p s 3-d secure verified by visa and mastercard securecode

PRODUCTS AND SERVICES

3-D Secure Verified by Visa and MasterCard SecureCode

What is 3-D Secure?

Visa and MasterCard have developed authenticated payment capabilities to improve online transaction security and help encourage the growth of e-commerce, collectively known as 3-D Secure. The 3-D Secure scheme creates a virtual Cardholder Present (CP) environment during Internet transactions, guaranteeing payments for the Merchant and providing a safer e-Commerce experience for the Cardholder, vastly improving the payments experience for all involved.

MasterCard have implemented their version of 3-D Secure, called MasterCard SecureCode, while Visa have called their brand Verified by Visa. Both of these protocols are brand identities of the 3-D Secure Cardholder Authentication Scheme.

3-D Secure is a payments protocol based on an architecture known as the Three Domain Model and builds on proven SSL technology to provide a standard, secure method of performing transactions over the Internet through authentication of all parties involved in an online transaction:

the Merchant and its bank (Acquirer Domain) the Cardholder and their bank (Issuer Domain) the Cardholder's bank and the Merchant's bank (Interoperability Domain)

How will the DataCash 3-D Secure solution work for you?

…DataCash has developed and integrated an efficient and resilient 3-D Secure solution to ensure Merchants are compliant with the MasterCard SecureCode mandate…

Chairman’s Statement 2

Operating Review 4

Chief Financial Officer’s Review 8

Directors 10

Advisers 11

Directors’ Report 12

Independent Auditor’s Report 22

Consolidated Statement of Comprehensive Income 23

Consolidated Balance Sheet 24

Consolidated Cash Flow Statement 25

Consolidated Statement of Changes in Equity 26

Notes to the Consolidated Financial Statements 28

Company Balance Sheet 64

Notes to the Company Financial Statements 65

Notice of Annual General Meeting 71

CONTENTS

Group plc

1Group plc

CHAIRMAN’S STATEMENT

2

The DataCash Group continued its track recordof growth in 2009, with revenues for the yearup 32% to £36.9m. Adjusted pre-tax profitswere up 13.6% to £16.58m, and adjusted dilutedearnings per share were up 16.5% to 12.86p.With strong cash balances of £18.6m (includingescrow and security deposits of £3.7m) at yearend the dividend for the year was increased by25% (interim dividend in November 2009 of0.5p, and a second interim paid on 1 April 2010of 1.75p).

Revenue for the year rose by 32% to £36.9m (2008: £28.0m),reflecting good growth in bothtransaction volumes and revenuesfrom our higher added valueproduct range (notably fraudservices and alternative paymentproducts).

Adjusted pre-tax Profits (beforeamortisation of intangible assetsand impairment of goodwill, andforeign exchange movements ondeferred consideration payments)rose by 13.6% to £16.58m (2008:£14.6m). As previously reported,the significant strengthening of the South African Rand in the yearincreased the costs of our CapeTown operations, especially in thesecond half of the year when ourcurrency hedging position expired.

The cash position of the Groupremains strong, with approximately£18.6m in net cash (includingescrow and security deposits of£3.7m) at year end (2008: £16.6m).Net cash inflow from operations inthe year was £15.4m with £1.7m paidin dividends; £4.1m on corporationtax payments; £4.7m on deferredconsideration payments, and £2.4mpaid in January 2009 to acquire acontrolling interest in The 3rd Man.

Adjusted diluted earnings per sharerose by 15.9% to 12.86p per share(2008: 11.10p). On 25 February theBoard announced a second interimdividend of 1.75p per share, which is to be paid on 1 April. This, with the interim dividend of 0.5p paid in November 2009, brings the totalfor the year to 2.25p per share, an overall increase of 25%. Aspreviously stated, the Board is notrecommending a final dividend.

The Board anticipates furthergrowth in revenue, profits anddividends in 2010. We continue to look for acquisitions to expandour geographical reach and productset further. The acquisitions made in2008 made good progress in 2009.Our German business, ExperCashGmbh was particularly notable,increasing revenue and profitsconsiderably. EuroCommerce,focusing on the travel and airlinemarket, moved into profit in thelatter part of 2009, helped by ourfraud offering which is an importantdifferentiator. We expect furtherprogress in 2010.

On behalf of all the shareholders, I would like to take this opportunityto thank our staff for all their efforts.

Group plc

3

We continue to look for

acquisitions to expand

our geographical

reach and product

set further.

The acquisitions made

in 2008 made good

progress in 2009

Group plc

OPERATING REVIEW

4Group plc

THE DATACASH SERVICEDataCash is a leading developer andprovider of outsourced ElectronicPayment Solutions (online and pointof sale), Fraud Prevention, AlternativePayment Options, Back Officereconciliation and comprehensivesolutions for Merchants selling viamultiple channels. These channelsinclude: Internet, call centre, mobiledevices, interactive digital TV andpoint-of-sale environments.

Our Fraud Prevention offering coversthe breadth of requirement fromproviding simple transactionscreening to a fully outsourced, 24X7 fraud prevention service.

We provide connections between ourcustomer’s sales channels (e.g.websites) on the one hand and arange of financial institutions, walletsand identity checking services on theother. DataCash, as the transaction‘switch’ in the middle, provides themeans by which merchants canaccept, authorise and settletransactions made by a variety offinancial instruments such as creditand debit cards and direct debits.

THE COMPETITIONDirect competitors to DataCash fallinto two main categories:

• Outsourced model - expertoutsourced managed paymentservices to companies with asimilar offer to DataCash

• In-house payments softwarepurchased and run on in-housesystems with in-house fraudprevention systems andoperational staff

The outsourced ‘expert’ model isbecoming increasingly adopted asthe world of payments becomesmore complex. Dealing with apayments expert makes it easier tokeep up with developments in thepayments arena. Additionally, manycompanies prefer to pay for theseservices on a monthly basis ratherthan purchasing software andhardware and employing dedicatedstaff.

BUSINESS MODELDataCash derived its revenues in2009 from the following main areas

• Annual licence fees for the useof our services.

• Monthly transaction processingfees based on volumes oftransactions processed.

• Monthly transaction fees forfraud screening of transactionsagain based upon volumesprocessed.

• Back office fraud preventionservice fees, based on apercentage of the valuesscreened and charges forDataCash staff taking action onthe results generated from thefraud screening system,relieving our customers of theneed to maintain a skilledpresence to do this.

• Back office reconciliationservice fees, based on apercentage of the valuehandled and charged forDataCash staff to reconcile, onbehalf of our customers, themulti denominational paymentsand charge backs receivedfrom the payment throughtheir chosen instrumentproviders - acquiring banks, e-wallet operators etc.

• Commissions and rebates fromAcquirers and other paymentinstrument operators forsigning new clients to theirservices.

• Currency revenues fromcurrency conversion solutions.

5Group plc

In summary, DataCash distinguishesitself from its competitors in themarket by our:

• Expert outsourced model:Providing an ‘expert’outsourced service.

• Owning and developing theIPR in our systems: Havingfull intellectual property rightsto our own technologyapplication and architecture.This facilitates the simple andquick integration into ourcustomers systems and thespeedy extension, modificationand expansion of our productrange

• System reliability: Deliveringworld-class systems availabilityand capacity management. Our strength within theGaming industry, whichrequires extremely high systemavailability and seasonal peaks,drives us towards the goal of100% availability and wecontinued to invest in ourinfrastructure and technologyduring 2009.

• Full Back OfficeManagement: Few customerscan justify the cost of fullystaffing and operating a 24X7reconciliation or fraudmanagement service in-house.DataCash possesses both theexpertise and the critical massto make our outsourcing ofthese functions increasinglyattractive to our clients

• Pricing model: DataCash’score processing services areoffered on a ‘pence-per-transaction’ or managedservice basis. Our additionalback office services aretypically priced based upon thevalue of transactions handled.Both models effectively chargeon an “as used” basis removingthe waste of in-houseoperations who must alwaysprovision service availabilityregardless of demand

• Customer Base: DataCash canboast an unrivalled andincreasingly internationalcustomer base and can providereferences from blue chip highstreet retailers to the leadingon-line Gaming Merchants

• Product range: The continuedenhancement of our serviceoffering, accessed through asingle integration with theDataCash Payment Gatewayvia our API (ApplicationProgramming Interface)further differentiates DataCashfrom its direct competitors andprovides evidence of theadvantages of the outsourcedmodel.

• Bank Independence:DataCash is bank-independent(unlike many of its competitors)enabling the offer of impartialadvice to the client base

OPERATING REVIEW - CONTINUED

6Group plc

• PCI DSS Compliance:DataCash’s ability to provide acompliant solution adds weightto its strategy of focussing onproviding outsourced solutionswhich absolve clients from theresponsibility to cover the costsof bank and card schememandated standards

As a result of these differentiators,and through continued developmentof value added transaction services,we believe DataCash’s proven abilityto secure the serious customer willcontinue to strengthen the barrieragainst our competition obtaining asignificant position in the market-place.

Our acquisition of ACK eliminatedour need to employ 3rd partysoftware as part of this solution andgives us the ability to offer an end toend service controlled by DataCash.

The acquisition of The 3rd Man inJanuary 2009, further diversifies thefraud prevention customer base andprovides the opportunity to mergethe technologies, the result of whichwill be an enhanced fraud preventionoffering, dominance in the UKmarket and expansion globally. Our work in cross selling our fraudsystem has resulted in new sectorrevenues for fraud in 2009 and theopportunity to sell in to newcustomers with the benefit ofoffering a single consolidatedsolution for payments and fraud. We see this trend continuing.Additionally we are starting to sellother fraud prevention productsbeyond the traditional customer baseto other audiences including banksand consumers.

2009 BUSINESS REVIEWDuring the period, DataCashcontinued to focus on diversifying itscustomer base and expanding intonew market sectors and geographies.The customer base continued togrow with some notable wins,particularly in the retail, electronicmedia and the airline and travelsectors. DataCash continues to bethe leader in the provision ofpayment services to the Gamingmarket, which remains a fast growingsector and one which is quick toadopt new payment types andtechnologies.

Our continued sector diversity andincreasing international reachprovide insulation against down turnsin a particular industry and ourspread of clients limits exposure toany single business.

Our emerging Cardholder Present(CP) service continued to grow in2009 with nearly 50,000 points ofsale deployed or committed to bedeployed by customers.This increaseis driven by the onerous demands ofcompliance with the Payment CardIndustry Data Security Standards(PCI DSS) imposed on organisationsthat handle debit and credit carddata by the international cardschemes lead by VISA andMasterCard.

7Group plc

TECHNOLOGY ANDINFRASTRUCTUREREVIEWDuring the course of 2009 wecontinued to develop infrastructureto support the growth of oursystems, their capacity and theirreliability further. This major projectcomprised the following areas in ourproduction environments:

• Maintenance of data centres

• Maintenance andenhancements to networks

• Continual refresh of hardwarecomponents

The full programme supplies theGroup with industry leading facilitiesand infrastructure. This has beendesigned to easily accommodateadditional systems that may begained on the back of newacquisitions or links to new providersand geographies. More efficientintegrations enable us to offer notonly new functionality to our clientsmore quickly, but also the addedbenefit, realising cost savings toDataCash.

• Consolidation of fraudprevention platforms and theability to fraud screen at anaccount level

• More added value servicesincluding fully Hosted PaymentPages and Tokenisation for webpayments and End to Endencryption for CardholderPresent Transactions

• Enhancements to groupreporting systems toaccommodate card andalternative paymenttransactions

Paul BurtonChief Finance Officer28 April 2010

Further technological developmentswere also made in 2009, to expandthe product range available tocustomers. This included:

• Development of additionalinternational payment optionsthrough accreditation withinternational platforms inEurope, the USA andAustralasia

• The introduction of specialistGerman payment instruments,taken from the ExperCashbusiness, in to the core Groupproduct offering

• Fraud screening for alternativepayment method transactionssuch as PayPal.

2010 will see the DataCash Group plcfocus on the further developmentand integration of products, servicesand systems to provide our existingand prospective global customerbase with:

• Operational quality, reliability,responsiveness and delivery

• The widest possible range ofinternational payment productand service options

CHIEF FINANCIAL OFFICER’S REVIEW

8

OVERVIEWDuring 2009 the Group hasexpanded both by acquisition andorganic growth. The Group recordedan adjusted profit before tax (seenote 13) of £16.58m (2008: £14.59m)an increase of 13.6%.

TRADINGAnnual revenue grew by 32% to£36.9m including revenue of currentyear acquisitions of £1.7m. Directadministrative expenses have grownby 47.6%.

Operating margins have beendampened by the addition of The 3rdMan who, whilst profitable, hasinherently lower profit margins thanthe historic business mix. Combinedwith the lower margins of our otherrecent acquisitions part way through2008, our operating margins havedecreased to 43.2% (2008: 49.3%).

The effective tax rate for adjustedprofit before taxation was maintainedat 29.7% (2008: 29.7%).

CASHFLOWOur cash balance at the year endstood at £18.6m, an increase of£1.9m since 31 December 2008.

The Group’s operations for the yearcontinue to generate a positivecashflow of £12.0m (2008: £13.6m)after increased corporation taxpayments of £4.1m (2008: £3.5m).

Cash on investing activities duringthe year at £8.9m (2008: £12.8m)represent the acquisition of The 3rdMan Group Ltd (£2.4m) and furtherdeferred consideration payments forprior year acquisitions (£4.7m).Capital expenditure decreasedslightly to £1.6m (2008: £1.7m).

With increases to both the full yeardividend for 2008 and the firstinterim dividend for 2009, the Groupwas able to fund dividend paymentstotalling £1.7m (2008: £1.4m) duringthe year. Cash generation continuesto be supported by good cashcollections. The Group’s tradereceivable days was in line with theprior year at 45 (2008: 42).

The continued positive cashgeneration has enabled the board topay a second interim dividend for2009 early in 2010.

ACQUISITIONS ANDINVESTMENTSThe acquisition of approximately76% of share capital of The 3rd ManGroup Ltd on 21 January 2009 added£4.1m to the Group’s fair value ofgoodwill and intangible assets.Annual revenue grew by 48% to£1.7m (2008: £1.1m). Operating profitshave grown to £295k during 2009.This demonstrates a significantimprovement in operating marginssince acquisition by the Group from4.4% to 17.4%. Goodwill remainsunimpaired as at year end.

The annual turnover for Expercash,acquired by the Group in September2008, grew by 42% to ¤3.5m duringa period of considerable expansion.Operating profits have grown by 13%which reflects some developmentinto lower margin activities.

Group plc

9

FOREIGN EXCHANGEDuring 2009 the Group settled aproportion of its deferred contingentconsideration from the Easydebitacquisition and has thereforereduced its exposure to foreigncurrency movements on this liability.

Our operations in South Africacreates a requirement for the Groupto hold Rand. This contributes 19%of the Groups operating expenses. The Group purchased Rand inadvance at a favourable rate whichwould cover the expenses of ourSouth African operation for the firstnine months of 2009. The Rand’srelative strength compared with 2008has been responsible for increasingour cost base by £540k over theprevious year.

The impairment to goodwill duringthe year of £1,566k was toEuroCommerce due to difficultconditions in the airline sector duringthe first half of 2009. The businessperformance in the second halfimproved significantly. Annualrevenue grew by 21.7% to ¤2.4m.Operating profit improvedsignificantly and for the full year was able to contribute a profit to theGroup. No further impairment wasrequired at year end (Note 16).

The weakening of the Euro during2009 reduced the value of our Eurobased acquisitions, EuroCommerceand Expercash, by £1.6m ontranslation to the Group’s reportingcurrency. This loss was recogniseddirectly in other competitive income.

Intangibles for all subsidiariescontinue to be amortised in line withGroup policy.

The Group continues to have a Euroliability for the deferred contingentconsideration for the acquisition ofEasydebit GmbH. The Groupgenerate Euros in the course of itsoperations and has used this as anatural hedge against any potentialliability for deferred contingentconsideration rather than purchasein advance potentially unwantedEuros.

Group plc

DIRECTORS AND ADVISERS

10

Ashley Head,Executive Chairman

Ashley Head, 59, has over 30 yearsexperience in the paymentprocessing/banking industry. He wasinvolved in establishing the businessof ProcCyber where he led thebusiness development. Previous roleshave included Senior Vice Presidentfor the Africa region for MastercardInternational and Director ofTechnology and Electronic Bankingfor The National Commercial Bank inSaudi Arabia.

David Bailey, Deputy Non-Executive Chairman

David Bailey, 61, joined the Board inNovember 1999. David spent manyyears as a partner of Phillips andDrew and subsequently a directorfollowing its acquisition by UBS. He iscurrently Non-Executive Chairman ofGoIndustry plc, the AIM-listed usedindustrial equipment auctioneer, anon-executive director of AIM-listedSports Media Group plc, and a non-executive director of several otherprivate companies.

Paul Burton,Chief Financial Officer

Paul Burton, 39, joined ProcCyber inJanuary 2005 as Chief ExecutiveOfficer of ProcCyber Services S.A.(Pty) Ltd. Prior to this he wasmanaging director of Mercantrade(which was acquired by ProcCyber),having previously served as FinanceDirector. Paul holds a B.com, aB.Compt (hons) and CA (S.A.), and isa member of the South AfricaInstitute of Chartered Accountants.

Nicholas Temple,Non-Executive Director

Nicholas Temple, 62, joined the Boardin August 2000. Nicholas has over30 years experience in the globaltechnology markets with IBM andwas appointed Chief ExecutiveOfficer of IBM UK in 1992 andsubsequently became Chairman in1995. Nick is a non-executive directorof a number of other technologybusinesses.

Group plc

11

Company Secretary and registered office:

Paul Burton B.Com, B.Compt (hons),CA (S.A.)Descartes House8 Gate Street London, WC2A 3HPRegistered Number: 3168091

Independent Auditor:

Baker Tilly UK Audit LLP2 Bloomsbury Street London, WC1B 3ST

Nominated Adviser and Broker:Investec2 Gresham StreetLondon, EC2V 7QP

Solicitors:

Teacher Stern Selby37-41 Bedford RowLondon, WC1R 4JH

Registrars:

Capita RegistrarsThe Registry34 Beckenham RoadBeckenhamKent, BR3 4TU

Bankers:

Barclays Bank plcHanover Square Corporate Banking Group50 Pall MallLondon, SW1A 1QD

Group plc

DIRECTORS’ REPORT

12

The directors present their report and the auditedfinancial statements of the Group for the year to 31 December 2009.

RESULTS AND DIVIDENDThe results for the Group are shown on page 23 andshow a profit for the year of £8.12m before taxation(2008: £5.50m).

The directors paid an interim dividend in the year of 0.5p(2008: 0.4p) amounting to £459,000 (2008: £366,000)and since the year end have announced a second interimdividend in lieu of a final dividend on the ordinary sharesof 1.75p per share (2008: final dividend of 1.4p per share)amounting to £1,607,000 (2008: £1,284,000).

PRINCIPAL ACTIVITIESThe principal business of the Group during the year wasthe provision of outsourced payment processing servicesto merchants.

The Chairman’s statement and Operating Review thataccompany this report give a more detailed descriptionof the Group’s activity during the year.

REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTSA review of the development of the business during theyear is given in the Chairman’s Statement, Chief FinancialOfficer’s Report and Operating Review on pages 2 to 9.This also includes reference to the Group’s futureprospects.

The Group measures and monitors a number of keyperformance indicators, the most important of which areRevenues, Adjusted Profits before taxation, AdjustedEarnings per share and Operational Performance.Operational Performance is measured throughout theGroup by monitoring service uptime, volume andintensity of transactions processed, number of supportcalls placed in and out of service agreements, and theaverage time taken to resolve a support call.

Revenue is an important measure of growth in thecustomer base and the success of our sales efforts. In 2009 Group revenue increased by 32% to £36.89m(2008: £28.04m).

Adjusted Profit before taxation reflects our ability tomaintain or grow our margins as we extract more valuefrom the core processing services, by selling value addedproducts as described in the operating review. In 2009Group Adjusted Profit before taxation increased by 14%to £16.6m (2008: £14.6m).

Adjusted Earnings per share increased by 15.3% to 12.93pper share (2008: 11.21p per share).

Group plc

13

PRINCIPAL RISKS AND UNCERTAINTIES All businesses are subject to risk and many individualrisks are macro-economic or social and common acrossmany businesses. Many risks are to a greater or lesserdegree controllable, but some are not controllable.Through its internal risk management process, the Groupidentifies business-specific risks. It classifies the key risksas those which could materially damage the Group’sstrategy, reputation, business, profitability or assets andthese risks are listed below. This list is in no particularorder and is not an exhaustive list of all potential risks.Some risks may be unknown and it may transpire thatothers, currently considered immaterial, becomematerial.

Foreign currency riskDataCash has overseas businesses and customers whoserevenues and costs are denominated in the currencies inwhich the operations are located.

Information Technology (“IT”)DataCash uses a range of computer systems to deliverits primary service offerings, operational management,and for financial management, including calculatingemployee wages and billing customers. Failure in thesesystems, along with the failure of business continuityprocedures in the event of physical damage to orinaccessibility of day-to-day operating systems, couldresult in damage to reputation and the loss of revenueand profitability.

Any lengthy failure or disruption to the IT system in anybusiness unit or country would result in loss of sales anddelays to cash flow. These systems are notinterdependent, and there are dedicated support staffdirectly employed, together with external support serviceproviders, to monitor the IT systems. There are duallocations for servers and daily back-ups are done ofsystems.

Commercial relationshipsDataCash is exposed to changes in relationships withboth customers and suppliers. It is a key task for theoperational management in each business unit tomaintain and develop relationships with customers andsuppliers.

Government legislationDataCash operates in five countries, each with their own laws and regulations, encompassing environmental,legal, health and safety, employment and tax matters.DataCash is committed to complying with each localrequirement and the clear devolvement of responsibilityto local operating management together with theemployment of competent advisors supports thisrequirement. Changes to legislation are monitored locally and appropriate actions taken to ensure they areincorporated into our business policies and procedures.

Key PersonnelBusiness success depends to a significant extent uponthe recruitment, development and retention of talentedindividuals across the entire business. The DataCashgroup of companies aspires to treating all employeesfairly, creating opportunities for personal growth andrewarding for achievements made.

Major changes in market dynamicsSuch changes in dynamics could include newtechnologies, government legislation or customerconsolidation and could, particularly if rapid orunpredictable, impact the Group’s revenues andprofitability.

Group plc

DIRECTORS’ REPORT - CONTINUED

14

DIRECTORSThe following were Directors of the Company during the financial year under review:

David Bailey

Nicholas Temple

Andrew Dark (resigned 31 March 2009)

Paul Burton

Ashley Head

Joseph Blass (appointed 2 March 2009 and resigned 30 July 2009)

RETIREMENT BY ROTATIONThe Company’s two non-executive directors, David Bailey and Nicholas Temple, are also retiring and offeringthemselves for re-election in addition to Paul Burton (who does so in accordance with the Company’s articles ofassociation). Although this is not necessary for the two non-executive directors, this is in accordance with best practice corporate governance, due to the length of time David Bailey and Nicholas Temple have served on the board.

DIRECTORS’ INTERESTS IN SHARESOn the dates given, the interests of Directors’ who were in office at 31 December 2009 and their beneficial interests inthe issued ordinary shares of the Company were as follows:

There have been no changes in Directors’ interests in shares since 31 December 2009, except David Bailey hasacquired 20,000 further shares and Paul Burton owns 81,166 shares following the exercise of share options.

No director had any interest in shares in any of the subsidiary companies.

No. of Shares % No. of Shares %

Ashley Head 39,947,745 43.28 39,947,745 43.28

David Bailey 605,562 0.66 535,562 0.58

Paul Burton – – – –

Nicholas Temple 23,600 0.03 33,600 0.04

At 31 December 2008 At 31 December 2009

Group plc

15

DIRECTORS’ INTERESTS IN SHARE OPTIONS

The Directors’ who were in office at 31 December 2009 hold options over the Company’s ordinary shares as follows:

There have been no changes in Directors’ interests in share options since 31 December 2009, except Paul Burton hasexercised 81,166 share options.

The market price of a share of the Company at 31 December 2009 was £2.030 and the lowest and highest marketprice during the year were £1.994 and £2.810 respectively.

All interests of Directors’ shown above were held beneficially.

The Board believes that the granting of share options and employee share ownership enhances and strengthens thelink between, and the mutual interests of, both employees and shareholders. The remuneration committee hasadopted a policy of phasing grants under the share option scheme, rather than issuing all options available in a block,in order to be able to continue to retain and motivate executives and key employees.

No of No. of No. of No. of No. of

Shares Shares Shares Shares Shares

Ashley Head 26,507 – – – 26,507 100.8p 14/02/03 14/02/10

7,026 – – – 7,026 183.3p 20/04/03 20/04/10

40,300 – – – 40,300 196.0p 10/07/03 10/07/10

20,935 – – – 20,935 140.8p 25/10/03 25/10/10

20,000 – – – 20,000 26.6p 29/01/05 29/01/12

70,000 – – – 70,000 24.5p 08/04/05 08/04/12

Paul Burton 120,000 – – – 120,000 0.0p 17/07/10 17/07/17

25,000 – – – 25,000 0.0p 20/05/11 20/05/18

– – – 50,000 50,000 0.0p 01/05/12 01/05/19

Nicholas Temple 20,935 – – – 20,935 140.8p 25/10/03 25/10/10

At 31 At 31 Date fromDecember Exercised Expired Granted December Exercise which Expiry

2008 in year in year in year 2009 Price exercisable Date

Group plc


16

SUBSTANTIAL SHAREHOLDINGSThe following individual shareholdings, other than Directors, represented 3% or more of the issued share capital of the Company as at 31 March 2010.

No of Shares %

Fidelity International Ltd and its

direct and indirect subsidiaries 9,118,819 9.88

AXA Framlington 8,861,084 9.60

Gavin Breeze 7,912,495 8.57

Aegon Asset Management 3,491,184 3.78

Majedie Asset Management 2,826,142 3.06

At 31 March 2010

CREDITOR PAYMENT POLICYThe Company’s payment policy for the forthcomingfinancial year is to agree terms of payment with allsuppliers before business is transacted, to ensuresuppliers are aware of the agreed terms and to settleaccounts in accordance with those terms. The creditordays based on creditors as at 31 December 2009 were34 days (2008: 35 days).

AUTHORITY TO ISSUE AND ALLOTSHARESThe Companies Act 2006 contains restrictions on thepower of the Directors’ to allot a Company’s shares. As aresult the Directors’ may only issue the shares pursuantto the authority within the statutory terms given byshareholders’ resolution or contained in the articles ofassociation. Their power to issue equity shares for cashto persons other than the existing shareholders issimilarly restricted.

Resolutions to confer these authorities were passed atthe Annual General Meeting held on 10 June 2009.These authorities will expire at the conclusion of the2010 Annual General Meeting unless previously renewed,varied or revoked by the Company in general meeting.

Subsequent to the passing of the resolutions at the AGMto be held on 25 May, the Directors will have authority toallot shares up to an aggregate nominal amount of£307,734 and it will not be necessary for the Directors’ toseek further approval from shareholders to issue sharesfor cash to persons, other than existing shareholders, upto an aggregate nominal amount of £46,160. While theDirectors’ consider that it is in the best interests of theCompany for the Directors’ to have these authorities, theDirectors’ have no present intention to make any issue ofshares pursuant to them.

CORPORATE GOVERNANCEThe Company is listed on the Alternative InvestmentMarket of the London Stock Exchange and is thereforenot required to comply with the provisions of theCombined Code. However, the Board is committed toensuring that proper standards of corporate governanceoperate and has established governance procedures andpolicies that are considered appropriate to the natureand size of the Group. The Board considers that at thisstage in the Company’s development, the expense of fullcompliance with the Combined Code is not appropriatealthough it intends, as the Company grows, to ensurethat it observes the provisions of the Code, so far as ispracticable.

Group plc

17

The Directors are responsible for the Group’s and theCompany’s system of internal financial control,safeguarding the assets of the Group and the Companyand for taking reasonable steps for the prevention anddetection of fraud and other irregularities. In carrying outtheir responsibilities the Directors have put in place aframework of controls to ensure ongoing financialperformance is monitored in a timely and correctivemanner and risk is identified as early as practicablypossible. Clear lines of authority, responsibility andfinancial accounting exist between the relevant heads of department and the Directors’. The Directors’ havereviewed the effectiveness of the system of internalcontrol. Such a system can only provide reasonable and not absolute assurance against materialmisstatement or loss.

AUDIT COMMITTEEThe Audit Committee is comprised of the two non-executive Directors, David Bailey and Nicholas Temple,together with Ashley Head. The committee is chaired byNicholas Temple and provides a link between the boardand the Company’s auditor on matters falling within thescope of the Company’s audit. These matters includeaccounting standards and policies, internal financialcontrol procedures and the Company’s financial statutoryreports, which are intended for publication.

Each year the auditor provides written confirmation inrelation to their independence.

GOING CONCERNThe Directors’ are of the opinion at the time of approvingthe financial statements, the Company and the Group asa whole have adequate resources to continue inoperational existence for the foreseeable future. For thisreason, they continue to adopt the going concern basisin preparing the financial statements.

DIALOGUE WITH SHAREHOLDERSThe Company reports formally to shareholders twice ayear, when its half-year and full-year results areannounced and an Interim Report and Annual Report aresent to shareholders. The Annual Report includes noticeof the Annual General Meeting of the Company at whicha presentation is given and Directors are available to take

questions both formally during the meeting andinformally after the meeting. The management isavailable for dialogue with major shareholders on theCompany’s plans and objectives and from time to timemeets with them.

ELECTRONIC COMMUNICATIONA number of amendments have been made to theCompany’s articles of association to reflect theprovisions of the Companies Act 2006 which enable theCompany to communicate with its shareholders byelectronic means. Communication with shareholders byelectronic means can take two forms: websitecommunication and communication in electronic form(commonly email).

Before the Company can communicate with a memberby means of website communication, the relevantmember must be asked individually by the Company toagree that the Company may send or supply documentsor information to him by means of a website, and theCompany must either have received a positive responseor have received no response within the period of 28 days beginning with the date on which the requestwas sent. The Company will notify the member (either inwriting, or by other permitted means) when a relevantdocument or information is placed on the website. Amember who receives a document via the website canask for a hard copy at any time and members can alsorevoke their consent to receive documents via thewebsite at any time.

Additionally and separate to website communication,members will be asked if they would like to receivecommunications in electronic form, for example, byemail. Before the Company may communicate withmembers by email, members must agree to receiveinformation in this way to an address which the memberhas specified for this purpose. If a member does notexpressly agree (or has subsequently revoked theiragreement) to receive communications in electronicform, then the Company must continue to communicatewith members in writing (although this will not affectwebsite communications where this continues to beconsented to).

Group plc


18

A new Article containing these new provisions and theexisting notice provisions of the Company’s articles havebeen modified accordingly. The Company will be writingto shareholders to ask for the relevant consents forwebsite and electronic form communications. This newregime will enable the Company to take advantage of theefficiencies, cost-savings and environmental benefits ofelectronic communications.

REMUNERATION COMMITTEE AND REPORTThe Remuneration Committee consists of Ashley Headand the non-executive Directors, David Bailey and Nicholas Temple.

The Remuneration Committee takes the following intoaccount in determining the salaries and benefits ofexecutive Directors:

• the need to pay salaries comparable to those ofcompetitor companies;

• the provision of related benefits which includethe provision of medical insurance andinsurance related to the Directors’ duties;

• the need to link individuals to the long-termsuccess of the Group through the award ofshare options with amounts allocateddetermined by importance of the role andperformance of the executive concerned;

• the use of a profit-related incentive scheme toreward individual contribution to attainment ofprofit targets.

The Board reviews the salaries and benefits of executiveDirectors each year by considering therecommendations of the remuneration committee andhaving regard to personal performance, affordability andcomparable pay levels in the market. Details of Directorsremuneration covering the period they served as adirector is shown below. Further details of Directors’interests in shares and share options are given in theDirectors’ report on pages 14 and 15.

Executive Directors

Andrew Dark 43,153 – 212 43,365 2,158 45,523

Paul Burton 126,000 84,400 868 211,268 12,574 223,842

Joseph Blass 95,153 – – 95,153 – 95,153

Ashley Head 50,000 – – 50,000 – 50,000

Non-Executive Directors

David Bailey* 35,000 – – 35,000 – 35,000

Nicholas Temple* 25,000 – – 25,000 – 25,000

TOTAL 374,306 84,400 1,080 459,786 14,732 474,518

Year ended Salary/Fees* Bonus Benefits Sub total Pensions Total31 December 2009 (£’s) (£’s) (£’s) (£’s) (£’s) (£’s)

Group plc

19

Directors Service ContractsAshley Head’s service contract, dated 1 June 2009, is terminable on six months’ notice by either party.

Paul Burton’s service contract, dated 1 June 2006, is terminable on six months’ notice by either party.

David Bailey’s services are provided to the Company by David Bailey Enterprises Limited pursuant to anagreement dated 11 November 1999. The agreement is terminable by either party on three months’ notice.

Nicholas Temple’s service contract dated 14 August 2000is terminable on three months notice by either party.

The remuneration committee reviews salaries annually.

All of the Executive Directors are entitled to certain otherbenefits including a contribution to a personal pensionscheme, medical insurance, permanent health insurance,to participate in any bonus scheme operated by theCompany from time to time and, at the discretion of theBoard, to participate in the Share Option Scheme. Theagreements contain restrictive covenants relating tocompetition, customers, suppliers and employees.

SHARE BASED COMPENSATIONThe Group operates an Enterprise ManagementIncentive (‘EMI’) share option plan and an unapprovedshare option plan (together the “share option plans”).

RULES OF THE SHARE OPTION PLANS• The Directors have an absolute discretion as to the

selection of persons, who are employees of the Group,to whom an Option is granted by the Company.

• The number of shares in respect of which subscriptionoptions may be granted shall not exceed 10% of theordinary share capital.

• The total market value of shares over whichunexercised options have been granted cannot exceed£3 million.

• Employees have entered into a joint election for thetransfer of Employers National Insurance contributionsto the Employee.

• Options are exercisable 3 years after the date of grantif the performance hurdles below are met.

Executive Directors

Gavin Breeze 23,175 – 425 23,600 1,159 24,759

Andrew Dark 157,103 67,150 858 225,111 7,855 232,966

Paul Burton 126,000 63,000 862 189,862 6,300 196,162

Ashley Head 50,000 – – 50,000 2,500 52,500

Non-Executive Directors

David Bailey* 35,000 – – 35,000 – 35,000

Nicholas Temple* 25,000 – – 25,000 – 25,000

TOTAL 416,278 130,150 2,145 548,573 17,814 566,387

Year ended Salary/Fees* Bonus Benefits Sub total Pensions Total31 December 2008 (£’s) (£’s) (£’s) (£’s) (£’s) (£’s)

Non-Executive Directors’ remunerated with fees denoted by asterisk (*).

Total gains on the exercise of share options by the Directors were nil (2008: £386k).

Group plc


20

PERFORMANCE HURDLESThe percentage growth in the EPS over the prescribed 3 year period, comparing the financial year in which theoption is granted with the financial year ending with thedate on which the prescribed period ends, is at least 15%compounded per annum and for those options grantedin 2009 the share price must have reached at least250.5p (2008: 277.8p; 2007: 257.5p) and stayed abovethat price for a period of at least 30 consecutive daysprior to, and at least that price at, the end of the financialyear ending with the date on which the 3 year prescribedperiod ends.

FINANCIAL INSTRUMENTSThe Company uses forward contracts to sell Euro and USDollar which are surplus to requirements. This aims toreduce the Group’s foreign currency exposure. There areno significant changes to the role financial instrumentsplay in creating or changing the risks the Group faces inits activities from the previous period or post year end.This is discussed in more detail in Note 32.

THIRD PARTY INDEMNITY PROVISIONFOR DIRECTORSThe Company currently has in place Directors andOfficers Liability insurance for the benefit of all Directorsof the Company.

OWN SHARESDataCash Group plc Employee Share Option Trust holds588,000 (2008: 588,000) shares in the Company.Further details are disclosed in note 28 of the Group’sfinancial statements.

RESEARCH AND DEVELOPMENTThe Group continues to invest in its software platforms.Those costs that fall under the recognition criteria of IAS38 are capitalised.

CHARITABLE AND POLITICALDONATIONSThe Group contributed £nil for charitable purposes(2008: £nil). No political donations were made (2008: nil).

STATEMENT AS TO DISCLOSURE OFINFORMATION TO THE AUDITOR The Directors who were in office on the date of approvalof these financial statements have confirmed that, so faras they are each aware, there is no relevant auditinformation of which the auditor is unaware. Each of theDirectors’ have confirmed that they have taken all thesteps that they ought to have taken as Directors’ in orderto make themselves aware of any relevant auditinformation and to establish that it has beencommunicated to the auditor.

Group plc

21

AUDITORBaker Tilly UK Audit LLP has indicated its willingness tocontinue in office. A resolution to reappoint Baker TillyUK Audit LLP and to authorise the Directors to agreetheir remuneration will be proposed at the AnnualGeneral Meeting.

DIRECTORS’ RESPONSIBILITIESSTATEMENTThe Directors are responsible for preparing the Directors’Report and the financial statements in accordance withapplicable law and regulations.

Company law requires the Directors to prepare Groupand Company financial statements for each financialyear. The Directors are required by the AIM Rules of theLondon Stock Exchange to prepare Group financialstatements in accordance with International FinancialReporting Standards (“IFRS”) as adopted by theEuropean Union (“EU”) and have elected under companylaw to prepare the Company financial statements inaccordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom AccountingStandards and applicable law).

The Group financial statements are required by law andIFRS adopted by the EU to present fairly the financialposition and performance of the Group; the CompaniesAct 2006 provides in relation to such financialstatements that references in the relevant part of thatAct to financial statements giving a true and fair view arereferences to their achieving a fair presentation.

Under company law the Directors must not approve thefinancial statements unless they are satisfied that theygive a true and fair view of the state of affairs of theGroup and the Company and of the profit or loss of theGroup for that period.

In preparing each of the Group and Company financialstatements, the Directors are required to:

a. select suitable accounting policies and thenapply them consistently;

b. make judgments and accounting estimatesthat are reasonable and prudent;

c. for the Group financial statements, statewhether they have been prepared inaccordance with IFRSs adopted by the EU andfor the Company financial statements statewhether applicable UK accounting standardshave been followed, subject to any materialdepartures disclosed and explained in theCompany financial statements;

d. prepare the financial statements on the goingconcern basis unless it is inappropriate topresume that the Group and the Company willcontinue in business.

The Directors are responsible for keeping adequateaccounting records that are sufficient to show andexplain the Group’s and the Company’s transactions anddisclose with reasonable accuracy at any time thefinancial position of the Group and the Company andenable them to ensure that the financial statementscomply with the Companies Act 2006. They are alsoresponsible for safeguarding the assets of the Group andthe Company and hence for taking reasonable steps forthe prevention and detection of fraud and otherirregularities.

The Directors are responsible for the maintenance andintegrity of the corporate and financial informationincluded on the DataCash Group plc website.

Legislation in the United Kingdom governing thepreparation and dissemination of financial statementsmay differ from legislation in other jurisdictions.

On behalf of the Board

Paul BurtonDirector8 Gate Street,LondonWC2A 3HP

Group plc

INDEPENDENT AUDITOR’S REPORT

22

TO THE MEMBERS OF DATACASH GROUP PLCWe have audited the Group and parent companyfinancial statements (“the financial statements”) onpages 23 to 70. The financial reporting framework thathas been applied in the preparation of the Groupfinancial statements is applicable law and InternationalFinancial Reporting Standards (IFRSs) as adopted by theEuropean Union. The financial reporting framework thathas been applied in the preparation of the parentcompany financial statements is applicable law andUnited Kingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice).

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 beenundertaken so that we might state to the Company’smembers those matters we are required to state to themin an auditor’s report and for no other purpose. To thefullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Companyand the Company’s members as a body, for our auditwork, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORSAs more fully explained in the Directors’ ResponsibilitiesStatement set out on page 21, the Directors’ areresponsible for the preparation of the financialstatements and for being satisfied that they give a trueand fair view. Our responsibility is to audit the financialstatements in accordance with applicable law andInternational Standards on Auditing (UK and Ireland).Those standards require us to comply with the AuditingPractices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financialstatements is provided on the APB’s website atwww.frc.org.uk/apb/scope/UKNP.

OPINION ON THE FINANCIALSTATEMENTSIn our opinion

– the financial statements give a true and fair view ofthe state of the Group’s and of the parent company’saffairs as at 31 December 2009 and of the Group’sprofit for the year then ended;

– the Group financial statements have been properlyprepared in accordance with IFRSs as adopted by theEuropean Union;

– the parent company financial statements have beenproperly prepared in accordance with United KingdomGenerally Accepted Accounting Practice; and

– the financial statements have been prepared inaccordance with the requirements of the CompaniesAct 2006.

Opinion on other matters prescribed by theCompanies Act 2006In our opinion the information given in the Directors’Report for the financial year for which the financialstatements are prepared is consistent with the financialstatements.

Matters on which we are required to report byexceptionWe have nothing to report in respect of the followingmatters where the Companies Act 2006 requires us toreport to you if, in our opinion:

– adequate accounting records have not been kept by theparent company, or returns adequate for our audit havenot been received from branches not visited by us; or

– the parent company financial statements are not inagreement with the accounting records and returns; or

– certain disclosures of Directors remuneration specifiedby law are not made; or

– we have not received all the information andexplanations we require for our audit.

RICHARD COATES (Senior Statutory Auditor)For and on behalf of BAKER TILLY UK AUDIT LLP,Statutory Auditor Chartered Accountants2 Bloomsbury StreetLondon WC1B 3ST28 April 2010

Group plc

23

For the year ended 31 December 2009

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Note 2009 2008

£000 £000

Revenue 5 36,887 28,037Administrative expenses (20,967) (14,205)Operating profit before impairment and amortisation 15,920 13,832Impairment and amortisation 6 (8,619) (8,013)

Total operating profit 7,301 5,819

Finance income 10 727 968Finance cost – notional interest on deferred consideration 10 (49) (280)Foreign exchange gains/(losses) on deferred consideration 25 156 (1,078)Share of (loss)/profit in joint ventures 18 (15) 72

Profit before taxation 6 8,120 5,501

Taxation 11 (2,901) (2,861)

Profit for the year 5,219 2,640

Other comprehensive income:Exchange differences on translation of overseas operations (940) 4,259Tax effect of share options – 63Other comprehensive income for the year (940) 4,322Total comprehensive income for the year 4,279 6,962

Profit attributable to:Owners of the parent 5,153 2,640Minority interest 66 –Profit for the year 5,219 2,640

Total comprehensive income attributable to:Owners of the parent 4,213 6,962Minority interest 66 –

Total comprehensive income for the year 4,279 6,962

Basic earnings per share 14 5.62p 2.89pDiluted earnings per share 14 5.59p 2.86p

Group plc

CONSOLIDATED BALANCE SHEET

24

Chart Title can sit hereAs at 31 December 2009

Notes 2009 2008

£000 £000Non current assetsIntangible assets 15 10,879 13,544Goodwill 16 55,887 57,672Property, plant and equipment 17 2,012 2,357Investments in joint ventures 18 72 87Investments 19 4,181 3,902

73,031 77,562Current assetsTrade and other receivables 20 6,123 5,161Cash and cash equivalents 30 18,583 16,641

24,706 21,802

Total assets 97,737 99,364

Current liabilitiesTrade and other payables 21 (3,698) (4,555)Current tax liabilities (2,744) (2,304)Provisions – deferred consideration 25 (1,592) (4,280)

(8,034) (11,139)

Net current assets 16,672 10,663

Non current liabilitiesDeferred tax liability 24 (2,620) (3,196)Provisions – deferred consideration 25 (333) (1,706)Other liabilities 23 (26) (32)

(2,979) (4,934)

Total liabilities (11,013) (16,073)

Net assets 86,724 83,291

Capital and reservesShare capital 27 923 923Share premium account 10,986 10,986Own shares 28 (1,512) (1,512)Foreign currency translation reserve 3,095 4,035Share option reserve 1,502 1,365Merger reserve 63,603 63,603Retained earnings 7,301 3,891Equity attrributable to owners of the parent 85,898 83,291Minority interest 826 –

Total equity 86,724 83,291

The financial statements were approved and authorised for issue by the Board of Directors on 28 April 2010.

Paul BurtonChief Financial Officer

Group plc

Company registration number 03168091

25


CONSOLIDATED CASH FLOW STATEMENT

Note 2009 2008

£000 £000

Net cash inflow from operations 29 15,442 16,167Interest received 10 727 968Tax paid (4,115) (3,502)

Net cash inflow from operating activities 12,054 13,633

Cashflow from investing activitiesAcquisition of subsidiaries (net of cash acquired) 31 (2,378) (4,075)Payment of deferred consideration 25 (4,676) (3,101)Investments 19 (279) (3,902)Purchase of property, plant and equipment 17 (680) (1,253)Capitalised development expenditure 15 (874) (445)

Net cash outflow from investing activities (8,887) (12,776)

Cashflow from financial activitiesNet proceeds from issue of share capital 27 – 350Purchase of own shares 28 – (827)Equity dividends paid 12 (1,743) (1,372)

Net cash outflow from financing activities (1,743) (1,849)

Net cash inflow/(outflow) for the year 1,424 (992)Cash and cash equivalents at start of the year 16,641 17,942Exchange gains/(losses) on cash and cash equivalents 518 (309)

Cash and cash equivalents at the end of the year 30 18,583 16,641

Group plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

26

Chart Title can sit hereFor the year ended 31 December 2009

ForeignShare currency Share

Share premium Own translation option Merger Retained Minority Totalcapital account shares reserve reserve reserve earnings Total interest equity

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

At 1 January 2008 919 10,640 (685) (224) 1,152 94,676 (28,513) 77,965 – 77,965

Comprehensive income

Profit for the year – – – – – – 2,640 2,640 – 2,640

Other Comprehensive income

Exchange differenceson translation ofoverseas operations – – – 4,259 – – – 4,259 – 4,259

Tax effect in equity of share options – – – – – – 63 63 – 63

Total other comprehensive income – – – 4,259 – – 63 4,322 – 4,322

Total othercomprehensive income for the year – – – 4,259 – – 2,703 6,962 – 6,962

Transactions with owners

Share-based payments – – – – 213 – – 213 – 213Own shares acquired – – (827) – – – – (827) – (827)Issue of shares 4 346 – – – – – 350 – 350Dividends paid – – – – – – (1,372) (1,372) – (1,372)Reserve transfer – – – – – (31,073) 31,073 – – –

Total transanctionswith owners 4 346 (827) – 213 (31,073) 29,701 (1,636) – (1,636)

At 31 December 2008 923 10,986 (1,512) 4,035 1,365 63,603 3,891 83,291 – 83,291

Group plc

27


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ForeignShare currency Share

Share premium Own translation option Merger Retained Minority Totalcapital account shares reserve reserve reserve earnings Total interest equity

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

At 31 December 2008 923 10,986 (1,512) 4,035 1,365 63,603 3,891 83,291 – 83,291

Comprehensive income

Profit for the year – – – – – – 5,153 5,153 66 5,219Other comprehensive

income:Exchange differences

on translation ofoverseas operations – – – (940) – – – (940) – (940)

Total othercomprehensiveincome for the year – – – (940) – – – (940) – (940)

Total comprehensiveincome for the year – – – (940) – – 5,153 4,213 66 4,279

Transactions with owners

Share-based payments – – – – 137 – – 137 – 137Dividends paid – – – – – – (1,743) (1,743) – (1,743)Total contributions

by and distributionsto owners – – – – 137 – (1,743) (1,606) – (1,606)

Changes in ownershipinterests of subsidiarynot resulting in lossof control:

Minority interestarising on businesscombinations – – – – – – – – 760 760

Total transanctionswith owners – – – – 137 – (1,743) (1,606) 760 (846)

At 31 December 2009 923 10,986 (1,512) 3,095 1,502 63,603 7,301 85,898 826 86,724

Group plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

28


1 BASIS OF PREPARATIONThe financial statements have been prepared inaccordance with International Financial ReportingStandards and IFRIC interpretations as adopted by theEuropean Union (‘IFRS’) and with those parts of theCompanies Act 2006 applicable to companies reportingunder IFRS.

The financial statements have been prepared under thehistorical cost convention as modified to include therevaluation of available-for-sale financial assets.

The following new and amended financial reportingstandards have been adopted in the financial statementsduring the year:

IFRS 2 Share-based Payment (Amendment)

IFRS 7 Financial Instruments: Disclosures(Amendment)

IFRS 8 Operating Segments

IAS 1 Presentation of Financial Statements(Amendment)

IAS 23 Borrowing Costs (Revised)

IAS 27 Consolidated and Separate FinancialStatements (Amendment)

IAS 32 Financial Instruments: Presentation(Amendment)

IAS 39 Financial Instruments: Recognition andMeasurement (Amendment)

IFRIC 9 Reassessment of Embedded Derivatives(Amendment)

IFRIC 13 Customer Loyalty Programmes

IFRIC 15 Agreements for the Construction ofReal Estate

IFRIC 16 Hedges of Net Investment in a ForeignOperation

The adoption of these standards has resulted inamended presentation of certain of the primary financialstatements and additional disclosures in relation tooperating segments and financial instruments.

2 SIGNIFICANT ACCOUNTING POLICIESThe principal IFRS accounting policies adopted by theGroup are set out below.

(a) Basis of consolidationThe consolidated financial statements incorporate thefinancial statements of the Company and entitiescontrolled by the Company (its subsidiaries) for the yearended 31 December 2009. Control is achieved where theCompany has the power to govern the financial andoperating policies of an investee entity so as to obtainbenefits from its activities.

Where necessary, adjustments are made to the financialstatements of subsidiaries to bring the accounting policiesused into line with those used by the Group. All intra-group transactions, balances, income and expenses areeliminated on consolidation.

A list of subsidiaries is given in note 2 of the Companyfinancial statements.

The purchase method of accounting is used for theacquisition of subsidiaries. The cost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred orassumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costsdirectly attributable to the business combination. Theacquiree’s identifiable assets, liabilities and contingentliabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at theacquisition date.

Under IFRS 1, the Group is not required to restateacquisitions or business combinations prior to the date of transition. Therefore, the Group is permitted toretain its historical merger accounting position in theconsolidated accounts in the merger reserve. Transfersfrom the merger reserve to retained earnings may beelected in respect of realised losses recognised in theincome statement on the related assets which aregoodwill and other intangible assets.

Group plc

29

Chart Title can sit here

(b) Deferred contingent considerationDeferred contingent consideration on the balance sheetrepresents the Directors estimate of future considerationpayable in connection with acquisitions. Deferredcontingent cash consideration is discounted andrecorded at present value. Any deferred considerationpayable in a foreign currency is retranslated at thebalance sheet date with gains and losses included inprofit and loss for the year. Changes in the Directorsestimate of future consideration payable are treated asan adjustment to the cost of the business combination,and therefore to goodwill.

(c) EquityThe total equity attributable to the owners of the parentcomprises the following.

Share CapitalShare capital represents the nominal value of sharesissued.

Share premium accountShare premium represents amounts subscribed for sharecapital in excess of nominal value less the related costsof share issues.

Merger reserveThe merger reserve represents the reserve arising onthe acquisition of ProcCyber Services (UK) Limited on 1 June 2006.

Share option reserveThe share option reserve arises as the expense of issuingshare-based payments is recognised over time. Thereserve will fall as share options vest and are exercisedbut the reserve may equally rise or might see anyreduction offset, as new potentially dilutive share optionsare issued.

Retained earningsThe retained earnings represents undistributedcumulative earnings.

Foreign currency translation reserveThe foreign currency translation reserve represents themovement on the translation of the net investment inforeign operations.

Own sharesOwn shares comprise shares held in DataCash Group plcby the Group’s Employee Share Ownership Trust.

(d) Joint venturesJoint ventures are accounted for using the equitymethod of accounting. A joint venture is an entity inwhich DataCash has a long-term interest and exercisesjoint control. Under the equity method, DataCash’s shareof the aggregate assets and liabilities is included in thebalance sheet and DataCash’s share of operating profit,finance and income tax expense of this joint venture isincluded in profit or loss.

(e) Operating segmentsThe Group has adopted IFRS 8 Operating Segments witheffect from 1 January 2009. IFRS 8 requires operatingsegments to be identified on the basis of internal reportsabout components of the Group that are regularlyreviewed by the chief operating decision maker in orderto allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard(IAS 14 Segment Reporting) required an entity to identifytwo sets of segments (business and geographical), usinga risks and returns approach, with the entity’s ‘system of internal financial reporting to key managementpersonnel’ serving only as the starting point for theidentification of such segments. As a result, following the adoption of IFRS 8, the identification of the Group’sreportable segments has changed.

Information reported to the Group’s chief operatingdecision maker, the Board of DataCash Group Plc, for thepurposes of resource allocation and assessment ofsegment performance is more specifically focussed oneach of the separate business units within the Group.The Group’s reportable segments under IFRS 8 aretherefore as follows:

DataCash Services LimitedDataCash LimitedThe 3rd Man Group EuroCommerceEasydebit

Group plc


30


(f) GoodwillGoodwill arising on consolidation represents the excessof the cost of acquisition over the Group’s interest in thefair value of the identifiable assets and liabilities of asubsidiary. Goodwill is initially recognised as an asset atcost and is subsequently measured at cost less anyaccumulated impairment losses.

For the purpose of impairment testing, goodwill isallocated to each of the Group’s cash-generating unitsexpected to benefit from the synergies of thecombination. Cash-generating units to which goodwillhas been allocated are tested for impairment annually, or more frequently when there is an indication that thegoodwill may be impaired. If the recoverable amount ofthe cash-generating unit is less than the carrying amountof the unit, the impairment loss is allocated first toreduce the carrying amount of any goodwill allocated tothe unit and then to the other assets of the unit pro rataon the basis of the carrying amount of each asset in theunit. An impairment loss is recognised immediately in theprofit or loss and is not subsequently reversed.

Goodwill arising on other acquisitions before the date of transition to IFRS has been retained at the previousUK GAAP net book value subject to being tested forimpairment at that date and subsequently in accordancewith the policy detailed above.

(g) Revenue recognitionRevenue represents the net value of billings, excludingVAT, for services rendered in the normal course ofbusiness. Billings for the payment solutions business arerecognised in the month in which services are provided.

Revenue is measured at the fair value of theconsideration received or receivable and representsamounts receivable for services provided in the normalcourse of business, net of discounts, VAT and other salesrelated taxes. Revenue is recognised when services aredelivered to customers and it is probable that futureeconomic benefit will flow to the entity.

(h) Operating profitOperating profit consists of revenues and otheroperating income less operating expenses. Operatingprofit includes impairment and amortisation, butexcludes share of profits in joint ventures, net financeincome and costs, foreign exchange gains/(losses) ondeferred consideration and taxation.

(i) Property, plant and equipmentProperty, plant and equipment are stated at cost lessaccumulated depreciation and any provision forimpairment. Cost comprises all costs that are directlyattributable to bringing the asset into working conditionfor its intended use. Depreciation is calculated to writedown the cost of assets to their residual values on astraight-line basis over the following estimated usefuleconomic lives:

Plant and equipment – 33% per annum

Fixtures and fittings – 20% per annum

(j) InvestmentsAvailable-for-sale financial assets are non-derivatives thatare either designated in this category or not classified inany of the other financial asset categories. They areincluded in non-current assets unless managementintends to dispose of the investment within 12 months of the balance sheet date.

Available-for-sale financial assets are initially measuredat fair value plus transaction costs and subsequently atfair value. Changes in the fair value of the assets arerecognised in other comprehensive income. When theassets are sold or impaired, the accumulated fair valueadjustments are recognised in profit or loss.

The fair value of investments quoted in an active marketis their current bid price. The fair value of unlisted assetsis established by using valuation techniques. Theseinclude the use of recent arm’s length transactions,reference to other instruments that are substantially thesame and discounted cash flow analysis.

An equity conversion option on a debt instrument is, if material, split from the debt instrument and changes in fair value are recognised in profit or loss.

Group plc

31


(k) LeasesLeases that confer rights and obligations similar to thosethat attach to owned assets are classified as financeleases. All other leases are classified as operating leases.

Assets held under finance leases are included withinproperty, plant and equipment, initially measured at theirfair value or, if lower, the present value of the minimumlease payments and a corresponding liability isrecognised within obligations under finance leases.Subsequently, the assets are depreciated on a basisconsistent with similar owned assets or over the term ofthe lease, if shorter. At inception of the lease, the leaserentals are apportioned between an interest element anda capital element so as to produce a constant periodicrate of interest on the outstanding liability. Thereafter, the interest element is recognised as an expense in profitor loss while the capital element is applied to reduce theoutstanding liability.

An operating lease does not transfer the risk or rewardsof ownership to the Group. Rentals payable underoperating leases are charged to income on a straight-linebasis over the term of the original lease. Benefitsreceived and receivable as an incentive to enter into anoperating lease are also spread on a straight-line basisover the lease term.

(l) Impairment of property, plant and equipmentand intangible assets excluding goodwillProperty, plant and equipment and intangible assets arereviewed for impairment whenever events or changes incircumstances indicate that the carrying amount maynot be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amountexceeds its recoverable amount. The recoverable amountis the higher of an asset’s fair value (less disposal costs)and value in use.

Value in use is based on the present value of the futurecash flows relating to the asset. For the purpose ofassessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cashflows (Cash Generating Units).

(m) Intangible assets - arising on businesscombinationsIn accordance with IFRS 3 Business Combinations,goodwill arising on acquisitions is capitalised as anintangible asset. Other intangible assets are alsoidentified and measured at fair value on acquisition andsubsequently carried at cost and amortised over three tofive years. Examples of these are customer relationshipsand software. Goodwill is not amortised, but subject toannual impairment reviews.

(n) Internally generated intangible assets -research and development expenditureExpenditure on research activities is recognised as anexpense in the period in which it was incurred.

An internally generated intangible asset arising from thedevelopment of software is recognised only if all of thefollowing conditions have been met:

• It is probable that the asset will create future economicbenefits;

• The development costs can be measured reliably;

• Technical feasibility of completing the intangible assetcan be demonstrated;

• There is intention to complete the asset and use or sellit; and

• Adequate technical, financial and other resources tocomplete the development and to use or sell the assetare available.

Internally generated intangible assets are amortised overtheir estimated useful lives which is between three to sixyears. Where no internally generated intangible asset canbe recognised, development expenditure is charged toprofit or loss in the period in which it is incurred.

(o) Cash and cash equivalentsCash and cash equivalents include cash at bank and inhand and short-term deposits with an original maturityperiod of three months or less.

Group plc


32


(p) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest rate method less provision forimpairment. A provision for impairment of tradereceivables is established where there is objectiveevidence that the Group will not be able to collect allamounts due according to the original terms of thereceivables. Significant financial difficulties of thecustomer, probability that the customer will enterbankruptcy or financial reorganisation and default ordelinquency in payments are considered indicators thatthe trade receivable is impaired.

When a trade receivable is uncollectible, it is written offagainst the provision for trade receivables. Subsequentrecoveries of amounts previously written off are creditedagainst administrative expenses in profit or loss.

(q) Trade payablesTrade payables represent the amount of invoicesreceived from suppliers for purchases of goods andservices for which payment has not been made. Tradepayables are initially recognised at fair value andsubsequently measured at amortised cost using theeffective interest method.

(r) TaxationIncome tax expense represents the sum of the taxcurrently payable and deferred tax.

The tax currently payable is based on taxable profit forthe year. Taxable profit differs from profit as reportedin profit or loss because it excludes items of income orexpense that are taxable or deductible in other years and it further excludes items that are never taxable ordeductible. The Group’s liability for current tax iscalculated using tax rates that have been enacted orsubstantively enacted by the balance sheet date.

Deferred tax is recognised on differences between thecarrying amounts of the assets and liabilities in thefinancial statements and the corresponding tax basesused in the computation of taxable profit and isaccounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for alltaxable temporary differences. Deferred tax assets arerecognised to the extent that it is probable that taxableprofits will be available against which deductibletemporary differences can be utilised. Such assets andliabilities are not recognised if the temporary differencearises from goodwill or from the initial recognition (otherthan in a business combination) of other assets andliabilities in a transaction that affects neither the taxableprofit nor accounting profit.

Deferred tax liabilities are recognised for taxabletemporary differences arising on investments insubsidiaries and associates and interests in jointventures, except where the Group is able to control thereversal of the temporary difference and it is probablethat the temporary difference will not reverse in theforeseeable future.

The carrying amount of deferred tax assets is reviewedat each balance sheet date and reduced to the extentthat it is no longer probable that sufficient taxable profitswill be available to allow all or part of the asset to berecovered.

Deferred tax is calculated at the tax rates that areexpected to apply in the period when the liability issettled or the asset realised based on the tax rates thathave been enacted or substantively enacted at thebalance sheet date. Deferred tax and current tax arecharged or credited to profit or loss, except when itrelates to items recognised in other comprehensiveincome or directly in equity. In which case the tax is alsorecognised in other comprehensive income or equity.

Tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets againstcurrent tax liabilities and when they relate to income taxlevies by the same taxation authority and the Groupintends to settle its current tax assets and liabilities on anet basis.

Group plc

33


In recognising income tax assets and liabilities,management makes estimates of the likely outcome ofdecisions by tax authorities on transactions and eventswhose treatment for tax purposes is uncertain. Wherethe financial outcome of such matters is different, orexpected to be different, from previous assessmentsmade by management, a change to the carrying value of income tax assets and liabilities will be recorded in aperiod in which such a determination is made. Thecarrying values of income taxes and liabilities aredisclosed separately in the consolidated balance sheet.

(s) Foreign currency translationThe individual financial statements of each Group entityare presented in the currency of the primary economicenvironment in which the entity operates (its functionalcurrency). For the purpose of the consolidated financialstatements, the results and financial position of eachentity are expressed in Pounds Sterling, which is thefunctional currency of the Company and presentationalcurrency for the consolidated financial statements.

Transactions in currencies other than the functionalcurrency of the Company are initially recorded at theexchange rate prevailing on the dates of the transaction.At each balance sheet date, monetary assets andliabilities that are denominated in foreign currencies areretranslated at the exchange rate prevailing on thebalance sheet date. Non-monetary assets and liabilitiescarried at fair value that are denominated in foreigncurrencies are translated at the rates prevailing at thedate when the fair value was determined. Gains andlosses arising on retranslation are included in profit orloss, except for exchange differences on non-monetaryassets and liabilities, which are recognised in othercomprehensive income when the changes in fair valueare recognised in other comprehensive income.

On consolidation, the assets and liabilities of the Group’soverseas operations are translated into the Group’spresentational currency at exchange rates prevailing onthe balance sheet date. Income and expense items aretranslated at the average exchange rates for the periodunless exchange rates have fluctuated significantlyduring the year, in which case the exchange rate at thedate of the transaction is used. Exchange differencesarising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translationdifferences are recognised as income or as expenses in the period in which the operation is disposed of.

Goodwill and fair value adjustments arising on theacquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the ratesprevailing at the balance sheet date.

The Group has elected to treat goodwill and fair valueadjustments arising on acquisitions before the date oftransition to IFRS as sterling denominated assets andliabilities.

(t) Equity share-based employee remunerationThe Group issues options to certain employees. The fairvalue of options granted is recognised as an employeeexpense, with a corresponding increase in equityreserves. The fair value is recognised at the grant dateand spread over the period until the employees becomeunconditionally entitled to the options. The fair value ofthe options granted is measured using either the BlackScholes or Binomial option pricing model, taking intoaccount the terms and conditions on which the optionswere granted. The amount recognised as an expense isadjusted to reflect the actual number of share optionsexpected to vest including the effect of non-market-based vesting conditions.

(u) Retirement benefit costsContributions to the Group’s defined contributionpension schemes are recognised in profit or loss in theperiod in which they become payable.

(v) DataCash Group PLC Employee ShareOwnership Trust (“ESOT”)Investment in the Company’s own Shares which are heldby the Trustees of the Group’s ESOT for the benefit ofparticipants in the Company’s nil-cost option scheme areshown as a deduction from equity. Similarly, obligationsin respect of the Shares to be issued to satisfyobligations under the nil-cost option scheme and otherlong term incentives are deducted from own shareswithin equity.

Other assets and liabilities of the ESOT are recognised asassets and liabilities of the Group.

Group plc


34


(w) DividendsDividends on ordinary shares are recognised as a liabilityin the period in which they are approved by theCompany’s shareholders.

Dividends payable on ordinary shares are recognised in the financial statements when they have beenappropriately authorised and are no longer payable atthe Company’s discretion. Accordingly, interim dividendsare recognised when they are paid and final dividendsare recognised when they are declared followingapproval by shareholders at the Company’s AnnualGeneral Meeting. Dividends on ordinary shares arerecognised as an appropriation of equity attributable to owners of the parent.

(x) ProvisionsProvisions are recognised when the Group has a presentobligation as a result of a past event, and it is probablethat the Group will be required to settle that obligation.Provisions are measured at the Directors best estimateof the expenditure required to settle the obligation at thebalance sheet date, and are discounted to present valuewhere the effect is material.

(y) Financial instrumentsFinancial assets and financial liabilities are recognised inthe Group’s balance sheet when the Group becomes aparty to a contractual provision of the instrument. Tradeand loan receivables are initially measured at fair value,and are subsequently measured at amortised cost usingthe effective interest rate method, less any impairment.Trade payables are initially measured at fair value, andsubsequently measured at amortised cost using theeffective interest rate method.

In accordance with its treasury policy, the Group doesnot hold or issue derivative financial instruments fortrading purposes.

(z) Equity instrumentsAn equity instrument is any contract that evidences aresidual interest in the assets of the Group afterdeducting all of its liabilities. Equity instruments issued bythe Group are recorded at the proceeds received, net ofdirect issue costs.

3 CRITICAL ACCOUNTING ESTIMATESAND JUDGMENTS

In preparing the consolidated financial statements,management has to make judgements on how to applythe Group’s accounting policies and make estimatesabout the future. The critical judgements that have beenmade in arriving at the amounts recognised in theconsolidated financial statements and the key sources of estimation uncertainty that have a significant risk ofcausing a material adjustment to the carrying value ofassets and liabilities in the next financial year, arediscussed below:

AcquisitionsWhen acquiring a business, the Directors have to makejudgements and best estimates about the fair value ofthe assets, liabilities and contingent liabilities acquiredand separate recognition of other intangible assets. The Directors also have to estimate on acquisition, andthen on each balance sheet date, the expected deferredcontingent cash consideration that may be payable.These are estimated in accordance with the accountingpolicy explained above.

Impairment reviewsAt each balance sheet date, the Group tests whethergoodwill has suffered any impairment. The recoverableamounts of cash-generating units have been determinedbased on value-in-use calculations. These calculationsrequire the use of estimates including discount rates andgrowth rates.

Group plc

35


4 FUTURE CHANGES TO ACCOUNTING POLICIESThe International Accounting Standards Board (IASB) and the International Financial Reporting InterpretationsCommittee (IFRIC) have issued the following standards and interpretations to be applied to the financial statementswith periods commencing after the date of these financial statements. They have not been adopted early by the Group and the Directors do not expect these standards and interpretations to have a material impact on the financial statements.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS/IAS) EFFECTIVE DATE

IFRS 2* Share based Payment (Amendment) 1 July 2009

IFRS 3* Business Combinations (Amendment) 1 July 2009

IFRS 5* Non-current Assets Held for Sale and Discontinued Operations (Amendment) 1 July 2009

IFRS 8* Operating Segments (Amendment) 1 Jan 2010

IFRS 9* Financial Instruments 1 Jan 2013

IAS 1* Presentation of Financial Statements (Amendment) 1 Jan 2010

IAS 7* Statement of Cash Flows (Amendment) 1 Jan 2010

IAS 17* Leases (Amendment) 1 Jan 2010

IAS 18* Revenue (Amendment) Once endorsed

IAS 24* Related Party Disclosures (Revised) 1 Jan 2011

IAS 27 Consolidated and Separate Financial Statements (Amendment) 1 July 2009

IAS 28 Investments in Associates (Amendment) 1 July 2009

IAS 31 Interests in Joint Ventures (Amendment) 1 July 2009

IAS 32 Financial Instruments: Presentation (Amendment) 1 Feb 2010

IAS 36* Impairment of Assets (Amendment) 1 Jan 2010

IAS 38* Intangible Assets (Amendment) 1 July 2009

IAS 39 Financial Instruments: Recognition and Measurement (Amendment) 1 July 2009

INTERNATIONAL FINANCIAL REPORTING INTERPRETATIONS (IFRIC)

IFRIC 9* Reassessment of Embedded Derivatives (Amendment) 1 July 2009

IFRIC 14* Amendments – Prepayments of a Minimum Funding Requirement 1 Jan 2011

IFRIC 16* Hedges of a Net Investment in a Foreign Operation (Amendment) 1 July 2009

IFRIC 17 Distribution of Non-Cash Assets to Owners 1 July 2009

IFRIC 18 Transfer of Assets from customers 1 July 2009

IFRIC 19* Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

*Still to be endorsed by the EU as at the date of the approval of these financial statements.

Group plc


36


5 OPERATING SEGMENTSInformation regarding the Group’s reportable segments is presented below. Amounts reported for the prior year havebeen restated to conform to the requirements of IFRS 8. All income in the year is derived from the rendering ofoutsourced payment processing services.

DataCashServices DataCash Euro- The Inter-

2009 Limited Limited Commerce Easydebit 3rd Man segment Total

£000 £000 £000 £000 £000 £000 £000

Segment revenue 16,948 13,176 2,174 3,130 1,698 (239) 36,887

Segment profit 9,119 5,758 117 661 265 – 15,920

Impairment – – (1,566) – – – (1,566)

Amortisation (3,912) (581) (611) (665) (1,284) – (7,053)

Share of operating loss

in joint venture (15)

Finance income 727

Finance costs (49)

Foreign exchange gains

on deferred consideration 156

Profit before tax 8,120

Segment assets 59,398 21,639 4,142 9,099 3,843 (5,485) 92,636

Elimination of balances

due from parent (9,405)

Cash held by parent 9,972

Investments 4,180

Unallocated assets 354

Total assets 97,737

Segment liabilities 2,399 2,417 5,748 719 420 (5,485) 6,218

Deferred consideration 1,925

Deferred taxation 2,620

Unallocated liabilities 250

Total liabilities 11,013

Depreciation (411) (679) (28) (20) (11) – (1,149)

Additions to non-current assets 363 803 232 9 147 – 1,554

Group plc

37


5 OPERATING SEGMENTS - CONTINUED

DataCashServices DataCash Euro- Inter-

2008 Limited Limited commerce Easydebit Third Man company Total

£000 £000 £000 £000 £000 £000 £000

Segment revenue 13,669 12,105 1,594 708 – (39) 28,037

Segment profit/(loss) 9,176 5,131 (628) 153 – – 13,832

Impairment – – (2,773) – – – (2,733)

Amortisation (4,147) (217) (754) (122) – – (5,240)

Share of operating profit in joint venture 72

Finance income 968

Finance costs (280)

Foreign exchange losses on deferred consideration (1,078)

Profit before tax 5,501

Segment assets 68,345 19,403 7,080 8,992 – (6,211) 97,609

Elimination of balances

due from parent (11,332)

Cash held by parent 7,450

Investments 3,902

Unallocated assets 1,735

Total assets 99,364

Segment liabilities 5,112 2,838 4,518 450 – (6,211) 6,707

Deferred consideration 5,986

Deferred taxation 3,196

Unallocated liabilities 184

Total liabilities 16,073

Depreciation (403) (411) (46) – – – (860)

Additions to non-current assets 285 948 20 – – – 1,253

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note2. Segment profit represents the profit earned by each segment without allocation of central administration costs andDirectors salaries, profits of associates, investment revenue, finance costs and income tax expense. This is the measurereported to the chief operating decision maker for the purposes of resource allocation and assessment of segmentperformance. All transactions between group companies are on an arm’s length basis.

No individual customer provided more than 10% of the Group’s revenues in the year (2008: £nil).

Group plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

38


5 OPERATING SEGMENTS - CONTINUEDGeographical segments

The Group’s operations are located in UK, South Africa, Ireland, Germany, China and Cyprus.

The following table provides an analysis of the Group’s sales by geographical market and customer, irrespective of theorigin of the services:

2009 2008

£000 £000

UK 14,120 11,461

Rest of Europe 21,864 14,293

Rest of World 903 2,283

36,887 28,037

6 PROFIT BEFORE TAXATIONThis is stated after charging/(crediting) the following:

2009 2008

£000 £000

Foreign exchange (gains)/losses on deferred consideration (156) 1,078

Staff costs (note 9) 10,781 8,340

Other foreign exchange losses/(gains) 758 (816)

Depreciation of property, plant and equipment:

Owned assets 1,149 860

Operating lease rentals – land and buildings 421 134

Amortisation of other intangible assets 7,053 5,240

Impairment of goodwill 1,566 2,773

Group plc

39


7 AUDITOR’S REMUNERATIONAmounts payable to Baker Tilly UK Audit LLP and its associates in respect of both audit and non-audit services.

2009 2008

£000 £000Audit services

– Statutory audit of parent and consolidated accounts 50 50

– Audit of company’s subsidiaries where such services are provided

by Baker Tilly UK Audit LLP or its associates 88 60

Tax services

– Compliance services 34 22

– Advisory services – share schemes 1 5

Other services

– Interim review 10 9

– Corporate finance – 8

183 154

Comprising

– Audit services 138 110

– Non audit services 45 44

183 154

8 REMUNERATION OF KEY MANAGEMENT PERSONNELThe remuneration of the Directors, who are the key management personnel of the Group, is set out below inaggregate for each of the categories specified in IAS 24 Related Party Disclosures.

2009 2008

£000 £000

Short-term employee benefits:

Directors’ emoluments 460 549

Social security costs 59 70

519 619

Pension costs 15 18

Share-based payments 75 124

609 761

Highest Paid Director

Emoluments 211 50

Company payments to personal defined contribution pension schemes 13 3

Gains made on exercise of share options – 386

224 439

Group plc


40


8 REMUNERATION OF KEY MANAGEMENT PERSONNEL - CONTINUEDDuring the year the Group made payments to the personal pension schemes of two Directors (2008: four). The Directors’ interests in the share capital and share option scheme of the Company and details of individualDirectors’ remuneration are disclosed in the Directors’ Report.

9 STAFF COSTSStaff costs for all employees including executive Directors’ consist of:

2009 2008

£000 £000

Wages and salaries 10,274 7,776

Social security costs 636 338

Other pension costs 124 98

Share based payments 138 213

11,172 8,425

Capitalised development costs 391 85

Staff costs expensed 10,781 8,340

11,172 8,425

The average monthly number of employees of the Group during the year, including executive Directors’, was

as follows:

Sales 46 12

Operations 97 69

Finance and Administration 31 17

Support 189 140

363 238

10 FINANCE INCOME AND COSTS

2009 2008

£000 £000

Income

Interest receivable on bank deposits 479 968

Other interest (note 19) 248 –

727 968

Finance costs

Notional interest on deferred consideration (note 25) 49 280

Group plc

41


11 TAXATION

2009 2008

£000 £000

Current tax

Current tax on profits for the year 4,555 3,824

Adjustments in respect of prior periods – (1)

Total current tax 4,555 3,823

Deferred tax

Origination and reversal of temporary differences (1,654) (963)

Adjustments in relation to deferred tax of previous years – (1)

Total deferred tax (1,654) (962)

Taxation expense for the year 2,901 2,861

The tax credit recognised in other comprehensive income of £nil (2008: £63,000) comprised a current tax creditof £nil (2008: £188,000) less a deferred tax charge of £nil (2008: £125,000) both in respect of share basedpayments.

The tax for the period is higher (2008: higher) than the standard rate of corporation tax in the UK (28%). The differences are explained below:

2009 2008

£000 £000

Profit before taxation 8,120 5,501

Profit on ordinary activities multiplied by rate of corporation tax

in the UK of 28% (2008: 28.5%) 2,274 1,568

Effects of:

Expenses not deductible for tax purposes 567 979

Other differences 44 43

Tax losses (utilised)/not recognised (9) 79

Higher tax rates on overseas earnings 25 192

Total taxation 2,901 2,861

Group plc


42


12 DIVIDENDS

2009 2008

£000 £000

Ordinary

Final paid in respect of the year ended 31 December 2008 – 1.4p 1,284 1,006

(2007 – 1.1p)

Interim dividend paid in respect of the year ended 31 December 2009 – 0.5p

(2008 – 0.4p) 459 366

1,743 1,372

A second interim dividend of 1.75p per share was announced on 25 February 2010 and was paid on 1 April

2010. It has not been included as a liability in these financial statements.

13 ADJUSTED EARNINGS RECONCILIATION

2009 2008

£000 £000

Profit before taxation per the statement of comprehensive income 8,120 5,501

Adjustments

Impairment and amortisation 8,619 8,013

Foreign exchange (gain)/loss on deferred consideration (156) 1,078

Adjusted profit before taxation 16,583 14,592

Taxation per statement of comprehensive income (2,901) (2,861)

Tax effect of adjustments detailed above (1,755) (1,477)

Adjusted tax (4,656) (4,338)

Adjusted profit for the year 11,927 10,254

Adjusted profit attributable to:

Owners of the parent 11,861 10,254

Minority interest 66 –

11,927 10,254

The Directors believe that the adjusted profit for the year assists in the presentation of the Group’s

underlying performance.

Group plc

43


14 EARNINGS PER SHARE

Weighted average number of 1p ordinary shares in issue during the year

2009 2008

For basic earnings per share 91,712,490 91,472,062

Dilutive effect of share options 546,397 788,000

For diluted earnings per share 92,258,887 92,260,062

Basic earnings per share 5.62p 2.89p

Diluted earnings per share 5.59p 2.86p

Adjusted basic earnings per share 12.93p 11.21p

Adjusted diluted earnings per share 12.86p 11.10p

The basic and diluted earnings per share are calculated using the profit for the year attributable to owners of theparent as disclosed in the statement of comprehensive income. The adjusted basic and diluted earnings per share arecalculated using the adjusted profit for the year attributable to owners of the parent detailed in note 13 above.

Basic earnings per share has been calculated by dividing the earnings attributable to owners of the parent by theweighted average number of ordinary shares in issue during the year, determined in accordance with IAS 33 Earningsper share.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on theassumption of conversion of all the potentially dilutive ordinary shares for which all the conditions have been met.

Group plc


44


15 OTHER INTANGIBLE ASSETS

Acquired Acquired InternalCustomer Software Development

Relationships Development Costs Total

£000 £000 £000 £000

Cost

At 1 January 2008 20,521 4,372 116 25,009

Exchange differences 688 479 – 1,167

Additions – – 445 445

Acquired on acquisition of subsidiaries 1,837 1,142 – 2,979

At 31 December 2008 23,046 5,993 561 29,600

Exchange differences (244) (119) – (363)

Additions – – 874 874

Acquired on acquisition of

subsidiaries (note 31) 1,574 2,276 – 3,850

At 31 December 2009 24,376 8,150 1,435 33,961

Aggregate impairment and amortisation

At 1 January 2008 9,093 1,723 – 10,816

Amortisation 3,380 1,833 27 5,240

As at 31 December 2008 12,473 3,556 27 16,056

Exchange differences 6 (33) – (27)

Amortisation 4,949 1,903 201 7,053

At 31 December 2009 17,428 5,426 228 23,082

Carrying amount

At 1 January 2008 11,428 2,649 116 14,193

At 31 December 2008 10,573 2,437 534 13,544

At 31 December 2009 6,948 2,724 1,207 10,879

The amortisation period for these intangible assets is three to five years, with one to five years remaining.

Other intangible assets are tested for impairment whenever events or changes in circumstances indicate that thecarrying value may not be recoverable.

Group plc

45


16 GOODWILL

Goodwill onConsolidation

£000Cost

At 1 January 2008 67,627

Reduction in deferred contingent consideration (note 25) (903)

Additions 6,452

Exchange differences 3,612

As at 31 December 2008 76,788

Increase in deferred contingent consideration (note 25) 722

Additions 266

Exchange differences (1,343)


Aggregate impairment

At 1 January 2008 16,110

Impairment 2,773

Exchange differences 233


Impairment 1,566

Exchange differences (136)


Carrying amount

At 1 January 2008 51,517

At 31 December 2008 57,672

At 31 December 2009 55,887

Group plc


46


16 GOODWILL - CONTINUED

2009 2008

£000 £000Business Segment:

Cash generating unit 1 DataCash Services Limited 16,754 16,754

Cash generating unit 2 DataCash Limited 30,310 30,310

Cash generating unit 3 EuroCommerce 2,185 4,616

Cash generating unit 4 Easydebit 6,372 5,992

Cash generating unit 5 The 3rd Man Group 266 –

55,887 57,672

The Group tests goodwill annually for impairment or more frequently if there are any indications that goodwill mightbe impaired.

The recoverable amounts of the CGU are determined from value in use calculations. The key assumptions for the valuein use calculations are those regarding the discount rates, growth rates and expected changes to selling prices anddirect costs during the period. Management estimates discount rates using pre-tax rates that reflect current marketassessments of the time value of money and the risks specific to the CGU. The growth rates are based on industrygrowth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of futurechanges in the market. The CGUs represent those specific businesses forming the Group.

In all cases, the approved budget for the following financial year formed the basis for the cash flow projections for a CGU. The approved cashflow projections in the two to five financial years following the budget year reflectedmanagement’s expectations of the medium-term operating performance of the CGU and growth prospects in theCGU’s market.

The EuroCommerce CGU reduced to its recoverable amount through recognition of an impairment loss againstgoodwill of £1.6m as at 30 June 2009. The impairment was recognised mainly as a result of deteriorating economicfactors in the airline industry in which EuroCommerce CGU operates. The impairment reviews were calculated using a growth rate used to extrapolate the results at 0% beyond the three year forecast period and a pre-tax discount rateof 13%. There was no further impairment as at 31 December 2009.

Group plc

47


17 PROPERTY, PLANT AND EQUIPMENT

Plant and Fixtures &Equipment Fittings Total

£000 £000 £000

Cost

At 1 January 2008 2,715 243 2,958

Amounts acquired through business combinations 154 – 154

Exchange movements 142 5 147

Additions 1,253 – 1,253

Disposals – (2) (2)

At 1 January 2009 4,264 246 4,510

Amounts acquired through business combinations (note 31) 41 18 59


Additions 669 11 680

Disposals (1,682) (69) (1,751)

At 31 December 2009 3,355 302 3,657

Accumulated depreciation

At 1 January 2008 1,045 123 1,168

Charge for the year 828 32 860

Exchange movements 126 – 126

Disposals – (1) (1)

At 1 January 2009 1,999 154 2,153

Charge for the year 1,110 39 1,149


Disposals (1,663) (68) (1,731)

At 31 December 2009 1,508 137 1,645

Net book amount

At 1 January 2008 1,670 120 1,790

At 31 December 2008 2,265 92 2,357

At 31 December 2009 1,847 165 2,012

At 31 December 2009 all assets were owned by the Group.

Depreciation is charged to administrative expenses in profit or loss.

Group plc


48


18 INVESTMENT IN JOINT VENTURES

CSC24SEVEN Chase TopAggregated amounts relating to joint ventures Technologies Total

£000 £000 £000

Group share of net assets/cost

At 1 January 2008 18 (31) (13)

Share of profit for the year 43 29 72

Exchange differences 10 18 28

At 1 January 2009 71 16 87

Share of profit/(loss) for the year 24 (39) (15)

At 31 December 2009 95 (23) 72

The CSC24SEVEN joint venture comprises 50% holding in CSC24SEVEN Limited, a company incorporated in Cyprus.The remaining 50% is owned by CSC, a banking service provider. The principal activity of the joint venture is theprovision of an e-wallet solution.

The Chase top technologies associate comprises 50% holding in Chase top technologies, a company incorporated inChina. The significant shareholder of the remaining 50% is owned by, Shenzhen Huaxung Tongyu Technology Co. Ltd.,a technology company. The principal activity of the joint venture is the provision of payment solutions.

The investments are treated as joint ventures by virtue of the Group’s shareholding in each company and the jointlycontrolled Boards of Directors.

19 INVESTMENTS

Loan Shares Total

£000 £000 £000

Cost and valuation

1 January 2008 – – –

Additions 3,902 – 3,902

1 January 2009 3,902 – 3,902

Conversion of investment in Smartvoucher (1,400) 1,400 –

Additions – 279 279

31 December 2009 2,502 1,679 4,181

Investments comprise an investment of £3,902,000 in Smart Voucher Limited and £279,000 in Raven Russia Limited.

The strategic investment in Smart Voucher Limited of £3,902,000 is through a three year convertible loan instrumentbearing a coupon of 5.1% which, if converted, would give the Group approximately 16.66% of the enlarged equity ofSmart Voucher.

Group plc

49


19 INVESTMENTS - CONTINUED

During the year £1.4m (2008: £nil) of the loan was converted into ordinary shares capitalised in Smart Voucher Limitedand interest of £196,000 (2008: £52,000) accrued on the convertible loan investment.

The investment is convertible at the option of both the Company and the issuer and will automatically convert afterthree years. The issuer has the option to repay the debt at any time prior to conversion at book value.

The asset is classified as an available-for-sale financial asset which is denominated in £ Sterling and the Directorsconsider that the fair value of the asset is not materially different from the book value. The Directors consider theoption to convert at any time during the three year period to have minimal value.

During the year, the Group made sales to Smart Voucher Limited of £132,752 (2008: £109,000). Ashley Head and PaulBurton are both Directors of Smart Voucher Limited.

The investment in Raven Russia Limited of £279,000 is through the purchase of 300,000 Raven Russia 12%redeemable preference shares at 93p per share. These shares are listed on the AIM market of the London StockExchange and their market value as at 31 December 2009 was £278,000.

The asset is classified as an available-for-sale financial asset which is denominated in £ Sterling and the Directors’consider that the fair value of the asset is not materially different from the book value.

20 TRADE AND OTHER RECEIVABLES

2009 2008

£000 £000

Trade receivables 4,752 3,688

Less: provision for impairment (247) (461)

4,505 3,227

Other receivables 817 519

Prepayments and accrued income 801 1,415

6,123 5,161

The average credit period taken on sales of services is 45 days (2008: 42 days). Trade receivables between 30 days and120 days are provided for based on estimated irrecoverable amounts from the sale of services, determined byreference to past default experience.

Included in the Group’s trade receivables balance are debtors with a carrying amount of £886,000 (2008: £818,000)which are past due at the reporting date for which the Group has not provided as there has not been a significantchange in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral overthese balances. The average age of these receivables is 86 days (2008: 79 days).

Group plc


50


20 TRADE AND OTHER RECEIVABLES - CONTINUED

Ageing of past due but not impaired receivables 2009 2008

£000 £000

60-90 days 640 446

90-120 days – 372

Total 640 818

Movement in the provision for impairment 2009 2008

£000 £000

Balance at the beginning of the year 461 446

Impairment losses recognised 295 52

Amounts recovered during the year (509) (37)

Balance at the end of the year 247 461

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the tradereceivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limiteddue to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further creditprovision required in excess of the provision for impairment.

Included in the provision for impairment are individually impaired trade receivables with a balance of £18,000 (2008: £32,000) which have been placed under liquidation. The impairment recognised represents the differencebetween the carrying amount of these trade receivables and the present value of the expected liquidation proceeds.The Group does not hold any collateral over these balances.

Ageing of impaired trade receivables 2009 2008

£000 £000

90-120 days 64 –

120+ days 183 461

247 461

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

Group plc

51


21 TRADE AND OTHER PAYABLES - CURRENT

2009 2008

£000 £000

Trade payables 581 764

Other taxation and social security payable 682 939

Other payables 580 858

Accruals and deferred income 1,855 1,994

3,698 4,555

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 21 days (2008: 23 days). For most suppliers no interest ischarged on the trade payables for the first 60 days from the date of the invoice. Thereafter, interest is charged on theoutstanding balances at various interest rates. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

22 OPERATING LEASE COMMITMENTS

At 31 December 2009, the Group had the following outstanding commitments, for future minimum lease paymentsunder non-cancellable operating leases.

Land and Buildings2009 2008

£000 £000

Within one year 355 403

Later than one year and less than five years 760 1,166

1,115 1,569

The Group leases various offices under non-cancellable operating lease agreements. These leases have various terms,escalation clauses and renewal rights.

Operating lease payments represent rentals payable by the Group for certain of its office properties. Leases arenegotiated for an average term of 5 years and rentals are fixed for an average of 5 years.

Group plc


52


23 NON CURRENT LIABILITIES

National insurancecontributions on

share option gains

£000

At 1 January 2009 32

Credit for the year (6)

As at 31 December 2009 26

The provision represents National Insurance Contributions on 184,768 (2008: 184,768) outstanding share options inissue at the year end. The provision has been calculated at the current National Insurance rate of 12.8% applied to thedifference between the exercise price and a market price at the year end of £2.03 (2008: £2.29).

24 DEFERRED TAX

2009 2008

£000 £000

1 January (3,196) (3,289)

Credit to profit or loss 1,674 963

Debit to equity – 125

Acquisition of subsidiaries (note 31) (1,078) (995)

Total deferred tax (2,600) (3,196)

Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise todeferred tax assets because it is probable that these assets will be recovered except for tax losses arising in connectionwith Eurocommerce Internet Solutions Limited of approximately ¤15m (2008: ¤15m). These tax losses are available tooffset against future taxable profits arising in that subsidiary and equate to a deferred tax asset of ¤1.9m (2008: ¤1.9m)or £1.7m (2008: £1.8m). No deferred tax asset has been recognised in relation to these losses due to the uncertainty asto the timing of future taxable profits.

No deferred tax is recognised on the unremitted earnings of the overseas subsidiaries. As the earnings are continuallyreinvested by the Group, no tax is expected to be payable on them in the foreseeable future.

Group plc

53


24 DEFERRED TAX - CONTINUEDThe movements in deferred tax assets and liabilities during the year are shown below.

Intangibleassets Other Total

£000 £000 £000

At 1 January 2008 (3,470) 181 (3,289)

Capitalised development expenditure (117) – (117)

Other temporary differences – (75) (75)

Amortisation in the year 1,280 – 1,280

Acquisition of subsidiary (995) – (995)

At 31 December 2008 (3,302) 106 (3,196)

Capitalised development expenditure (144) – (144)

Other temporary differences – (1) (1)

Amortisation in the year 1,799 – 1,799

Acquisition of subsidiary (1,078) – (1,078)

At 31 December 2009 (2,725) 105 (2,620)

25 DEFERRED CONSIDERATION

Deferred consideration is payable in respect of the prior year acquisitions of ExperCash GmbH (formerly EasydebitGmbH) and ACK Limited.

Consideration payable is either guaranteed or contingent on the future financial performance of the acquired entity.This can be analysed as follows:

2009 2008

£000 £000

Deferred contingent cash consideration 1,925 5,986

1,925 5,986

Amounts are payable over a period of up to three years from the acqusition date and are payable in the followingcurrencies:

2009 2008

£000 £000

Sterling 125 677

Euro 1,800 5,309

1,925 5,986

The provision for deferred consideration represents the Directors best estimate of the amount expected to be payablein cash. The provision is discounted at a rate equivalent to the borrowing rate of the amount payable except wherecash is held in escrow.

Group plc


54


25 DEFERRED CONSIDERATION - CONTINUED

Details of the movements in the deferred consideration during the year are as follows:

2009 2008

£000 £000

1 January 5,986 3,887

Paid in year (4,676) (3,101)

Exchange differences (156) 1,078

Acquisitions – 4,745

Notional interest charge (note 10) 49 280

Increased/(reduced) consideration (note 16) 722 (903)

31 December 1,925 5,986

Current 1,592 4,280

Non-current 333 1,706

1,925 5,986

26 SHARE BASED PAYMENTS

Equity-settled share option schemeThe Company has an unapproved Executive Share Option Scheme that has been in existence since 28 October 1996 to incentivise the Group’s Board and certain key employees. The vesting period is 3 years. If the options remainunexercised after a period of 10 years from the date of grant, the options expire. Options are forfeited if the employeeleaves the Group before the options vest.

Details of the share options outstanding during the year are as follows:

2009 2008Number Weighted Number Weightedof share average exercise of share average exerciseoptions price (in p) options price (in p)

Outstanding at 1 January 2009 369,536 92.3 878,342 85.3

Forfeited during the year – – (70,764) 81.5

Exercised during the year – – (438,042) 80.0

Outstanding at 31 December 2009 369,536 92.3 369,536 92.3

Exercisable at the end of the year 369,536 92.3 369,536 92.3

The options outstanding at 31 December 2009 had a weighted average remaining contractual life of 0.75 years (2008: 1.75 years). No options were granted in 2009 or 2008.

There is no share based payment charge for the year as all the options had vested by 31 December 2006.

Group plc

55


26 SHARE BASED PAYMENTS - CONTINUED

Share Grant SchemeThe Company has a Share Grant Scheme that has been in existence since 17 July 2007 to incentivise the Group’s Boardand certain key employees. The vesting period is three years and the options are subject to performance conditions,which are explained in the Directors’ Report. If the grants remain unexercised after a period of 10 years from the dateof grant, the grants expire. Grants are forfeited if the employee leaves the Group before the grants vest.

Details of the share options outstanding during the year are as follows:

2009 2008Number Weighted Number Weightedof share average exercise of share average exerciseoptions price (in p) options price (in p)

Outstanding at 1 January 2009 408,000 – 280,000 –

Granted during the year 191,500 – 148,000 –

Forfeited in the year (184,000) – (20,000) –

Exercised during the period – – – –

Expired during the period – – – –

Outstanding at 31 December 2009 415,500 – 408,000 –

Exercisable at the end of the year – – – –

The options outstanding at 31 December 2009 had a weighted average remaining contractual life of 8.4 years (2008: 8.9 years). In 2009, grants were issued on one date. The aggregate of the estimated fair values of the optionsgranted is £335,000 (2008: £334,000).

The share based payment charge is based on the fair value of the share options.

The fair value of the share options has been calculated using the Binomial option-pricing model.

The inputs into the model are as set out below.

2007 2008 2009

Weighted average share price at date of grant 257.5p 277.8p 250.5p

Weighted average exercise price 0.0p 0.0p 0.0p

Expected volatility 43% 41% 41%

Expected life 4 years 4 years 4 years

Risk free rate 5.0% 5.0% 4.5%

Expected dividends 0.5% 0.5% 0.5%

The expected volatility was determined by analysing the daily share price for the 3 years prior to the date of issue ofthe options.

The expected useful life used in the model is based on management’s best estimates based on non-transferability,exercise restrictions and behavioural considerations.

The Group’s share option charge for the year is £137,000 (2008: £213,000).

Group plc


56


26 SHARE BASED PAYMENTS - CONTINUED

At 31 December 2009 share options which had been granted and remain outstanding were as follows

Number of Exercise Date Options Dates OptionsOrdinary Shares Price Granted Exercisable

Employee share option scheme

53,014 100.8p 14 February 2000 14 February 2003 - 14 February 2010

14,052 183.3p 20 April 2000 20 April 2003 - 20 April 2010

80,600 196.0p 10 July 2000 10 July 2003 - 10 July 2010

41,870 140.8p 25 October 2000 25 October 2003 - 25 October 2010

40,000 26.58p 29 January 2002 29 January 2005 - 29 January 2012

140,000 24.5p 8 April 2003 8 April 2006 - 8 April 2013

Share Grant Scheme

160,000 0.0p 17 July 2007 17 July 2010 - 17 July 2017

133,000 0.0p 14 May 2008 20 May 2011 - 20 May 2018

122,500 0.0p 01 May 2009 01 May 2012 - 01 May 2019

Movements in year:

At 1 January At 31 December2009 Granted Exercised Forfeited 2009

777,536 191,500 – (184,000) 785,036

Group plc

57


27 SHARE CAPITAL

2009 2008

£ £

Authorised

130,000,000 ordinary shares of 1p each 1,300,000 1,300,000

Allotted, Call Up and Fully Paid

92,300,490 (2008: 92,300,490) ordinary shares of 1p each 923,005 923,005

A reconciliation of the movements in issued share capital is as follows:

Number of shares

At 1 January 2008 91,862,448

Placing shares issued on exercise of employee share options 219,021

Completion shares issued on exercise of options arising on acquisition of

ProCyber Services (UK) Limited 219,021

At 1 January 2009 and at 31 December 2009 92,300,490

During the year nil (2008: 438,042) options were exercised for nil consideration (2008: £350,309).

28 DATACASH GROUP PLC EMPLOYEE SHARE OWNERSHIP TRUST (“ESOT”)

2009 2009 2008 2008

Shares £000 Shares £000

At the beginning of the year 588,000 1,512 280,000 685

Purchase of own shares – – 308,000 827

At end of year 588,000 1,512 588,000 1,512

Own shares represent the cost of the Company’s ordinary shares acquired to meet the Group’s expected obligationsunder the employee share grant scheme.

As at 31 December 2009 the market value of own shares held was £1,193,640 (2008: £1,343,580).

Group plc


58


29 NOTES TO THE CONSOLIDATED CASH FLOWSTATEMENT

Reconciliation of profit for the year to net cash inflow from operations:

2009 2008

£000 £000

Profit for the year 5,219 2,640

Taxation 2,901 2,861

Finance income (727) (968)

Finance costs 49 280

Amortisation and impairment of goodwill and intangibles 8,619 8,013

Depreciation 1,149 860

Loss on disposal of property, plant and equipment 20 1

Loss/(profit) on joint ventures 15 (72)

Share option charge 137 213

Exchange movements (156) 1,078

Changes in trade and other receivables (675) 517

Changes in trade and other payables (1,109) 744

Net cash inflow from operations 15,442 16,167

30 CASH AND CASH EQUIVALENTS

2009 2008

£000 £000

Cash and cash equivalents 17,275 14,661

Restricted cash held in escrow 1,308 1,980

18,583 16,641

Amounts shown as cash and cash equivalents exclude amounts held on behalf of clients for the purposes of facilitatingsettlements, totalling £8.6m (2008: £13.2m).

Restricted cash held in escrow relates to amounts payable under deferred consideration agreements.

Included in cash and cash equivalents are security cash deposits of £2.3m (2008: £2.3m) and cash held in a solicitors’account of £nil (2008: £2.4m) in relation to the acquisition of The 3rd Man Group plc.

Group plc

59


31 ACQUISITIONS

On 21 January 2009, the Group acquired 76.36% of the issued share capital of The 3rd Man Group plc for a cashconsideration of £2,388,355. Total goodwill arising on the acquisition is £266,000.

Carrying values Fair valuepre acquisition adjustments Fair value

£000 £000 £000

Intangible assets 162 3,688 3,850

Property, plant and equipment 59 – 59

Trade and other receivables 287 – 287

Cash and cash equivalents 298 – 298

Trade and other payables (246) – (246)

Deferred tax liabilities – (1,078) (1,078)

Net assets acquired 560 2,610 3,170

Goodwill 266

Minority interest (760)

Total purchase consideration 2,676

Consideration satisfied by:

Cash 2,388

Directly attributable costs 288

2,676

Intangible assets comprise customer relationships of £1,574,000 and software development of £2,276,000.

The goodwill arising on acquisition of The 3rd Man Group Plc represents the value of anticipated future operatingsynergies from the combination. There is no deferred or contingent consideration payable in respect of this acquisition.

From the date of acquisition to 31 December 2009 the acquisition contributed £1,698k to revenue and £234k in profit.

If the acquisition of The 3rd Man Group plc had been completed on the first day of the financial year, Group revenuesfor the year would have increased by £91k and Group profit attributable to owners of the parent would have increasedby £7k.

On 29 March 2010 the Group acquired the remaining 23.63% of The 3rd Man Group plc. Total consideration for theacquisition is expected not to exceed £2.7 million. This comprises an initial payment of £1.2 million in cash andadditional amounts payable in loan notes which in aggregate are not expected to exceed £1.5 million in principal andare subject to an earn-out structure which includes certain performance criteria.

Group plc


60


32 FINANCIAL INSTRUMENTS

Capital risk managementThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern whilemaximising the return to stakeholders through the optimisation of the equity balance. The capital structure of theGroup consists of equity attributable to owners of the parent, comprising issued capital, reserves and retained earningsas disclosed in the statement of changes in equity. The structure is managed to minimise the Group’s cost of capitaland to provide ongoing returns to shareholders and service debt obligations. Surplus cash is reinvested in the business.The Group is not subject to externally imposed capital requirements.

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shallbe undertaken.

None of the financial instruments of the Group are classified as ‘fair value through profit or loss’ or ‘held-to-maturity’,The financial assets of the Group are all classified as loans and receivables except for available-for-sale assets asdisclosed in note 19. The financial liabilities of the Group are stated at amortised cost.

Financial risk management objectivesThe Group’s Board of Directors monitors and manages the financial risks relating to the operations of the Groupthrough internal risk reports which analyses exposures by degree and magnitude of risks. These risks include marketrisk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interestrate risk.

Foreign currency risk managementThe Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange ratefluctuations arise. Exchange rate exposures are managed within approved policy parameters. The Group uses forwardcontracts to sell Euro and US Dollar which are surplus to requirements. This aims to reduce the Group’s foreigncurrency exposure. There are no significant changes to the role financial instruments play in creating or changing therisks the Group faces in its activities from the previous period or post year end. At the year end there were no materialoutstanding forward contracts (2008: £nil).

The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities at thereporting date are as follows:

Liabilities Assets2009 2008 2009 2008

£000 £000 £000 £000

Euro (264) (5,993) 2,462 2,185

US dollar – – 445 2,963

Rand (931) (366) 573 4,362

Canadian dollar – – – 114

The Group is mainly exposed to the currency of the USA (US dollar currency), Europe (Euro currency) and the currencyof South Africa (South African Rand).

Group plc

61


32 FINANCIAL INSTRUMENTS - CONTINUED

The following table details the Group sensitivity to a 10% increase and decrease in the Sterling against the relevantforeign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key managementpersonnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts theirtranslation at the end for a 10% change in foreign currency rates. The sensitivity analysis includes loans to foreignoperations within the Group where the denomination of the loan is in a currency other than the currency of the lenderor borrower. A positive number below indicates an increase in profit and other equity.

Euro currency US dollar currency South African Rand2009 2008 2009 2008 2009 2008

£000 £000 £000 £000 £000 £000

Impact on profit or loss on equity10% increase in sterling (220) 381 (44) (296) 36 (400)

10% decrease in sterling 220 (381) 44 296 (36) 400

Credit risk managementThe financial assets of the Group exposed to credit risk are trade and other receivables.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to theGroup. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficientcollateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transactswith entities that are rated the equivalent to investment grade and above. This information is supplied by independentrating agencies where available and if not available the Group uses other publicly available financial information and itsown trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties arecontinuously monitored and the aggregate value of transactions concluded is spread amongst approvedcounterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the GroupFinancial Controller and Board of Directors annually.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, creditguarantee insurance cover is purchased.

The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterpartieshaving similar characteristics. The Group defines counterparties as having similar characteristics if they are connectedentities. Concentration of credit did not exceed 5% of gross monetary assets at any time during the year. The credit riskon liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international creditrating agencies.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses,represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

Liquidity risk managementUltimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriateliquidity risk management framework for the management of the Group’s short, medium and long-term funding andliquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and bycontinuously monitoring forecast and actual cashflows and matching the maturity profiles of financial assets.

Group plc


62



The undiscounted contractual cash flows for the Group’s financial liabilities, including interest payments, are as follows:

Less than Between one Between two After more2009 one year and two years and five years than five years Total

£000 £000 £000 £000 £000

Trade and other payables 1,161 – – – 1,161

1,161 – – – 1,161

Less than Between one Between two After more2008 one year and two years and five years than five years Total

£000 £000 £000 £000 £000

Trade and other payables 1,650 – – – 1,650

1,650 – – – 1,650

The above disclosures exclude deferred contingent cash consideration. Further details are disclosed in note 25.

Fair values of financial instrumentsFor the following financial assets and liabilities: trade and other payables, trade and other receivables, and cash andcash equivalents, the carrying amount approximates the fair value of the instrument due to the short-term nature ofthe instrument. These are summarised below:

2009 2008

£000 £000

Trade and other payables (1,161) (1,650)

Trade and other receivables 5,324 4,600

Cash and cash equivalents 18,583 16,641

22,746 19,591

Details of the Group’s available for sale investments are disclosed in note 19 and details of the deferred considerationare disclosed in note 25.

The Directors consider that there were no material differences between the book values and the fair values of all theGroup’s financial assets and liabilities at each year end based on the expected future cash flows.

Fair value measurements recognised in the balance sheetThe following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value grouped under IFRS 7 (revised) into Level 1 to 3 based on the degree to which the fair value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identicalassets or liabilities.

Group plc

63



Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 thatare observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset orliability that are not based on observable market data (unobservable inputs).

2009Level 1 Level 2 Level 3 Total

£000 £000 £000 £000

Available for sale financial assets

Investments – preference shares (listed) 279 – – 279

Investments – convertible loan/unlisted shares – – 3,902 3,902

There were no transfers between levels in the year. There were no movements in the fair value measurements of level 3 financial assets during the year.

Convertible loan/unlisted sharesThe financial statements include a convertible loan and holdings in unlisted shares which are measured at fair value.Fair value is estimated using a discounted cashflow model, which includes some assumptions that are not supportableby observable market prices or rates. In determining the fair value, an earnings growth factor of 0% beyond the twoyear forecast period and a pre-tax risk adjusted discount factor of 12% are used.

Interest rate riskThe Group had no borrowings facilities during the year. Cash and cash equivalents and short term deposits are the only assets/liabilities that are interest bearing. A 0.5% reduction in bank deposit rates would have reduced the financeincome by £36k.

2009 2008

£000 £000

Interest rate risk of financial assets

Fixed rate 2,502 3,902

Floating rate 18,583 16,641

Fixed rate financial assets comprise a three year convertible loan instrument bearing a coupon of 5.1%.

Floating rate financial assets comprise cash deposits on a quarterly or monthly money market deposit dependent onanticipated interest rate fluctuations.

33 RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated onconsolidation and are not disclosed in this note. Details of key management personnel remuneration are disclosed innote 8 and their interests are disclosed in the Directors’ Report.

Group plc

COMPANY BALANCE SHEET

64

Chart Title can sit hereAs at 31 December 2009

Note 2009 2008

£000 £000Fixed assetsInvestments 2 21,718 19,904

Current assetsDebtors 3 265 5,811Cash at bank and in hand 7 9,972 7,450

10,237 13,261

CreditorsAmounts falling due within one year 4 (9,728) (17,166)

Net current assets/(liabilities) 509 (3,905)

Total assets less current liabilities 22,227 15,999

Provisions for liabilities 5 (1,925) (5,986)

Net assets 20,302 10,013

Capital and reservesCalled up share capital 8 923 923Share premium account 6 10,986 10,986Own shares 6 (1,512) (1,512)Share option reserve 6 1,502 1,365Profit and loss account 6 8,403 (1,749)

Equity shareholders’ funds 9 20,302 10,013

The financial statements were approved and authorised for issue by the Board of Directors on 28 April 2010.

Paul BurtonChief Financial Officer

Group plc

Company registration number 03168091

65


1. ACCOUNTING POLICIES

Basis of PreparationThe financial statements are prepared under thehistorical cost convention and in accordance withapplicable accounting standards in the United Kingdomand the Companies Act 2006.

Parent company profit and loss accountNo profit and loss account has been presented forDatacash Group plc as permitted under section 408 of the Companies Act 2006. The Company recorded aprofit of £11,895,000 (2008: loss of £1,659,000).

InvestmentsInvestments held as fixed assets are stated at cost lessany provision for impairment in value.

Foreign CurrenciesTransactions in foreign currencies are translated intosterling at the rate ruling at the date of the transaction.Monetary assets and liabilities denominated in foreigncurrencies at the balance sheet date are translated at therate ruling at that date. Any exchange differences aredealt with in the profit and loss account.

Share Based PaymentsFor all grants of share options, the fair value as at thedate of grant is calculated using the option price modeland the corresponding expense is recognised over thevesting period. The share based payment charge inrespect of share options issued to employees of theCompany’s subsidiaries is charged as an expense in theaccounts of the subsidiary and added to the cost ofinvestment in subsidiaries in these accounts.

Deferred TaxationDeferred tax is recognised in respect of all timingdifferences that have originated but not reversed at thebalance sheet date where transactions or events thatresult in an obligation to pay more tax in the future or aright to pay less tax in the future have occurred at thebalance sheet date. Timing differences are differencesbetween the Company’s taxable profits and its results asstated in the financial statements that arise from theinclusion of gains and losses in tax assessments inperiods different from those in which they are recognisedin the financial statements.

Deferred tax is measured at the average tax rates thatare expected to apply in the periods in which timingdifferences are expected to reverse, based on tax ratesand laws that have been enacted or substantially enactedby the balance sheet date. Deferred tax is measured on anon-discounted basis.

Own SharesShares held by the Datacash Group plc Employee ShareOwnership Trust (“ESOT”) are shown as a deduction fromshareholders’ funds. Other assets and liabilities of theESOT are recognised as assets and liabilities of theCompany.

Financial InstrumentsThe Company has taken an exemption from FRS 13Derivatives and other financial instruments as thisinformation is provided in note 32 of the Group’sFinancial Statements.


NOTES TO THE COMPANY FINANCIAL STATEMENTS

Group plc


66


2 FIXED ASSET INVESTMENTS

Investments in Othersubsidiaries investments Total

£000 £000 £000

Net book value

At 1 January 2009 16,002 3,902 19,904

Additions – 279 279

Acquisitions 2,676 – 2,676

Share based payment charge 137 – 137

Increased consideration 722 – 722

Impairments in the year (2,000) – (2,000)

As at 31 December 2009 17,537 4,181 21,718

The acquisition in the year represents the cost of acquiring 76% of the issued share capital of The 3rd Man Group Plc. The other investments comprise an investment of £3.9m made in Smart Voucher Limited in 2008 and an investmentof £279,000 in Raven Russia Limited in 2009. Further details are disclosed in note 19 of the Group’s financialstatements.

The historic cost of the fixed asset investments are £25,400,000 (2008: £21,586,000).

Details of the acquisition are in note 31 of the Group financial statements.

Group plc

67


2 FIXED ASSET INVESTMENTS - CONTINUED

Details of the Company’s subsidiaries at 31 December 2009 are as follows:

Country of Class ofRegistration/ Shares Proportion Nature of

Name of Company Incorporation Held Held Business

DataCash Limited England & Wales Ordinary 100% Paymentsolutions

Auxinet Investments Limited England & Wales Ordinary 100% Dormantcompany

DataCash Services Limited England & Wales Ordinary 100% Paymentsolutions

DataCash (Pty) Limited* South Africa Ordinary 100% Paymentsolutions

EuroCommerce Call Centre Ireland Ordinary 100% HoldingSolutions Limited company

EuroCommerce Internet Ireland Ordinary 100% PaymentSolutions Limited* solutions

ACK Limited England & Wales Ordinary 100% Paymentsolutions

ExperCash GmbH Germany Ordinary 100% Payment(formerly Easydebit GmbH) solutions

DataCash Fraud Services Limited England & Wales Ordinary 76% Fraudservices

The 3rd Man Group Limited* England & Wales Ordinary 76% Fraud(formerly The 3rd Man Group Plc) services

The 3rd Man Limited* England & Wales Ordinary 76% Fraudservices

Details of the Company’s joint ventures at 31 December 2009 are as follows:

CSC24SEVEN.com Limited* Cyprus Ordinary 50% E-walletsolutions

Chase Top Technologies* China Ordinary 50% Paymentsolutions

* Indirectly held through subsidiary entities.

Group plc


68


3 DEBTORS

2009 2008

£000 £000

Due within one year

Amounts owed by subsidiary undertakings – 5,641

Other debtors 105 67

Prepayments and accrued income 160 103

265 5,811

4 CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR

2009 2008

£000 £000

Tax creditors 7 39

Corporation tax 212 –

Amounts owed by subsidiary undertakings 9,405 16,973

Accruals and deferred income 104 154

9,728 17,166

5 PROVISIONS FOR LIABILITIES

DeferredContingent

Consideration

£000

At 1 January 2009 5,986

Exchange differences (156)

Notional interest charge 49

Increased consideration in relation to prior year acquisition 722

Deferred contingent consideration paid in year (4,676)

At 31 December 2009 1,925

The acquisitions of ACK Limited on 12 June 2008 and Expercash GmbH (formerly Easydebit GmbH) on 9th September2008 involve earn out agreements whereby the consideration payable includes a deferred element that is contingenton the future financial performance of the acquired entity.

The provision for contingent consideration represents the Directors’ best estimate of the amount expected to be payablein cash. The provision is discounted to present value at a rate equivalent to a borrowing rate for the amount payableexcept where cash is held in escrow. Further information is provided in note 25 of the Group financial statements.

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6 RESERVES

Own Share Share Option Profit andShares Premium Reserve Loss Account Total

£000 £000 £000 £000 £000

At 1 January 2009 (1,512) 10,986 1,365 (1,749) 9,090

Profit for the year – – – 11,895 11,895

Dividends paid – – – (1,743) (1,743)

Share option charge – – 137 – 137

At 31 December 2009 (1,512) 10,986 1,502 8,403 19,379

7 CASH AT BANK AND IN HAND

Cash at bank and in hand includes £1.31m (2008: £1.98m) of restricted cash held in escrow relating to amounts payableunder deferred consideration agreements (see note 5) and £nil (2008: £2.4m) held in a solicitors’ account in relation tothe acquisition of The 3rd Man Group Plc.

8 SHARE CAPITAL

2009 2008

£ £

Authorised

130,000,000 ordinary shares of 1p each 1,300,000 1,300,000

Allotted, called up and fully paid

92,300,490 (2008: 92,300,490) ordinary shares of 1p each 923,005 923,005

During the year no options were exercised (2008: 1,038,046 options were exercised for a total consideration of£350,309).

The Company has a share option scheme under which options have been granted to certain key executives and keyemployees, details of which are given in note 26 of the Group accounts.

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9 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS

2009 2008

£000 £000

Profit/(loss) for the year 11,895 (1,659)

Dividends (1,743) (1,372)

10,152 (3,031)

Issue of shares – 350

Purchase of own shares – (827)

Share option charge 137 213

Opening shareholders’ funds 10,013 13,308

Closing shareholders’ funds 20,302 10,013

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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 2010 Annual General Meeting (the “Meeting”) of DataCash Group plc (the “Company”) for thecalendar year 2009 will be held at 1pm on 25 May 2010 at the registered office of the Company whose address is DescartesHouse, 8 Gate Street, London WC2A 3HP for the following purposes:

Ordinary Business

To consider and, if thought fit, pass resolutions 1 - 6 as ordinary resolutions.

1. To receive the accounts for the year ended 31 December 2009, together with the report of the directors and auditorsthereon.

2. To re-elect as a director Paul Burton who retires in accordance with the Company’s Articles of Association (the “Articles”).

3. To re-elect as a director David Bailey.

4. To re-elect as a director Nicholas Temple.

5. To re-appoint Baker Tilly UK Audit LLP as auditor and to authorise the directors to agree their remuneration.

6. That the directors be and they are hereby authorised generally and unconditionally in accordance with section 551 of theCompanies Act 2006 (the “Act”) to exercise all powers of the Company to allot equity securities (within the meaning ofsection 560 of the Act) and grant such subscription and conversion rights as are contemplated by sections 551(1)(a) and (b)of the Act up to an aggregate nominal amount of £307,734 such authority to expire at the conclusion of the next AnnualGeneral Meeting of the Company after the passing of this resolution (unless such authority is previously revoked, varied orextended by the Company in general meeting) but so that such authority allows the Company to make offers or agreementsbefore the expiry thereof which would or might require relevant securities to be allotted after the expiry of such authority,and the directors may allot relevant securities in pursuance of those offers or agreements as if this authority had notexpired. This authority is in substitution for any and all authorities previously conferred upon the directors for the purposesof section 551 of the Act or section 80 of the Companies Act 1985, without prejudice to any allotments made pursuant tothe terms of such authorities.

Special Business

To consider and, if thought fit, pass resolutions 7, 8 and 9 as special resolutions.

As Special Resolutions

7. That, subject to the passing of resolution 6 as set out above, the directors be and they are hereby empowered for the periodcommencing on and with effect from the date of adoption of this resolution and (unless previously revoked, varied orrenewed) expiring on the date of the next Annual General Meeting of the Company, pursuant to section 570 of the Act toallot equity securities wholly for cash pursuant to the authority conferred by the said resolution 6 as if the provisions ofsection 561(1) of the Act did not apply to any such allotment provided that this power shall be limited:

(a) to the allotment of equity securities in connection with an offer of such securities by way of a rights issue in favour ofordinary shareholders where the equity securities respectively attributable to the interests of all ordinary shareholdersare proportionate (as nearly as may be) to the respective numbers of ordinary shares held by them, or to holders ofother equity securities, as required by the rights of those securities, or as the directors otherwise consider necessary,but subject to such exclusions or other arrangements as the directors may in their absolute discretion deemnecessary or expedient to deal with fractional entitlements or any legal or other practical problems arising under thelaws of any territory, or the requirements of any regulatory body or stock exchange; and

(b) to the allotment, otherwise than pursuant to sub-paragraph (a) above, up to an aggregate nominal value of £46,160,such power to expire at the conclusion of the next Annual General Meeting of the Company, save that the Companymay before such expiry make offers or agreements which would or might require equity securities to be allotted aftersuch expiry and the directors may allot equity securities in pursuance of such offers or agreements as if the powerconferred hereby had not expired.

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8. That in accordance with article 3 of the Articles and Part 18 of the Act, the Company be and is hereby granted general andunconditional authority (pursuant to section 701 of the Act) to make one or more market purchases (within the meaning ofsection 693 of the Act) on the London Stock Exchange of ordinary shares of 1 pence each in the capital of the Companyprovided that:

(a) the maximum aggregate number of ordinary shares authorised to be purchased is 4,616,024 (representing 5 per cent.of the Company’s issued ordinary share capital);

(b) the minimum price which may be paid for such shares is 1 pence per share;

(c) the maximum price which may be paid for an ordinary share shall not be more than 5 per cent. above the average ofthe middle market quotations for an ordinary share as derived from the London Stock Exchange Daily Official List orthe AIM supplement thereto for the five business days immediately preceding the date on which the ordinary share ispurchased;

(d) unless previously renewed, varied or revoked, the authority conferred by this resolution shall expire at the conclusionof the Company’s next Annual General Meeting; and

(e) the Company may make a contract or contracts to purchase ordinary shares under the authority conferred by thisresolution prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of suchauthority and may make a purchase of ordinary shares in pursuance of any such contract or contracts.

9. That the Articles be amended as follows:

(a) by the insertion of a new Article 40A as set out below:

“40A ELECTRONIC COMMUNICATION

40A.1 The Company may give any document, notice or information (the “Communicated Material”) required pursuant tothese Articles or the Companies Act 2006 (“the 2006 Act”) in hard copy form or, subject to the 2006 Act, in electronicform or by electronic means.

40A.2 Where the Company sends any Communicated Material in electronic form, such Communicated Material will be validlysent provided that:

a) the Member has agreed (generally or specifically) (or in the case of a company it is deemed to have agreed by aprovision in the 2006 Act) that Communicated Material can be sent in electronic form;

b) the Communicated Material is material to which the agreement applies; and

c) copies of the Communicated Material are sent in electronic form to the address notified by the Member to theCompany for that purpose.

40A.3 Where the Company sends Communicated Material in electronic form, it shall be deemed to have been received by theintended recipient 24 hours after it was first transmitted, and in proving such receipt it shall be sufficient to show thatsuch Communicated Material was properly addressed.

40A.4 Where the Company sends Communicated Material to its Members by means of a website, such CommunicatedMaterial will be validly sent provided that:

a) the Member has expressly agreed (generally or specifically) that Communicated Material can be sent by meansof a website to him or her or he or she has been asked (individually) to agree that Communicated Material canbe sent by means of a website and the Company has received no response to that request within 28 days fromthe date on which the request was sent;

b) the Communicated Material is material to which the agreement applies; and

c) the Member is notified of the presence of the Communicated Material on the website, the address of the website,the place on the website where the Communicated Material may be accessed and how the CommunicatedMaterial may be accessed.

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40A.5 Where the Company sends Communicated Material by means of a website, it shall be deemed to have been receivedwhen the Communicated Material was first made available on the website or, if later, when the recipient received (or isdeemed to have received) notice of the fact that the Communicated Material was available on the website.

40A.6 Communicated Material must be available on the website for a period of not less than 28 days from the date of thenotification unless the Act makes provisions for any other time period.

40A.7 If the Communicated Material is published on the website for only part of the period of time referred to in Article40A.6 above, it shall be regarded as having been published for the entire period if the failure to publish is caused bytechnical or other circumstances which it would not have been reasonable to expect the Company to avoid or prevent.

40A.8 Where the Company sends Communicated Material to Members other than in hard copy form, any Member canrequire the Company to send him or her a hard copy version and the Company must do so free of charge and within21 days of the Member’s request.

40A.9 Where the 2006 Act permits documents to be sent to the Company, only such documents as are expressly specifiedby the Company may be sent to the Company in electronic form to the address specified by the Company for thatpurpose. A document sent to the Company in electronic form is sufficiently authenticated if the identity of the senderis confirmed in the way the Company has specified.”

(b) Article 40.1 shall be deleted and replaced with a new Article 40.1 as set out below:

“40.1 Any notice or document may be given or served by the Company on any Member either personally or by sending itthrough the post in a pre-paid letter addressed to such Member at his or her address as appearing in the Register ofMembers or in electronic form or by means of a website, subject to the terms of Article 40A below. In the case of jointholders of a share all notices shall be given to that one of the joint holders whose name stands first in the Register ofMembers in respect of the joint holding and notice so given shall be sufficient notice to all the joint holders.”

(c) Article 40.2 shall be deleted and replaced with a new Article 40.2 as set out below:

“40.2 Subject to Article 40A, any Member described in the Register of Members by an address not within the UnitedKingdom who from time to time gives to the Company an address within the United Kingdom at which notices may beserved upon him shall be entitled to have notices served upon him at such address but otherwise no Member, otherthan a Member described in the Register of Members by an address within the United Kingdom, shall be entitled toreceive any notice from the Company.”

(d) Article 40.5 shall be deleted and replaced with a new Article 40.5 as set out below:

“40.5 Any notice required to be given by the Company to the Members or any of them and not provided for by or pursuantto these Articles, shall be sufficiently given if given by advertisement inserted once in at least one national dailynewspaper or, if in accordance with the 2006 Act and Article 40A, in electronic form.”

(e) Article 40.6 shall be deleted and replaced with a new Article 40.6 as set out below:

“40.6 Except as otherwise provided by the Act or by these Articles, any notice shall be exclusive of the day on which it isserved or deemed to be served and of the day for which it is given. Any notice or other document required to beserved by the Company on any Member, if served by post, shall be deemed to have been served at the latest within 24 hours if pre-paid as first class and within 48 hours if pre-paid as second class after it has been posted. In provingsuch service it shall be sufficient to prove that the letter containing the notice or document was properly addressedand duly posted. A notice to be given by advertisement shall be deemed to have been served on the day on which the advertisement appears. Notices permitted to be given in electronic form shall be deemed received as set out inArticle 40A.”

(e) Article 40.7 shall be deleted and replaced with a new Article 40.7 as set out below:

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“40.7 Any notice or document delivered or sent i) in electronic form, ii) by means of a website, iii) by post or iv) left at theregistered address of any Member in pursuance of these Articles shall, notwithstanding that such Member is thendead, bankrupt, of unsound mind or (being a corporation) in liquidation and, whether or not the Company has noticeof the death, bankruptcy, insanity or liquidation of such Member, be deemed to have been duly served in respect ofany share registered in the name of such Member as sole or joint holder unless his name has at the time of the serviceof the notice or document been removed from the Register of Members as the holder of the share and such serviceshall, for all purposes, be deemed a sufficient service of such notice or document on all persons interested (whetherjointly with or as claiming through or under him) in the share.”

(f) Article 15.2 shall be deleted and replaced with a new Article 15.2 as set out below:

“15.2 Every notice shall be in writing and shall specify the place, the day and the time of meeting, and, in the case of specialbusiness, the general nature of such business, and in the case of an annual general meeting, shall specify the meetingas such. The term “in writing” shall include notices given in electronic form or by means of a website pursuant toArticle 40A.”

BY ORDER OF THE BOARDPaul Burton – Secretary28 April 2010

Registered OfficeDescartes House8 Gate StreetLondonWC2A 3HP

N O T E S1. A Member entitled to be present and vote at the Meeting may appoint a proxy or proxies to attend and, on a poll vote instead of him/her. A proxy

need not be a Member of the Company. Details of how to appoint the Chairman of the Meeting or another person as your proxy using the proxy formare set out in the notes to the proxy form.

2. A form of proxy is enclosed with this Notice for use at the Meeting. Forms of proxy must be received by the Company’s registrars, Capita Registrars(Proxies), PO Box 25, Beckenham, Kent, BR3 4BR, not later than 48 hours before the time appointed for holding the Meeting. Completion and return ofa form of proxy will not preclude a Member from attending and voting in person.

3. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint morethan one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact Capita Registrars.

4. Contracts of service of the directors and copies of the marked up Articles will be available for inspection at the Meeting.

5. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those Members entered on the Company’s Register ofMembers at 6pm on 23 May 2010 or, if the Meeting is adjourned, shareholders entered on the Company’s Register of Members not later than 6pm onthe date two days prior to the adjourned meeting shall be entitled to attend, and vote at the Meeting in respect of the number of shares registered intheir name at the time. In each case, changes to the Register of Members after such time shall be disregarded in determining the rights of eachperson to attend or vote at the Meeting.

6. As at 6pm on 28 April 2010, the Company’s issued share capital comprised 92,320,490 ordinary shares of 1p each. Each ordinary share carries theright to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at 6pm on 28 April 2010 is92,320,490.

7. In order to facilitate voting by corporate representatives at the Meeting, arrangements will be put in place at the Meeting so that (i) if a corporateshareholder has appointed the chairman of the meeting as its corporate representative to vote on a poll in accordance with the directions of all of theother corporate representatives for that shareholder at the meeting, then on a poll those corporate representatives will give voting directions to thechairman and the chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and (ii) if more than onecorporate representative for the same corporate shareholder attends the Meeting but the corporate shareholder has not appointed the chairman ofthe meeting as its corporate representative, a designated corporate representative will be nominated, from those corporate representatives whoattend, who will vote on a poll and the other corporate representatives will give voting directions to that designated corporate representative.Corporate shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporaterepresentatives (www.icsa.org.uk) for further details of this procedure. The guidance includes a sample form of appointment letter if the chairman isbeing appointed as described in (i) above of this note 7.

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