Registered number: 05504126
HANDEPAY LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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COMPANY INFORMATION
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R Harding (appointed 14 August 2023)
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1 The Boulevard, Shire Park
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KPMG LLP, Statutory Auditor
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CONTENTS
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Independent Auditor's Report to The Members of Handepay Limited
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their Strategic Report together with the audited financial statements for the year ended 31 March 2023. The following strategic review is aligned to the wider PayPoint Group to which the Company is a fully owned subsidiary.
The Company is a limited company incorporated and trading in the United Kingdom. It is a wholly-owned subsidiary of PayPoint plc ("PayPoint") having been acquired on 3 February 2021.
There have not been any significant changes in the Company's principal activities in the period under review. The directors are not aware, at the date of the annual report, of any likely changes in the Company’s activities in the next year.
Principal risks and uncertainties
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The Company is a subsidiary of PayPoint which manages risk and uncertainties from a central risk function. The risk function monitors risks and uncertainties from a wholistic group basis with risks and uncertainties common to all group companies.
The risk management and internal control framework, as part of the wider governance framework, aims to provide assurance and confidence to stakeholders about PayPoint’s ability to deliver its objectives and manage principal risks. During the year, the Group Audit Committee received and reviewed risk information relating to the key risk areas below, together with details of actions taken and relevant mitigating controls, prior to advising the Board in this regard.
The Board then carried out its formal assessment and gave final approval to the list of principal risks which were disclosed in the annual accounts of PayPoint plc and are extracted in the section below:
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Financial key performance indicators
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During the year revenue decreased by 2.6% to £14.8 million (31 March 2022: £15.2 million) due to lower average revenue per merchant number due to lower volume and value processed. Cost of revenue increased by 25% to £7.6 million (31 March 2022: £6.1 million) as the sales force returned to full strength and administrative expenses remained the same £3.3 million (31 March 2022: £3.3 million). Profit before tax decreased by 28.8% to £4.2 million (31 March 2022: £5.9 million).
The directors manage the company operations by monitoring ongoing performance of the business through a number of measures including:
∙Financial indicators such as gross and EBITDA margins.
∙Customer trends by customer segment, card turnover and revenue per customer.
∙Customer satisfaction from feedback through online ratings.
These are monitored through monthly management accounts and meetings with variance analysis.
Non-financial key performance indicators
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Due to the size and structure of the Company there were no relevant non-financial key performance indicators.
The financial and non-financial key performance indicators of PayPoint, which includes the Company, are discussed in the Group's annual report which does not form part of this report.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙use the going concern basis of accounting unless they either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
The principal activity of the Company in the year under review is that of an Independent Sales Organisation in the merchant acquiring industry.
The profit for the year, after taxation, amounted to £3,437k (2022 - £4,777k).
During the year no dividends were declared or paid (2022: £nil).
The directors who served during the year were:
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
There were no political contributions in the current year or previous period.
The primary source of carbon emissions is business travel, mainly to visit existing and prospective merchants in the UK. The Company aims to reduce unnecessary travel and routes are pre-planned to ensure efficiency where possible. The second largest source of CO2 emissions arises from energy consumption in the Company’s office.
The Company promotes a cycle to work scheme and car sharing for all UK employees, where drivers offer lifts to other employees who live near them or on their route to work. The Company recycles paper, cans, plastic cups, cardboard, toners and print cartridges. Where possible, the Company also aims to recycle computer equipment.
The Company aims to create a positive working environment that enables us to attract and retain a talented workforce. The Company recruits externally from a wide range of industries.
The Company keeps its people informed of Company performance and new developments through different channels including formal business updates, staff briefings and regular team meetings.
PayPoint values diversity and it is important to us that our working environment is one where all are treated equally and which is free from discrimination in respect of gender, ethnicity, religion, sexual orientation, age or disability. The Company is committed to offering equal opportunities to all our people. Our Diversity and Inclusion Policy can be found on our website.
Matters covered in the Strategic Report
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Disclosures required under S416(4) of the Companies Act 2006 are commented upon in the Strategic Report as the directors consider them to be of strategic importance to the Company.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Post balance sheet events
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In July 2023, the Company paid £10m interim dividend to the parent company. There have been no other significant events affecting the Company since the year end.
KPMG LLP have confirmed that they will be resigning as auditors after the completion of this years audit as part of the Group's rotation of auditors. Their resignation will be accepted at the forthcoming annual general meeting and a resolution to appoint PricewaterhouseCoopers LLP will be proposed.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
This report was approved by the board and signed on its behalf.
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1 The Boulevard, Shire Park
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANDEPAY LTD
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANDEPAY LTD
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We have audited the financial statements of Handepay Ltd (“the Company”) for the year ended 31 March 2023,which comprise the Statement of comprehensive income, Statement of financial position, Statement of changes in equity and related notes, including the accounting policies in note 2
In our opinion the financial statements:
∙give a true and fair view of the state of the Company’s affairs as at 31 March 2023 and of its profit for the year then ended;
∙have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
In our evaluation of the directors’ conclusions, we considered the inherent risks to the Company’s business model and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the going concern.
Our conclusions based on this work:
∙we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
∙we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the going concern period.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
∙Enquiring of directors and inspection of policy documentation as to the Company’s high-level policies and procedures to prevent and detect fraud, including the internal audit function, and the Company’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud.
∙Reading Board minutes.
∙Considering remuneration incentive schemes and performance targets for management, directors and sales
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANDEPAY LTD
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staff.
∙Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account possible pressures to meet profit targets, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because of the low complexity and judgement involved in revenue recognition.
We did not identify any additional fraud risks.
We performed procedures including:
∙Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation. These included those posted by senior finance management, those posted without a user ID or a seldom user ID, those containing certain words in journal description, those posted to unusual accounts, those with rounded amount reversals from accruals or provisions.
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience ,and through discussion with the directors and others management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.
As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, and taxation legislation, and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: consumer credit regulations, health and safety, anti-bribery, employment law, and certain aspects of company legislation, recognising the nature of the Company’s activities to provide consumer credit regulations. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANDEPAY LTD
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compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
Directors’ report
The directors are responsible for the directors’ report. Our opinion on the financial statements does not cover that report and we do not express an audit opinion thereon.
Our responsibility is to read the directors’ report and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:
∙we have not identified material misstatements in the directors’ report;
∙in our opinion the information given in that report for the financial year is consistent with the financial statements; and
∙in our opinion that report has been prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
Directors’ responsibilities
As explained more fully in their statement set out on page 7, the directors are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HANDEPAY LTD
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James Tracey (Senior statutory auditor)
for and on behalf of
KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
1 November 2023
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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Interest receivable and similar income
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Profit for the financial year
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Other comprehensive income
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Total comprehensive income for the year
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There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of comprehensive income.
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The notes on pages 19 to 32 form part of these financial statements.
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HANDEPAY LTD
REGISTERED NUMBER:05504126
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
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Property, plant and equipment
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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Capital redemption reserve
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 32 form part of these financial statements.
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HANDEPAY LTD
REGISTERED NUMBER:05504126
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STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MARCH 2023
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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Capital redemption reserve
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Comprehensive income for the year
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Total comprehensive income for the year
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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Capital redemption reserve
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 19 to 32 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Handepay Ltd is a private Company limited by shares and incorporated and registered in England and Wales under the Companies Act 2006. The nature of the Company’s operations and its principal activities are set out in the Strategic Report.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' and the Companies Act 2006.
In the transition to FRS 101 from UK-adopted IFRS, the Company has made no measurement and recognition adjustments.
These financial statements are presented in Pounds Sterling rounded to thousands (£’000). The Pound Sterling is the currency of the primary economic environment in which the Company operates.
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 101 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions under FRS 101:
∙the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share-based payment
∙the requirements of IFRS 7 Financial Instruments: Disclosures
∙the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
- paragraph 79(a)(iv) of IAS 1;
- paragraph 73(e) of IAS 16 Property, Plant and Equipment;
- paragraph 118(e) of IAS 38 Intangible Assets;
∙the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of Financial Statements
∙the requirements of IAS 7 Statement of Cash Flows
∙the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
∙the requirements of paragraph 74A(b) of IAS 16
∙the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures
∙the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
∙ the requirement of new but not yet effective IFRS's
This information is included in the consolidated financial statements of PayPoint plc as at 31 March
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Financial Reporting Standard 101 - reduced disclosure exemptions (continued)
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2023 and these financial statements may be obtained from 1 The Boulevard, Shire Park, Welwyn Garden City, Hertfordshire, AL7 1EL.
The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The Company has a resilient statement of financial position, with net assets of £13.8 million as at 31 March 2023, having made a profit for the year of £3.4 million. At 31 March 2023, the Company had cash and cash equivalents of £0.1 million.
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements which indicate that, taking account of reasonably possible downsides, the Company will have sufficient funds, to meet its liabilities as they fall due for that period.
Additionally, the Directors have carried out an assessment of the principal risks and uncertainties relating to projected future cash flow of the business as a part of the assessment of the Company's ability to continue as a going concern including: working capital requirements, capital expenditure requirements, seasonality and any other items that may have a signifcant impact on the financial forecasts.
Consequently, the directors are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Revenue represents the value of services sold to customers which is measured using the fair value of the consideration received or receivable, net of value added tax. Performance obligations are identified at contract inception and the revenue is recognised once the performance obligations are satisfied. Revenue comprises of commissions earned from card acquirers and fees are recognised when each transaction is processed.
Interest income is recognised in profit or loss using the effective interest method.
The Company makes payments to a defined contribution pension scheme. Pension costs are recognised as an expense when employees have rendered services entitling them to the contributions. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the Statement of Financial Position.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense represents the amount payable in respect of the year under review based on the taxable profit for the year and deferred tax. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and items that are not taxable or deductible.
The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
Deferred tax is provided in full on taxable temporary differences between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is calculated using tax rates that have been substantively enacted by the Statement of Financial Position date. Deferred tax assets are recognised on deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the tax will be realised.
The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is recorded in equity.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
The Company developed computer software and other intangible assets for its own use. Development expenditure on large projects was recognised as an intangible asset if the product or process was technically and commercially feasible and the Company intends to and has the technical ability and sufficient resources to complete development, future economic benefits are probable and if the Company can measure reliably the expenditure attributable to the intangible asset during its development. The costs that are capitalised are the directly attributable costs necessary to create and prepare the asset for operations. Development costs recognised as an intangible asset are amortised on a straight-line basis over its useful life, which is between five and ten years. Other software costs are recognised in administrative expenses when incurred.
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Property, plant and equipment
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Property, plant and equipment under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Property, plant and equipment (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following basis:
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straight-line over 3 years
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straight-line over 3 years
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Trade receivables are initially recorded at fair value and represent the amount of commission due from acquirers or partners for which payment has not been received, less any allowance for doubtful accounts.
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Cash and cash equivalents
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For the purpose of the Statement of Financial Position, cash and cash equivalents comprise cash at bank.
Trade payables are initially recorded at fair value and represent the value of invoices received from suppliers for purchases of goods and services for which payment has not been made.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets or financial liabilities are added to or deducted from fair value on initial recognition.
Financial assets
Financial assets are classified depending on their nature and purpose and the classification is determined at the time of initial recognition.
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would be immaterial.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each Statement of Financial Position date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed on a collective basis. Objective evidence of impairment for a portfolio of receivables includes past experience of collecting payments and the ageing of the receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables. A provision is created for trade receivables and any amounts that are subsequently written off are written off against the provision. Any changes in the provision are recognised in the Statement of Comprehensive Income.
If in a subsequent period the amount of the impairment loss decreases and this decrease can be related objectively to events occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
Financial assets are derecognised when, and only when, the contractual rights to the cash flows expire or when it transfers substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in the Statement of Comprenshive Income.
Financial liabilities
Financial liabilities including borrowing costs are initially measured at fair value, net of transaction costs, and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when, and only when the Company’s obligations are discharged, cancelled or they expire.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The directors have assessed that, in preparing the Company's financial statements, there are no critical
accounting judgements on key sources of estimation uncertainty.
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An analysis of revenue by class of business is as follows:
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Commission - Inter company
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All revenue arose within the United Kingdom.
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The operating profit is stated after charging:
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Depreciation of property, plant and equipment
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Amortisation of intangible assets
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Defined contribution pension cost
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Redundancy and termination costs
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During the year, the Company obtained the following services from the Company's auditor:
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Fees payable to the Company's auditor for the audit of the Company's financial statements
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The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Staff costs, including directors' remuneration, were as follows:
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Redundancy and termiantion costs
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Sales, distribution and marketing
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Operations and administration
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 1 director (2022 - 3) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £235k (2022 - £66k).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £9k (2022 - £5k).
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The directors below received total remuneration of £1,403k (2022: £155k) from fellow subsidiary companies during the year. The Company has not been charged for services provided to the Company by fellow subsidiary companies. The following amounts would have been charged to the Company:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Directors' remuneration (continue)
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The allocation to the Company is based on a time basis.
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Interest receivable from group companies
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Taxation on profit on ordinary activities
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
10.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2022 - higher than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
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Adjustments to tax charge in respect of prior periods
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Remeasurement of deferred tax for changes in tax rates
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Total tax charge for the year
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Factors that may affect future tax charges
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The income tax charge is based on the UK statutory rate of corporation tax for the year of 19% (2022: 19%). Deferred tax has been calculated using the enacted tax rates that are expected to apply when the liability is settled, or the asset realised. During the prior financial year, an increase in the main rate of UK corporation tax from 19% to 25% with effect from 1 April 2023 was enacted. Deferred tax has been calculated based on the rate applicable at the date timing differences are expected to reverse.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Property, plant and equipment
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Due after more than one year
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Amounts owed by group undertakings
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Amounts owed by group undertakings
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Prepayments and accrued income
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
13.Debtors (continued)
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Interest on amounts owed by parent undertakings is charged between 3% & 3.5% per annum (2022: 3%). Interest charged in the period was £379k (2022: £151k).
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Cash at bank measured at fair value
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Trade and other receivables measured at fair value
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Financial liabilities measured at fair value
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Financial assets measured at fair value comprises cash and cash equivalents and trade and other receivables.
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Financial liabilities measured at fair value comprises trade and other payables.
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Credited to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Other temporary differences
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Allotted, called up and fully paid
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1,200 (2022 - 1,200) A ordinary shares shares of £1.00 each
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258,334 (2022 - 258,334) B ordinary shares shares of £1.00 each
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23,556 (2022 - 23,556) C ordinary shares shares of £1.00 each
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A ordinary shares entitle the holders to attend and vote at any general meeting. Each A ordinary share entitles the holder to 750 votes per A ordinary share held. B ordinary shares entitle the holders to attend and vote at any general meeting. Each B ordinary share entitles the holder to 1 vote per B ordinary share held. C ordinary shares do not carry any voting rights. A and B ordinary shareholders are entitled to dividends. These are distributed amongst holders of A ordinary shares and B ordinary shares in the ration 750:1 in favour of A ordinary shares. C ordinary shares do not carry any dividend rights.
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Profit and loss account
Retained earnings represents cumulative profits and losses, net of dividends paid and other adjustments.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £175k (2022: £175k). There were unpaid pension contributions at the reporting date of £29k (2022: £25k).
The immediate and ultimate controlling party of the Company is PayPoint plc, a company registered at 1 The Boulevard, Shire Park, Welwyn Garden City, Hertfordshire, AL7 1EL.
The largest and smallest group in which the results of the Company are consolidated is that headed by PayPoint plc. These accounts can be obtained from the registered office at 1 The Boulevard, Shire Park, Welwyn Garden City, Hertfordshire, AL7 1EL. No other group accounts include the results of the Company.
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