,143 | 117,134 |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | 165,874 | 3,431 | - | 1,143 | 170,448 |
| non-current | | | | | |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Current | | | | | |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Inventories | 652 | - | - | - | 652 |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Trade | 7,822 | - | - | - | 7,822 |
| and | | | | | |
| other | | | | | |
| receivables | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Derivative | - | - | 304 | - | 304 |
| financial | | | | | |
| instrument | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Cash | 12,440 | - | - | - | 12,440 |
| and | | | | | |
| cash | | | | | |
| equivalents | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | 20,914 | - | 304 | - | 21,218 |
| current | | | | | |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | 186,788 | 3,431 | 304 | 1,143 | 191,666 |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Current | | | | | |
| liabilities | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Interest-bearing borrowings | (7,722) | - | - | - | (7,722) |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Trade | (30,156) | - | - | - | (30,156) |
| and | | | | | |
| other | | | | | |
| payables | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Current | (353) | - | - | - | (353) |
| tax | | | | | |
| liabilities | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | (38,231) | - | - | - | (38,231) |
| current | | | | | |
| liabilities | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Non-current | | | | | |
| liabilities | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Deferred | - | - | - | (1,143) | (1,143) |
| tax | | | | | |
| liability | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Interest-bearing | (109,768) | - | - | - | (109,768) |
| borrowings | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Provisions | (3,063) | (3,431) | - | - | (6,494) |
| | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | (112,831) | (3,431) | - | (1,143) | (117,405) |
| non-current | | | | | |
| liabilities | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | (151,062) | (3,431) | - | (1,143) | (155,636) |
| liabilities | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Net | 35,726 | - | 304 | - | 36,030 |
| assets | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Equity | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Called | 8,296 | - | - | - | 8,296 |
| up | | | | | |
| share | | | | | |
| capital | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Share | 132,617 | - | - | - | 132,617 |
| premium | | | | | |
| account | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Other | 522 | - | - | - | 522 |
| reserve | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Hedging | - | - | 304 | - | 304 |
| reserve | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Translation | (526) | - | - | - | (526) |
| reserve | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Retained | (105,338) | - | - | - | (105,338) |
| losses | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Equity | 35,571 | - | 304 | - | 35,875 |
| attributable | | | | | |
| to equity | | | | | |
| holders of | | | | | |
| the parent | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Minority | 155 | - | - | - | 155 |
| interests | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
| Total | 35,726 | - | 304 | - | 36,030 |
| equity | | | | | |
+------------------------------------+---------------+--------------+-------------+-------------+---------------+
41 Transition to IFRS - continued
RECONCILIATION OF CONSOLIDATED BALANCE SHEET BETWEEN UK GAAP AND IFRS
As at 1 October 2006
+------------------------------------------------+---------------+-------------+---------------+
| | UK GAAP | IAS 39 | IFRS |
| | EUR'000 | | EUR'000 |
| | | Financial | |
| | | | |
| | | Instruments | |
| | | EUR'000 | |
+------------------------------------------------+---------------+-------------+---------------+
| Non-current assets | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Property, plant | 44,807 | - | 44,807 |
| and equipment | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Intangible assets | 149,136 | - | 149,136 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total non-current assets | 193,943 | - | 193,943 |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Current assets | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Inventories | 2,172 | - | 2,172 |
+------------------------------------------------+---------------+-------------+---------------+
| Trade and other receivables | 13,237 | - | 13,237 |
+------------------------------------------------+---------------+-------------+---------------+
| Derivative financial | - | 493 | 493 |
| instrument | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Cash and cash equivalents | 11,875 | - | 11,875 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total current assets | 27,284 | 493 | 27,777 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total assets | 221,227 | 493 | 221,720 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Current liabilities | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Interest-bearing borrowings | (10,929) | - | (10,929) |
+------------------------------------------------+---------------+-------------+---------------+
| Trade and other payables | (38,353) | - | (38,353) |
+------------------------------------------------+---------------+-------------+---------------+
| Current tax liabilities | (4) | - | (4) |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total current liabilities | (49,286) | - | (49,286) |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Non-current liabilities | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Interest-bearing borrowings | (93,026) | - | (93,026) |
+------------------------------------------------+---------------+-------------+---------------+
| Trade and other payables | (270) | - | (270) |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total non-current | (93,296) | - | (93,296) |
| liabilities | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total liabilities | (142,582) | - | (142,582) |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Net assets | 78,645 | 493 | 79,138 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Equity | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Called up share capital | 7,786 | - | 7,786 |
+------------------------------------------------+---------------+-------------+---------------+
| Share premium account | 130,468 | - | 130,468 |
+------------------------------------------------+---------------+-------------+---------------+
| Other reserve | 522 | - | 522 |
+------------------------------------------------+---------------+-------------+---------------+
| Hedging reserve | - | 493 | 493 |
+------------------------------------------------+---------------+-------------+---------------+
| Retained (losses) | (60,286) | - | (60,286) |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Equity attributable to equity holders of the | 78,490 | 493 | 78,983 |
| parent | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Minority interests | 155 | - | 155 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
| Total equity | 78,645 | 493 | 79,138 |
| | | | |
+------------------------------------------------+---------------+-------------+---------------+
41 Transition to IFRS - continued
RECONCILIATION OF CONSOLIDATED INCOME STATEMENT BETWEEN UK GAAP AND IFRS
For the year ended 30 September 2007
+------------------------------------------------+--------------+--------------+--------------+
| | UK GAAP | IFRS 3 | IFRS |
| | EUR'000 | | EUR'000 |
| | | Business | |
| | | | |
| | | Combinations | |
| | | EUR'000 | |
+------------------------------------------------+--------------+--------------+--------------+
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Revenue | 130,970 | - | 130,970 |
+------------------------------------------------+--------------+--------------+--------------+
| Cost of sales | (84,158) | - | (84,158) |
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Gross profit | 46,812 | - | 46,812 |
+------------------------------------------------+--------------+--------------+--------------+
| Administrative expenses - | (33,177) | - | (33,177) |
| excluding amortisation of | | | |
| intangible assets and | | | |
| special items | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Administrative expenses - special items | (2,067) | (49,140) | (51,207) |
+------------------------------------------------+--------------+--------------+--------------+
| Administrative expenses - amortisation of | (50,106) | 49,140 | (966) |
| intangible assets | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Administrative expenses | (85,350) | - | (85,350) |
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Operating loss | (38,538) | - | (38,538) |
+------------------------------------------------+--------------+--------------+--------------+
| Finance income | 396 | - | 396 |
+------------------------------------------------+--------------+--------------+--------------+
| Finance costs | (8,964) | - | (8,964) |
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Loss before taxation | (47,106) | - | (47,106) |
+------------------------------------------------+--------------+--------------+--------------+
| Income tax expense | (358) | - | (358) |
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Loss for the period all | (47,464) | - | (47,464) |
| attributable to equity | | | |
| holders of the parent | | | |
+------------------------------------------------+--------------+--------------+--------------+
| | | | |
+------------------------------------------------+--------------+--------------+--------------+
| Basic and diluted loss per share (cent per | | | (41c) |
| share) | | | |
+------------------------------------------------+--------------+--------------+--------------+
41 Transition to IFRS - continued
RECONCILIATION OF CONSOLIDATED CASH FLOW STATEMENT BETWEEN UK GAAP AND IFRS
IAS 7 "Cash Flow Statements" requires the presentation of cash flows to be
classified under three headings (operating, investing and financing activities)
as opposed to the five headings which were required under UK GAAP. Therefore, a
reclassification of certain items has occurred.
(a) Taxation is now classified under operating activities, instead of being
separately disclosed on the face of the cash flow.
(b) Interest received has been reclassified to operating activities and
interest paid has been reclassified to operating activities from returns and
servicing of finance, as this classification no longer exists.
(c) Additions of property, plant and equipment have been reclassified to
investing activities from capital expenditure and financial investment, as this
classification no longer exists.
42Approval of financial statements
The financial statements were authorised for issue by the Board of Directors on
16 January 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ILFFALFIELIA
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