Registered number: 04443310
MERCHANT RENTALS LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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COMPANY INFORMATION
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A Kemp (resigned 15 September 2023)
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R Harding (appointed 14 August 2023)
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D Henshaw (appointed 18 September 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 Merchant Rentals 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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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 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 business is the provision of card terminals and leasing/rental solutions for the merchant acquiring industry. The company is a wholly owned subsidiary of PayPoint plc.
The profit for the year, after taxation, amounted to £2,765k (2022 - £3,224k).
During the year no dividends were declared or paid (2022: £nil).
The directors who served during the year were:
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A Kemp (resigned 15 September 2023)
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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.
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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There have been no 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 PricewaterhouseCoppers LLP will be proposed.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
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 MERCHANT RENTALS LIMITED
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We have audited the financial statements of Merchant Rentals Limited (“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 MERCHANT RENTALS LIMITED
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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 round number releases of provisions or accruals.
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 hire legislation, health and safety, data protection laws, anti-bribery, employment law, and certain aspects of company legislation, recognising the nature of the Company’s activities to provide finance lease activities. 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 MERCHANT RENTALS LIMITED
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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.
∙the directors were not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.
We have nothing to report in these respects.
Directors’ responsibilities
As explained more fully in their statement set out on page 1, 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
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCHANT RENTALS LIMITED
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Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
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 payable and similar expenses
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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 11 to 25 form part of these financial statements.
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MERCHANT RENTALS LIMITED
REGISTERED NUMBER:04443310
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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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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The Company's financial statements have been prepared in accordance with the provisions applicable to entities subject to the small companies regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 11 to 25 form part of these financial statements.
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MERCHANT RENTALS LIMITED
REGISTERED NUMBER:04443310
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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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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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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 11 to 25 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Merchant Rentals Limited is a private Company, limited by shares, incorporated in England under the Companies Act 2006. The address of the registered office is given on the Company Information page and the nature of the Company's operations and its principal activity are set out on page 1.
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 IFRS 7 Financial Instruments: Disclosures
∙the requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts with Customers
∙the requirements of paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases. The requirements of paragraph 58 of IFRS 16, provided that the disclosure of details in indebtedness relating to amounts payable after 5 years required by company law is presented separately for lease liabilities and other liabilities, and in total
∙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
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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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party to the transaction is wholly owned by such a member
∙the requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
∙ 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 2023 and these financial statements may be obtained from 1 The Boulevard, Shire Park, Welwyn Garden City, Hertfordshire, AL7 1EL.
The Company has a resilient statement of financial position, with net assets of £6.2 million as at 31 March 2023, having made a profit for the year of £2.8 million for the year then ended. At 31 March 2023, the Company had cash and cash equivalents of £0.4 million.
The directors have prepared cash flow forecasts for a period of 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.
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.
Those forecasts are dependent on the Company’s ultimate parent, PayPoint not seeking repayment of the amounts currently due from the Company, which at 31 March 2023 amounted to £1.1 million. PayPoint has indicated that it does not intend to seek repayment of these amounts for the period covered by the forecasts. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The Company owns the relationship with the merchant and is primarily responsible for providing the maintenance service to the merchant. The Company accordingly recognises the revenue and cost of providing the maintenance service as a principal, rather than as a pass-through cost for merchants.
The following criteria must also be met before revenue is recognised:
Revenue from finance leases
Where assets leased to a third party give rights approximating to ownership (finance lease), the lessor recognises as a receivable an amount equal to the net investment in the lease i.e. the minimum lease payments receivable under the lease discounted at the interest rate implicit in the lease. This receivable is reduced as the lessee makes capital payments over the term of the lease.
Revenue from operating leases
Rental revenue from operating leases is credited to the Statement of Comprehensive Income on a straight-line basis over the term of the relevant lease.
The Company’s policy is to recognise right-of-use assets and liabilities for leases, except in the case of short term leases and leases of low-value assets. In these instances, the lease payments are recognised as an expense on a straight-line basis over the lease term.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date.
∙The right-of-use asset is initially measured at cost and subsequently at cost less accumulated depreciation and impairment losses.
∙The lease is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease. The lease liability is subsequently increased by the interest cost on the lease and decreased by payments made. In the event of a change in future lease payments, the lease liability will be remeasured and the difference recognised in the right-of-use asset.
Interest costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Defined contribution pension plan
The Company makes payments to several defined contribution pension schemes. 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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Current and deferred taxation
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The Company’s policy is to pay tax when due but to minimise tax payments where practically possible,without engaging in aggressive tax schemes.
The tax expense represents the amount payable in respect of the year under review based on the taxable profit for the year and the provision for deferred tax. Taxable profit differs from net profit asr reported in the income statement 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 are applicable to the current year.
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 balance sheet 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 asset will be realised. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet 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 profit or loss, except when it relates to items charged or credited to other comprehensive income or equity, in which case the deferred tax is recorded in other comprehensive income or equity.
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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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Computer equipment & terminals
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straight line over 3-5 years
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over the term of the leasehold
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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.
Inventories are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Statement of Comperhensive Income.
Debtors are initially recorded at fair value and represent the amount of fees due from merchants for which payment has not been received, less an allowance for doubtful accounts that is estimated based on an assessment of historical customer data and trends which is reviewed annually.
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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.
Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
The Company recognises financial instruments when it becomes a party to the contractual arrangements of the instrument. Financial instruments are de-recognised when they are discharged or when the contractual terms expire. The Company's accounting policies in respect of financial
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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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instruments transactions are explained below:
Financial assets and financial liabilities are initially measured at fair value.
Financial assets
All recognised financial assets are subsequently measured in their entirety at either fair value or amortised cost, depending on the classification of the financial assets.
Fair value through profit or loss
All of the Company's financial assets are subsequently measured at fair value at the end of each reporting period, with any fair value gains or losses being recognised in profit or loss.
Impairment of financial assets
The Company always recognises lifetime ECL for debtors and amounts due on contracts with customers. The expected credit losses on these financial assets are estimated based on the Company's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
Financial liabilities
Fair value through profit or loss
Financial liabilities are classified as at fair value through profit or loss, when the financial liability is held for trading.
At amortised cost
Financial liabilities which are neither, held for trading, are subsequently measured at amortised cost using the effective interest method. This is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate a shorter period, to the amortised cost of a financial liability.
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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 or key sources of estimation uncertainty.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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An analysis of revenue by class of business is as follows:
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Terminal finance lease income
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Terminal operating lease income
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Maintenance contract income
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All turnover arose within the United Kingdom and is attributable to the principal activity.
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The average monthly number of employees, including the directors, during the year was as follows:
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Operations and administration
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The company does not employ any of its directors by virtue of the fact that contracts of employment of directors within the Group are in the names of PayPoint plc, a parent company and fellow subsidiaries, Handepay Limited and Paypoint Network Limited. The Company has not been charged for services provided to the Company by PayPoint plc and fellow subsidiaries.
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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Property, plant and equipment
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Terminals and computer equipment
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Right of use assets - Property
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Finished goods and goods for resale
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The Company holds stocks of card terminals for lease to retailers. Stocks of terminals are held at the lower of cost and net realisable value.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Due after more than one year
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Net investment in finance leases
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Amounts owed by group undertakings
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Prepayments and accrued income
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Net investment in finance leases
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Cash and cash equivalents
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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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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Creditors: Amounts falling due after more than one year
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Block loans are secured over certain assets of the Company. Across the block discount loan facilities, a fixed rate of interest between 4% to 7% is applied.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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The Company’s policy is to recognise right-of-use assets and liabilities for leases, except in the case of short term leases and leases of low-value assets. In these instances, the lease payments are recognised as an expense on a straight-line basis over the lease term.
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Lease liabilities are due as follows:
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Between one year and five years
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The following amounts in respect of leases, where the Company is a lessee, have been recognised in profit or loss:
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Interest expense on lease liabilities
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Where assets leased to a third party give rights approximating to ownership (finance lease), the lessor recognises as a receivable an amount equal to the net investment in the lease i.e. the minimum lease payments receivable under the lease discounted at the interest rate implicit in the lease. This receivable is reduced as the lessee makes capital payments over the term of the lease.
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The following table summarises the undiscounted lease payments receivable after the reporting date.
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Between one and three years
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Between three and five years
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Total undiscounted lease payments receivable
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Less: unearned finance income
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Net investment in the lease
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
14.Leases (continued)
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The following table summarises the undiscounted lease payments receivable after the reporting date.
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Total undiscounted lease payments receivable
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Cash and cash equivalents measured at fair value
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Net investment in finance leases measured at amortised cost
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Financial liabilities measured at amortised cost
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Financial assets measured at fair value comprises cash and cash equivalents.
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Financial assets measured at amortised cost comprises net investment in finance leases.
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Financial liabilities measured at amortised cost comprises trade and other payables and loans and lease liabilities.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Charged to profit or loss
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The deferred tax (liability)/asset is made up as follows:
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Accelerated capital allowances
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Short term timing differences
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Allotted, called up and fully paid
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500,000 (2022 - 500,000) Ordinary shares shares of £1.00 each
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Share capital represents the nominal value of shares issued.
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Profit and loss account
Retained earnings represents cumulative profits and losses, net of dividends paid.
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 £24,060 (2022: £24,258).
There were unpaid pension contributions at the reporting date of £3,522 (2022: £3,219).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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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