Registered number: 04476269
PAYPOINT RETAIL SOLUTIONS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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PAYPOINT RETAIL SOLUTIONS LIMITED
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COMPANY INFORMATION
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R Harding (appointed 14 August 2023)
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Indigo Corporate Secretary Limited
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PricewaterhouseCoopers LLP, Statutory Auditors
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PAYPOINT RETAIL SOLUTIONS LIMITED
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CONTENTS
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Independent Auditors' Report to The Members of PayPoint Retail Solutions 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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PAYPOINT RETAIL SOLUTIONS LIMITED
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their Strategic Report together with the audited financial statements for the year ended 31 March 2024.
There have not been any significant changes in the Company's principal activities in the year 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.
Delivering a significantly enhanced platform with strong shareholder returns
The PayPoint plc Group provides a multichannel payments platform and delivers community services through a universe of over 65,000 SME and retailer partner locations across multiple sectors, including food services, convenience retail, garages and hospitality. In our building Community Cash Access and Banking network, ATM performance has been disappointing, with net revenue decreasing by 8.2% year on year. Management in this area has been strengthened, with a new hire secured to drive tighter operational management of the estate and to win new estate growth opportunities. Our Counter Cash service, offering withdrawals and balance enquiries over the counter, has grown to 2,150 locations, and we have processed over £430 million of consumer deposits for our neobank clients in the year.
Principal risks, financial risks and uncertainties
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The Company is a subsidiary of PayPoint plc 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 plc’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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Competition and Markets
Trend = Increasing
Appetite = Medium
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PayPoint’s markets and competitors continue to evolve. The decline in legacy business cash usage is expected to continue prompting the need for further business diversification. The current economic climate, of continually rising prices and lower spend levels by consumers, has continued from the previous financial year. The impact in particular
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The Executive Board closely monitors consumer trends and spending behaviour, regularly re-assessing our markets, competitor activity, along with any opportunities to further de-risk its legacy business. We continue to develop our service offerings and to adapt to changes in consumer needs and behaviours, including strategic acquisitions or investments, where
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Risk is increasing as cost of living pressures have continued in the year causing changes in consumer activities, particularly in spending behaviours. This, along with the continued decline in cash legacy business has impacted income streams for certain parts of the business.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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markets, such as the Cards market, has been noticeable with transaction process volumes remaining subdued.
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Emerging Technology
Trend = Stable
Appetite = Medium
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As our markets continue to evolve, so does the technology supporting the service provision. Pressures to deliver new and innovative products remain and failure to keep pace with this technological change is a risk for the Group.
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We continually review technological developments (including the evolution of AI) to understand how new technologies can be used to support and enhance our service offerings. The Executive Board closely monitors emerging technologies and the impact they may have on the Group. We also develop and implement our own innovative technology, where appropriate.
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Risk is stable as Group acquisitions, investments and partnerships have helped to mitigate risks associated with emerging technologies. The ongoing programme of replatforming our digital proposition will facilitate the further expansion of our presence in digital payment markets. We continue to roll out the new, updated version of our retailer terminal – the PayPoint Mini.
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IT Trans-formation
Trend = Increasing
Appetite = Medium
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Several significant IT projects are in our 3-year plan and the delivery of these projects will be key to delivering our business strategy and growth aspirations, along with platform resilience.
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The Executive Board is accountable for the management and delivery of these projects, with oversight from the Group Board.
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Risk is increasing as several of these projects have been mobilised after the FY24 year end and will be delivered over the course of the next 2 – 3 years.
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Client Services
Trend = Increasing
Appetite = Medium
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Clients' expectations in terms of service level standards and compliance are increasing as the business diversifies into new products/ channels (such as community banking). Client retention and the exposure to clients developing in house solutions as an alternative to our services remains an ongoing risk, along with customer concentration risk, such as in Parcels.
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PayPoint builds and carefully manages strategic relationships with key clients, retailers, redemption partners and suppliers. We continually seek to improve and diversify services through new initiatives, products and technology and our involvement in new and innovative markets.
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Risk is increasing. We continue to renew contracts and onboard new retailers, clients, merchants and redemption partners in line with expectations. We have built on our services and continue to encourage our clients to diversify and utilise more than one of our service provisions. Working with our clients to continue to understand their requirements and how best we can meet our clients needs remains a priority for the Group.
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PayPoint is required to comply with numerous contractual, legal, and continuously evolving regulatory requirements.
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Our Legal and Compliance teams work closely with the business on all legal and regulatory matters and adopt strategies to ensure PayPoint
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Risk is stable. We continue to manage new legal and regulatory exposures through our risk management framework and this
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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Trend = Increasing
Appetite = Low
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Failure to anticipate and meet obligations may result in fines, penalties, prosecution and reputational damage. Increased levels of regulatory supervision, the implementation of consumer duty and the addition of new service offerings, such as open banking and PISP, have all increased the complexity of the regulatory environment in which we operate.
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is appropriately protected and complies with regulatory requirements. The teams advise on all key contracts and legal matters and oversee regulatory compliance, monitoring and reporting. Emerging regulations are incorporated into strategic planning, and we engage with regulators to ensure our frameworks are appropriate to support new products and initiatives.
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framework has been rolled out across our Love2shop business following its acquisition in 2023. The two claims served on a number of companies in the Group in relation to the matters addressed by commitments made to Ofgem in 2021 in resolution of Ofgem’s competition concerns are still ongoing. The Group's position remains unchanged and we are confident that we will successfully defend these claims.
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People
Trend = Increasing
Appetite = Low
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Failure to retain and attract key talent impacts many areas of our business. A key element of the 3 year plan is revenue growth, and we need to be confident we can attract/ retain those individuals who are instrumental in driving top line growth, along with individuals who will support the operational transformation of our business. Key person dependencies, at both executive and senior management levels, have been noted as a key risk.
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The Executive Board continues to monitor this risk, with oversight from the Remuneration Committee. We continue to invest in our people, with a clear focus on retaining talent and key person dependency. PayPoint’s purpose, vision and values, are defined and embedded within the business, our expected behaviours and our review and monitoring processes. An employee forum comprising employees from across the business engages directly with the Executive Board on employee matters.
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Risk is increasing. The delivery of £100m EBITDA requires significant revenue growth over FY25 and FY26 and a key element of this is retaining and attracting key talent to support delivery of this growth. Employee engagement surveys remain positive and key actions around cost-of-living support, better employee interaction and flexible working have been implemented.
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Cyber Security
Trend = Increasing
Appetite = Low
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Cyber security risk continues to grow due to the growing volume and ever-increasing sophistication of the nature of these attacks and our expanding digital footprint. Such attacks may significantly impact service delivery and data protection causing harm to PayPoint, our customers and stakeholders. As the geographical instability has continued and increased over the last year, cyber-crime and its potential impact on our Group continues to
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Recognising the importance and potential impact this risk poses to our business, the Executive Board regularly assesses PayPoint’s cyber security and data protection framework, and the Cyber Security and IT Sub-Committee of the Audit Committee maintains oversight. Our IT security framework is comprehensive, with multiple security systems and controls deployed across the Group. We are ISO27001 and PCI DSS Level 1
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Risk is increasing because of the growing volume and sophistication of cyber-attacks, coupled with our expanding digital footprint. We continue to enhance our architecture, systems, processes and cyber monitoring and response capabilities. We regularly engage third parties to assess and assist on our cyber defences and strengthen our controls and have implemented strong monitoring capability across the Group.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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increase as do our efforts to mitigate the likelihood of such an attack and in monitoring activities for potential instances of attack.
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certified, and systems are constantly monitored for attacks with response plans implemented and tested. Employees receive regular cyber security training, and awareness is promoted through phishing simulations and other initiatives. We have implemented tools to assist in quick identification of potential threats. We operate a robust incident response framework to address potential and actual breaches in our estate or within our supply chain. We engage with stakeholders, including suppliers on cyber-crime and proactively manage adherence with data protection requirements.
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Business
Interruption
Trend = Increasing
Appetite = Low
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Failure to provide a stable infrastructure environment or to promptly recover failed services following an incident can lead to loss of service provision, and financial and reputational loss. Interruptions may be caused by system failures, cyber-attack, failure by a third party or failure of an internal process. Recovery of the service can be hampered by lack of appropriate resilience levels.
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PayPoint’s has developed a comprehensive and robust business continuity framework. This is reviewed by the Executive Board and the Cyber Security and IT sub-Committee of the Audit Committee maintains oversight of the framework and its implementation. Business continuity, disaster recovery and major incident response plans are maintained and tested with failover capabilities across third party data centres and the cloud. Systems are routinely upgraded with numerous change management processes deployed and resilience embedded where possible. Risk from supplier failure is managed through contractual arrangements, alternative supplier arrangements and business continuity plans.
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Risk is increasing. System disruption is an inherent business risk. However, we recognise that the acquisition of Love2shop, our IT transformation projects and our expansion into different products contribute to an increasing complexity of our operations. Better staff training and retention has enhanced our ability to detect and recover from service issues.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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Credit and Liquidity/ Treasury Management
Trend = Stable
Appetite = Low
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The Group has significant exposures to large clients/ retailers, redemption partners and other counterparties. We process high volumes of payments which are dependent upon effective operational controls. The Group also operates a number of debt/banking covenants and interest expenses which must be carefully managed. Cashflow management plays an increasingly important role in the Group’s operations.
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PayPoint has effective credit and operational processes and controls. Retailers and counterparties are subject to ongoing credit reviews, and effective debt management processes are implemented. Settlement systems and controls are continually assessed and enhanced with new technology. We have effective governance with oversight committees, delegated authorities and policies for key processes. Segregation of duties and approvals are implemented for all areas where fraud or material error may occur. Residual risk associated with potential default of gift card providers is mitigated through insurance.
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Risk is stable. Cost of living pressures may impact our client and retail estate. However, we have robust monitoring and an increase in support payment processing in place to reduce default rates and impacts. The risk profile of our business operations remains stable. We continue to review and enhance our operational processes and controls, and relationships with our funding partners. We successfully refinanced to support the acquisition of Love2shop and our cash generation remains robust. We also successfully refinanced our facility in June 2024. Liquidity targets as planned for the year have been met.
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Operational Delivery
Trend = Stable
Appetite = Low
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Delivery of key initiatives and strategic objectives, including sales and service delivery growth, is key to achieving the desired success levels anticipated for the group. Successful planning, forecasting and successful execution of all business function areas are key to ensuring operational delivery. Supply chain management is also a key factor in delivering our operational targets. Failure to manage this risk would hamper our business performance, impact our stakeholders, and lead to regulatory or legal sanctions.
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The Executive Board has overall responsibility for delivering key initiatives implementing a robust control framework. The Executive Board have implemented a robust and effective reporting suite to ensure management of BAU activity is supported by timely and accurate business analysis. We continue to develop our Business Intelligence and Management information reporting capabilities to enhance, support and develop our management functions. Our project management methodology ensures projects are prioritised and governed effectively. Our existing processes are continuously reviewed to make sure they are efficient and well controlled.
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Risk is stable. We continue to focus on effective integration of Love2shop into our business. We continue to develop new services and enhance existing capabilities.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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ESG and Climate
Trend = Stable
Appetite = Medium
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We continue to focus on environmental, social and governance matters and recognise that our business needs to be environmentally responsible to create shared value for all stakeholders. PayPoint continues to seek ways to reduce carbon emissions and its environmental impact. We continue to closely monitor the impacts on our business to ensure our revenue streams remain sustainable.
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The CEO and the Executive Board have overall accountability for PayPoint’s climate and social responsibility agendas, and they recommend strategy to the Board. PayPoint aligns its business with reducing carbon emissions, and continually assesses its approach to environmental risk and social responsibility, which are embedded in our decision-making processes. We have multiple policies and processes governing our social responsibility strategy and we continually assess and evolve our strategy and working practices to ensure the best outcomes for stakeholders and the environment.
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Our ESG working group has implemented various measures as we embed low carbon strategies into our working practices and business strategy. The roll out of the PayPoint Mini, our new terminal, supports reduction of our carbon footprint through production of lower emissions. We continue the move toward electric cars for our company fleet, helping our field team to travel in more environmentally friendly ways. We run an employee forum and have implemented various measures as a result, such as cost of living support.
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Financial key performance indicators
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The Company’s revenue has decreased by 3.8% to £23,065k (2023: £23,968k) as a result of lower volume of cash withdrawals.
Profit before tax has increased by £911k to £18,948k (2023: £18,037k).
Other 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 plc, 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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PAYPOINT RETAIL SOLUTIONS LIMITED
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their report and the audited financial statements for the year ended 31 March 2024.
The principal activities of the Company in the year under review were the supply of automatic teller machines (ATMs/cash machines) and the supply of card payment and counter cash services.
The profit for the year, after taxation, amounted to £14,138k (2023 - £14,667k).
During the year a dividend of £42,000k was declared and paid (2023: £5,000k).
The directors of the Company who were in office during the year and up to the date of signing the financial statements were:
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A Dale (resigned 6 December 2023)
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R Harding (appointed 14 August 2023)
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The PayPoint plc's Counter Cash service, offering cashback without purchase and balance enquiries over the counter, is now live in over 6,114 stores, with over £63.8 million withdrawn during the year. We are now actively exploring how we support High Street Bank customers with cash access for consumer and SME deposits and withdrawals across our extensive network.
Qualifying third party indemnity provisions
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In addition to the indemnity provisions in the Articles of Association, the Company has entered into direct indemnity agreements with each of the Directors who served during the financial year. These indemnities constitute qualifying indemnities for the purposes of the Companies Act 2006 and remain in force for all current serving Directors at the date of approval of this report without any payment having been made under them. The Company also maintains directors’ and officers’ liability insurance which gives appropriate cover for any legal action brought against its Directors.
Matters covered in the Strategic Report
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The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the Company’s Strategic Report information required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors’ report. It has done so in respect of financial risk management.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
Statement of directors’ responsibilities in respect of the financial statements
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The directors are responsible for preparing the Annual Report and Financial Statements 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 the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted
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PAYPOINT RETAIL SOLUTIONS LIMITED
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law).
Under company law, 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;
∙state whether applicable UK Accounting Standards, comprising FRS 101 have been followed, subject to any material departures disclosed and explained in the financial statements;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are also 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.
The directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
In the case of each director in office at the date the directors' report is approved:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙they have taken all the steps that they ought to have taken as a director in order to make themeselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
The independent auditors, PricewaterhouseCoopers LLP, Statutory Auditors, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
The financial statements on pages 12 to 28 were approved by the Board of Directors and signed on its behalf by.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PAYPOINT RETAIL SOLUTIONS LIMITED
Report on the audit of the financial statements
Opinion
In our opinion, PayPoint Retail Solutions Limited's financial statements:
∙give a true and fair view of the state of the company’s affairs as at 31 March 2024 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”, and applicable law); and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the statement of financial position as at 31 March 2024; the statement of comprehensive Income and the statement of changes in equity for the year then ended; and the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PAYPOINT RETAIL SOLUTIONS LIMITED (CONTINUED)
With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Strategic report and Directors' report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year ended 31 March 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also 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.
In preparing the financial statements, the directors are responsible for 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 the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
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 an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of data protection regulations and employment law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as Companies Act 2006 and UK tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to to posting inappropriate journal entries and management bias in accounting estimates. Audit procedures performed by the engagement team included:
∙Discussions with management and directors, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
∙Challenging assumptions and judgements made by management in any significant accounting estimates and judgements and considering adequacy of any associated disclosures;
∙Identifying and testing journal entries, in particular any unusual or unexpected journals;
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PAYPOINT RETAIL SOLUTIONS LIMITED
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PAYPOINT RETAIL SOLUTIONS LIMITED (CONTINUED)
∙Reviewing minutes of meetings with those charged with governance; and
∙As required by ISA 240, an element of unpredictability was incorporated into our audit testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
∙we have not obtained all the information and explanations we require for our audit; or
∙adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
∙certain disclosures of directors’ remuneration specified by law are not made; or
∙the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
David Beer (Senior statutory auditor)
for and on behalf of
PricewaterhouseCoopers LLP, Statutory Auditors
Chartered Accountants
40 Clarendon Road
Watford
Hertforshire
WD17 1JJ
29 November 2024
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
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Interest receivable and similar income
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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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The notes on pages 15 to 28 form part of these financial statements.
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PAYPOINT RETAIL SOLUTIONS LIMITED
REGISTERED NUMBER:04476269
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
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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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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 28 form part of these financial statements.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
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Comprehensive income for the year
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Profit for the financial year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total transactions with owners
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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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Profit for the financial year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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The notes on pages 15 to 28 form part of these financial statements.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
PayPoint Retail Solutions Limited ('the company') is a private limited company by shares and incorporated, domiciled and registered in England in the United Kingdom, 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 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.
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 judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied consistently, other than where new policies have been adopted:
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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;
∙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 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 for the year
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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Financial Reporting Standard 101 - reduced disclosure exemptions (continued)
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ended 31 March 2024 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 £2,234k (2023: £30,096k) as at 31 March 2024, having made a profit for the year of £14,138k (2023: £14,667k).
The Company meets its day-to-day working capital requirements through its cash reserves and group borrowings. The current economic conditions continue to create uncertainty, particularly over the level of demand for the Company’s services. The Company’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Company should be able to operate within the level of its current cash reserves and group borrowings. After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.
Revenue represents commissions, rebates and fees from card payment and ATM transaction fees and are recognised when each transaction is processed.
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Operating leases: the company as lessor
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Rental income received for ATMs from retail agents under operating leases are credited to the Statement of Comprehensive Income on a straight-line basis over the lease term.
Interest income comprises of bank deposit interest received on cash and cash equivalents held at financial institutions. Interest is recognised as earned which reflects the effective interest rate method.
Finance 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.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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 Profit or Loss 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.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, 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 Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is recorded in equity.
The credit for research and development tax claims is recognised within operating profit in the statement of comprehensive income.
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Property, plant and equipment
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Tangible fixed assets 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.
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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3 to 5 years straight line
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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.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Trade debtors are initially recorded at fair value and represent the amount of commission due from clients or fees from retailers for which payment has not been received, less an allowance for doubtful accounts that is estimated based on factors such as the credit rating of the customer, historical trends, the current economic environment and other information. Payment terms for Cardnet are 14 days.
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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 and in hand and short term deposits with original maturity of less than three months and are subject to insignificant risk of changes in value..
Trade creditors 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.
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.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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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 Comprehensive 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.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The directors have assessed that, in preparing the Company's financial statements, there are no critical accounting judgements on key sources of estimation uncertainty.
The whole of the revenue is attributable to the operation of the Company’s ATM network and the provision of card payment and counter cash services.
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All turnover arose within the United Kingdom.
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The operating profit is stated after charging/(crediting):
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Depreciation of tangible fixed assets
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Defined contribution pension cost
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During the year, the Company obtained the following services from the Company's auditors:
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Fees payable to the Company's auditors 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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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Staff costs were as follows:
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Cost of defined contribution scheme
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The company does not have any of its own employees (2023: no) by virtue of the fact that contracts of employment of employees within the Group are in the name of PayPoint Network Ltd, a fellow subsidiary. PayPoint Network Ltd makes a recharge to the company of all costs of staff assigned to deal with company's affairs.
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The directors below received total remuneration of £2,452k (2023: £1,851k) from parent company during the year. The Company has not been charged for services provided to the Company by parent company. Following amounts would have been charged to the Company.
The allocation to the Company is based on a time basis.
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Interest receivable and similar income
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Interest receivable from group companies
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Other interest receivable
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Interest payable and similar expenses
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Loans from group undertakings
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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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Adjustments in respect of previous periods
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
11.Tax on profit (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is the same as (2023 - lower than) the standard rate of corporation tax in the UK of 25% (2023 - 19%). The differences are explained below:
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Profit before tax multiplied by standard rate of corporation tax in the UK of 25% (2023 - 19%)
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Adjustments in respect of previous periods
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Revaluation of deferred tax due to rate change
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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 25% (2023: 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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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Property, plant and equipment
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Charge for the year on owned assets
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Amounts falling due after more than one year
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Amounts falling due within one year
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Amounts owed by group undertakings
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Prepayments and accrued income
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Amounts owed by group undertakings are unsecured, interest bearing 6.76% per annum (2023: between 3% & 3.5%), have no fixed date of repayment and are repayable on demand.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, interest bearing 6.76% per annum (2023: between 3% & 3.5%), have no fixed date of repayment and are repayable on demand.
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Financial assets measured at fair value
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Financial assets measured at amortised cost
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Financial liabilities measured at fair value
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Financial liabilities measured at amortised cost
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Financial assets measured at fair value comprise cash and cash equivalents.
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Financial assets measured at amortised cost comprises trade and other receivables.
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Financial liabilities measured at fair value comprise bank overdraft.
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Financial liabilities measured at amortised cost comprises trade and other payables.
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Charged to the profit or loss
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The deferred tax asset is made up as follows:
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Accelerated capital allowances
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Allotted, called up and fully paid
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1 (2023 - 1) Ordinary share of £1.00
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Retained earnings represents cumulative profits and losses, net of dividends paid and other adjustments.
In FY24, a number of companies in the PayPoint Group, including PayPoint Retail Solutions Limited, received two claims relating to issues addressed by commitments accepted by Ofgem in November 2021 as a resolution of Ofgem’s concerns raised in its Statement of Objections received by the PayPoint Group in September 2020. The Ofgem resolution did not include any infringement findings.
The first claim was served by Utilita Energy Limited and Utilita Services Limited (subsequently renamed Luxion Sales Limited) (“Utilita”) on 16 June 2023. The second claim was served by Global-365 plc and Global Prepaid Solution Limited (“Global 365”) on 18 July 2023. A first Case Management Conference (CMC) was held on 31 October 2023 at the Competition Appeal Tribunal relating to these claims. The focus of the first CMC was to agree disclosure and a timetable for proceedings. A second CMC was held on 26 April 2024 to agree further disclosure and the appointment of expert witnesses for all parties. Both claims have been listed for a joint trial at the Competition Appeal Tribunal starting on 10 June 2025.
The Group’s position remains unchanged: it is confident that it will successfully defend the claim by Utilita,
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PAYPOINT RETAIL SOLUTIONS LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
21.Contingent liabilities (continued)
which does not provide any clear evidence to support the cause of action or the amount claimed, and also that it will successfully defend the claim by Global 365, which fundamentally misunderstands the energy market and the relationships between the relevant Group companies and the major energy providers, whilst also over-estimating the opportunity available, if any, for the products offered by Global 365. Consequently, no accounting provision has been made for these claims.
The Group will continue to update the market on a regular basis as part of its financial reporting cycle.
The Company pension cost is a recharged cost by PayPoint Network Ltd, a fellow subsidiary, which operates a defined contribution pension scheme. The assets of the scheme are held separately from those of PayPoint Network Ltd in an independently administered fund. The pension cost recharge represents contributions payable by the Company to the fund and amounted to £16k (2023: £17k). There were unpaid pension contributions at the reporting date of £nil (2023: £nil).
The immediate parent undertaking and ultimate controlling party of the Company is PayPoint plc.
The smallest and largest group to consolidate these financial statements is that headed by PayPoint plc. Copies of the PayPoint plc consolidated financial statements can be obtained from the Company Secretary at 1 The Boulevard, Shire Park, Welwyn Garden City, Hertfordshire, AL7 1EL. No other group financial statements include the results of the Company.
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