Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1Accounting policies
Basis of preparation
These consolidated financial statements include the results of the company and its subsidiaries ("the group") for the nine month periods ended 30 June 2013 and 2012.
The consolidated financial statements have been prepared under the historical cost convention, on a going concern basis and in accordance with generally accepted accounting principles in the United Kingdom.
The group's accounting policies have remained unchanged from the previous period and are set out below.
Basis of consolidation
The consolidated financial statements incorporate the company and all of its subsidiary undertakings. A subsidiary undertaking is consolidated by reference to whether the company controls the management of the affairs of the related entity, unless the subsidiary is held temporarily exclusively with a view to subsequent sale.
The results of all of the group’s undertakings are prepared to the group’s financial year end. The subsidiaries are listed at note 12.
The identifiable assets and liabilities of the acquired entities are included in the consolidated financial statements at their fair value at the date of acquisition. The difference between the fair value and the cost of acquisition is recognised as goodwill or negative goodwill. They are measured at fair values that reflect the conditions at the date of the acquisition. The cost of acquisition is the amount of cash or cash equivalents paid and the fair value of other purchase consideration, including contingent consideration, given by the acquirer, together with the associated transaction expense.
The results of subsidiaries acquired are included in the consolidated profit and loss account from the date of acquisition. The results of the subsidiary undertakings disposed of are included in the consolidated profit and loss account up to the date that control passes.
Inter-company transactions and balances between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Foreign currency translation
(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 company operates (‘the functional currency’). The consolidated financial statements are presented in British Pounds Sterling ("£"), which is the company’s functional and the group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated profit and loss account.
Foreign exchange gains and losses are presented in the consolidated profit and loss account within ‘Net operating expenses’.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
1Accounting policies - continued
Foreign currency translation – continued
(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 consolidated balance sheet presented are translated at the closing rate prevailing at the end of the relevant reporting period. |
· | Income and expenses for each consolidated profit and loss account 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 directly in reserves (“Exchange Revaluation reserve”). |
Turnover
Turnover consists of transaction fees and other sundry income receivable from its estate of automated teller machines after eliminating sales within the group. Turnover arising from transaction fees is exempt from value added tax and turnover from sundry income is stated net of value added tax. The group recognises turnover when it can be reliably measured and when it is probable that future economic benefits will flow to the company.
Turnover is recognised in the period earned by rendering of services.
Cost of sales
Cost of sales consists of commissions due to hosts, cash replenishment costs, processing costs, cost of cash, phone costs and alarms and other cost of sales.
Tangible fixed assets and depreciation
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 company 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 consolidated profit and loss account 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:
| |
ATMs | 5 to 7 years |
Fixtures, fittings and equipment | rates between 20% and 33.3% |
Computer equipment | 33.3% |
Motor vehicles | 33.3% |
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 assets' 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 consolidated profit and loss account.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
1Accounting policies - continued
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill is being amortised over a period of five years, being its estimated useful life.
Impairment assessment of tangible and intangible fixed assets
Tangible and intangible fixed assets held and used by the group are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. If the carrying amount of the asset exceeds the recoverable amount, an impairment loss will be recorded. The amount of the impairment loss is measured as the amount by which the carrying amount of the asset exceeds its recoverable amount and is recorded in the consolidated profit and loss account.
Stocks
Stocks are stated at the lower of cost and net realisable value, after making allowance for obsolete and slow moving items.
Cost is the invoiced price of the stock. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal.
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated profit and loss account and is calculated on the basis of the tax laws enacted or substantively enacted in the countries where group companies 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. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted 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 only 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 assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Contributions to pension schemes
The group operates a defined contribution scheme. The pension costs charged in the consolidated profit and loss account represents the amount of the contributions payable to the schemes in respect of the accounting period.
Leased assets
Assets held under finance leases, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible 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 consolidated profit and loss account 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.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
2Going concern
The directors, after making enquiries and taking into account the group’s financial position and finance available from the parent undertaking, have a reasonable expectation that the group has adequate resources to enable it to continue to meet its liabilities as they fall due for the foreseeable future and the going concern basis has been adopted in preparing these accounts.
| | | |
3Turnover | 2013 £’000 | | 2012 £’000 |
| | | |
The turnover is attributable to the principal activity of the group. | | | |
| | | |
Geographical analysis of turnover: | | | |
United Kingdom | 41,761 | | 41,826 |
Germany | 8,267 | | 6,079 |
| 50,028 | | 47,905 |
| | | |
4Profit on ordinary activities before taxation | 2013 £’000 | | 2012 £’000 |
| | | |
The profit on ordinary activities before taxation is stated after charging: | | | |
| | | |
Deprecation of fixed assets (note 10) | 2,976 | | 3,791 |
Amortisation of goodwill (note 11) | 1,418 | | 2,703 |
Operating lease rentals: | | | |
-land and buildings | 164 | | 252 |
Impairment of tangible fixed assets (note 10) | 480 | | 422 |
Loss on disposal of fixed assets | 290 | | 304 |
| | | |
5Other operating income | 2013 £’000 | | 2012 £’000 |
| | | |
Reversal of management charge | - | | 3,154 |
In 2012, there was a credit arising through the reversal of the management charges that were over charged in prior periods.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
| | | |
6Staff costs and employees information | 2013 £’000 | | 2012 £’000 |
Staff costs for the group during the period: | | | |
| | | |
Wages and salaries | 4,724 | | 4,966 |
Social security costs | 517 | | 548 |
Defined contribution pension cost | 60 | | 39 |
| 5,301 | | 5,553 |
| | | |
| 2013 Number | | 2012 Number |
| | | |
The average number of employees during the period was: | | | |
| | | |
Administration and management | 173 | | 201 |
| | | |
7Net interest | 2013 £’000 | | 2012 £’000 |
| | | |
Interest payable on intercompany balances | 1,814 | | 2,159 |
Interest payable on finance leases | 7 | | 27 |
Bank charges | 21 | | 24 |
Total interest and similar charges payable | 1,842 | | 2,210 |
| | | |
8Tax on profit on ordinary activities - analysis at charge in period | 2013 £’000 | | 2012 £’000 |
| | | |
Current tax: | | | |
United Kingdom corporation tax at 24% | - | | - |
| | | |
Foreign tax: | | | |
Corporation tax | 187 | | 106 |
| 187 | | 106 |
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
8Tax on profit on ordinary activities - analysis at charge in period - continued
The tax for the period is lower than the standard effective rate of corporation tax in the UK for the year ended 30 September 2012 of 25%. The differences are explained below:
| | | |
| 2013 £’000 | | 2012 £’000 |
| | | |
Profit on ordinary activities before taxation | 4,759 | | 3,821 |
| | | |
Profit on ordinary activities before taxation multiplied by standard rate of corporation tax in the UK of 23.5% (2012: 25%) | 1,118 | | 955 |
| | | |
Effect of: | | | |
Expenses not deductible for tax purposes | 351 | | 1,042 |
Capital allowances less than/(in excess) of depreciation | 334 | | 478 |
Other short term timing differences | 73 | | 59 |
Group relief | (306) | | (380) |
Utilisation of tax losses forward | (1,424) | | (2,143) |
Adjustment in respect of foreign tax rates | 41 | | 95 |
Current tax charge for the period | 187 | | 106 |
A number of changes to the UK corporation tax system were introduced, including a change in the UK main corporation tax rate from 26% to 24%, effective from 1 April 2012.
In addition to the changes in rates of corporation tax disclosed above, further changes to the UK corporation tax rates were announced in the 2012 Autumn Statement and the March 2013 Budget. These include further reductions to the main rate to reduce the rate to 21% from 1 April 2014 and to 20% from 1 April 2015. These changes had not been substantively enacted at the balance sheet date and, therefore, are not reflected in these consolidated financial statements.
9Deferred taxation
The group has a potential deferred tax asset, which has not been recognised in the financial statements, as set out below. This asset will be recoverable to the extent that sufficient trading profits arise in the future.
| | | |
| 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
| | | |
Capital allowances – tax effect | 9,267 | | 10,279 |
Trading losses – tax effect | 9,661 | | 10,474 |
Short term timing differences | 155 | | 168 |
| 19,083 | | 20,921 |
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
| | | |
10Tangible fixed assets | ATMs and other equipment |
| 30 Jun 2013 £'000 | | 30 Sep 2012 £'000 |
Cost | | | |
At beginning of period (1 October 2012 and 2011, respectively) | 74,803 | | 73,344 |
Additions | 5,356 | | 5,065 |
Disposals | (1,222) | | (2,093) |
Exchange adjustments | 1,223 | | (1,513) |
At end of period | 80,160 | | 74,803 |
| | | |
Accumulated depreciation | | | |
At beginning of period | 63,685 | | 61,369 |
Charge for the period (note 4) | 2,976 | | 4,883 |
Impairment charge for the period (note 4) | 480 | | 506 |
Disposals | (918) | | (1,698) |
Exchange adjustments | 1,154 | | (1,375) |
At end of period | 67,377 | | 63,685 |
| | | |
Net book amount | | | |
At end of period | 12,783 | | 11,118 |
At beginning of period | 11,118 | | 11,975 |
An impairment charge of £480,000 (year ended 30 Sep 2012: £506,000) has been recorded this period against ATM and ATM installation costs incurred on machines that were removed from service during the period.
| 2013 | | 2012 |
11Intangible assets | Goodwill 30 Jun 2013 €'000 | | Goodwill 30 Sep 2012 €'000 |
Cost | | | |
At beginning of period and at end of period | 171,311 | | 171,311 |
| | | |
Accumulated amortisation | | | |
At beginning of period | (164,696) | | (161,521) |
Charge for the period (note 4) | (1,418) | | (3,175) |
At end of period | (166,114) | | (164,696) |
| | | |
Net book value | | | |
At end of period | 5,197 | | 6,615 |
At beginning of period | 6,615 | | 9,790 |
The goodwill arose on the acquisition of Omnicash in April 2011. The goodwill is being amortised over five years.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
12Investments in subsidiary undertakings
Cardpoint Limited had interests in the following subsidiary undertakings as at 30 June 2013:
| | | |
Name of subsidiary | Country of incorporation | Proportion held | Nature of business |
| | | |
Cardpoint Group Limited | United Kingdom | 100% | Intermediate holding company |
Cardpoint Remote Limited | United Kingdom | 100% | Ownership and operation of an independent estate of ATMs |
Moneybox Corporation Limited | United Kingdom | 100% | Ownership and operation of an independent estate of ATMs |
Cardpoint Technical Services Limited | United Kingdom | 100% | Maintenance and repair of ATMs |
Cardpoint Services Limited | United Kingdom | 100% | Ownership and operation of an independent estate of ATMs |
OmniCash Limited | United Kingdom | 100% | Ownership and operation of an independent estate of ATMs |
Moneybox Holdings Limited | United Kingdom | 100% | Intermediate holding company |
Moneybox Limited | United Kingdom | 100% | Intermediate holding company |
Cardpoint GmbH | Germany | 100% | Ownership and operation of an independent estate of ATMs |
Moneybox Deutschland GmbH | Germany | 100% | Ownership and operation of an independent estate of ATMs |
| | | |
13Other debtors | 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
| | | |
Trade debtors | 536 | | 81 |
Prepayments and accrued income | 6,828 | | 5,891 |
Other debtors | 629 | | 682 |
| 7,993 | | 6,654 |
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
| | | |
14Creditors: amounts falling due within one year | 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
| | | |
Finance lease liabilities | 33 | | 275 |
Trade creditors | 3,741 | | 1,600 |
Restricted creditors | 4,641 | | 5,485 |
Corporation tax | 253 | | 274 |
Other taxes and social security | 60 | | 383 |
Accruals and deferred income | 5,644 | | 7,025 |
Other creditors | 19 | | - |
| 14,391 | | 15,042 |
| | | |
15Amounts owed to/from parent group | 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
| | | |
Intercompany debtors: | | | |
Amounts owed by group undertakings | 33,054 | | 29,137 |
| | | |
Intercompany creditors: | | | |
Loan due to group undertakings | 60,569 | | 60,569 |
Amounts owed to group undertakings | 6,134 | | 4,331 |
| 66,703 | | 64,900 |
Amounts owed to and from group undertakings are unsecured, interest free and repayable on demand.
Loans due to group undertakings are unsecured, interest bearing and have no fixed date of repayment.
These are amounts due to/from group undertakings outside the Cardpoint Limited Group.
| | | |
16Called up share capital | 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
Authorised | | | |
240,000,000 ordinary shares of 5p each | 12,000 | | 12,000 |
| | | |
Allotted, called up and fully paid | | | |
116,071,834 ordinary shares of 5p each | 5,804 | | 5,804 |
The share capital of the company was pledged as security to the group's banking syndicate led by RBS, in return for the group's banking facilities extended to Prize Holdings 4 S.á.r.l.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
| | | | | |
17Reserves | Share premium account £'000 | | Exchange revaluation reserve £'000 | | Profit and loss account £'000 |
| | | | | |
At 1 October 2011 | 97,969 | | 1,034 | | (128,978) |
Profit for the financial year | - | | - | | 5,016 |
Currency translation | - | | (943) | | - |
At 30 September 2012 | 97,969 | | 91 | | (123,962) |
| | | | | |
At 1 October 2012 | 97,969 | | 91 | | (123,962) |
Profit for the period | - | | - | | 4,572 |
Currency translation | - | | 726 | | - |
At 30 June 2013 | 97,969 | | 817 | | (119,390) |
| | | |
18Reconciliation of movements in shareholders' (deficit) | 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
| | | |
Profit for the period | 4,572 | | 5,016 |
Currency translation | 726 | | (943) |
Opening shareholders’ (deficit) | (20,098) | | (24,171) |
Closing shareholders’ (deficit) | (14,800) | | (20,098) |
| | | |
19Cash flow from operating activities | 2013 £’000 | | 2012 £’000 |
| | | |
Operating profit | 6,601 | | 6,031 |
Adjustments for: | | | |
Deprecation of tangible fixed assets (note 10) | 2,976 | | 3,791 |
Goodwill amortisation (note 11) | 1,418 | | 2,703 |
Impairment of tangible fixed assets (note 10) | 480 | | 422 |
Loss on disposal of tangible fixed assets (note 4) | 290 | | 304 |
Other non-cash changes - foreign exchange gains on operating activities | 657 | | (719) |
Increase in stock | (336) | | (15) |
Increase in debtors | (1,340) | | (820) |
(Decrease)/increase in creditors | 456 | | 684 |
Decrease in intercompany balances | (3,928) | | (7,377) |
Net cash inflow from continuing operations | 7,274 | | 5,004 |
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
| | | |
20Leasing commitments | 30 Jun 2013 Land and buildings £'000 | | 30 Sep 2012 Land and buildings £'000 |
| | | |
The annual commitment under non-cancellable operating leases is as follows: | | | |
| | | |
Less than one year | - | | - |
Within two to five years | 141 | | 141 |
| | | |
21Related party transactions | 2013 €’000 | | 2012 €’000 |
The following transactions were carried out with related parties, being members of the Prize Holdings 1 S.á.r.l. group: | | | |
| | | |
(a) Purchases of services | | | |
| | | |
Group company (management services) | - | | 402 |
Group company (reversal of prior years’ management services) | - | | (3,154) |
| - | | (2,752) |
(b) Interest payable | | | |
| | | |
| 30 Jun 2013 £'000 | | 30 Sep 2012 £’000 |
| | | |
Group company | 1,814 | | 2,764 |
22Ultimate parent undertaking
At 30 June 2013 and 30 September 2012, the group’s immediate parent undertaking was Payzone Ventures Limited, a company incorporated in the United Kingdom.
The group’s ultimate parent undertaking and controlling party was Prize Holdings 1 S.á.r.l, a company incorporated in Luxembourg, which is the parent undertaking of the largest and smallest group to consolidate these financial statements. Copies of Prize Holdings 1 S.á.r.l consolidated financial statements may be obtained from 2, Rue des Dahlias, L-1411 Luxembourg, Grand-Duchy of Luxembourg.
23Restricted cash
At 30 June 2013, restricted cash of £4,641,000 (30 September 2012: £5,485,000) relates to balances held on behalf of certain creditors.
24Subsequent events
On 7 August 2013, Cardtronics, a global ATM provider, acquired Cardpoint Limited. As a result Cardtronics Inc., a company incorporated in the United States, became the group's ultimate parent undertaking and controlling party.
Cardpoint Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – continued
(Unaudited)
25Summary of Significant Differences Between Accounting Principles Generally Accepted in the United Kingdom and Accounting Principles Generally Accepted in the United States
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United Kingdom (UK GAAP). Such principles differ in certain respects from generally accepted accounting principles in the United States (US GAAP). A summary of principal differences applicable to the group is set out below:
Identifiable Intangible Assets
Under UK GAAP, identifiable intangible assets are not required to be separately identified and recorded on a Company’s balance sheet in connection with a business combination. Additionally under UK GAAP, goodwill is amortized over an estimated period of a time on a straight line basis. Under US GAAP, identifiable intangible assets are required to be separately identified and determined to be indefinite-lived or definite-lived subject to amortization over an estimated useful life using a systematic and rational method to match the pattern of use of the asset. Under US GAAP, goodwill is not amortized, but instead is tested at least annually for impairment or more frequently as events may trigger a need for an impairment analysis. Identifiable infinite-lived intangible assets are also required to be tested for impairment under US GAAP at least annually or more frequently as events may trigger a need for an impairment analysis.
