RD Card Holdings Australia Pty Limited
ABN 75 123 181 635

Annual report
for the year ended 31 December 2009

RD Card Holdings Australia Pty Limited ABN 75 123 181 635

Annual report — 31 December 2009

Contents

		Page
Financial statements			1
Directors’ declaration			33
Report of independent auditors			34

RD Card Holdings Australia Pty Limited ABN 75 123 181 635
Annual report — 31 December 2009

Contents

		Page
Financial statements
Statements of comprehensive income			2
Statements of financial position			3
Statements of changes in equity			4
Statements of cash flows			5
Notes to the financial statements			6
Directors’ declaration			33
Report of independent auditors			34

These financial statements cover both the separate financial statements of RD Card Holdings Australia Pty Limited as an individual entity and the consolidated financial statements for the consolidated entity consisting of RD Card Holdings Australia Pty Limited and its subsidiaries. The financial statements are presented in the Australian currency.

RD Card Holdings Australia Pty Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

      RD Card Holdings Australia Pty Limited
      Level 1
      2-6 Glenferrie Rd
      Malvern VIC 3144

The immediate parent entity of RD Card Holdings Australia Pty Limited is RD Card Holdings Limited (incorporated in the United Kingdom) and the ultimate controlling party is Palamon Capital Partners LP (incorporated in Scotland).

The financial statements were authorised for issue by the directors on 30 August 2010. The company has the power to amend and reissue the financial statements.

RD Card Holdings Australia Pty Limited
Statements of comprehensive income
For the year ended 31 December 2009

						Consolidated								Parent entity
						2009				2008				2009				2008
		Notes				$’000				$’000				$’000				$’000
Revenue from continuing operations			5				57,390				58,268				—				—
Depreciation and amortisation expense			6				(13,424	)			(13,979	)			—				—
Other expenses							(1,202	)			(1,210	)			(27	)			(32	)
Transaction charges							(2,743	)			(2,663	)			—				—
System costs							(1,106	)			(1,021	)			—				—
Salaries and wages							(10,851	)			(10,054	)			—				—
Customer rebates							(637	)			(287	)			—				—
Advertising and promotional expense							(1,181	)			(1,157	)			—				—
Bad debts expense							(2,254	)			(2,340	)			—				—
Professional fee expense							(1,464	)			(1,131	)			—				(48	)
Management fee							(850	)			(1,770	)			—				—
Postage							(582	)			(532	)			—				—
Premises expense							(1,550	)			(1,213	)			—				—
Terminal trading charges							(453	)			(567	)			—				—
Finance costs			6				(16,516	)			(22,242	)			(14,216	)			(20,037	)
Profit/(loss) before income tax							2,577				(1,898	)			(14,243	)			(20,117	)
Income tax (expense)/credit			7				(1,113	)			(2,008	)			4,273				6,021
Profit/(loss) from continuing operations							1,464				(3,906	)			(9,970	)			(14,096	)
Profit/(loss) for the year							1,464				(3,906	)			(9,970	)			(14,096	)
Other comprehensive income for the year							—				—				—				—
Total comprehensive income/(loss) for the year							1,464				(3,906	)			(9,970	)			(14,096	)
							1,464				(3,906	)			(9,970	)			(14,096	)
Total comprehensive income/(loss) for the year is attributable to:
Owners of RD Card Holdings Australia Pty Limited							1,464				(3,906	)			(9,970	)			(14,096	)
							1,464				(3,906	)			(9,970	)			(14,096	)
						Cents				Cents
Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company:
Basic earnings per share			32				1.98				(5.29	)
Diluted earnings per share			32				1.98				(5.29	)
						Cents				Cents
Earnings per share for profit attributable to the ordinary equity holders of the company:
Basic earnings per share			32				1.98				(5.29	)
Diluted earnings per share			32				1.98				(5.29	)

The above statements of comprehensive income should be read in conjunction with the accompanying notes.

RD Card Holdings Australia Pty Limited
Statements of financial position
As at 31 December 2009

						Consolidated								Parent entity
						2009				2008				2009				2008
		Notes				$’000				$’000				$’000				$’000
ASSETS
Current assets
Cash and cash equivalents			8				8,660				5,871				—				—
Trade and other receivables			9				86,313				84,454				17,605				11,197
Inventories			10				268				239				—				—
Current tax receivables							—				175				—				175
Total current assets							95,241				90,739				17,605				11,372
Non-current assets
Investments			11				—				—				295,454				295,454
Property, plant and equipment			12				2,638				3,385				—				—
Deferred tax assets			13				3,457				968				—				251
Intangible assets			14				243,075				251,870				—				—
Total non-current assets							249,170				256,223				295,454				295,705
Total assets							344,411				346,962				313,059				307,077
LIABILITIES
Current liabilities
Trade and other payables			15				138,355				107,497				143,547				92,501
Borrowings			16				11,353				8,226				8,024				7,292
Current tax liabilities							1,960				—				1,960				—
Provisions			17				748				981				—				—
Total current liabilities							152,416				116,704				153,531				99,793
Non-current liabilities
Borrowings							121,015				158,487				119,987				157,522
Deferred tax liabilities			18				1,091				3,433				670				921
Provisions			19				384				297				—				—
Total non-current liabilities							122,490				162,217				120,657				158,443
Total liabilities							274,906				278,921				274,188				258,236
Net assets							69,505				68,041				38,871				48,841
EQUITY
Contributed equity			20				73,864				73,864				73,864				73,864
Accumulated losses			21				(4,359	)			(5,823	)			(34,993	)			(25,023	)
Total equity							69,505				68,041				38,871				48,841

The above statements of financial position should be read in conjunction with the accompanying notes.

RD Card Holdings Australia Pty Limited
Statements of changes in equity
For the year ended 31 December 2009

						Contributed				Accumulated				Total
						equity				losses				equity
Consolidated		Notes				$’000				$’000				$’000
Balance at 1 January 2008							73,864				(1,917	)			71,947
Total comprehensive (loss) for the year			21				—				(3,906	)			(3,906	)
Balance at 31 December 2008							73,864				(5,823	)			68,041
Balance at 1 January 2009							73,864				(5,823	)			68,041
Total comprehensive income for the year			21				—				1,464				1,464
Balance at 31 December 2009							73,864				(4,359	)			69,505

						Contributed				Accumulated				Total
						equity				losses				equity
Parent entity		Notes				$’000				$’000				$’000
Balance at 1 January 2008							73,864				(10,927	)			62,937
Total comprehensive (loss) for the year			21				—				(14,096	)			(14,096	)
Balance at 31 December 2008							73,864				(25,023	)			48,841
Balance at 1 January 2009							73,864				(25,023	)			48,841
Total comprehensive (loss) for the year			21				—				(9,970	)			(9,970	)
Balance at 31 December 2009							73,864				(34,993	)			38,871

The above statements of changes in equity should be read in conjunction with the accompanying notes.

RD Card Holdings Australia Pty Limited
Statements of cash flows
For the year ended 31 December 2009

						Consolidated								Parent entity
						2009				2008				2009				2008
		Notes				$’000				$’000				$’000				$’000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)							997,178				1,185,358				—				—
Payments to suppliers and employees (inclusive of goods and services tax)							(958,662	)			(1,141,962	)			(27	)			(34	)
							38,516				43,396				(27	)			(34	)
Interest received							62				399				—				—
Borrowing costs							(23,773	)			(33,269	)			(21,464	)			(31,064	)
Income taxes refund/(paid)							(3,813	)			1,170				(3,813	)			1,170
Net cash inflow (outflow) from operating activities			31				10,992				11,696				(25,304	)			(29,928	)
Cash flows from investing activities
Payments for property, plant and equipment							(1,115	)			(756	)			—				—
Payments for intangible assets							(2,769	)			(3,114	)			—				—
Proceeds from sale of property, plant and equipment							2				77				—				—
Net cash (outflow) from investing activities							(3,882	)			(3,793	)			—				—
Cash flows from financing activities
Net proceeds/(repayment) of related party borrowings							30,697				(6,781	)			62,107				33,479
Net proceeds/(repayment) of external borrowings							(36,803	)			(3,551	)			(36,803	)			(3,551	)
Repayment of lease liabilities							(355	)			(474	)			—				—
Net cash (outflow) inflow from financing activities							(6,461	)			(10,806	)			25,304				29,928
Net increase/(decrease) in cash and cash equivalents							649				(2,903	)			—				—
Cash and cash equivalents at the beginning of the financial year							5,354				8,257				—				—
Cash and cash equivalents at end of year			8				6,003				5,354				—				—

The above statements of cash flows should be read in conjunction with the accompanying notes.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009

Contents of the notes to the financial statements

				Page
1		Summary of significant accounting policies			7
2		Financial risk management			15
3		Critical accounting estimates and judgements			16
4		Segment information			17
5		Revenue			18
6		Expenses			18
7		Income tax expense			19
8		Current assets — Cash and cash equivalents			20
9		Current assets — Trade and other receivables			20
10		Current assets — Inventories			22
11		Non-current assets — Investments			22
12		Non-current assets — Property, plant and equipment			22
13		Non-current assets — Deferred tax assets			23
14		Non-current assets — Intangible assets			23
15		Current liabilities — Trade and other payables			24
16		Current liabilities — Borrowings			24
17		Current liabilities — Provisions			24
18		Non-current liabilities — Deferred tax liabilities			24
19		Non-current liabilities — Provisions			25
20		Contributed equity			25
21		Accumulated losses			25
22		Dividends			26
23		Key management personnel disclosures			26
24		Remuneration of auditors			27
25		Contingencies			27
26		Commitments			27
27		Related party transactions			27
28		Subsidiaries			29
29		Deed of cross guarantee			29
30		Events occurring after the end of the reporting period			31
31		Reconciliation of profit/(loss) after income tax to net cash inflow/(outflow) from operating activities			31
32		Earnings per share			32

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements include separate financial statements for RD Card Holdings Australia Pty Limited as an individual entity and the consolidated entity consisting of RD Card Holdings Australia Pty Limited and its subsidiaries.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Interpretations.

Compliance with IFRS

The consolidated financial statements of the RD Card Holdings Australia Pty Limited group and the separate financial statements of RD Card Holdings Australia Pty Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.

Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Financial statement presentation

The Group has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009. The revised standard requires the separate presentation of statements of comprehensive income and statements of changes in equity. All non-owner changes in equity must now be presented in the statements of comprehensive income. As a consequence, the Group had to change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standard.

Capital deficiency

As at 31 December 2009, the Group, has a working capital deficiency of $57,175k (2008: $25,965k).The Group has experienced operating profits after income tax from continuing operations during the financial year ending on that date of $1,464k (2008: losses of $3,906k). The directors of RD Card Holdings Limited have given an undertaking that repayment of inter-company current account amounts will be subordinated in favour of all other creditors and RD Card Holdings Limited has accepted the responsibility of providing and undertakes to provide sufficient financial assistance to the Group as and when it is needed to enable the Group to continue its operations and fulfil all of its financial obligations now and in the future. The undertaking is provided for a minimum period of twelve months from 2 July 2010.

In the event of a sale of the Group within twelve months from the date of the letter of support, the letter of support will be rescinded on the date of sale. The ability of the Group to then continue as a going concern will be dependent upon whether the new owners will be able to support the Group or the Group obtains financing to support itself as a going concern entity.

As a result of the above matters, there is substantial doubt whether the Group will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report. However, the directors of RD Card Holdings Australia Pty Limited, having received the letter of support from the parent entity, have prepared the financial report on a going concern basis. At this time, the directors of RD Card Holdings Australia Pty Limited are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report at 31 December 2009. Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of RD Card Holdings Australia Pty Limited (“company” or “parent entity”) as at 31 December 2009 and the results of all subsidiaries for the year then ended. RD Card Holdings Australia Pty Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(h)).

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the individual financial statements of RD Card Holdings Australia Pty Limited.

The proportionate interests in the assets, liabilities and expenses of a joint venture operation have been incorporated in the financial statements under the appropriate headings.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is RD Card Holdings Australia Pty Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of comprehensive income.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

•		assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position
•		income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions) and
•		all resulting exchange differences are recognised in other comprehensive income.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are reclassified to profit or loss, as part of the gain or loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate.

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

(i) Card fee revenue

Card fee revenue is recognised when earned. Annual card fees charged in advance are deferred and brought to account over the period to which they relate.

(ii) Credit and service charges

Revenue, in the form of credit charges and service charges, is recognised when a transaction is charged to a customer’s account. Merchant services fee revenue is recognised on notification of a fuel or other sale by the merchant.

(f) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of each reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences only if it is probable that future taxable amounts will be available to utilise those temporary differences.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Tax consolidation legislation

RD Card Holdings Australia Pty Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 18 December 2006.

The head entity, RD Card Holdings Australia Pty Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, RD Card Holdings Australia Pty Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Details about the tax funding agreement are disclosed in note 7.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

(g) Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases (note 26). Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statements of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 26). Payments made under operating leases (net of any incentives received from the lessor) are charged to the statements of comprehensive income on a straight-line basis over the period of the lease.

(h) Business combinations

The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill (refer to note 1(n)). If the cost of acquisition is less than the Group’s share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the statements of comprehensive income, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(i) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(j) Cash and cash equivalents

For the purpose of presentation in the statements of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statements of financial position.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

(k) Trade receivables

All trade debtors are recognised when transactions are processed and include both unbilled and billed amounts.

Collectibility of trade debtors is reviewed on an ongoing basis. All accounts over 180 days are written off immediately as bad debts expense.

(l) Inventories

(i) POS terminals

Terminals are carried at the lower of cost and net realisable value.

(m) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statements of comprehensive income during the reporting period in which they are incurred.

Increases in the carrying amounts arising on revaluation of land and buildings are credited, net of tax, to other reserves in shareholders’ equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the statements of comprehensive income. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to the statements of comprehensive income and depreciation based on the asset’s original cost, net of tax, is transferred from the property, plant and equipment revaluation reserve to retained earnings.

The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the Group, whichever is the shorter.

Depreciation is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

		2009				2008
— Plant and equipment		3-5 years				3-5 years
— Leasehold improvements			15	%			15	%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(i)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statements of comprehensive income. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(n) Intangible assets

(i) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

(ii) Brands

Brands have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight line method to allocate the cost of brands and licences over their estimated useful lives, which vary from 10 to 20 years.

(iii) Customer contracts

Customer contracts acquired as part of a business combination are recognised separately from goodwill. The customer contracts are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated using the straight line method to allocate the cost over the period of the expected benefit which vary from 5 to 18 years.

(iv) Customer relationships

Customer relationships acquired as part of a business combination are recognised separately from goodwill. The customer relationships are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated using the straight line method to allocate the cost over the period of the expected benefit which is 13 years.

(v) Software development

Software development relates to software which has been internally developed. Software development is stated at cost less accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost over the period of the expected benefit which is 5 years.

(vi) Software licence

Software licences have a finite useful life and are carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight line method to allocate the cost of the licences over their estimated useful lives which is 3 years.

(vii) Technology

This relates to the giftvouchers.com database and the website. They have an estimated useful life of 10 years.

(o) Trade and other payables

All merchant and other payables are recognised when transactions are processed and are paid in accordance with the terms agreed by the merchant upon joining or the supplier. Payment dates and rates may vary from merchant to merchant.

Where it is not possible to identify merchant details, unclaimed monies are recorded separately and recognised as income over a period of six years in accordance with the relevant state legislation on unclaimed monies law in accordance with external legal advice.

(p) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statements of comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are removed from the statements of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of each reporting period.

(q) Borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

(r) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of each reporting period. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(s) Employee benefits

(i) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the end of each reporting period are recognised in other payables in respect of employees’ services up to the end of each reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of each reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of each reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Retirement benefit obligations

Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(t) Contributed equity

Ordinary shares are classified as equity.

(u) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.

(v) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

	•		the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares
	•		by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares .

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

	•		the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
	•		the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

RD Card Holdings Australia Pty Limited
Notes to the financial statements
31 December 2009
(continued)

1 Summary of significant accounting policies (continued)

(w) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statements of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(x) Rounding of amounts

The company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(y) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2009 reporting periods. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective for annual reporting periods beginning on or after 1 January 2013)

AASB 9 addresses the classification and measurement of financials assets and is likely to affect the group’s accounting for its financial assets. The standard is not applicable until 1 January 2013 and the group is yet to assess its full impact.