PaySquare SELiquidiert

PaySquare SE

Bad Vilbel

Jahresabschluss zum Geschäftsjahr vom 01.01.2014 bis zum 31.12.2014

Annual report 2014

PaySquare SE

Copyright © Equens SE and/or its subsidiaries. All rights reserved.

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Contents

Board of Directors PaySquare SE

Report Board of Directors

Company financial statements

Company statement of financial position

Company statement of profit or loss and other comprehensive income

Company statement of changes in equity

Company statement of cash flows

Notes to the company financial statements

Other information

Independent auditor's report

Appropriation of the result of PaySquare SE

Board of Directors PaySquare SE

Report Board of Directors

Our profile

In approaching and servicing our clients, key elements are trust, transparency and local presence.

PaySquare SE focuses on the needs of merchants when it comes to accepting card payments - both in SME (Small and Medium-sized Enterprises) segments as well as corporate accounts. We focus on being close to our clients and offer a one stop shop, including POS (Point Of Sale) terminal provision and services. We are active in the physical POS world as well as the virtual E-Commerce environment and provide in depth expertise for specific market segments (like hospitality, high luxury retail, travel and high risk). We offer a full package of payment means to the merchant, including NSP (Network Service Provider) and Sofort (Germany) and all international card brands (MasterCard, Visa, Amex, JCB, Diners, Union Pay International). In addition our merchants can benefit from value added services such as Dynamic Currency Conversion (which we offer in partnership with Global Blue), multi-currency acquiring, 3D secure transaction handling and on line statements.

Furthermore PaySquare offers issuing and acquiring licenses to banks to facilitate MasterCard and Visa payment processing.

PaySquare is PCI certified and is recognised as a Payment Institution by the Dutch Central Bank in accordance to the Payment Service Directive.

PaySquare holds acquiring licenses for the international brands MasterCard, Visa, JCB, Union Pay and Diners and holds a license for the German electronic-cash system.

Market developments

Although the European market for merchant payment acceptance varies considerably between the different countries, the clear trend is that margins are under pressure and that the need to offer a full product and services offer (from POS to E-Commerce, from NSP to acquiring international brands, from debit to credit, from terminal to PSP proposition - including the required value added services) is clearly increasing. In 2014 PaySquare realised an overall growth in transactions of 6%. Our specific market expertise and knowledge as well as our segmented value propositions have enabled this success.

The Netherlands

The Dutch market has strong focus on debit card products and shows a high level of competition in the credit card acceptance segments in which PaySquare is active. In essence we see a trend towards all market players aiming to broaden their value chain as well as a clear indication that the boundaries between the physical POS and virtual E-Commerce are disappearing. PaySquare suffered a small overall loss in credit transactions in the Dutch market of 3%. Furthermore there was an ongoing (and expected) migration of debit volumes to Dutch banks.

Germany

PaySquare's traditional main aim in the German market has been the combination of terminals, NSP and acquiring. We are looking to increase our market share in E-Commerce, both directly as well as in partnership.

In terms of pricing, sales value and amounts of transactions we encountered increasing competition. Despite these conditions we achieved slight growth of 4% in business revenues.

Belgium and Luxemburg

PaySquare aims to increase its market share in the Belgium & Luxemburg markets. Our approach is to combine key merchant attention with increasing focus on the SME segments, both through partnerships with ISO's as well as in a direct offer. We achieved strong growth in the Belgium and Luxemburg markets, through contracting some high volume clients, both in POS as in E-Commerce. Our amount of transactions grew by 135% in POS (sales value + 105%) and by 33% in E-Commerce (sales value +103%).

Poland

Our position in the Polish market develops very well. We achieved considerable growth in terminal services realizing a growth in installed rented terminals of 95% compared to 2013. Our approach in combining direct sales with banking partnerships is clearly paying off. In terms of sales value and amount of transactions we doubled our achievements.

Corporate Structure and Human Resources

As at 31 December 2013, montrada GmbH and PaySquare B.V. legally merged into PaySquare SE, a 100% subsidiary of Equens SE headquartered in Utrecht, The Netherlands. PaySquare SE has local branches in Frankfurt (Germany) and Warsaw (Poland). BD-POS GmbH - a specialist in terminal logistics and maintenance - is PaySquare' s 100% subsidiary, located in Hörselberg-Hainich, Germany. BD-POS employs 18 internal FTEs as per 31 December 2014.

PaySquare SE has a one-tier governance structure, no Supervisory Board is installed. The PaySquare Board consists of 3 Board members in a CXO model. Sadly, in October 2014 we lost our BoD member and colleague Harald Maurer, who passed away very suddenly and unexpectedly, shortly before his retirement. We will miss his dedication and contribution to the post-merger integration of former montrada and PaySquare.

As of 13 October 2014 Jan Sonneveld became a new member of the PaySquare Board in the Chief Executive Officer position, Petra Gerla holds the position of Chief Financial Officer and Huib Klarenbeek holds the Chief Marketing Officer position. The BoD reports directly to its shareholder Equens SE. As of 1 July 2015 Petra Gerla will leave PaySquare. The contracting of a new CFRO has almost been finalized.

On 31 December 2014 the Company has 88 employees, FTEs, both internal and external, (31 December 2013: 64 FTEs), 30 FTE in the Netherlands, 47 FTE in Germany and 11 FTE in Poland. All operation activities and supporting staff for the Benelux have been outsourced to Equens SE, based on a contract and service level agreements. This enables PaySquare to benefit from Equens' Group core competences.

As of 1 April 2014, all sales and marketing employees with a dedicated function in the acquiring business (20 FTEs) were transferred from Equens SE to PaySquare SE. PaySquare SE and Equens SE signed an asset purchase agreement.

As of 1 January 2013 the Dutch Act on Governance ("Wet Bestuur en Toezicht") is applicable for PaySquare SE, which requires a minimum of 30% female Board members. In order to comply with the Dutch Act on Governance we have invited the PaySquare shareholder whenever they are entitled to prepare a binding nomination for a new PaySquare Board member and/or Equens Board member to contemplate the nomination of a female Board member.

Risk Management and Compliance

PaySquare' s activities are exposed to a range of potential risks. The Company's risk management policies and organizational structure are designed to ensure that these risks are continuously identified, analysed, measured, monitored and managed. PaySquare classifies their main risks into market risk, credit risk, liquidity risk, compliance risk and operational risk. Several procedures and processes are designed and implemented to minimize these identified risks.

A well-functioning risk management and compliancy system, including operational security and fraud control, is an important success factor for PaySquare. Corporate staff of Equens SE in cooperation with BoD and local PaySquare risk and compliance employees in Germany are jointly responsible. The BoD attaches great importance to enterprise risk management as an effective management instrument. PaySquare has adopted the "three lines of defence" model. This model is also generally accepted as a basis for the organisation of risk control within financial institutions. Risk Management is responsible for the second line of defence. The third line of defence, Internal Audit, provides independent assurance on the effectiveness of the first and second lines of defence.

The paragraph on risks (see notes 27 and 28) elaborates on the policy principles to which PaySquare adheres in order to manage risks. PaySquare is compliant to the Payment Services Directive (PSD) requirements and the rules and regulations from related international and German domestic card schemes.

Our external auditor KPMG issued an ISAE 3402 statement type II for the acquiring services that were outsourced to Equens SE over the period 1 October 2013 - 30 September 2014.

We received an ISAE 3402 statement type II for the acquiring services that were outsourced to ATOS Worldline GmbH over the period 1 October 2013 - 30 September 2014, issued by Deloitte.

Financial

PaySquare follows the principles for valuation and determination of results as set by the International Financial Reporting Standards (IFRS) and accepted within the European Union.

The pro forma statement, as shown below, differs from the statement of financial position of the company. Given the volatility that characterizes the acquiring business, current receivables, payables, cash and cash equivalents and bank overdrafts which directly relate to the third party fund flows (merchant acquiring business), are presented separately. This provides better insight in the impact of our acquiring business on the company statement of financial position.

Pro forma company statement of financial position for the year ended 31 December

With the banking institutions a system of balance and interest netting is agreed, with a variable interest rate. Timing of settlement with schemes and merchants has a direct impact on the reported cash positions and trade receivables as well as other receivables and payables, which leads to fluctuations.

Bank overdrafts of EUR 3.2 million are largely a result of money flows being routed over multiple bank accounts with no material economical effect due to an interest compensation structure.

As per 31 December 2014 banks provided guarantees for the amount of USD 24 million to MasterCard International Inc. on behalf of PaySquare SE (2013: USD 24 million and EUR 0.2 million to respectively MasterCard International Inc. and Visa Europe Services Inc.) for the settlement of risks for debit- and credit cards.

PaySquare has implemented a structure in which the acquiring related cash-in-transit funds for the Benelux are legally separated from its company capital in order to secure these funds for the beneficiary merchants. The Stichting Third Party Fund PaySquare Foundation, established in 2012, separates the merchant acquiring funds in transit from the means of PaySquare. In Germany and Poland a similar setup is applicable, in which PaySquare works with so called 'Treuhandkonten' (escrow accounts) at Commerzbank in Germany.

The outstanding short term interest bearing loan (12 month Euribor) granted by Equens SE to the German branch of PaySquare of EUR 2.0 million is fully paid in 2014.

The solvency ratio amounts to 39% as per 31 December 2014 (31 December 2013: 33%). However, it should be noted that as a result of the PaySquare merchant acquiring activities EUR 31.3 million (consisting of current receivables from the card schemes of EUR 26.4 million and current payables to merchants of 57.7 million) of the total net cash position as per 31 December 2014 is considered as "cash in transit", as there is a direct, short-term liability to pay out these amounts to merchants. Excluding these cash in transit position, receivables and payables, the solvency ratio amounts to 79% as per 31 December 2014 (31 December 2013: 73%).

In order to compare the combined companies PaySquare B.V. and montrada GmbH, we provide a pro forma income statement in which the comparing 2013 figures of these former entities have been aggregated.

Pro forma company statement of profit or loss for the year ended 31 December

PaySquare' s pro forma aggregated revenue from continuing operations increased by EUR 3.6 million to EUR 70.4 million in 2014. The increase took mainly place in Belgium, Germany and Poland as a result of growth in clients and transaction numbers and volumes.

The cost of outsourced work and other external costs decreased by EUR 1.2 million.

The work contracted out to Equens SE decreased by EUR 2.8 million, mainly due to the transfer of 20 FTEs from Equens SE to PaySquare SE in 2014, resulting in higher personnel expenses for the same amount in 2014.

Furthermore, the housing expenses (mainly due to the move in 2014 from Bad Vilbel to the Equens SE office in Frankfurt) and the consultancy expenses (mainly due to the legal merger in 2013) decreased respectively by EUR 0.7 million and EUR 0.6 million. On the other hand, the direct acquiring costs increased by EUR 2.6 million, caused by higher costs of card schemes and processing costs related to the growth in transactions.

The personnel expenses increased with EUR 3.0 million, as the sales and marketing employees dedicated to the acquiring business were transferred from Equens SE to PaySquare SE. As a result the cost of outsourced work and other external cost are lower for the same amount.

Development costs have been made to expand our portfolio, amongst others with E-Commerce services in Germany, connect new partners, implement a new setup for JCB and UP processing and a new tool for on boarding clients.

Net financing income decreased by EUR 0.2 million, mainly as a result of significantly lower interest rates, a one off accounting error in 2013, offset by improved foreign exchange results.

In the last quarter of 2014 the Dutch Tax Authorities expressed their opinion that PaySquare services should be considered as a VAT-taxable services. In the first quarter of 2015 PaySquare decided to apply this new tax regime retroactively as per 1 January 2014. In 2015 PaySquare has initiated a project to adjust the processing systems. The change in VAT taxability has no financial impact on the PaySquare 2014 annual accounts.

Prospects

Cooperation between PaySquare and Equens SE is based on a strong mutual connection and a joined strategic approach. Although synchronising the strategic interests of a processor and an acquirer always posts challenges, we are convinced that the truly common interests outweigh these easily. Our joint approach of servicing clients based on local ('native') knowledge and presence allows us to be close to our clients. Combining our strengths offers substantial benefits to our respective clients as well as to both partners. The new PaySquare SE gives us the well positioned starting point to optimise our European proposition.

Finally

Dutch corporate law requires that the company financial statements present a true and fair view per the reporting date. Responsibility for the financial information lies with the BoD of PaySquare.

As Board of Directors, we are confident that we have implemented an adequate financial reporting system inclusive of adequate processes and internal controls. PaySquare has established and maintains a comprehensive system of internal control measures designed to ensure transactions are executed as authorised and financial reporting is accurate and reliable.

We would like to thank our staff, including the staff working for PaySquare within Equens SE, for their dedication, effort and commitment in 2014.

Company financial statements 31 December 2014

Company statement of financial position

For the year ended 31 December

The notes on page 20 to 56 are an integral part of these company financial statements.

Company statement of profit or loss and other comprehensive income

For the year ended 31 December

The notes on page 20 to 56 are an integral part of these company financial statements.

The total comprehensive income for 2014 is entirely attributable to the owner of the Company. There are no non-controlling interests.

As at 31 December 2013, montrada GmbH legally merged into PaySquare SE. For the contributions of the German and Polish permanent establishments of PaySquare SE (previously montrada GmbH) on the company statement of profit or loss and other comprehensive income of 2014, including the effect of the amortization of the capitalised value of the customer contracts and the agency contracts, we refer to note 29 on page 44.

Company statement of changes in equity

The notes on page 20 to 56 are an integral part of these company financial statements.

Company statement of cash flows

For the year ended 31 December

^* 2013: Re-presented for reasons of comparison.

The notes on page 20 to 56 are an integral part of these company financial statements.

The timing of settlement is very influential on cash flow from operational activities. Consequently, the cash flow of the Company can exhibit considerable annual fluctuations, and can be negative.

Notes to the company financial statements

Note

Basis of preparation

Performance for the year

Employee benefits

Income taxes

Assets

Equity and liabilities

Financial instruments

Company composition

Other information

Services provided by the external

Accounting policies

Notes to the company financial statements

1. Reporting entity

PaySquare SE (the "Company") is a company domiciled in the Netherlands and is part of Equens SE. The address of the Company's registered office is Eendrachtslaan 315, Utrecht, the Netherlands. The Company is the specialised partner when it comes to accepting domestic and international means of payment.

As at 31 December 2013, montrada GmbH and PaySquare B.V. legally merged into PaySquare SE. The legal merger is considered as a business combination under common control, since the two combining entities are ultimately controlled by the same party before and after the combination, Equens SE. PaySquare SE has control over the disappearing entity montrada GmbH as per 31 December 2013. As that date, the assets and liabilities of montrada GmbH transferred into the Company. For the contributions of the German and Polish permanent establishments of PaySquare SE (previously montrada GmbH) on the company statement of profit or loss and other comprehensive income in 2014, we refer to note 29.

The Company is exempt from the requirement to prepare group consolidated financial statements by article paragraph 4 of IFRS 10. The Stichting Third Party Fund PaySquare Foundation and subsidiary BD-POS GmbH held by the Company are taken up within the consolidated financial statements of the ultimate parent company. Under the exemption provided by paragraph 4 of IFRS 10, the Company does not prepare consolidated financial statements and, in lieu thereof, files with the Trade Register of the Chamber of Commerce in Utrecht the audited annual group financial statements of Equens SE.

A special framework is formulated in an agreement signed between Stichting Third Party Fund PaySquare Foundation and PaySquare SE, whereby Stichting Third Party Fund PaySquare Foundation provides production of payments services exclusively to PaySquare SE. The agreement stipulates that operational deposits are to be held and used to cover the operational financial exposure, which may arise if and when negative

collections are imposed upon merchant accounts. The agreement also lies down that PaySquare SE bears all cost in relation to the production of services, profit and losses of Stichting Third Party Fund PaySquare Foundation such as all taxes, bank charges and also those financial and economic risks in relation to the accounts operated by Stichting Third Party Fund PaySquare Foundation.

2. Basis of accounting

The company financial statements have been prepared voluntary in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Netherlands Civil Code. The company financial statements were authorised for issue by the Board of Directors on 19 May 2015.

Details of the Company's accounting policies, including changes during the year, are included in notes 38 and 39.

3. Functional and presentation currency

These company financial statements are presented in euro, which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

4. Use of judgements and estimates

In preparing these company financial statements in conformity with IFRSs, management has made judgements, estimates and assumptions that affect the application of the Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to estimates are recognised prospectively.

(a) Judgements

Information about judgements in applying accounting policies that have the most significant impact on the amounts recognised in the company financial statements is included in the following notes:

(b) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 December 2015 is included in the following notes:

(i) Measurement of fair values

A number of the Company's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of a business combination is the estimated amount for which property could be exchanged on the acquisition date between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

Intangible assets

The fair value of customer contracts, customer relations and brands acquired in business combinations is based on the discounted cash flows expected to be derived from the use of these intangible assets.

Fair value, for determining the fair value less cost to sell for impairment testing, is the price that would be received if the Cash Generating Unit (CGU) would be sold in an orderly transaction in the principal (or most advantageous) market at measurement date under current market conditions regardless of whether that price is directly observable or estimated using another estimation technique. A fair value measurement of a nonfinancial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use. Highest and best use takes into account the use that is physically possible, legally permissible and financially feasible.

Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

Equity and debt securities

The fair value of financial assets at fair value through profit or loss and available-for-sale financial assets is determined by reference to their quoted closing bid price at the reporting date.

Trade and other receivables

The fair values of trade and other receivables, excluding development work in progress, are estimated at the present value of future cash flows, discounted at the market rate of interest at the measurement date. Shortterm receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual reporting date.

Non-derivative financial liabilities

Non-derivative financial liabilities are measured at fair value, at initial recognition and for disclosure purposes, at each annual reporting date. Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date.

For finance leases the market rate of interest is determined with reference to similar lease agreements.

5. Revenue

See accounting policy in note 39 (b)

The rendering of services of the Company are related to the following business lines:

^* 2013: Re-presented for reasons of comparison.

Revenue generated by acquiring concerns the entire range of services provided to merchants. The acquiring turnover arises from commissions, which are charged to merchants on the basis of transaction volumes and other acquiring related revenues.

The sale of goods concern the supply of terminals to PaySquare's merchants. The associated cost position of EUR 0.2 million is shown as direct production costs in the cost of outsourced work and other external cost.

6. Cost of outsourced work and other external cost

The cost of outsourced work and other external costs can be specified as follows:

^* 2013: Re-presented for reasons of comparison.

Interchange fees are the fees paid by an acquirer to an issuer for, amongst others, the authorisation management the issuer has organised. The size of the interchange is transaction-volume oriented.

The costs of card schemes are related to several fees charged to PaySquare SE by credit card organisations.

The direct production costs in 2014 consists mainly of external processing costs for PaySquare in Germany and Poland. The direct production costs in 2013 included a refund of taxes paid in previous years of EUR 0.7 million after getting clarity on the VAT treatment of invoices for processing services.

The work contracted out to Equens SE can be specified as follows:

Equens SE, a related party, is the sole provider of outsourced services for PaySquare in the Benelux. The related contract has an initial term of three years and will be extended automatically with one year. Termination can take place ultimately 30 days prior to the end of the contract year. Besides, SLA agreements have been made for several services. The agreed acquiring services are charged by Equens SE by means of a fee per service provided. Corporate services comprise a fee per employee for Equens' staff expenses including salary, housing and office-automation.

The outsourcing costs to BD-POS GmbH, amounting to EUR 1.0 million in 2014, relate to delivered terminal services to PaySquare Germany.

The other external costs include, amongst others, advisory expenses and costs of bank payments.

7. Research and development expenses

The results from operating activities include expenses made for development projects and software

development. The Company has invested in several development projects regarding acquiring solutions. The total net research and development expenses amounted to EUR 0.3 million in 2014 (2013: EUR 0.5 million), mainly consisting of in- and external personnel expenses which have neither been capitalised nor charged to clients. For the accounting principles regarding capitalisation of development expenditure we refer to note 39 (i)(ii).

8. Other expenses

The other expenses relate mainly to additions to and releases of provisions for legal claims and other provisions (see note 25) and net impairments made regarding trade receivables (see note 27 (c)).

9. Net finance income

See accounting policies in notes 39 (e), 0 and (k)

10. Dividend received from subsidiaries

In 2014 the Company received a dividend of EUR 177 thousand from its subsidiary BD-POS GmbH (2013: nil), which is recognised as a profit in the statement of profit or loss and other comprehensive income.

11. Employee benefits

See accounting policies in notes 39 (d)(ii), (iii), (iv) and (v)

The defined benefit obligation relates to the Company's permanent establishment in Germany for which a defined benefit scheme is applicable for a limited group of employees. This defined benefit plan exposes the Company to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk. The plan is unfunded.

(a) Movement in net defined benefit (assets) liability

The following table shows the reconciliation from the opening balances to the closing balances for the defined benefit liability and its components.

(b) Defined benefit obligation

(i) Actuarial assumptions

The following were the principal actuarial assumptions at the reporting date:

Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the values of the liabilities of the defined benefit plan at the reporting date was as follows:

The Company expects to pay EUR 33 thousand in contributions to its defined benefit plan in 2015 (2014: EUR 23 thousand).

(ii) Sensitivity analysis

Reasonably possible changes at the reporting date of one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts below.

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

(c) Other long-term employee benefits

The other employee benefits as per 31 December 2014 of EUR 78 thousand (2013: 8 thousand) consists of the net present value of the jubilee gratuities that will be paid out for long-lasting employment. The other employee benefits are regarded as long-term liabilities.

12. Accrued personnel expenses

See accounting policy in note 39 (d)(i)

The other accrued personnel expenses as per 31 December 2014 mainly relates to costs in respect of severance payments. The accrued personnel expenses are regarded as short-term liabilities.

13. Personnel expenses

On 31 December 2014 the Company employed a total of 88 FTEs (31 December 2013: 64 FTEs) including both internal and external employees. All activities for PaySquare in the Netherlands until March 2014, from sales & marketing to operations to supporting staff were outsourced to Equens SE, except for the Dutch Board members and an employee for business development, who were employed by PaySquare. As from April 2014 all sales and marketing personnel were transferred from Equens to PaySquare, explaining the increase in total FTEs.

As from 1 January 2014, the Board of PaySquare SE consists of three members. For a further explanation on the compensation of key personnel we refer to note 34.

14. Income taxes

See accounting policy in note 39 (f)

(a) Amounts recognised in profit or loss

(b) Amounts recognised in other comprehensive income

(c) Amounts recognised directly in equity

There is no tax directly recognised in equity (2013: nil).

(d) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of tax losses incurred by the permanent establishment of PaySquare SE in Poland. Management has established that it is uncertain whether future taxable profits would be available against which these losses can be used, and therefore these tax losses have not been recognised as an deferred tax asset as per 31 December 2014.

(e) Reconciliation of effective tax rate

The total tax rate for the Company in the year 2014 is 58.4% (2013: 27.5%) of the results before taxation, which is significantly higher than the Company's domestic tax rate of 25% This is mainly caused by the effect of a higher tax rate in Germany and the current year loss of the permanent establishment in Poland for which no deferred tax asset is recognised.

In the Netherlands, PaySquare SE is part of a tax group with Equens SE for income tax purposes and for VAT purposes and is together with Equens SE liable for the income tax and VAT payable of the fiscal entity.

(f) Movement in deferred tax balances

15. Property, plant and equipment

See accounting policies in notes 39 (h), (m)(ii) and (o) (a) Reconciliation of carrying amount

The property, plant and equipment, amounting to EUR 4.0 million (2013: EUR 4.3 million), consists of equipment (mainly terminals) and hardware for the German and Polish permanent establishments and capitalised investments in fixtures and fittings regarding the migration of the Bad Vilbel office to the Frankfurt office in the first quarter of 2014.

(b) Depreciation and impairment

The depreciation charge is allocated to the corresponding line item in the statement of profit or loss and other comprehensive income. No impairments have been recognised in 2014 in respect to items of the property, plant and equipment (2013: nil).

(c) Leased plant and equipment

The Company leases equipment under finance lease agreements. The leased equipment secures lease obligations (see note 24). The net carrying amount of leased equipment on 31 December 2014 amounts to EUR 132 thousand (2013: EUR 679 thousand).

16. Intangible assets and goodwill

See accounting policies in notes 39 (i) and (m)(ii)

(a) Reconciliation of carrying amount

(b) Amortisation and impairment loss

The amortisation charge is allocated to the corresponding line item in the statement of profit or loss and other comprehensive income. No impairments have been recognised in 2014 in respect to items of the intangible assets and goodwill (2013: nil).

(c) Impairment testing for cash-generating unit containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Company's cash generating units (CGUs) which represent the lowest level within the Company at which the goodwill is monitored for internal management purposes. The aggregate Company represents the lowest level within PaySquare SE, forming the CGU "Merchant acquiring services" within Equens SE.

The following table shows the basis on which the recoverable amounts were determined and the carrying amounts including goodwill for the purpose of impairment testing:

For the CGU "Merchant Acquiring and services" the value in use amount was determined by discounting the future cash flows to be generated from the continuing use of the CGU. Value in use in 2014 was determined in a similar manner as 2013.

The value in use estimation was based on the following key assumptions:

The values assigned to the key assumptions represent management's assessment of future trends in the market for payments and card processing with SEPA compliant services and are based on both external sources and internal sources. The use of observable inputs is maximised and the use of unobservable inputs is minimised.

For the cash-generating unit 'Merchant acquiring and services' the value in use amount was significantly higher than the carrying value including allocated goodwill. No goodwill impairments have been recognised in the year under review for this CGU.

(d) Customer contracts and customer relations

The capitalised customer contracts and relations relate to the German and Polish permanent establishments (formerly montrada GmbH) of PaySquare SE. The value of the customer contracts and customer relations as at 31 December 2014 amounts to EUR 4.8 million (2013: EUR 5.6 million) and are amortised over the remaining contract period. This resulted in an amortisation in 2014 of EUR 0.8 million (2013: nil).

No impairment test indications have been identified in respect of items presented under this heading.

(e) Agency contracts

The capitalised agency contracts relate to the German and Polish permanent establishments (formerly montrada GmbH) of PaySquare SE. The value of the agency contracts as at 31 December 2014 amounts to EUR 7.8 million (2013: EUR 8.5 million) and are amortised over the estimated useful life of 15 years. This resulted in an amortisation in 2014 of EUR 0.7 million (2013: nil).

No impairment test indications have been identified in respect of items presented under this heading.

(f) Licenses

Licenses relate to granted licenses for services. Licenses are amortised over the estimated useful life (3-10 years). This resulted in an amortisation in 2014 of EUR 0.4 million (2013: nil).

No impairments have been recognised in respect of items presented under this heading.

17. Investments in subsidiaries

See accounting policy in note 39 (j)

On 31 December 2013 montrada GmbH has merged into the Company. BD-POS GmbH, formerly a 100% subsidiary of montrada and after the legal merger a 100% subsidiary of PaySquare SE, is stated at cost less any impairment loss. No impairment test indications have been identified in respect of items presented under this heading.

An overview of the Company's significant subsidiaries can be found in note 30.

18. Other investments

See accounting policies in notes 39 (k)(i), (ii), (iv) and (m)(i)

The other investments as per 31 December 2014 of EUR 433 thousand (2013: EUR 433 thousand) consists of several investments held by the German permanent establishment of the Company, recognised as financial assets designated at fair value through profit or loss. These assets are regarded as long-term assets.

The Company's exposure to credit and interest rate risks related to other investments is disclosed in note 27.

19. Inventories

See accounting policy in note 39 (g)

The inventories amounting to EUR 367 thousand (2013: 515 thousand) consist mainly of terminals and are measured at the lower of cost and net realisable value.

20. Trade and other receivables

See accounting policies in notes 39 (k)(i) and (ii)

The trade and other receivables decreased by EUR 9.3 million to EUR 30.0 million. This decrease is mainly driven by lower receivables related to the merchant acquiring business (mainly receivables from card schemes). The amount of these receivables is highly volatile, heavily depending on the day of the week on which our financial year closes.

The other (trade) receivables are mainly related to the cards- and terminal services of PaySquare's permanent establishment in Germany.

The Company's exposure to credit and currency risks, and impairment losses related to trade and other receivables is disclosed in note 27.

21. Cash and cash equivalents

See accounting policy in note 39 (k)(ii)

The cash and cash equivalents and bank overdrafts as per 31 December 2014 of EUR 54.6 million (2013: EUR 53.4 million) relate to balances on current accounts with different banks. At 31 December 2014 PaySquare SE had a temporary overdraft of EUR 3.2 million (2013: EUR 12.2 million). With the banking institutions a system of balance and interest netting is agreed, with a variable interest rate.

A total amount of EUR 31.3 million of the cash and cash equivalents and bank overdrafts is considered as "cash in transit" relating to acquiring operations since there is a direct, short-term liability to pay out these amounts to merchants (2013: EUR 32.0 million).

PaySquare SE has granted ABN AMRO Bank N.V. the power to block accounts up to an amount of EUR 16.6 million, which ABN AMRO Bank can be obliged to pay to MasterCard International Inc. in New York and MasterCard Europe S.p.r.L. in Waterloo for the settlement of risks for PaySquare SE for debit and credit cards (2013: EUR 16.6 million).

Furthermore, the Company has pledged an amount of EUR 1.0 million which can be obliged to pay to Visa Inc. for the settlement of risks for PaySquare SE for debit- and credit cards (2013: EUR 1.0 million).

The freely available cash for the Company as per 31 December 2014 is consequently EUR 5.6 million (31 December 2013: EUR 3.8 million).

PaySquare implemented for the Dutch branch a structure in which the acquiring related cash-in-transit funds are legally separated from its company capital to secure these funds for the beneficiary merchants. Hereto the Stichting Third Party Fund PaySquare Foundation was established in 2012.

For the German and Polish branch, the acquiring related cash-in-transit funds are legally separated from its company capital to secure these funds for the beneficiary merchants by means of so called escrow accounts ('Treuhandkonten').

The Company's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 27.

22. Capital and reserves

See accounting policy in note 39 (k)(l)

(a) Equity, attributable to owners of the Company

(b) Share capital

The Company's authorised share capital amounts to EUR 625 thousand, divided into 625,000 shares with a

nominal value of EUR 1.00 each. At year-end 2014, 125,000 shares had been issued and paid up in full.

(c) Share premium

The share premium account reflects the balance of paid-in or contributed-in amounts above par value at issuance of new shares less the amount charged for share dividends.

The legal merger of montrada GmbH and PaySquare B.V. into PaySquare SE as per 31 December 2013 increased the share premium reserve as per that date with EUR 28.6 million to EUR 29.5 million.

(d) Translation reserve

This legal reserve consists of the currency translation differences relating to the valuation of the permanent establishment of PaySquare SE in Poland.

(e) Retained earnings

The retained earnings include the results after taxes of the financial year 2013, in conformity with the decision of the Shareholders' General Meeting.

(f) Unappropriated results

Unappropriated results on shares of PaySquare SE consist of the result 2014 for the account of the Shareholder of the ordinary shares.

(g) Other Comprehensive Income, accumulated in reserves, net of tax

23. Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the financial performance of the Company based on, amongst others, earnings before interest and tax (EBIT) and cash flow.

The Board of Directors also monitors the level of dividends to the shareholder. PaySquare SE is subject to legal restrictions on the amount of dividends it can pay to her shareholder in accordance with Book 2, Part 9 of the Netherlands Civil Code and the equity requirements based upon the Payment Service Directive. There were no changes in the Company's approach to capital management during the year.

24. Loans and borrowings

See accounting policies in notes 39 (k)(i), (iii) and (o)

This note provides information about the contractual terms of the Company's interest-bearing loans and borrowings. For more information about the Company's exposure to interest rate and liquidity risk, see note 27.

The nominal interest rate of the finance lease liabilities as per 31 December 2014 is 2.3% and will mature in the year 2015.

The outstanding short term interest bearing loan (12 months Euribor) as per 31 December 2013 of EUR 2.0 million, granted by Equens SE, is fully repaid in 2014.

(a) Finance lease liabilities

Finance lease liabilities are payable as follows:

25. Provisions

See accounting policy in note 39 (n)

Movement in provisions

As a result of the business activities, the Company received claims from counterparties such as suppliers and customers. The provision is based on the best estimation of the amount that might have to be paid for compensation. An amount of EUR 345 thousand was recognised as per 31 December 2014 (31 December 2013: EUR 593 thousand).

26. Trade and other payables

See accounting policies in notes 39 (k)(ii) and (iv)

The trade and other payables decreased by EUR 8.5 million to EUR 62.8 million. This decrease is mainly driven by the merchant acquiring business.

The amount of payables related to the merchant acquiring business (mainly liabilities to merchants) is highly volatile, heavily depending on the day of the week on which our financial year closes.

The Company's exposure to credit and currency risks, and impairment losses related to trade and other receivables is disclosed in note 27.

27. Financial instruments - Fair values and risk management

Certain comparative amounts in this note have been adjusted and reclassified to conform to current year's presentation.

(a) Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

The fair values of the financial assets and liabilities do not materially deviate from the carrying amounts. The basis for determining fair values is disclosed in note 4.

(b) Financial risk management

PaySquare's activities are exposed to a range of potential risks. The Company's risk management policies and organisational structure are designed to ensure that these risks are continuously identified, analysed, measured, monitored and managed. PaySquare uses standardised risk taxonomy to classify the main types of risks into operational risk (see note 28), compliance risk, credit risk, liquidity risk and market risk. Several procedures and processes are in place to minimise any identified risks. E.g. in order to reduce exposure to credit risk, the Company evaluates the financial conditions of its customers and has appropriate payment terms and credit limits in place. Besides this the exposure to credit risk is monitored on a frequent basis and normal credit management procedures are in place like dunning cycles and escalation procedures.

Regarding investments in cash and cash equivalents the Company focuses on managing the concentration of financial counterparty risks. A Treasury Directive is in place which sets clear instructions for maximal positions to be held with individual banks depending on their credit rating.

The Company is covered for a range of different kinds of losses by insurance policies in the areas of property damage, business interruption, general and product liability, transport, fraud and directors' and officers' liability. For most policies deductibles are in place.

(c) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's bank balances and deposits and its receivables from customers.

The carrying amount of financial assets represents the maximum credit exposure. Due to the nature of the business, with daily settlement of positions, the positions are highly volatile. The maximum exposure to credit risk at the reporting date was:

As per 31 December 2014 the total amount of cash and cash equivalents of EUR 57.8 million is outstanding with banks with a minimum long term Standard and Poor's credit rating of A-.

PaySquare also has credit risk with respect to its current receivables due from card schemes regarding acquiring transactions, mainly handled by MasterCard Inc. and Visa Inc., with a long term Standard and Poor's credit rating of A-. Current receivables due from card schemes are to be settled within 2 working days.

For financial assets due within one year the nominal value is considered to reflect the fair value. The average duration of the trade and other receivables and the bank balances and deposits is one month, which makes the carrying amount equal to the fair value.

The maximum exposure to credit risk for trade and other receivables at the reporting date by type of customer was:

The aging of trade and other receivables at the reporting date was:

^* 2013: Re-presented for reasons of comparison.

The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:

(d) Liquidity risk

The objective of PaySquare's liquidity management activities is to ensure the availability of sufficient funds to meet all financial commitments.

The compliancy requirements of MasterCard International Inc. and MasterCard Europe S.p.r.L. with regard to settlement- and acquiring risks are covered by means of guarantees issued by banks for the amount of USD 24 million on behalf of PaySquare SE (2013: USD 24 million).

Furthermore, the Company has pledged an amount of EUR 1.0 million which can be obliged to pay to Visa Inc. for the settlement of risks for PaySquare SE for debit- and credit cards (2013: EUR 1.0 million).

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

As a result of PaySquare's business, the main part of the trade and other payables are settled within one month.

(e) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company's income or net equity. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(i) Currency risk

The Company is exposed to currency risk on sales and purchases that are denominated in a currency other than the euro. There are risks regarding trade and other receivables and payables and bank balances in foreign currencies. A Treasury Directive is in place which sets clear instructions for maximal foreign currency positions to be held.

The Company's exposure to foreign currency risk was as follows:

^* 2013: Re-presented for reasons of comparison.

Besides the exposure to foreign currency risk mentioned above, the Company holds bank balances and has current receivables and payables in several other foreign currencies amounting to a total of EUR 0.1 million (2013: EUR 0.2 million).

In order to mitigate currency risk for cardholders and PaySquare to a minimum, PaySquare uses Dynamic Currency Conversion (DCC) in the Benelux. This is a financial service in which holders of credit cards have the cost of a transaction converted to their local currency when making a payment in foreign currency. One of PaySquare's benefits of using DCC is that the DCC provider takes the currency risk.

Another reason why PaySquare SE hardly runs any currency risk is that settlement with MasterCard and Visa for acquiring takes place in the currency in which the merchant is paid. Due to the nature of the offered multicurrency acquiring, PaySquare will keep a small currency risk on this offering mainly regarding to margin and charge backs. Given the limited foreign currency exposure there are no financial instruments in place to mitigate foreign currency risks.

Sensitivity analysis

A strengthening of the EUR of 10 per cent against all other foreign currencies at 31 December 2014 would have decreased the total of equity and profit or loss by EUR 0.1 million (2013: EUR 0.1 million). This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact on forecasted sales and purchases. This analysis is performed on the same basis for 2013.

(ii) Interest rate risk

PaySquare's objective in managing the interest rate risk is to ensure effective management of the interest rate exposure within the limits decided. The Company's positions in loans at fixed interest rates are exposed to the risk of changes in fair value due to changes in the interest rate. Positions at floating interest rates are exposed to the risk of changes in cash flows due to changes in the interest rate.

PaySquare hardly has any interest rate risk due to the fact that the operations related current assets and liabilities expire within one month. PaySquare in the Benelux has covered the interest rate risk by including a stipulation in its general terms and conditions that interest percentages with regard to credit advanced on credit cards can be adjusted, depending on developments in the capital market. The exposure to interest rate risk is considered limited.

At the reporting date the interest rate profile of the Company's interest-bearing financial instruments was:

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss directly.

Cash flow sensitivity analysis for variable rate instruments

With the banking institutions a system of balance and interest netting is agreed, with a variable interest rate.

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by EUR 0.5 million (2013: EUR 0.5 million). This analysis assumes that all other variables, in particular foreign currency rates, remain constant. This analysis is performed on the same basis for 2013.

Price risk

Given the nature and the activities of the Company there is a price risk regarding sales prices which are concluded between one and two years. If a contract becomes onerous, provisions will be made.

28. Operational risk

Operational risk includes all risks that are not directly related to the underlying economics of the activities of PaySquare. For the purposes of reporting and monitoring, this risk is split into event risk and business risk. Event risk is the risk of losses due to non-recurring events such as system failure, error, fraud, crime, legal proceedings or damage to property. Business risk includes the risk of losses due to events that could damage a business franchise or its operating economics such as shifts in the competitive environment or legislative or tax changes.

The exposure to these operational risks is mitigated due to the following:

In accordance with industry practice, PaySquare has acquired insurance policies issued by third party insurers which provide coverage against, among others, professional indemnity and loss of profits. PaySquare also holds a directors and officers' liability insurance. These policies are subject to certain specific deductibles, maximum coverage and conditions as specified in the insurance policy in question.

29. Legal merger

As at 31 December 2013, montrada GmbH legally merged into PaySquare SE. The legal merger is considered as a business combination under common control, since the two combining entities were ultimately controlled by the same party, Equens SE, before and after the combination. PaySquare SE has control over the disappearing entity montrada GmbH as per 31 December 2013. As that date, the assets and liabilities of montrada GmbH were transferred into the Company.

The following table presents the contributions of the German and Polish permanent establishments of PaySquare SE (previously montrada GmbH) on the company statement of profit or loss and other comprehensive income of 2014, including the effect of the amortization of the capitalised value of the customer contracts and the agency contracts.

30. List of subsidiaries

31. Operating leases Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Operating leases mostly relates to license agreements, rental contracts for office automation, office space and car leases of the German and Polish permanent establishments of PaySquare SE.

During the year ended 31 December 2014, EUR 0.6 million was recognised as an expense in the statement of profit or loss and other comprehensive income in respect of operating leases (2013: nil).

32. Capital commitments

As at 31 December 2014 the Company did not entered into contracts to purchase property, plant and equipment in 2015.

33. Contingencies

As per 31 December 2014 ABN AMRO Bank N.V. has issued guarantees for the amount of USD 20 million on behalf of the Dutch headquarters of PaySquare SE (2013: USD 20 million) to MasterCard International Inc. in New York and MasterCard Europe S.p.r.L. in Waterloo to cover for the risks of PaySquare SE for debit- and credit cards. PaySquare has implemented a structure in which the acquiring related cash-in-transit funds are legally separated from its company capital to secure these funds for the beneficiary merchants. Hereto Stichting Third Party Fund PaySquare Foundation was established in 2012 in order to separate formally and legally the merchant acquiring funds in transit from the means of PaySquare SE.

Furthermore, the Company has pledged an amount of EUR 1.0 million which can be obliged to pay to Visa Inc. for the settlement of risks for PaySquare SE for debit- and credit cards (2013: EUR 1.0 million).

On behalf of the German and Polish branches of PaySquare SE, Commerzbank AG has issued guarantees as per 31 December 2014 for the amount of USD 4.0 million to MasterCard to cover for the risks of PaySquare SE for debit- and credit cards (2013: USD 4.0 million to MasterCard and EUR 0.2 million to Visa). In Germany PaySquare works with so called 'Treuhandkonten' (escrow accounts) at Commerzbank, in order to separate formally and legally the merchant acquiring funds in transit from the means of PaySquare SE.

PaySquare SE is part of a tax group with Equens SE for income tax purposes and for VAT purposes and is together with Equens SE liable for the income tax and VAT payable of the fiscal entity.

34. Related parties

General

Related parties to PaySquare SE include Equens SE, the shareholders of Equens SE (ING Bank N.V., ABN AMRO Bank N.V., Rabobank Nederland, DZ Bank AG and ICBPI Group), Stichting Third Party PaySquare Foundation, BD-POS GmbH, Stichting Pensioenfonds Equens and the Board of Directors of PaySquare SE. As part of its business operations PaySquare SE frequently enters into transactions with related parties. These transactions are carried out on commercial terms and at market rates.

Key management personnel compensation

The Board of Directors of PaySquare B.V. consisted until 31 December 2013 of two directors, Mrs Gerla and Mr Klarenbeek. As from 1 January 2014, the Board of PaySquare SE consisted of three members, now including the former Board member of montrada GmbH, Mr Maurer. As per 13 October 2014 Mr Sonneveld was appointed as CEO into PaySquare's Board of Directors. Sadly, Mr Maurer passed away in October 2014.

The total key management personnel compensation in 2014 amounted to EUR 774 thousand (2013: EUR 413 thousand), of which at year end an amount of EUR 50 thousand was outstanding (31 December 2013: EUR 50 thousand).

Other related party transactions

All transactions with these related parties are priced at an arm's-length basis and are to be settled in cash within two months of the reporting date. None of the balances is secured. The outstanding receivables from and payables to related shareholders of Equens SE per year-end consists of recognised interest receivables and payables to banks.

Bank balances and deposits are mainly placed on bank accounts with related parties. No expenses are made with major shareholders besides the usual bank fees and interest expenses.

35. Services provided by the external auditor

According to article 2:382a of the Dutch Civil Code, PaySquare is required to disclose the fees charged by its auditor, unless this is done in the company financial statements of the ultimate parent. For an overview of the fees charged by the auditor we refer to the company financial statements of Equens SE.

36. Subsequent events

In the last quarter of 2014 the Dutch Tax Authorities expressed their opinion that PaySquare services should be considered as a VAT-taxable services. In the first quarter of 2015 PaySquare decided to apply this new tax regime retroactively as per 1 January 2014. In 2015 PaySquare has initiated a project to adjust the processing systems. The change in VAT taxability has no financial impact on the PaySquare 2014 annual accounts.

37. Basis of measurement

The company financial statements have been prepared on the historical cost basis except for the following material items, which are measured on an alternative basis on each reporting date.

The methods used to measure fair values are discussed further in note 4.

38. Changes in accounting policies

The Company has consistently applied the accounting policies set out in note 39 to all periods presented in these company financial statements. New standards, amendments to a standard and new interpretations with a date of initial application of 1 January 2014 (e.g. IFRIC 21 and amendments to IAS 36) have no material impact on PaySquare's financial position, performance and/or disclosures.

39. Significant accounting policies

Except for the changes explained in note 38, the Company has consistently applied the following accounting policies to all periods presented in these company financial statements.

Certain comparative amounts in the statement of profit or loss have been reclassified or re-presented for reasons of comparison.

Set out below is an index of the significant accounting policies, the details of which are available on the pages that follow.

(a) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

However, foreign currency differences arising from the translation of the following items are recognised in other comprehensive income:

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated into euro at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and accumulated in the translation reserve, except to the extent that the translation difference is allocated to the non-controlling interest (NCI).

When a foreign operation is disposed in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as a part of the gain or loss on disposal. If the Company disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Company disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

(b) Revenue

(i) Rendering of services

Revenue from rendering of services is recognised in profit or loss in the same period as services are provided. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(ii) Development revenue

Development revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a development contract can be estimated reliably, development revenue is recognised in profit or loss in proportion to the stage of completion of the contract. The stage of completion is assessed by reference to surveys of work performed. When the outcome of a development contract cannot be estimated reliably, development revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable.

Contract expenses are recognised as incurred unless they create an asset related to future contract activity. An expected loss on a contract is recognised immediately in profit or loss.

(iii) Sale of goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. When the Company acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net margin made by the Company.

(c) Cost

Costs are recognised in the period which they relate to.

(d) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(iii) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The discount rate is the yield at the reporting date on high-quality corporate bonds that the Company interprets as AA (Standard & Poor's), that have maturity dates approximating the terms of the Company's obligations and that are denominated in the currency in which the benefits are expected to be paid.

The calculation of the defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) Other long-term employee benefits

The Company's net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognised in profit or loss in the period in which they arise.

(v) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.

(e) Finance income and finance costs

Finance income comprises interest income, dividend income, gains on the disposal of available-for-sale financial assets, fair value gains on financial assets at fair value through profit or loss, foreign currency gains and reclassifications of net gains previously recognised in other comprehensive income. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Company's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Finance costs comprise interest expense on borrowings, bank overdrafts, unwinding of the discount on provisions, foreign currency losses, fair value losses on financial assets at fair value through profit or loss, impairment losses recognised on financial assets (other than trade receivables) and reclassifications of net losses previously recognised in other comprehensive income. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

(f) Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

(h) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line basis over the estimated useful lives, and is generally recognised in profit or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(i) Intangible assets and goodwill

(i) Goodwill

Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

(ii) Research and development

Expenditure on research activities is recognised in profit or loss as incurred.

Development expenditure is capitalised only if the expenditure cost can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.

(iii) Other intangible assets

Other intangible assets, including customer contracts and relations, agency contracts and licenses, that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

(iv) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(v) Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Goodwill is not amortised.

The estimated useful lives are as follows:

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Subsidiaries

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The investments in subsidiaries in the company financial statements are stated at cost, less provision, if appropriate, for any impairment in value.

(k) Financial instruments

The Company classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, deposits, loans and receivables and available-for-sale financial assets.

(i) Non-derivative financial assets and financial liabilities - recognition and de-recognition

The Company initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset.

Any interest in such financial assets that is created or retained by the Company is recognised as a separate asset or liability.

The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

(ii) Non-derivative financial assets - measurement Financial assets at fair value through profit or loss A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest or any dividend income, are recognised in profit or loss.

Loans and receivables

These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.

Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents includes bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

(iii) Non-derivative financial liabilities - measurement

Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.

(iv) Derivative financial instruments

Derivatives are recognised initially at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised immediately in profit or loss.

(l) Share capital

Ordinary shares

Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity.

Repurchase of share capital

When shares recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity.

(m) Impairment

(i) Non-derivative financial assets

Financial assets not classified as at fair value through profit or loss are assessed at each reporting date to determine whether there is objective evidence of impairment.

Objective evidence that financial assets are impaired includes:

Financial assets measured at amortised cost

The Company considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Company uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

(ii) Non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than biological assets, investment property, inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.

Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

Fair value less costs to sell is the price that would be received if the CGU would be sold in an orderly transaction in the principal (or most advantageous) market at measurement date under current market conditions regardless of whether that price is directly observable or estimated using another estimation technique.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(n) Provisions

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(i) Restructuring

A provision for restructuring is recognised when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating costs are not provided for.

(ii) Onerous contracts

A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract, see note (m)(ii).

(iii) Other provisions

Among others, provisions for claims are included in the other provisions. These provisions are recognised on the basis of the evidence available when the financial statements are approved. The amount provided is based on the best estimate of the amount to settle the obligation.

(o) Leases

(i) Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Company's incremental borrowing rate.

(ii) Leased assets

Assets held by the Company under leases which transfer to the Company substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases and are not recognised in the Company's statement of financial position.

(iii) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(p) Cash flow statement

The cash flow statement is prepared using the indirect method. The cash flow statement shows the source and application of cash funds. Cash flows are divided into those from operating, investing and financing activities. Cash and cash equivalents comprise the cash in hand and balances withdrawable on demand with banks and other financial instruments with maturities of twelve months or less. Changes resulting from foreign currency translation differences are eliminated, where material.

40. Standards issued but not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these company financial statements. The Company prepares the company financial statements in accordance with IFRS as adopted by the European Union and does not plan to adopt new standards and interpretations early.

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2014; however, the Company has not applied the following new or amended standards in preparing these company financial statements. The Company prepares the company financial statements in accordance with IFRS as adopted by the European Union and does not plan to adopt new standards and interpretations early.

The following new or amended standards are not expected to have a significant impact of the Company's financial statements.

Other information

Independent auditor's report

To: the Board of Directors of PaySquare SE

Report on the company financial statements

We have audited the accompanying company financial statements 2014 which are part of the financial statements of PaySquare SE, Utrecht, and comprise the company statement of financial position as at 31 December 2014, the company statements of profit or loss and other comprehensive income, company statement of changes in equity and company statement of cash flows for the year then ended and notes, comprising a summary of the significant accounting policies and other explanatory information.

Management's responsibility

Management is responsible for the preparation and fair presentation of these company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code, and for the preparation of the report of the Board of Directors in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Furthermore, management is responsible for such internal control as it determines is necessary to enable the preparation of the company financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these company financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the company financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the company financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the company financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the company financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the company financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the company financial statements give a true and fair view of the financial position of PaySquare SE as at 31 December 2014 and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code.

Report on other legal and regulatory requirements

Pursuant to the legal requirements under Section 2:393 sub 5 at e and f of the Netherlands Civil Code, we have no deficiencies to report as a result of our examination whether the report of the Board of Directors, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b - h has been annexed. Further, we report that the report of the Board of Directors, to the extent we can assess, is consistent with the company financial statements as required by Section 2:391 sub 4 of the Netherlands Civil Code.

Appropriation of the result of PaySquare SE

Provisions of the articles of association concerning the appropriation of result of the Company

The profit of the Company for the year 2014, amounting to EUR 617 thousand has been included in the equity as 'unappropriated results'. No interim dividend was distributed from equity during the year 2014.

The following appropriation of the profit for the year 2014 is proposed: