TIDMPAYZ
RNS Number : 0852U
Payzone plc
18 June 2009
18 June, 2009
Payzone plc ("Payzone" or the "Company")
Interim results for the six months ended 31 March 2009
Payzone announces the Company's interim results for the six months ended 31
March 2009.
HIGHLIGHTS
The group has performed well in challenging and changing markets:
Financial
* Pro forma EBITDA up 8% to EUR20.3m1
* Revenues for the period were EUR583m2
* Losses before tax for the period of EUR7m3
* Goodwill impairment charges of EUR77m
* Cash balances of EUR30.3m at 31 March 2009
* Payzone has instigated discussions with its finance providers to establish a
more appropriate long-term capital structure
Operational
* Disposal of French, Italian and Spanish businesses for gross consideration of
EUR20m
* Profitability of UK ATM business increased three-fold following various
operational improvements
* Operating costs of Payzone UK business reduced by 26%
* Group central costs reduced by 23%
* Transaction volumes in Romanian and Greece increased by 7% and 21% respectively
* Disposal of Open Loop Gift business
* Network of electronic point-of-sale terminals and ATMs now numbers 136,300
Mike Maloney, Payzone's chief executive, said:
"Payzone has responded to a weak economy by vigorously restructuring its
businesses. By taking out cost and eliminating losses, the group has been able
to improve pro forma EBITDA, adjusted for disposals, currency and certain
special items, by 8% to EUR20.3m. This is a significant achievement when
transaction volumes have been affected by poor consumer sentiment.
"Payzone will need to continue to respond quickly and aggressively to the
operating challenges presented by the macroeconomic environment. The immediate
goal is for the company to establish a more appropriate capital structure, and
we look forward to achieving a satisfactory outcome from the current discussions
with our banks and other finance providers."
1. The pro forma figures compare the results for Payzone's continuing operations
in the six months to 31 March 2009 and in the six months to 31 March 2008. The
merger that created Payzone was completed in December 2007. This comparison also
excludes the effects of currency translation and certain special items
2. Excluding discontinued operations in Spain, France and Italy
3. Before impairment charges of EUR77m and intangible amortisation costs of EUR7m
Contacts
Payzone
Tel: + 353 1 207 6000
Mike Maloney / Nigel Bell
Media Enquiries
Powerscourt
Tel: +44 20 7250 1446
Paul Durman /Rory Godson
Chairman's statement
Introduction
I am pleased to report the results for Payzone plc for the 6 months period ended
31 March 2009.
Since Payzone was formed from the "merger" of Cardpoint plc ("Cardpoint") and
alphyra Holdings Limited ("alphyra") in December 2007, the Group's management
has had to respond to a deteriorating economic climate. The weakening of
consumer sentiment across Europe has had an impact on transaction volumes in
both our mobile phone top-up and ATM businesses.
Despite these challenges, Payzone's management has restructured the business to
limit the impact on group EBITDA, which increased 8% to EUR20.3 million on a
pro-forma basis (i.e. six months trading for both businesses), after adjusting
for disposals, currency translation effects and certain special items. Payzone's
Board regards this as a significant achievement which demonstrates the
resilience of our business in a market that has experienced declines in revenues
from mobile phone top-ups and ATM transactions.
Since the merger, Payzone has restructured its Board and 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.
In addition, 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 throughout 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.
The Board remains committed to establishing a more appropriate long-term capital
structure for the Company. As disclosed in March 2009, Payzone has instigated
discussions with its finance providers with that end in mind. These discussions
are expected to result in changes to the Company's financing arrangements.
Payzone will provide a further update as soon as practicable.
International Financial Reporting Standards
The results for the six months to 31 March 2009 are presented under
International Financial Reporting Standards ("IFRS") as required under the AIM
Rules for Companies.
Under IFRS the "merger" was accounted for as a reverse acquisition. As Cardpoint
has the power to govern the financial and operating policies of Payzone, it was
deemed to be the "acquirer" of alphyra and Payzone. Therefore the comparative
figures presented reflect six months trading from the Cardpoint businesses to 31
March 2008 and include the results from the Alphyra businesses since 5 December
2007. Payzone has elected to present its financial statements in euro.
Trading and profitability
Total revenues for the period were EUR583 million compared to revenues for the
same period in 2008 of EUR424 million. These figures exclude revenues from
discontinued operations following the disposal of our businesses in Spain,
France and Italy in October 2008. Revenues in 2008 only included the alphyra
businesses from the date of the merger 5 December 2007, i.e. four months. On a
pro forma basis revenues (excluding discontinued revenues) were 8% lower for the
six month period ended 31 March 2009 compared to the prior period.
Group EBITDA before special items increased by 24% to EUR20.3 million in the
period. On a pro-forma basis EBITDA decreased by 1%. Excluding the translation
effect of foreign exchange (both Sterling and Romanian Ron declined compared to
the same period last year) EBITDA increased by 8%.
Through the first half of the 2009 financial year each of the Group's businesses
has been focused on improving profitability and cash generation. In our Irish
and UK operations this has involved the relocation and removal of certain
loss-making mobile phone top-up terminals and ATMs to more profitable, high
footfall locations. The removal of such terminals and ATMs, along with lower
consumer spending driven by the worsening economic environment, has seen our
mature markets experience revenue declines year-on-year. Despite the
deteriorating macroeconomic environment, the renewed strategic focus of the
business has had positive results in the period with both the gross margin and
EBITDA margin improving by 2% and 5% respectively in the UK and Ireland segment.
The re-focused strategy in our UK mobile phone top-up and utility distribution
business has led to the rationalisation of certain non-core activities, reducing
the operating cost base by 26% in the period. Despite the UK experiencing a
decline in mobile phone top-up transaction volumes of 6%, utility and bill
payment transactions have increased 11% in the period.
Our UK ATM business has benefited significantly from operational improvements.
The business has had a renewed focus on profitable locations with the removal of
840 loss-making machines. The removal of such loss-making machines, along with a
market driven decline in withdrawal volumes, has led to a 31% decline in
revenues in the period. However, the refocused operations-led strategy has led
to a significant improvement in profitability with the gross margin and EBITDA
margin increasing by 2% and 8% respectively in the period. Total EBITDA
contribution from this business is three times greater than the same period last
year.
Our Irish business has had the benefit of launching new products onto its
distribution network such as prepaid motorway tolling and bill payment. Despite
the fall in mobile phone top-up transaction volumes the introduction of these
new differentiating products has helped improve the gross margin by 4% in the
period.
Our Northern European business, which includes Germany, the Netherlands and
Sweden, has experienced a decline in consumer demand which has led to lower
transactions in the period ended 31 March 2009 versus the same period last year.
However, the business has maintained its gross margin percentage by compensating
mobile phone top-up declines with growth in other revenues such as EFT and
cost-restructuring programs which have included the outsourcing of certain
operations.
Revenues in our Southern European business were up 33% on the same period last
year. This increase was driven by the migration of mobile phone top-up from
physical distribution to electronic, the rollout of new terminals and the launch
of bill payment and prepaid services. These developments increased transaction
volumes by 21% and 7% in our Greek and Romanian businesses respectively.
Management focus on central costs and restructuring through product
rationalisation has led to a reduction in central overheads by 23%.
Payzone conducted a goodwill impairment review as at 30 September 2008 which led
to an impairment of EUR149 million, and a charge was made in the full-year
accounts to write down the carrying value of goodwill to its recoverable value.
A further goodwill impairment review was carried out as at 31 March 2009. The
carrying value of goodwill was calculated to exceed its recoverable amount by
EUR77 million, and this amount has also been written off as an additional
impairment charge in the interim accounts. The recoverable amount of goodwill
was calculated based on its value-in-use which employs a discounted cashflow
model.
Losses before tax for the period were EUR7 million before impairment charges of
EUR77 million and intangible amortisation costs of EUR7M.
Finance costs include all debt interest costs for the period. These include
special items which include costs in relation to the restructuring of the
Company's debt and, in our comparatives, the termination of Cardpoint's banking
facilities and restructuring of the Company's debt (following the merger).
The 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 136,300 at the end
of March 2009. 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 motorway tolling. EFT,
prepaid parking and prepaid utilities, all of which are expected to contribute
to future profitability. 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
and product expansion as well as the migration of mobile phone top-up from
physical cards to electronic distribution.
Disposals
On 8 October 2008 Payzone announced the disposal of its French, Italian and
Spanish businesses for a total gross consideration of EUR20 million. Of this sale
price EUR13.2 million was payable in cash and EUR6.5 million comprised of the
assignment of financial guarantees. The purchasing Company 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.
The disposal of these Payzone subsidiaries fits with our strategy of focusing on
markets where Payzone had both a strong market presence and growth potential
from offering 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 optimal returns. Consequently certain non core
assets have been classified as held for resale.
Growth
The Group's strategy for growth continues to be that of growing transaction
volumes organically through improving the quality of deployment and offering a
broader range of products across our existing distribution network. We continue
to invest in our core businesses in mobile phone top-ups and electronic payments
that have demonstrated robust profitability and which can drive growth. There
will be a continued focus in exiting and re-negotiating legacy loss-making
contracts as well as the evaluation of outsourcing or in-sourcing of certain
activities to bolster profitability for both the ATM and mobile phone top-up
terminal estates.
Cashflow and borrowings
As reported on 12 March 2009, given the continued challenging market conditions
being experienced by the Group's businesses, the Company instigated discussions
with its finance providers covering a range of financing options with a view to
establishing a more appropriate long term capital structure for the Company.
These discussions continue and are expected to result in changes to the
Company's existing arrangements.
Management structure
There were no changes to the Board during the period.
The Board has met on a regular basis throughout the period to assess and direct
the Company through the current operational and financing activities.
Outlook
We remain focussed on maintaining the financial stability and profitability of
the Company and are confident that, in conjunction with Payzone's various
stakeholders, we can achieve a successful outcome from the ongoing restructuring
activities.
The management team has made a significant contribution to improving the
stability of the Group through restructuring the cost base of the business.
Despite some progress there remain challenges in our key markets as the
macroeconomic environment has continued to deteriorate. The various
restructuring activities which have included cost-cutting, pricing changes and
business rationalisation have helped mitigate the majority of these downward
pressures, but the business will need to continue to anticipate and change in
line with the operating environment.
We are grateful to our shareholders for supporting the Company during a
difficult period. We are especially grateful to the management and staff who
have also shown great commitment through the first half of 2009.
CONSOLIDATED UNAUDITED INCOME STATEMENT
Six Months Ended 31 March 2009
+------------------------------------------+-------+---------------+---------------+---------------+
| |Notes | 6 | 6 | 12 |
| | | months to | months to | months to |
| | | 31 | 31 | 30 |
| | | March | March | September |
| | | 2009 | 2008 | 2008 |
| | | EUR'000 | EUR'000 | EUR'000 |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Revenue | | 583,303 | 423,899 | 1,015,153 |
+------------------------------------------+-------+---------------+---------------+---------------+
| Cost of sales | | (543,873) | (389,229) | (931,943) |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Gross profit | | 39,430 | 34,670 | 83,210 |
+------------------------------------------+-------+---------------+---------------+---------------+
| Administrative expenses - | | (32,270) | (28,548) | (65,542) |
| excluding | | | | |
| amortisation of intangible assets | | | | |
| and | | | | |
| special items | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Administrative expenses - special items | 6 | (75,757) | (153,667) | (178,799) |
+------------------------------------------+-------+---------------+---------------+---------------+
| Administrative expenses - | | (7,164) | (4,690) | (15,218) |
| amortisation | | | | |
| of intangible assets | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Administrative expenses | | (115,191) | (186,905) | (259,559) |
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Operating loss | | (75,761) | (152,235) | (176,349) |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Finance income | | 1,123 | 139 | 1,374 |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Finance costs - | | (15,410) | (10,406) | (25,697) |
| excluding special | | | | |
| items | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Finance costs - | 7 | (456) | (2,818) | (4,286) |
| special items | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Finance costs | | (15,866) | (13,224) | (29,983) |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Share of losses of | | (408) | (526) | (1,162) |
| associates | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Loss before taxation | | (90,912) | (165,846) | (206,120) |
+------------------------------------------+-------+---------------+---------------+---------------+
| Income tax | | (23) | 322 | 2,186 |
| (charge)/credit | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Loss for the period from continuing | | (90,935) | (165,524) | (203,934) |
| | | | | |
| operations | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Discontinued | | | | |
| operations | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Loss from discontinued | | (871) | (925) | (1,990) |
| operations | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Loss retained for the | | (91,806) | (166,449) | (205,924) |
| financial period | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Profits attributable | | 71 | 110 | 462 |
| to minority interest | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Attributable to equity | | (91,877) | (166,559) | (206,386) |
| holders of the parent | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
| Basic and diluted loss | 8 | (21c) | (89c) | (67c) |
| per share (cent per | | | | |
| share) | | | | |
+------------------------------------------+-------+---------------+---------------+---------------+
CONSOLIDATED UNAUDITED BALANCE SHEET
As at 31 March 2009
+------------------------------------------+-------+---------------+---------------+----------------+
| |Notes | As at | As at | As at |
| | | 31 | 31 | 30 |
| | | March | March | September |
| | | 2009 | 2008 | 2008 |
| | | EUR'000 | EUR'000 | EUR'000 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Assets | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Non-current assets | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Property, plant and equipment | | 36,846 | 83,569 | 71,992 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Goodwill and intangible assets | | 147,158 | 316,178 | 303,323 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Investment in associated companies | | - | 640 | - |
+------------------------------------------+-------+---------------+---------------+----------------+
| Derivative financial instrument and | | - | 124 | 697 |
| available for sale financial assets | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Deferred tax | | 418 | 1,457 | 572 |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Total non-current assets | | 184,422 | 401,968 | 376,584 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Current assets | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Inventories | | 6,008 | 24,160 | 18,782 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Trade and other receivables | | 46,990 | 87,207 | 91,636 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Restricted cash | | 15,295 | 13,154 | 17,072 |
+------------------------------------------+-------+---------------+---------------+----------------+
| Cash and cash equivalents | 11 | 30,299 | 24,762 | 43,348 |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Total current assets | | 98,592 | 149,283 | 170,838 |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Assets of disposal groups held for sale | | 102,519 | - | 30,044 |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Total assets | | 385,533 | 551,251 | 577,466 |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Current liabilities | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Borrowings | 9 | (291,868) | (291,171) | (14,951) |
+------------------------------------------+-------+---------------+---------------+----------------+
| Trade and other payables | | (117,439) | (192,096) | (199,701) |
+------------------------------------------+-------+---------------+---------------+----------------+
| Current tax liabilities | | (286) | (1,233) | (1,267) |
+------------------------------------------+-------+---------------+---------------+----------------+
| Provisions | | (383) | (15,442) | (7,833) |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Total current liabilities | | (409,976) | (499,942) | (223,752) |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Liabilities of disposal groups held for | | (61,465) | - | (21,041) |
| sale | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Non-current liabilities | | (471,441) | (499,942) | (244,793) |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Deferred tax liability | | (9,684) | (18,540) | (16,914) |
+------------------------------------------+-------+---------------+---------------+----------------+
| Borrowings | 9 | (839) | (1,971) | (278,462) |
+------------------------------------------+-------+---------------+---------------+----------------+
| Provisions | | (2,524) | (5,343) | (6,993) |
+------------------------------------------+-------+---------------+---------------+----------------+
| Derivative financial instrument | | (5,387) | (902) | - |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Total non-current liabilities | | (18,434) | (26,756) | (302,369) |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Total liabilities | | (489,875) | (526,698) | (547,162) |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
| Net assets | | (104,342) | 24,553 | 30,304 |
| | | | | |
+------------------------------------------+-------+---------------+---------------+----------------+
CONSOLIDATED BALANCE SHEET - continued
As at 31 March 2009
+------------------------------------------+------+---------------+---------------+---------------+
| |Note | As at | As at | As at |
| | | 31 | 31 | 30 |
| | | March | March | September |
| | | 2009 | 2008 | 2008 |
| | | EUR'000 | EUR'000 | EUR'000 |
+------------------------------------------+------+---------------+---------------+---------------+
| | | | | |
+------------------------------------------+------+---------------+---------------+---------------+
| Equity | | | | |
+------------------------------------------+------+---------------+---------------+---------------+
| Called up share capital | 10 | 6,003 | 4,263 | 6,003 |
+------------------------------------------+------+---------------+---------------+---------------+
| Share premium account | 10 | 346,520 | 314,886 | 346,840 |
+------------------------------------------+------+---------------+---------------+---------------+
| Reverse acquisition reserve | 10 | 12,036 | 12,036 | 12,036 |
+------------------------------------------+------+---------------+---------------+---------------+
| Hedging reserve | 10 | (5,387) | (902) | 573 |
+------------------------------------------+------+---------------+---------------+---------------+
| Translation reserve | 10 | (64,556) | (37,938) | (27,881) |
+------------------------------------------+------+---------------+---------------+---------------+
| Retained (losses) | 10 | (399,646) | (268,057) | (307,884) |
| | | | | |
+------------------------------------------+------+---------------+---------------+---------------+
| Equity attributable to equity holders of | | (105,030) | 24,288 | 29,687 |
| the parent | | | | |
+------------------------------------------+------+---------------+---------------+---------------+
| Minority interest | 10 | 688 | 265 | 617 |
| | | | | |
+------------------------------------------+------+---------------+---------------+---------------+
| Total equity | | (104,342) | 24,553 | 30,304 |
| | | | | |
+------------------------------------------+------+---------------+---------------+---------------+
CONSOLIDATED UNAUDITED CASH FLOW STATEMENT
Six Months Ended 31 March 2009
+------------------------------------------+-------+--------------+---------------+---------------+
| | Notes | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 30 |
| | | 31 | 31 | September |
| | | March | March | 2008 |
| | | 2009 | 2008 | EUR'000 |
| | | EUR'000 | EUR'000 | |
+------------------------------------------+-------+--------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Cash (outflow)/inflow from | | | | |
| continuing | | | | |
| operating activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Loss before taxation | | (90,912) | (165,846) | (206,120) |
+------------------------------------------+-------+--------------+---------------+---------------+
| Depreciation of | | 13,179 | 12,017 | 22,996 |
| property plant and | | | | |
| equipment | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Amortisation of | | 7,164 | 4,690 | 15,218 |
| intangible assets | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Goodwill impairment | | 76,531 | 143,081 | 149,173 |
+------------------------------------------+-------+--------------+---------------+---------------+
| Share of losses for | | 408 | 526 | 1,162 |
| associates | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Finance income | | (1,123) | (139) | (1,374) |
+------------------------------------------+-------+--------------+---------------+---------------+
| Finance costs | | 15,866 | 13,224 | 29,983 |
+------------------------------------------+-------+--------------+---------------+---------------+
| Loss on sale of | | (1,859) | - | (78) |
| property, plant and | | | | |
| equipment | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| (Profit) on business | | (3,665) | - | - |
| closures and disposals | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Share based payment | | 115 | 3,840 | 3,840 |
| expense | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| | | 15,704 | 11,393 | 14,800 |
+------------------------------------------+-------+--------------+---------------+---------------+
| Net Cash (outflow)/inflow from | | (871) | (114) | 24 |
| discontinued | | | | |
| operations | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Operating cashflows before | | 14,833 | 11,279 | 14,824 |
| movements | | | | |
| in working capital and provisions | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Decrease in | | 2,008 | 4,402 | 8,247 |
| inventories | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Decrease/(increase) in | | 19,092 | 1,159 | (15,376) |
| receivables | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| (Decrease) in payables | | (31,726) | (45,095) | (2,640) |
+------------------------------------------+-------+--------------+---------------+---------------+
| (Decrease)/increase in | | (5,557) | 14,192 | 4,892 |
| provisions | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Cash (outflow)/inflow | | (1,350) | (14,063) | 9,947 |
| from operating | | | | |
| activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Income tax paid | | (911) | (189) | (738) |
+------------------------------------------+-------+--------------+---------------+---------------+
| Interest paid | | (11,393) | (10,169) | (26,315) |
| | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Net cash flow (used | | (13,654) | (24,421) | (17,106) |
| in) operating | | | | |
| activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Cash flows from | | | | |
| investing activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Acquisition of | | - | 10,982 | 10,982 |
| subsidiaries, net of | | | | |
| cash acquired | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Acquisition of | | (6,042) | (3,069) | (16,771) |
| property, plant and | | | | |
| equipment | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Acquisition of | | (1,908) | (3,133) | (4,320) |
| intangible assets | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Funding of associate | | - | - | (1,100) |
+------------------------------------------+-------+--------------+---------------+---------------+
| Payments in relation | | (419) | - | - |
| to closure of business | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Proceeds from sale of | | 7,376 | - | - |
| subsidiaries, net of | | | | |
| cash disposed of | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Proceeds from sale of | | - | - | 295 |
| property, plant and | | | | |
| equipment | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Proceeds from sale of | | 2,072 | - | - |
| financial asset | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Interest received | | 1,123 | 139 | 1,374 |
| | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Net cash flow | | 2,202 | 4,919 | (9,540) |
| from/(used in) | | | | |
| investing activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Cash flows from | | | | |
| financing activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Proceeds from issuance | | (338) | 9,251 | 42,948 |
| of ordinary shares, | | | | |
| net of costs | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Proceeds from issuance | | - | - | 5,323 |
| of preference shares | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Repayment of | | (15,235) | (267,648) | (283,771) |
| borrowings | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Proceeds from | | 12,800 | 290,981 | 295,000 |
| borrowings | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| Net cash flow (used | | (2,773) | 32,584 | 59,500 |
| in)/from financing | | | | |
| activities | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
| | | | | |
+------------------------------------------+-------+--------------+---------------+---------------+
CONSOLIDATED UNAUDITED CASH FLOW STATEMENT - continued
Six Months Ended 31 March 2009
+------------------------------------------+-------+--------------+------------+-------------+
| | Notes | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 30 |
| | | 31 | 31 | September |
| | | March | March | 2008 |
| | | 2009 | 2008 | EUR'000 |
| | | EUR'000 | EUR'000 | |
+------------------------------------------+-------+--------------+------------+-------------+
| | | | | |
+------------------------------------------+-------+--------------+------------+-------------+
| Net (decrease)/increase in cash | | (14,225) | 13,082 | 32,854 |
| and cash | | | | |
| equivalents | | | | |
+------------------------------------------+-------+--------------+------------+-------------+
| Cash and cash | | 44,252 | 12,440 | 12,440 |
| equivalents at | | | | |
| beginning of period | | | | |
+------------------------------------------+-------+--------------+------------+-------------+
| Exchange gains and losses on cash | | (1,565) | (760) | (1,042) |
| and cash | | | | |
| equivalents | | | | |
+------------------------------------------+-------+--------------+------------+-------------+
| Cash and cash | 11 | 28,462 | 24,762 | 44,252 |
| equivalents at end of | | | | |
| period | | | | |
+------------------------------------------+-------+--------------+------------+-------------+
CONSOLIDATED UNAUDITED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Six Months Ended 31 March 2009
+------------------------------------------------+---------------+---------------+---------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 30 |
| | 31 | 31 | September |
| | March | March | 2008 |
| | 2009 | 2008 | EUR'000 |
| | EUR'000 | EUR'000 | |
+------------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Exchange differences on translating | (36,675) | (37,412) | (27,355) |
| foreign operations | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Cash flow hedges | (5,960) | (1,206) | 269 |
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Net loss recognised directly | (42,635) | (38,618) | (27,086) |
| in equity | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Loss for the period | (91,806) | (166,449) | (205,924) |
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Total recognised income and expense for | (134,441) | (205,067) | (233,010) |
| the period | | | |
+------------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Attributable to: | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Equity holders of the parent | (134,512) | (205,177) | (233,472) |
+------------------------------------------------+---------------+---------------+---------------+
| Minority interest | 71 | 110 | 462 |
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------------+---------------+---------------+---------------+
| Total recognised income and expense for | (134,441) | (205,067) | (233,010) |
| the period | | | |
+------------------------------------------------+---------------+---------------+---------------+
NOTES TO THE FINANCIAL INFORMATION
1 Going concern
This financial information has been prepared on a going concern basis. The
validity of this assumption is dependent on the group achieving operating
profitability for the years ending 30 September 2009 and 30 September 2010 and
the continued support of the group's bankers.
During the period ended 31 March 2009 the group incurred a loss (after
impairment charges) of EUR91,877K (2008: EUR166,559K). At the period end the group
has cash and cash equivalents of EUR30,299K (2008: EUR24,762K).
The directors have reviewed the forecast trading results of the group for a
period of three years from the date of approval of this financial information.
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 and will continue to
take steps to allow the group to achieve operating profitability notwithstanding
the current economic climate. In addition the Group has 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
* Disposal of businesses not considered a strategic fit for the group
The directors are satisfied that in view of the group's existing bank
relationships, the expected trading and disposal program, and the associated
cash flow performance, the Group should have the necessary resources to meet its
expected financial obligations. Accordingly, they believe it is appropriate for
the financial statements to be prepared on a going concern basis.
2 General information
The principal activity of Payzone Plc and its subsidiary undertakings (the
group) is the deployment of a network of Payzone owned terminals and ATM
machines, which process a variety of electronic transaction services. The main
products on the network include electronic phone top up, utility top up, EFT
processing and ATM cash withdrawal. The group operates in 18 countries across
Europe, with the group headquarters based in Dublin. There are circa 700 people
employed within the group.
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.
3 Basis of preparation
This financial information has been prepared in accordance with the group's
accounting policies under IFRS. Full details of the accounting policies adopted
by the group are set out in note 5. The accounting policies are those that will
be applied in preparing the financial statements for the year ending 30
September 2009.
The preparation of this financial information 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
reporting period 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 high degree of judgement or
complexly, or areas where assumptions and estimates are significant to the
financial report are disclosed in note 4.
This financial information is for the six months ended 31 March 2009.
The following provides a brief outline of the likely impact on future financial
statements of relevant IFRS which have not been early adopted in this financial
information:
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.
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.
3 Basis of preparation - continued
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.
IFRIC 18, 'Transfers of Assets from Customers' (effective for transfers of
assets from customers received on or after 1 July 2009). The interpretation is
still subject to EU endorsement. This interpretation applies to agreements in
which an entity receives from a customer an item of property, plant and
equipment (or an amount of cash which must be used to construct or acquire an
item of property, plant and equipment) that the entity must use either to
connect the customer to a network or to provide the customer with ongoing access
to a supply of goods or services, or do both. IFRIC 18 is currently not relevant
to the group's activities.
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 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 the financial information on a going concern basis.
Further details are described in note 1 supporting the 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 5. 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.
(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 5 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 EUR46.6 million and
property, plant and equipment of EUR36.8 million as at 31 March 2009. 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 5.
(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.
(f) Cardpoint as acquirer
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.
5 Accounting policies
The principal accounting policies applied in the preparation of this financial
information 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 last 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 Group's 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 Group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies 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 | rates between 15% and 33.3% |
| equipment | |
| | |
+--------------------------------+---------------------------------------------------+
| Computer equipment | rates between 20% and 33.3% |
| | |
+--------------------------------+---------------------------------------------------+
| Property and leasehold | 12.5% |
| renovations | |
+--------------------------------+---------------------------------------------------+
| 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.
5 Accounting policies - continued
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:
(i) The technical feasibility of completing the intangible asset so that it will
be available for use or sale.
(ii) An intention to complete the intangible asset and use or sell it.
(iii) An ability to use or sell the intangible asset.
(iv) How the intangible asset will generate probable future economic benefits.
(v) The availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
(vi) Its ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Other development expenditure which does 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 asset's 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 re-measured 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.
The group has only a cash flow 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.
5 Accounting policies - continued
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 (i.e.
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.
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.
5 Accounting policies - continued
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 its 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.
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.
5 Accounting policies - continued
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.
5 Accounting policies - continued
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.
6 Administrative expenses - special items
+------------------------------------------------+-------------+-------------+-------------+
| | 6 | 6 | Year |
| | month | month | ended |
| | period | period | 30 |
| | ended | ended | September |
| | 31 | 31 | 2008 |
| | March | March | EUR'000 |
| | 2009 | 2008 | |
| | EUR'000 | EUR'000 | |
+------------------------------------------------+-------------+-------------+-------------+
| | | | |
+------------------------------------------------+-------------+-------------+-------------+
| Goodwill impairment | 76,531 | 143,081 | 149,173 |
| (a) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| Restructuring | 2,050 | 8,478 | 19,873 |
| (b) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| (Profit)/loss on | (3,665) | - | 3,646 |
| disposal of subsidiaries | | | |
| (c) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| Increase in bad debt | 2,700 | - | - |
| provision (d) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| (Profit) on disposal of | (1,859) | - | - |
| financial asset (e) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| Share option charge | - | 2,108 | 2,015 |
| (f) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| Legal action with former | - | - | 4,092 |
| directors (g) | | | |
+------------------------------------------------+-------------+-------------+-------------+
| | 75,757 | 153,667 | 178,799 |
| | | | |
+------------------------------------------------+-------------+-------------+-------------+
(a) Goodwill impairment
The Group tests for impairment annually and also if there is an indication that
assets might be impaired. The Group identified the difficult trading conditions
and the weakening of sterling against the Euro as indicator 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 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 cash flow forecasts employed for the value-in-use computation are extracted
from management's budgets and forecasts for a five-year period approved by
senior management and the Board of Directors.
A growth rate of 2%-3% has been used in determining value-in-use beyond the
period covered by the budgets and forecasts. This assumption is made based on
the trading conditions which the Group expects to experience.
The recoverable amount stemming from this exercise represents the present value
of the future cash flows inclusive of the terminal value discounted at an
appropriate discount rate to the CGU being assessed for impairment; discount
rates of 11.8% - 12.3% were used.
6 Administrative expenses - special items - continued
Applying the above techniques, an impairment of goodwill of EUR76.5 million (2008:
6 months: EUR143.1 million 2008: 12 months (EUR149.17 million)) has been recognised.
The values applied to each of the key assumptions are derived from a combination
of internal and external factors based on historical experience and take into
account the stability of cash flows typically associated with these businesses.
Key assumptions include managements':
* estimates of future profitability;
* trade working capital investment needs and;
* expected capital expenditure in the normal course of business.
(b) Restructuring costs
Restructuring costs relate to redundancy costs associated with the
rationalisation and restructuring of various group activities after the disposal
of Spain, France and Italy. During 2008, restructuring costs related to the
costs, incurred in the closure of Cardpoint offices in Blackpool and Frankfurt
and include rebranding, consultancy, and redundancy costs in relation to the
integration of both businesses since 5 December.
The 2008 costs also included the write down of certain assets which did not meet
the criteria of fair value adjustments on the reverse acquisition of alphyra by
Cardpoint.
(c) (Profit)/loss on disposal of subsidiaries
The group successfully completed the sale of France, Spain and Italy in October
2008 (Spain and Italy) and March 2009 (France). Following the completion of the
sale a profit on disposal of EUR4.2m was recorded. The group sold its gift card
business OLG to Branded Payment Solutions Limited in October 2008. Following
completion of the sale a loss on disposal of EUR600k was recorded.
During 2008, the group provided for a loss on disposal of EUR3.6 million, to write
the carrying value of the subsidiaries held for resale to their recoverable
amount.
(d) Increase in bad debt provision
During the period, the group's bad debt provision was increased by EUR2.7m to
reflect exposure to a downturn in the Romanian economy. The group is in the
process of recovering value through guarantees but as the legal process will
take sometime to resolve the group has provided for the risk.
(e) (Profit) on disposal of financial assets
On January 6, 2009 the group sold its holding in Orbiscom to Mastercard, for a
profit of EUR1.9m.
(f) 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.
(g)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 an unfair dismissal case
and removal from office. Costs of EUR4.1 million were incurred in respect of
settlements, legal and related costs.
7 Finance costs - special items
+------------------------------------------------+------------+------------+------------+
| | 6 | 6 | Year |
| | month | month | ended |
| | period | period | 30 |
| | ended | ended | September |
| | 31 | 31 | 2008 |
| | March | March | EUR'000 |
| | 2009 | 2008 | |
| | EUR'000 | EUR'000 | |
+------------------------------------------------+------------+------------+------------+
| | | | |
+------------------------------------------------+------------+------------+------------+
| Bank arrangement fees | 456 | 2,385 | 3,853 |
+------------------------------------------------+------------+------------+------------+
| Easy termination of | - | 433 | 433 |
| derivative financial | | | |
| instruments | | | |
+------------------------------------------------+------------+------------+------------+
| | 456 | 2,818 | 4,286 |
| | | | |
+------------------------------------------------+------------+------------+------------+
Special items include fees incurred in relation to the renegotiation of the
group's facility agreement including related consulting and legal fees.
In 2008, the costs also included fees in relation to the early termination of
Cardpoint's banking arrangements, which include penalties on the early
termination of derivative financial instruments.
8 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 period.
+------------------------------------------------+--------------+---------------+---------------+
| | 6 | 6 | Year |
| | month | month | ended |
| | period | period | 30 |
| | ended | ended | September |
| | 31 | 31 | 2008 |
| | March | March | |
| | 2009 | 2008 | |
+------------------------------------------------+--------------+---------------+---------------+
| | | | |
+------------------------------------------------+--------------+---------------+---------------+
| Loss attributable to | (91,877) | (166,559) | (206,386) |
| equity holders of the | | | |
| company | | | |
| (EUR'000) | | | |
+------------------------------------------------+--------------+---------------+---------------+
| Weighted average number | 440,693 | 186,431 | 306,798 |
| of ordinary shares in | | | |
| issue ('000) | | | |
+------------------------------------------------+--------------+---------------+---------------+
| Basic and diluted loss | (21c) | (89c) | (67c) |
| per share (cent per share) * | | | |
+------------------------------------------------+--------------+---------------+---------------+
* None of the group's contingently issuable shares were dilutive as they
would have decreased the loss per share in all periods.
9 Classification of borrowings as current liabilities
As a result of a breach of banking covenants as at 31 March 2009 IAS 1
"Presentation of Financial Statements" requires the group's debt to be
classified as current. Negotiations with the bankers were ongoing at the time
and the bankers subsequently agreed to waive the default existing at 31 March
2009.
10 Reconciliation of changes in equity
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | Share | Share | Other | | | | | | Total |
| | | | | Reverse | Hedging | Translation | Retained | Minority | EUR'000 |
| | capital | premium | reserve | | | reserve | losses | | |
| | EUR'000 | EUR'000 | EUR'000 | acquisition | reserve | EUR'000 | EUR'000 | interests | |
| | | | | reserve | EUR'000 | | | EUR'000 | |
| | | | | EUR'000 | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| At 1 October 2007 | 8,296 | 132,617 | 522 | - | 304 | (526) | (105,338) | 155 | 36,030 |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Ordinary | 244 | 868 | | | | | | | 1,112 |
| shares | | | | | | | | | |
| issued in | | | | | | | | | |
| Cardpoint | | | | | | | | | |
| plc | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Exchange | | | | | | (43,895) | | | (43,895) |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translating | | | | | | | | | |
| foreign | | | | | | | | | |
| operations | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Transfer | (8,540) | (133,485) | (522) | 136,064 | | 6,483 | | | - |
| to reverse | | | | | | | | | |
| acquisition | | | | | | | | | |
| reserve | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Ordinary | 4,263 | 314,886 | | (124,028) | | | | | 195,121 |
| shares | | | | | | | | | |
| issued in | | | | | | | | | |
| Payzone | | | | | | | | | |
| plc | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Credit for | | | | | | | 3,840 | | 3,840 |
| equity | | | | | | | | | |
| settled | | | | | | | | | |
| share | | | | | | | | | |
| based | | | | | | | | | |
| payments | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Cash flow | | | | | | | | | |
| hedge: | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - Fair | | | | | (902) | | | | (902) |
| value loss | | | | | | | | | |
| in period | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - | | | | | (304) | | | | (304) |
| Transfer | | | | | | | | | |
| to finance | | | | | | | | | |
| costs | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Loss for | | | | | | | (166,559) | 110 | (166,449) |
| the | | | | | | | | | |
| financial | | | | | | | | | |
| period | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| At 31 | 4,263 | 314,886 | - | 12,036 | (902) | (37,938) | (268,057) | 265 | 24,553 |
| March 2008 | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Ordinary | 1,740 | 33,068 | | | | | | | 34,808 |
| shares | | | | | | | | | |
| issued in | | | | | | | | | |
| Payzone | | | | | | | | | |
| plc | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Share | | (1,114) | | | | | | | (1,114) |
| issue | | | | | | | | | |
| costs | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Exchange | | | | | (35) | 10,057 | | | 10,022 |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translating | | | | | | | | | |
| foreign | | | | | | | | | |
| operations | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Credit for | | | | | | | | | - |
| equity | | | | | | | | | |
| settled | | | | | | | | | |
| share | | | | | | | | | |
| based | | | | | | | | | |
| payments | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Cash flow | | | | | | | | | |
| hedge: | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| - Fair | | | | | 1,510 | | | | 1,510 |
| value gain | | | | | | | | | |
| in period | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| Loss for | | | | | | | (39,827) | 352 | (39,475) |
| the | | | | | | | | | |
| financial | | | | | | | | | |
| period | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
| At 30 | 6,003 | 346,840 | - | 12,036 | 573 | (27,881) | (307,884) | 617 | 30,304 |
| September | | | | | | | | | |
| 2008 | | | | | | | | | |
+-------------------------------+-------------+---------------+------------+---------------+------------+--------------+---------------+------------+---------------+
10 Reconciliation of changes in equity - continued
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| | Share | Share | Other | | | | | | Total |
| | | | | Reverse | Hedging | Translation | Retained | Minority | EUR'000 |
| | capital | premium | reserve | | | reserve | losses | | |
| | EUR'000 | EUR'000 | EUR'000 | acquisition | reserve | EUR'000 | EUR'000 | interests | |
| | | | | reserve | EUR'000 | | | EUR'000 | |
| | | | | EUR'000 | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| At 30 | 6,003 | 346,840 | - | 12,036 | 573 | (27,881) | (307,884) | 617 | 30,304 |
| September | | | | | | | | | |
| 2008 | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| Cash flow | | | | | | | | | |
| hedge: | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| - Fair | | | | | (5,960) | | | | (5,960) |
| value loss | | | | | | | | | |
| in period | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| Credit for | | | | | | | 115 | | 115 |
| equity | | | | | | | | | |
| settled | | | | | | | | | |
| share | | | | | | | | | |
| based | | | | | | | | | |
| payments | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| Share | | (320) | | | | | | | (320) |
| issue | | | | | | | | | |
| costs | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| Loss for | | | | | | | (91,877) | 71 | (91,806) |
| the | | | | | | | | | |
| financial | | | | | | | | | |
| period | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| Exchange | | | | | | (36,675) | | | (36,675) |
| differences | | | | | | | | | |
| on | | | | | | | | | |
| translating | | | | | | | | | |
| foreign | | | | | | | | | |
| operations | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
| At 31 | 6,003 | 346,520 | - | 12,036 | (5,387) | (64,556) | (399,646) | 688 | (104,342) |
| March 2009 | | | | | | | | | |
+-------------------------------+------------+-------------+------------+-------------+-------------+--------------+---------------+------------+---------------+
11 Cash and cash equivalents
+------------------------------------------------+-------------+------------+------------+
| | As at | As at | As at |
| | 31 | 31 | 30 |
| | March | March | |
| | 2009 | 2008 | September |
| | EUR'000 | EUR'000 | 2008 |
| | | | EUR'000 |
+------------------------------------------------+-------------+------------+------------+
| | | | |
+------------------------------------------------+-------------+------------+------------+
| Cash and cash | 30,299 | 24,762 | 43,348 |
| equivalents | | | |
+------------------------------------------------+-------------+------------+------------+
| Cash held in disposal | 1,097 | - | 1,659 |
| group held for sale | | | |
+------------------------------------------------+-------------+------------+------------+
| Bank overdraft in | (2,934) | - | (755) |
| disposal group held for sale | | | |
+------------------------------------------------+-------------+------------+------------+
| | 28,462 | 24,762 | 44,252 |
| | | | |
+------------------------------------------------+-------------+------------+------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAXKXFDLNEFE
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