Table of contents
Chief Executive Officer’s Year in Review
Director’s Report
Auditor’s Independent Declaration
Statement of comprehensive Income
Statement of financial position
Statement of cash flow
Statement of changes in equity
Notes to the financial statement for the year ended 30 June 2015
Note 1 Statement of Accounting Policies
Note 2 Revenue and Expense
Note 3 Income Tax
Note 4 Cash and Cash Equivalents
Note 5 Trade and Other Receivables
Note 6 Inventories
Note 7 Available for Sale Investments
Note 8 Property, Plant and Equipment
Note 9 Share Based Payments
Note 10 Trade Payables and Other Liabilities
Note 11 Provisions
Note 12 Long Term Liabilities
Note 13 Contributed Equity and Reserves
Note 14 Financial Risk Management Objectives, Policies and Processes
Note 15 Commitments and Contingencies
Note 16 Leases
Note 17 Segment Reporting
Note 18 Auditor’s Remuneration
Note 19 Related Party Disclosures
Note 20 Matters subsequent to the end of financial year
Director’s declaration
Independent Auditor’s Report
Tyro Payments Limited
ABN 49 103 575 042
3
7
13
14
15
16
17
18
26
27
28
28
29
29
29
30
33
33
33
34
36
41
42
42
42
43
45
46
47
Annual report for the year ended 30 June 2015
Page 2
Chief Executive Officer’s Year in Review
Tyro Payments Limited
ABN 49 103 575 042
Building a specialised banking institution for Australia’s small-to-medium enterprises
Tyro Payments Limited (Tyro) was founded on February 3, 2003 by Peter Haig, Andrew Rothwell and Paul Wood. Two
founders, Peter Haig and Andrew Rothwell, have maintained their active involvement with Tyro. In November 2004, Jost
Stollmann became a major investor, then Director and CEO. Kerry Roxburgh joined as a non-executive Director on April 18,
2008. He was appointed Chairman of the Board on February 19, 2010.
Tyro is Australia’s independent EFTPOS provider serving small-to-medium enterprises (SMEs) with payment solutions that are
seamlessly integrated with their business software. Payment acceptance and reconciliation is fully automated.
Tyro holds an authority under the Banking Act 1959 (Cth) to carry on a banking business and operates under the supervision of
the Australian Prudential Regulation Authority (APRA). Tyro is a Principal Member of Visa, MasterCard, UnionPay, eftpos and a
Tier 1 Member of the payment clearing streams BECS and CECS.
Tyro operates an in-house developed platform authorising, clearing and settling electronic card payments and health rebate
claims. Tyro accepts Visa, MasterCard, American Express/JCB, Diners, PIN-based eftpos, PayPal and gift card transactions.
Tyro is an accredited provider for Medicare Australia Easyclaim and provides claiming services for Medicare Australia and
Australia’s private health funds.
Tyro vision: Smart, fair and transparent banking
Tyro promotes the growth of Australia's SME community by providing banking services that increase SME competitiveness and
improve people's quality of life. The opportunity is significant and because of this Tyro has reinvested the growing earnings of
the fiscal year into product development.
During 2015, Tyro doubled its engineering staff to 130 professionals working in software development, testing, operations,
product management, and user experience design. Staff levels in all other departments also grew resulting in an increase of 74
percent to 221 professionals. To cater for the growth, Tyro moved to new premises at 155 Clarence Street, Sydney.
The focus of the development effort over the year was on expanding the acquiring system into a core banking platform. Tyro is
currently undergoing an authorisation process to remove the condition on its banking authority of not being allowed to take
money on deposit. Subject to this outcome, Tyro will offer its merchants an account integrated with a cloud-based accounting
solution. Tyro’s new deposit account will provide SMEs with automatic reconciliation between their accounting system and their
bank account as well as other features to enable increased productivity.
Tyro growth: Sustainably at 30 percent and above
As at June 30, 2015, Tyro was serving 13,032 SMEs, with a credit and debit card transaction volume growth rate of 30 percent
to $6.8 billion. Tyro’s revenue in 2015 grew 37 percent to $72.4 million. Over its nine years in business, Tyro has maintained a
high-growth rate in revenue and a compound annual growth rate of 37 percent over the past five years. While the year finished
with a profit, significant reinvestment into product development, premises and staff resulted in a drop in Tyro’s operating results.
Financial year ended 30 June
2007
2008
2009
2010
2011
2012
2013
2014
2015
Transactions ($M)
Revenue ($‘000)
6
116
511
1,310
1,983
2,951
4,074
5,250
6,800
502
1,510
6,283
14,298
19,913
28,440
39,091
52,644
72,358
Operating results ($’000)
(7,124)
(5,855)
(5,113)
(1,824)
(1,816)
(528)
3,293
3,852
691
Tyro Health
Tyro was the first to launch an integrated Medicare Easyclaim solution into the primary health care market. Easyclaim is a real-
time Medicare claiming and reimbursement service for patient-paid and bulk-billed claims. The solution uses an eftpos terminal
and the eftpos network to enable rebates from the medical practice immediately after consultation.
Tyro Easyclaim eliminates data entry errors and printing of paper vouchers. End-of-day banking is fast and accurate and
immediate payments reduce the practice’s outstanding debt. Patients enjoy Medicare rebates by swiping their card and seeing
their rebate in their account in 11 seconds.
Tyro leads the market with more than half of all Medicare rebate transactions processed through the eftpos card system. The
solution is certified with most of the practice automation software providers.
Tyro’s HealthPoint is a new private health fund and Medicare claiming solution tailored to allied health providers and integrated
directly with the practice management software. The major modalities that will benefit from this solution in the future are
dentists, optometrists and physiotherapists.
Annual report for the year ended 30 June 2015
Page 3
Chief Executive Officer’s Year in Review
Tyro Payments Limited
ABN 49 103 575 042
Tyro Retail
Tyro continues to execute its overall strategy of accessing merchants via Point of Sale (POS) vendors. The Tyro terminal
adapters enable the POS vendors to implement the EFTPOS integration protocol directly with Tyro. This means that integration
no longer requires weeks of effort but merely days and integrations are far more robust.
Tyro EFTPOS terminals process card payment transactions in an average of three seconds with most POS software and
without performance degradation through busy peak trading times such as Christmas. Reconciliation has become simpler
because the cash register and EFTPOS reports always match. There are no more time-consuming manual adjustments and
printouts each evening.
With a Dynamic Currency Conversion (DCC) feature, international customers can pay in more than 135 different currencies,
eliminating surprises on their statements when returning home. For the merchant, DCC provides extra revenue from the
generated foreign exchange margins.
Tyro Hospitality
Tyro was the first and is the only provider of a pay, split and tip-at-table function on its terminals that can be integrated with
most of the leading restaurant automation software systems.
In August 2014, Australia began phasing out the cardholder’s signature as an acceptable authentication method for face-to-face
payment card transactions. Now the consumer is required to enter their four-digit PIN. The hospitality sector was particularly
impacted by this change as table service restaurants had to arrange for the terminal to be brought to the table to complete the
payment process and the PIN entry.
Tyro's Pay@Table solution permits the payment terminal to communicate with a restaurant’s POS over a wireless network, thus
permitting pay-at-table transactions to be conducted on an integrated basis. Tyro provides a comprehensive suite of features
including tipping at table, splitting amounts and opening bar tabs.
Tyro Mobile
With its foundation partner PayPal, Tyro launched the first mobile integrated payment solution. Customers can search for stores
or restaurants, check-in and pay from their smartphone. There is no card or PIN required. Instant face recognition on the point
of sale system promotes personalised service and enables secure authentication.
For the Tyro merchant, offering customers more payment choices such as PayPal is easy. Tyro Mobile provides the same
seamless integration for mobile payments as it does for card payments.
Tyro Fintech Hub
Tyro opened up a floor of its new premises for other fintech startups and fast-growth companies who want to build new
solutions that Australia’s SME businesses need.
Entrepreneurs in the Tyro Fintech hub benefit from an inspiring work environment, the exchange of ideas and experiences with
the Tyro team and – for qualifying projects – from sharing in-depth banking and payments knowledge, use of open APIs and co-
development resources.
By opening up the Tyro platform and encouraging the ecosystem to use it, Tyro will leverage the talent and engineering
resources of its partners to provide better solutions for the SME community. Tyro does not take equity positions, and the hub is
an extension of its original eftpos banking strategy.
Annual report for the year ended 30 June 2015
Page 4
Information for shareholders
We report to shareholders each year, in late August or September, with the Annual Report and then the Annual General
Meeting. We also report half-yearly to shareholders via an email newsletter in January, following the end of the half-year. A
hard copy of the Annual Report can be obtained by contacting the Company Secretary.
Tyro Payments Limited
ABN 49 103 575 042
Annual General Meeting
The Tyro Annual General Meeting (AGM) will be held at the Hilton Sydney, 488 George Street Sydney NSW 2000 on Thursday,
22 October 2015 commencing at 4pm.
Shareholder Information
For information about your shareholding or to notify a change of address etc., you should contact the company via the
Company Secretary
Phone: (02) 8907 1714
Email: jmitchell@tyro.com
Tyro Payments Limited
Attn: Company Secretary
Level 1
155 Clarence Street
Sydney NSW 2000
Electronic Communications
Shareholders can elect to receive the Annual Report and shareholder newsletters by email. Shareholders who wish to register
or notify a change of their email address should contact the company via the Company Secretary
Tyro Payments Limited
Attn: Company Secretary
Level 1
155 Clarence Street
Sydney NSW 2000
Phone: (02) 8907 1714
Email: jmitchell@tyro.com
Annual report for the year ended 30 June 2015
Page 6
Tyro Payments Limited
ABN 49 103 575 042
Directors Report
Year ended 30 June 2015
Annual report for the year ended 30 June 2015
Page 7
Directors Report
Tyro Payments Limited
ABN 49 103 575 042
Directors Report
The Board of Directors of Tyro Payments Limited present their report together with the financial statements for the financial
year ended 30 June 2015.
Directors
The names and details of the company’s directors in office during the financial year and until the date of this report are Kerry
Chisholm Dart Roxburgh, Michael Alexander Cannon-Brookes, Robert Alexander Ferguson, Paul Gordon Rickard and
Hans-Josef Jost Stollmann. Skills, qualifications, experience and special responsibilities for each director are set out below:
Kerry Roxburgh, Chairman
Non-executive Director since 18 April 2008
Kerry is currently the Lead Independent non-executive Director of Ramsay Health Care Ltd, and a non-executive
director of the Medical Indemnity Protection Society and of MIPS Insurance Ltd. He is Chairman of the Eclipx Group and
of Tasman Cargo Airlines Ltd. Kerry is Deputy Chairman of Marshall Investments Pty. Ltd. He is also a member of the
Advisory Board of AON Risk Solutions Australia.
In 2000 he completed a 3 year term as CEO of E*TRADE Australia (a business that he co-founded in 1997), continuing
as its non-executive Chairman until June 2007, when it was acquired by the ANZ Bank. Prior to this appointment he was
an Executive Director of Hong Kong Bank of Australia Group (now HSBC Bank Australia) where for 10 years from 1986,
he held various positions including Head of Corporate Finance and Executive Chairman of the group’s stockbroker,
James Capel Australia. Until 1986 Mr Roxburgh was in practice for more than 20 years as a Chartered Accountant.
Kerry is Chairman of the Board of Tyro Payments Limited and a member of its Audit Committee, its Remuneration
Committee and of its Risk Committee.
Other directorships held in the last three years:
•
TEKTUM Limited – Chairman (ceased)
• Charter Hall Group - Chairman (ceased)
•
Tyro Payments Limited
Mike Cannon-Brookes
Non-executive Director since 10 December 2009
Michael is Co-Founder, CEO and director of Atlassian, an innovative, award-winning enterprise software company based in
Australia and established in 2002. Michael was named Australian IT Professional of the Year in 2004, awarded 'Australian
Entrepreneur of the Year' by EY in 2006 and honoured by the World Economic Forum in 2009 as a Young Global Leader.
Michael is an active investor and advisor to technology-focused ventures. Michael is Chairman of the Remuneration
Committee and member of the Audit and Risk Committees.
Directorships held during the past three years:
• Atlassian Corporation Pty Limited & Subsidiaries
• Tyro Payments Limited
Rebecca Dee-Bradbury
Non-executive Director since 5 February 2014 until 22 August 2014
Ms Dee-Bradbury was Chief Executive Officer/President Developed Markets Asia Pacific and ANZ for Kraft/Cadbury
from 2010 to 2014, leading the business through significant transformational change. Before joining Kraft/Cadbury Ms
Dee-Bradbury was Group CEO of the global Barbeques Galore group, and has held other senior executive roles in
organisations including Maxxium, Burger King Corporation and Lion Nathan/Pepsi Cola Bottlers. Ms Dee-Bradbury has
previously participated in public policy related areas including the Prime Ministers Manufacturing Leaders Group and
was a member of the Australian Federal Government's Asian Century Strategic Advisory Board.
Annual report for the year ended 30 June 2015
Page 8
Directors Report
Tyro Payments Limited
ABN 49 103 575 042
Directorships held during the past three years:
• BlueScope Steel Limited
• GrainCorp Limited
• TOWER Limited
• Tyro Payments Limited (ceased)
Rob Ferguson
Non-executive Director since 14 November 2005
Rob began his career as a research analyst for a Sydney stockbroker. He joined Bankers Trust Australia in 1972 and
became managing director in 1985. By mid 1990s, BT had $50 billion under management. Rob became chairman of BT
Funds Management in 1999 until he resigned the position in 2002. Rob is Chairman of the Risk Committee and a
member of the Audit and Remuneration Committees.
Directorships held during the past three years:
Tyro Payments Limited
• Chairman of GPT Management Holdings Limited
•
• Non-executive Chairman of Primary Health Care Limited
• Chairman of SmartWard Holdings Pty Ltd (appointed Feb-12)
• Non-executive Director of Watermark Market Neutral Fund Limited (appointed 28-May-13)
Paul Rickard
Non-executive Director since 28 August 2009.
Paul is a company director, financial adviser and financial services consultant. He was previously the Executive General
Manager, Payments & Business Technology for the Commonwealth Bank. During his 20 year career at the CBA, Paul
was the founding Managing Director of CommSec, which he led from 1994 through to 2002. In 2005, Paul was named
‘Stockbroker of the Year’ and admitted to the Industry Hall of Fame. Paul is Chairman of the Audit Committee and
member of the Risk Committee.
Directorships held during the past three years:
Tyro Payments Limited
•
• Property Exchange Australia Limited
• Switzer Financial Group Pty Ltd
• Halidon Asset Management Ltd
•
Lumus Financial Services Pty Ltd
• Substancia Capital Limited (ceased)
Jost Stollmann
Director and CEO since 5 April 2005
Jost founded and grew the German system and network integrator CompuNet Computer AG into a US$1B company,
sold it to GE Capital and led the integration and expansion of GE Capital IT Solutions across the continent as president
of Europe. As Federal Shadow Minister of Economy and Technology, he ran and managed his own election campaign
contributing significantly to the landslide victory of the first German government of Chancellor Gerhard Schröder.
Directorships held during the past three years:
•
Tyro Payments Limited
Annual report for the year ended 30 June 2015
Page 9
Directors Report
Tyro Payments Limited
ABN 49 103 575 042
Company Secretary
Our Company Secretary as at 30 June 2015 is Justin Mitchell.
Justin was appointed on 19 March 2007 to build and manage the compliance and risk frameworks and oversee
regulatory obligations. Justin was appointed Company Secretary on 12 April 2007. The Company Secretary ensures all
relevant business is put to the board and the decisions of the board are implemented. In the capacity of Chief Risk
Officer he is accountable for enabling the efficient and effective governance of significant risks. A main priority for Justin
is to ensure that the organisation is in full compliance with all applicable regulations.
DIVIDENDS
No dividends have been declared or paid since the date of incorporation.
CORPORATE INFORMATION
Corporate Structure
Tyro Payments Limited (“Tyro”) is an unlisted public company. It is incorporated and domiciled in Australia. The
registered office of Tyro is Level 1, 155 Clarence Street, Sydney, New South Wales, 2000.
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Tyro Payments Limited were:
Director
Shares
Options
Kerry Roxburgh1
Michael Cannon-Brookes2
Rebecca Dee-Bradbury
Rob Ferguson3
Paul Rickard
Jost Stollmann4
1,090,182
6,247,980
-
30,352,950
328,911
1,867,031
2,788, 819
-
4,640,186
1,386,043
59,336,874
11,957,110
1 Includes ordinary shares and options jointly held with Alex Roxburgh as trustees for the Kerry & Alex
Roxburgh Superannuation Fund being an associate of Kerry Roxburgh
2 Includes ordinary shares by Abyla Pty Ltd and Grokco Pty Ltd being associates of Michael Cannon-
Brookes
3 Includes ordinary shares held by Torryburn Superannuation Fund and Simon Peter Price and Rachel
Emma Ferguson being associates of Rob Ferguson
4 Includes options held by Fiona Stollmann being an associate of Jost Stollmann
Nature of operations and principal activities
Tyro is a financial institution providing payment solutions to Australian merchants. Tyro has implemented appropriate
systems and controls to comply with the stringent prudential and regulatory requirements to perform transaction
processing, clearing and settlement activities within the Australian Payments System.
There have been no significant changes in the nature of those activities during the year.
Annual report for the year ended 30 June 2015
Page 10
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
Tyro reported the following operating results for the year and the comparative period:
(amounts in $’000s)
Revenues
Operating profit before tax expense
Capital Structure
Directors Report
Tyro Payments Limited
ABN 49 103 575 042
2015
2014
$72,358
$52,644
$691
$3,852
Tyro is fully compliant with prudential capital requirements prescribed by APRA and has sufficient capital to fund on-
going operations. During the period, 450,858 ordinary shares were issued upon exercise of options raising a total of
$100,657.29 additional capital. As at 30 June 2015 Tyro had trade payables of $6,519k.
Cash from Operations
Tyro has achieved a profit for the 2014/15 financial year. The result is in line with budget after having reached the
milestone of sustained profitability since March 2012. Tyro is still in a phase of high growth and scaling up of the
business. Tyro had interest income of $805k for the period.
Funding
Tyro had cash and cash equivalents of $12,673k at the end of the period.
Tyro holds an authority under the Banking Act to carry on a banking business as an Australian Deposit-taking Institution
(ADI) and is subject to prudential capital requirements set by the Australian Prudential Regulation Authority (APRA).
The prudential capital requirements set by APRA is confidential and cannot be disclosed. APRA requires Tyro to
always maintain a prudent buffer above the regulatory minima. Total Tier 1 capital held as at 30 June 2015 was
$21.2m. Tyro has always held sufficient capital to meet its internal targets above APRA’s prudential capital
requirements.
Risk Management
The Board is responsible for reviewing and approving the risk management strategy, including determining our appetite
for risk. The Board has delegated to the Board Risk Committee responsibility for providing recommendations to the
Board, setting risk appetite, approving frameworks, policies and processes for managing risk, and determining whether
to accept risks beyond management’s delegated authorities.
The Board Risk Committee monitors the alignment of our risk profile with our risk appetite, and with our current and
future capital planning. The Board Risk Committee receives regular reports from management on the effectiveness of
our management of business risks.
The CEO and management team are responsible for implementing our risk management strategy and frameworks, and
for developing policies, controls, processes and procedures for identifying and managing risk.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs.
Significant events after balance date
On the 19 August 2015 APRA approved Tyro’s application for reauthorisation to carry on a banking business, revoking
the prior conditions which previously applied.
Annual report for the year ended 30 June 2015
Page 11
Directors Report
Tyro Payments Limited
ABN 49 103 575 042
Likely developments and expected results
The directors expect that in the 2015/16 financial year Tyro will continue to grow the business and continue to expand
the features and products offered to merchants to facilitate payments.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 80,021,864 un-issued ordinary shares under options. Option holders do not
have any right, by virtue of the option, to participate in any share issue of the company.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the company paid a premium in respect of a contract insuring the directors of the company
(named above) and the company secretary against a liability incurred as an officer of the company to the extent
permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
The company has entered into deeds of access and indemnity with its directors and company secretary which will
indemnify them against liability incurred as an officer of the company to a third party only to the extent permitted by the
Corporations Act.
The company has agreed to indemnify its auditor, EY, against a liability incurred as auditor only to the extent permitted
by law.
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each director is as follows:
Board Meetings
Audit
Committee
Risk
Committee
Remuneration
Committee
Meetings held during the year
Director
Kerry Roxburgh
Michael Cannon-Brookes
Rebecca Dee-Bradbury*
Rob Ferguson
Paul Rickard
Jost Stollmann
7
7
7
1
5
7
7
4
4
3
1
0
4
4
6
6
5
0
2
6
6
2
2
2
0
0
1
2
*Rebecca missed one Board Meeting before resigning during the period.
Committee Membership
As at the date of this report, Tyro had an Audit Committee, a Risk Committee and a Remuneration Committee of the
Board of Directors. Members acting on the Committees of the Board during the year were:
Audit Committee
P. Rickard (Chairman)
R. Ferguson
K. Roxburgh
Remuneration Committee
M. Cannon-Brookes (Chairman)
R. Ferguson
K. Roxburgh
Risk Committee
K. Roxburgh (Chairman)
M. Cannon-Brookes
P. Rickard
Annual report for the year ended 30 June 2015
Page 12
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Tyro
Payments Limited
In relation to our audit of the financial report of Tyro Payments Limited for the financial year ended 30
June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional
conduct.
Ernst & Young
Clare Sporle
Partner
20 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Continuing Operations
Fees and commission income
Fees and commission expense
Net fees and commission income
Terminal and accessories sale
Terminals and accessories COGS
Net terminal and accessories sale income
Interest income
Other income
Total Operating income
Less: Expenses
Employee benefits expenses
Administrative expenses
Depreciation
Impairment of inventories
Interest expense
Other expenses
Total operating expenses
Foreign currency gain/(loss)
Operating profit before tax expense
Income tax benefit/(expense)
Net income for the year
Other Comprehensive Income
Net fair value gain on available for sale financial instrument
Total comprehensive income for the period
Tyro Payments Limited
ABN 49 103 575 042
Note
2015
$000
70,850
(39,082)
31,768
573
(508)
65
805
130
2014
$000
51,327
(28,466)
22,861
554
(465)
89
750
13
32,768
23,713
21,429
8,348
2,436
8
30
59
32,310
233
691
120
811
150
961
13,736
4,428
1,276
214
64
107
19,825
(36)
3,852
(908)
2,944
32
2,976
2
2
2
2
2
3
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2015
Page 14
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Total Current Assets
Non-current Assets
Available-for-sale investments
Property, plant and equipment
Deferred Tax Assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade payables and other liabilities
Provisions
Total Current Liabilities
Non - current Liabilities
Provisions
Total Non - current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
12,673
7,893
492
855
21,913
596
7,673
5,631
13,900
2014
$000
9,011
12,099
309
293
21,712
381
2,996
5,575
8,952
35,813
30,664
6,519
1,088
7,607
418
418
8,025
27,788
34,013
8,707
(14,932)
3,383
618
4,001
424
424
4,425
26,239
33,912
8,041
(15,714)
27,788
26,239
Note
4
5
6
7
8
3
10
11
12
13
13
13
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2015
Page 15
Note
2
4
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Interest and fee income received
Payments to suppliers and employees
Receipts from Terminals & accessories sale
Dividend income received
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from loan
Loan repayment
Interest paid on Loans
Proceeds from exercise of share options
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at beginning of year
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
71,970
(62,190)
573
2
10,355
(7,138)
112
(7,026)
-
-
-
101
101
3,430
232
9,011
2014
$000
52,797
(65,369)
554
2
(12,016)
(2,542)
18
(2,524)
6,100
(6,100)
(63)
706
643
(13,897)
(37)
22,945
Cash and cash equivalents at end of year
4
12,673
9,011
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2015
Page 16
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Tyro Payments Limited
ABN 49 103 575 042
Attributable to equity holders of Tyro Payments Limited
Contributed
Equity
$000
33,206
Asset
Revaluation
Reserve
$000
178
Note
Employee
Equity
Benefits
Reserve
S000
6,311
Accumulated
Losses
$000
(18,575)
Option
Premium
Reserve
$000
480
General
Reserve
for Credit
Losses
$000
285
At 30 June 2013
Gain for the year
Other comprehensive
income
Total comprehensive
income
Issue of share capital
Share-based
payments
Transfer to general
reserve for credit
losses
-
-
-
706
-
-
-
32
32
-
-
-
-
-
-
-
672
-
2,944
-
2,944
-
-
(83)
-
-
-
-
-
Total
$000
21,885
2,944
32
2,976
706
672
-
-
-
-
-
83
-
At 30 June 2014
33,912
210
6,983
(15,714)
480
368
26,239
Gain for the year
Other Comprehensive
income
Total comprehensive
income
Issue of share capital
Share-based
payments
Transfer to general
reserve for credit
losses
-
-
-
101
-
-
-
150
150
-
-
-
-
-
-
-
487
-
811
-
811
-
-
(29)
-
-
-
-
-
-
-
-
-
-
-
29
811
150
961
101
487
-
At 30 June 2015
13
34,013
360
7,470
(14,932)
480
397
27,788
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2015
Page 17
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of this financial report are set out below:
The financial report of Tyro Payments Limited (the Company) was authorised for issue in accordance with a resolution of the
directors on 20 August 2015.
Tyro Payments Limited is an unlisted public company, incorporated and domiciled in Australia.
The nature of the operations and principal activities of the Group are described in the Directors’ report.
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report has also been prepared on a historical cost basis, except for available-for-sale
investments, which have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars, under the
option available to the Company under ASIC Class Order No. 98/100, unless otherwise stated.
Management has reviewed the method of presentation of revenue and expenses within Note 2. Similar categories of income
and expenses have been grouped together. Prior year comparative information for these amounts, and where necessary, has
been reclassified to achieve consistency in disclosure with current financial year amounts and other disclosures.
(b) Compliance with IFRS
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
(c) Going concern
The Company is in its eighth year of operation and has made an operating profit of $690,806 (2014: profit $3,851,678)
The Directors consider the Company is able to pay its debts as and when they fall due, and therefore the Company is able to
continue as a going concern.
(d) Statement of compliance
The financial report complies with Australian Accounting standards issued by the Australian Accounting Standards Board and
complies with International Financial Reporting Standards issued by the International Financial Reporting Standards Board.
(e) New Accounting standards and interpretations
(i) Changes in accounting policies
The accounting policies are consistent with those applied in the previous financial year and corresponding interim period.
The Company has adopted the following new and amended Australian Accounting Standards and AASB
Interpretations
AASB 2012-3
Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities
AASB 2011-4
Amendments to Australian Accounting Standards – Remove individual KMP disclosure requirements
AASB 2013-3
Recoverable amount disclosures for Non-Financial Assets
AASB 1031
Materiality
The adoption of the above Standards and Interpretations is deemed not to have an impact on the financial statements or
performance of the Company.
Annual report for the year ended 30 June 2015
Page 18
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(ii) Accounting standards and interpretations issued but not yet effective
The following Australian Accounting Standards and Interpretations, which have recently been issued or amended but are not
yet effective have not been adopted by the Company for the annual reporting period ended 30 June 2015:
• AASB 15 Revenue from Contracts with Customers - establishes principles for reporting useful information to users of
financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an
entity’s contracts with customers. The core principle of AASB 15 is that an entity recognises revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with the
core principles explained in a step by step approach in the standard. AASB 15 applies to annual reporting periods on
or after 1 January 2018. The new requirements of AASB 15 will be assessed closer to the effective date.
• AASB 9 Financial Instruments – simplifies the classifications of financial assets into those to be carried at amortised
cost and those to be carried at fair value. The new standard also:
-
-
-
-
simplifies requirements for embedded derivatives.
removes the tainting rules associated with held-to-maturity assets.
provides an opportunity to fair value investments in equity instruments to other comprehensive income, with
no separate impairment test, whilst taking dividends to income.
requires entities to reclassify their financial assets when there is a change in the entity's business model.
AASB 9 applies to annual reporting periods on or after 1 January 2017. The new requirements of AASB 9 will be
assessed closer to the effective date.
(f) Significant accounting judgements, estimates and assumptions
In applying the Company's accounting policies management continually evaluates judgements, estimates and assumptions
based on experience and other factors, including expectations of future events that may have an impact on the Company. All
judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances
available to management. Actual results may differ from judgements, estimates and assumptions. Significant judgements,
estimates and assumptions made by management in the preparation of these financial statements are outlined as follows:
Share-based payments transactions - The Company recognises the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date on which they are granted. The fair value is determined using
the Black-Scholes option valuation model, with the assumptions detailed in Note 9.
Classification of and valuation of investments - The Company classifies its investments in listed securities as 'available -for-sale'
investments and movements in fair values are recognised directly in equity. The fair value of listed shares has been determined
by reference to published price quotations in an active market.
Estimation of useful lives of assets - The estimation of the useful lives of assets has been based on historical experience. In
addition, the condition of the assets is assessed at least once per year and considered against their remaining useful lives.
Adjustments to useful lives are made when considered necessary. Depreciation charges are included in Note 8.
Long Service Leave - Entitlements that arise in respect of long service leave which are expected to be settled more than 12
months after the reporting date have been measured at their present values of expected future payments. Long service leave is
calculated based on assumptions and estimates of when employees will take leave and the prevailing wage rates at the time
the leave will be taken. Long service leave liability also requires a prediction of the number of employees that will achieve
entitlement to long service leave.
Annual report for the year ended 30 June 2015
Page 19
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(g) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
(i) Fee income
The Company derives fee income from the following sources:
- Merchant service fee income is generated from merchant customers for credit and debit card acquiring services. Fees are
charged to merchants depending on the type of transaction being performed based on a percentage of transaction value or
on a fixed amount per transaction. Fees related to the payment transactions are recognised at the time transactions are
processed. Related interchange fee, which is collected from merchants and paid to credit institutions is recognised as an
expense instead of netting-off against merchant service fee income in the Statement of Comprehensive Income.
- Revenue from terminal rental income generated from merchants is based on a fixed rental from terminals.
- Revenue from Debit Card Interchange generated from banks is based on a fixed fee per transaction and is recognised
when transactions are processed.
- Revenue from processing Medicare Easyclaim generated from merchants is based on a fixed fee per transaction and is
recognised when transactions are processed.
- Revenue from Dynamic Currency Conversion (DCC) transactions generated from merchants is calculated based on the
individual value of the transactions and is recognised once the transaction has been processed.
(ii) Interest income
Interest income is recognised in the Statement of Comprehensive Income on an accruals basis, using a method that
approximates the effective Interest method. The effective interest rate method measures the amortised cost of a financial asset
and allocates the interest income over the relevant period using the effective interest which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
(h) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires
an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether
the arrangement conveys a right to use the asset.
Leases in which the Company retains substantially all the risks and benefits of ownership of the leased asset are classified as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased
asset and recognised as an expense over the lease term on the same basis as lease rental income. Operating lease payments
are recognised as an income or expense in the Statement of Comprehensive Income on a straight-line basis over the lease
term.
Deferred income is recognised as a liability on the Statement of Financial Position on inception of the lease. The deferred lease
incentive is then recognised in the Statement of Comprehensive Income on a straight line basis over the term of the lease,
through rent expense.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. For the
purposes of the Statement of Cash Flows, cash and cash equivalents are reported net of outstanding bank overdrafts.
(j) Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less an allowance for any uncollectible amounts. Term Deposits are included
in Trade and other receivable.
Annual report for the year ended 30 June 2015
Page 20
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified. An allowance for doubtful debts is raised when there is objective evidence that the Company will not be able to
collect the debt.
(k) Prepayments
Prepayments are recognised for amounts paid whereby goods have not transferred ownership to the Company or where
services have not yet been provided. Upon receipt of goods or the service the corresponding asset is recognised in the
Statement of Financial Position or the expense is recognised in the Statement of Comprehensive Income.
(l) Available-for-sale Investments
Available-for-sale investments are initially recognised at fair value plus transaction costs that are directly attributable to the
acquisition of the investment. After initial recognition these investments are measured at fair value. Gains or losses on
available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or
otherwise disposed of or until the investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is transferred to the Statement of Comprehensive Income.
Purchase and sale of investments are recognised on settlement date - the date on which the Company receives or delivers the
asset.
(m) Inventories
(i) Cost and Valuation
The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently
recoverable by the Company from the taxing authorities), and transport, handling and other costs directly attributable to the
acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in
determining the costs of purchase. Inventories are subsequently held at the lower of cost and their net realisable value.
Impairment is assessed on an annual basis. Inventories are derecognised upon transfer to property, plant and equipment when
leased out to merchants or rights to benefits are transferred to a third party.
(ii) Impairment
Management make assessments of the net realisable value of Inventory on an annual basis. The cost of inventory may not be
recoverable where the inventory is damaged, wholly or partially obsolete, or if selling prices have declined. In accordance with
AASB 102, where the cost of inventory exceeds the net realisable value, Inventory is written down to their net realisable value.
Net realisable value is an estimate, based on the most reliable evidence at the time, of the amount the inventories are expected
to realise.
(n) Income Taxes
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or
paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the by the reporting date.
(o) Deferred tax asset
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the reporting date (Note 3).
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
Annual report for the year ended 30 June 2015
Page 21
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
(p) Other Taxes
Goods and Services Tax (GST)
Revenues, expenses, assets and liabilities are recognised net of the amount of GST except for the following:
-
-
when the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which
case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
trade receivables and trade payables are stated with the amount of GST included.
The net amount of GST recoverable from or payable to the taxation authority is included as part of other receivables or other
payables in the Statement of Financial Position.
Commitments and contingencies are disclosed net of the amount of GST.
(q) Acquisition of assets
All assets acquired including property, plant and equipment are initially recorded at their cost of acquisition at the date of
acquisition, being the fair value of the consideration provided plus any incidental costs directly attributable to the acquisition.
Expenditure is recognised as an asset only when it is probable that future economic benefits associated with the asset will flow
to the Company and the cost of the item can be measured reliably. All other expenditure is expensed as incurred.
(r) Property, plant and equipment
(i) Cost and Valuation
Property, plant and equipment are measured at cost less accumulated depreciation and any impairment in value. The Company
recognises in the carrying amount of an item of property, plant and equipment the cost of replacing parts when the cost is
incurred and the recognition criteria are met. When each major inspection is performed, its cost is recognised in the carrying
amount of the item of property, plant or equipment, as a replacement, provided that the recognition criteria are satisfied.
(ii) Depreciation
Depreciation is provided on a straight-line basis over the estimated useful life of each specific item of property, plant and
equipment.
Estimated useful lives are as follows:
2015
2014
Plant and equipment:
- EFTPOS terminals
- Furniture and office equipment
- Computer equipment
- Leasehold improvements
3 years
5 years
4 years
3 years
5 years
4 years
Remaining term of lease
-
The assets' residual values, remaining useful lives and depreciation methods are reassessed and adjusted, if appropriate at
each reporting date.
(iii) Impairment
Management has identified cash generating units and applicable impairment indicators in accordance with AASB 136
Impairment of Assets. The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets are written down to their recoverable amount. The recoverable amount of
plant and equipment is the greater of fair value less costs of disposal and its value in use.
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
Annual report for the year ended 30 June 2015
Page 22
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
(r) Property, plant and equipment (cont’d)
(iv) De-recognition and disposal
An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected to
arise from continued use of the asset. Gains and losses on disposals are calculated as the difference between the net disposal
proceeds and the asset's carrying amount and are included in the Statement of Comprehensive Income in the year the asset is
derecognised.
(s) Trade and other payables
Merchant payables arise when the Company has received monies from the relevant schemes and financial institutions that
have not yet been settled with the merchant.
Payables to merchants are only recognised to the extent that a liability arises. This liability arises when the proceeds have been
paid by the schemes and financial institutions and received by the Company.
Liabilities for trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for
goods and services received, whether or not billed to the Company.
(t) Interest-bearing loan and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs. After initial recognition, interest-bearing loans and liabilities are subsequently measured at amortised cost
using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of
the cost of the loans and liabilities. The fair value of the options attached to the loan is also included in the cost of the loan.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for 12 months after the reporting date. Borrowing costs consists of interest and other costs incurred in the borrowing of funds.
(u) Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the impact of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
Contingent liabilities are not recognised in the Statement of Financial Position, but are disclosed in the relevant notes to the
financial statements. They may arise from uncertainty as to the existence of a liability or represent an existing liability in respect
of which settlement is not probable or the amount cannot be reliably measured. Only when settlement becomes probable will a
liability be recognised.
The Company is contingently liable for processed credit card sales transactions in the event of a dispute between the
cardholder and a merchant. If a dispute is resolved in the cardholder’s favour, the Company will credit or refund the amount to
the cardholder and charge back the transaction to the merchant. If the Company is unable to collect the amount from the
merchant, the Company will bear the loss for the amount credited or refunded to the cardholder.
Management evaluates the risk of such transactions and estimates its potential loss for credit losses based primarily on
historical experience and other relevant factors. A provision is recognised for merchant losses necessary to absorb
chargebacks and other losses for merchant transactions that have been previously processed and on which revenues have
been recorded.
From the current financial year a specific provision for credit losses is maintained when there is objective evidence that the
company will not be able to collect the debts.
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
Annual report for the year ended 30 June 2015
Page 23
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
(v) General reserve for credit losses
The Company provides for estimated future credit losses with a general reserve for chargebacks. The Company estimates the
reserve by using a multiple of historical losses over a rolling 120 day period of transaction values. The general reserve for credit
losses is then allocated as a separate reserve within equity.
The methodology and assumptions used for estimating general reserve for credit losses required are reviewed regularly.
(w) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave and long service leave.
Entitlements arising in respect of salaries and wages, annual leave and other employee benefits that are expected to be settled
within one year have been measured at their nominal amounts. Employees are entitled to 20 days annual leave each year. The
company classes as a current liability the portion that is expected will be taken by the employees in the next 12 months.
Entitlements that arise in respect of long service leave which are expected to be settled more than 12 months after the reporting
date have been measured at their present values of expected future payments. Long service leave is calculated based on
assumptions and estimates of when employees will take leave and the prevailing wage rates at the time the leave will be taken.
Long service leave liability also requires a prediction of the number of employees that will achieve entitlement to long service
leave.
No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave to be taken in the future
by all employees at reporting date is estimated to be less than the annual entitlement for sick leave.
(x) Share-based payment transactions
Share-based compensation benefits are provided to employees (including Key Management Personnel) via the Employee
Share Option Plan, whereby employees render services in exchange for rights over the Company's shares.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined internally using the Black-Scholes option
valuation model.
The cost of equity-settled transactions is recognised, together with any corresponding increase in equity, over the period in
which the employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent to
which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Company, will
ultimately vest. This opinion is based on the best available information at the reporting date. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair
value at grant date.
No expense is recognised for awards that do not ultimately vest. There were no modifications to the terms of the outstanding
options during the financial year. Details of the types of share-based payments and their respective terms and vesting
conditions are disclosed in Note 9.
(y) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
accounted in contributed equity as a deduction, net of tax, from the proceeds of issue.
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(z) Foreign currency translation
Annual report for the year ended 30 June 2015
Page 24
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the spot rate of
exchange ruling at the reporting date.
Non-monetary assets and liabilities are translated at their historic rates of exchange at their respective transaction dates.
(aa) De-recognition of assets and liabilities
Assets and liabilities are derecognised from the Statement of Financial Position upon sale, maturity or settlement. Gains and
losses arising from de-recognition of these assets and liabilities are accounted in the Statement of Comprehensive Income.
Annual report for the year ended 30 June 2015
Page 25
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
2. REVENUE AND EXPENSES
The Operating profit before tax expense has been arrived at after accounting for the following items:
Tyro Payments Limited
ABN 49 103 575 042
Fees and commission income
Merchant service fee
Terminal rental income
Other fee income
Fees and commission expense
Interchange and scheme fees
Other settlement fees and expenses
Commissions expense
Other Income
Gain on disposal of PPE
Dividend income on financial instruments
Other Income
Employee benefits expense
Wages, salaries and bonuses
Superannuation
Share based payments expense
Other employee benefits expense
Other expenses
Other Write offs
Bad debt and credit loss expense
2015
$000
60,596
5,246
5,008
70,850
33,411
1,024
4,647
39,082
88
2
40
130
18,690
1,790
487
462
21,429
16
43
59
2014
$000
43,353
3,382
4,592
51,327
23,832
956
3,678
28,466
11
2
-
13
11,475
1,063
672
526
13,736
(3)
110
107
Annual report for the year ended 30 June 2015
Page 26
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
3. INCOME TAX
a) Income tax expense
Major components of income tax recognised in statement of comprehensive income for the period ended 30 June 2015:
Current Income Tax
Current income tax charge
Prior year under/(over)
Deferred Income Tax
Relating to origination and reversal of temporary differences and tax losses
Derecognition of deferred income tax from temporary differences
Income Tax expense/(benefit) in income statement:
Amount reported directly in other comprehensive income
Deferred tax on unrealised gain on available-for-sale investment
Income tax expense reported in equity
b) Reconciliation of income tax expense and prima facie tax:
Operating Profit Before Tax
At the statutory income tax rate of 30%
Research and development incentive
Share based payment remuneration
Entertainment
Adjustment in respect to previous year’s tax balances
Other
Total income tax (benefit)/expense
c) Deferred income tax assets and liabilities
2015
$000
592
-
-
(712)
(120)
-
64
64
691
207
(600)
147
16
110
-
(120)
2014
$000
1,033
-
(125)
-
908
-
14
14
3,852
1,156
(431)
201
15
-
(33)
908
2015
2014
Balance
Sheet
Income
Statement
Other
comprehensive
Income
Balance
Sheet
Income
Statement
Other
comprehensive
Income
$000
$000
$000
$000
$000
$000
Deferred income tax assets
Fixed Assets
Provisions & Accruals
Other (Section 40-880)
Lease Break Fee
Unrealised FX Loss
Tax Losses
Deferred income tax liabilities
Available-for-sale investments
Unrealised FX gain
Total
545
1,235
-
84
-
4,010
5,874
(154)
(89)
(243)
5,631
10
(636)
-
(84)
24
(115)
(801)
-
89
89
(712)
-
-
-
-
-
-
-
-
-
-
555
599
-
-
24
4,487
5,665
(90)
-
(90)
5,575
(13)
(97)
1
-
(24)
1,074
941
-
(33)
(33)
908
-
-
-
-
-
-
-
14
-
14
14
Annual report for the year ended 30 June 2015
Page 27
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
4. CASH AND CASH EQUIVALENTS
Call deposits
Exchange settlement balance
Cash in hand
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
4,168
8,504
1
12,673
2014
$000
2,030
6,980
1
9,011
Call deposits earn interest at floating rates based on daily bank deposit rates. The Reserve Bank of Australia (RBA) pays
interest on balances held in exchange settlement accounts at a rate of 25 basis points below the cash rate. Refer to note 15 for
details of cash and cash equivalents pledged as security.
Term deposits earn interest based on an agreed rate and term.
Reconciliation of operating loss after tax to net cash flows used in operations
Operating profit/(loss) for the year
Adjustments for:
Depreciation of non-current assets
Share-based payments expense
Gain on disposal of property plant and equipment
Deferred Tax Benefits
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
Decrease/(increase) in inventory
Increase in trade and other payables
Net cash from operating activities
5. TRADE AND OTHER RECEIVABLES
Scheme and other trade receivables
Term deposits held as collateral
Interest receivable
Other receivables
2015
$000
811
2,436
487
(88)
(120)
4,178
(184)
(561)
3,396
10,355
3,688
4,111
85
9
7,893
2014
$000
2,944
1,276
672
(11)
908
(19,121)
(124)
81
1,359
(12,016)
10,179
1,834
75
11
12,099
The Company's ageing of trade debtors and receivables (schemes and merchants) is as follows:
Current
$000
1-30
days
$000
31-60
days
$000
61-90
days
$000
>90
days
$000
Trade receivables before impairment.
Carrying value 2015 (Total $3,696,850)
Carrying value 2014 (Total $10,189,761)
3,543
9,831
127
359
13
-
9
-
5
-
Refer to Note 14 for term deposit maturities and Note 15 for details of cash and cash equivalents pledged as security.
Annual report for the year ended 30 June 2015
Page 28
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
6. INVENTORIES
Terminals and accessories
7. AVAILABLE-FOR-SALE INVESTMENTS
Investment in VISA shares
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
855
2015
$000
596
2014
$000
293
2014
$000
381
These investments were acquired following the demutualisation of VISA International, as a result of which listed VISA shares
were issued to members of the VISA network. All VISA shares were listed on the New York Stock Exchange (NYSE) on 26th
March 2008 with VISA’s certificate of incorporation providing for the mandatory buyback of up to 80% of the common stock
allocated to VISA members out of IPO proceeds as soon as possible after listing.
8. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of net carrying amounts at the beginning and end of the year:
Year ended 30 June 2015
At 1 July 2014 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers*
Depreciation for the year
At 30 June 2015 net of accumulated
depreciation and impairment
At 1 July 2014
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2015
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
EFTPOS
Terminals
$000
Furniture
and Office
Equipment
$000
Computer
Equipment
$000
Leasehold
Improvements
$000
Total
$000
2,505
4,545
(23)
(1,996)
5,031
7,145
(4,640)
2,505
11,560
(6,529)
5,031
76
690
(1)
(86)
679
254
(178)
76
919
(240)
679
415
807
-
(265)
-
1,096
-
(90)
2,996
7,138
(24)
(2,437)
957
1,006
7,673
2,133
(1,718)
415
2,390
(1,433)
957
-
-
-
1,096
(90)
1,006
9,532
(6,536)
2,996
15,965
(8,292)
7,673
Annual report for the year ended 30 June 2015
Page 29
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
8. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Reconciliation of net carrying amounts at the beginning and end of the year:
EFTPOS
Terminals
$000
Furniture
and Office
Equipment
$000
Computer
Equipment
$000
Leasehold
Improvements
$000
Total
$000
1,409
2,191
(7)
(1,088)
2,505
5,002
(3,593)
1,409
7,145
(4,640)
2,505
79
25
-
(28)
76
230
(152)
78
254
(178)
76
249
327
-
(161)
415
1,807
(1,557)
250
2,133
(1,718)
415
-
-
-
-
-
-
-
-
-
-
-
1,737
2,543
(7)
(1,277)
2,996
7,039
(5,302)
1,737
9,532
(6,536)
2,996
Year ended 30 June 2014
At 1 July 2013 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers*
Depreciation for the year
At 30 June 2014 net of accumulated
depreciation and impairment
At 1 July 2013
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2014
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
9. SHARE-BASED PAYMENTS
The Company will provide benefits to employees and Directors from time to time including share-based payments as
remuneration for service.
(a) Employee Share Option Plan
The Employee Share Option Plan was established to grant options over ordinary shares in the Company to employees or
Directors who provide services to the Company.
Options granted pursuant to the Employee Share Option Plan may be exercised, in whole or part, subject to vesting terms and
conditions as indicated below:
Type of Option
Vesting Terms and Conditions
Linear vesting schedule
Options granted will vest in proportion to the time that passes linearly during the vesting
schedule, subject to maintaining continuous status as an employee or consultant with the
Company during the vesting schedule.
Service vesting schedule
The options vest according to a period of service may be exercised as to a set number of shares
per agreed day of service, as defined in the specific option grant.
Fully vested at time of grant Options may be exercised as to all shares from the vesting commencement date.
All option grants must be held for a minimum period commencing on the date on which the options are granted and continuing
until the earlier of:
-
-
the date which is 3 years after the date on which options are granted; or
the date on which the participant ceases employment with the Company.
Annual report for the year ended 30 June 2015
Page 30
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
9. SHARE BASED PAYMENTS (cont'd)
Other relevant terms and conditions applicable to options granted under the Employee Share Option Plan include:
-
-
-
the term of each option grant shall be 7 years from the date of grant or such shorter term as provided in the Employee
Share Option Plan agreement.
Each option entitles the holder to one ordinary share.
All awards granted under the Employee Share Option Plan are equity-settled.
(b) Fair value of options
The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model. The table below
lists the assumptions used in determining the fair value of the options granted during the year ended 30 June 2015:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price ($)
2015
0%
62%
2.84%
$0.30
A zero dividend policy assumption is used for valuing all option grants. This is in line with the Company's capital management
policy and growth strategy.
Expected volatility used is the historical volatility of the peer group. The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may not necessarily be the actual outcome.
The average expected life for 7 year options is assumed to be 5 - 6 years from the grant date. The expected life for 10 year
option is assumed to be 5 - 8 years. For all other options with a contractual life of 5 year or less, the expected life is assumed to
be the total contractual life from the date of grant to the expiry date.
There were 450,858 options exercised during the year ended 30 June 2015 (2014:10,194,219).
The weighted average remaining contractual life for share options outstanding as at 30 June 2015 was 3 years (2014:4 years).
The following table summarises further details of the share options outstanding at 30 June 2015:
Range of Exercise Prices
Contractual life
Vesting conditions
No of Outstanding Options
6 cents to 55 cents
6 cents to 45 cents
6 cents to 55 cents
10 years or less
5 years and 10 years
3, 5 and 10 years
6 cents to 55 cents
10 years or less
5 year linear vesting
12 months service
12 months linear
vesting
Fully vested at time
of grant
Total
2015
2014
30,193,725
1,043,478
25,272,457
1,043,478
11,454,189
11,460,798
23,314,679
66,006,071
23,314,679
61,091,412
Annual report for the year ended 30 June 2015
Page 31
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
9. SHARE BASED PAYMENTS (cont'd)
The following table illustrates the number and weighted average exercise prices (WAEP) in cents and movements of share
options during the year:
2015
No
2015
WAEP (cents)
2014
No
2014
WAEP
(cents)
Linear vesting schedule
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Fully vested at time of grant
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Service Vesting Schedule
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Total outstanding at the end of the year
Total exercisable at the end of the year
36,733,255
6,554,981
(450,858)
(1,189,464)
41,647,914
32,076,185
23,314,679
-
-
-
23,314,679
23,314,679
1,043,478
-
-
1,043,478
1,043,478
66,006,071
56,434,342
12
45
22
37
21
21
7
-
-
-
7
7
6
-
-
6
6
34,326,124
7,618,284
(3,802,915)
(1,408,238)
36,733,255
36,733,255
29,235,501
-
(5,869,565)
(51,257)
23,314,679
23,314,679
1,565,217
-
(521,739)
1,043,478
1,043,478
61,091,412
61,091,412
12
14
8
21
12
12
7
-
6
34
7
7
6
-
6
6
6
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments is disclosed in
Note 2.
Annual report for the year ended 30 June 2015
Page 32
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
10. TRADE PAYABLES AND OTHER LIABILITIES
Tyro Payments Limited
ABN 49 103 575 042
Accounts payable
Rent payable
Accruals
Other liabilities
11. PROVISIONS
Annual leave provision
Balance at the beginning of the year
Provision during the year
Leave taken during the year
Balance at the end of the year
Long Service Leave Liability
Balance at the beginning of the year
(Released)/Provided for during the year
Balance at the end of the year
Provision for Credit Losses
Balance at the beginning of the year
Provided for during the year
Balance at the end of the year
12. LONG TERM LIABILITIES
Long Service Leave Liability
Balance at the beginning of the year
Provided for during the year
Balance at the end of the year
Annual Leave Liability
Balance at the beginning of the year
Provided for during the year
Leave taken during the year
Balance at the end of the year
Make Good Provision
Balance at the beginning of the year
Provided for during the year
Balance at the end of the year
2015
$000
1,963
1,265
2,119
1,172
6,519
2015
$000
504
417
(71)
850
85
146
231
30
(23)
7
2015
$000
319
(29)
290
105
7
(9)
103
-
25
25
2014
$000
796
36
1,857
694
3,383
2014
$000
431
168
(95)
504
45
39
84
-
30
30
2014
$000
243
76
319
90
35
(20)
105
-
-
-
Annual report for the year ended 30 June 2015
Page 33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
13. CONTRIBUTED EQUITY AND RESERVES
(i) Ordinary Shares
Issued and fully paid
Ordinary shares paid at 5 cents each
Ordinary shares paid at 6 cents each
Ordinary shares paid at 8 cents each
Ordinary shares paid at 10 cents each
Ordinary shares paid at 12 cents each
Ordinary shares paid at 15 cents each
Ordinary shares paid at 30 cents each
Ordinary shares paid at 37.5 cents each
Ordinary shares paid at 45 cents each
Ordinary shares paid at 55 cents each
Number of Shares
54,618,733
156,320,233
1,273,227
5,166,595
21,311
10,475,433
32,767,214
53,924
8,120,589
11,282,322
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
2,732
9,379
102
517
3
1,571
9,830
20
3,654
6,205
34,013
2014
$000
2,732
9,379
94
510
-
1,571
9,771
-
3,650
6,205
33,912
Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends when declared and, in the event of winding up of the Company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on ordinary
shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Movement in ordinary shares on issue
At 1 July 2013
Shares issued during the year:
- 1 August 2013 shares issued at 30c each
- 20 November 2013 shares issued at 6c each
- 31 December 2013 shares issued at 6c each
- 31 December 2013 shares issued at 6c each
- 31 December 2013 shares issued at 6c each
- 28 February 2014 shares issued at 6c each
- 1 April 2014 shares issued at 10c each
- 1 April 2014 shares issued at 10c each
- 2 April 2014 shares issued at 10c each
No:
Shares
$000
269,454,504
33,206
50,725
146,739
5,869,565
521,739
1,000,001
1,043,478
450,000
600,000
511,972
15
9
352
31
80
63
45
60
51
At 1 July 2014
279,648,723
33,912
Shares issued during the year:
- 29 July 2014 shares issued at 37.5c each
- 5 January 2015 shares issued at 30c each
- 5 January 2015 shares issued at 8c each
- 5 January 2015 shares issued at 10c each
- 5 January 2015 shares issued at 12c each
- 5 March 2015 shares issued at 45c each
- 30 June 2015 shares issued at 45c each
At 30 June 2015
53,924
195,652
106,559
63,935
21,311
7,477
2,000
20
59
9
6
3
3
1
280,099,581
34,013
Annual report for the year ended 30 June 2015
Page 34
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
13. CONTRIBUTED EQUITY AND RESERVES (cont’d)
(ii) Share-based payments reserve
Balance at the beginning of the year
Share-based payments expensed during the year
Balance at the end of the year
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
6,983
487
7,470
2014
$000
6,311
672
6,983
Nature and purpose of reserve
The share-based payments reserve is used to record the value of share-based payments / benefits provided to any Directors,
employees and consultants as part of their remuneration or compensation.
(iii) General reserve for credit losses:
Balance at the beginning of the year
Transfer from accumulated losses
Balance at the end of the year
2015
$000
368
29
397
2014
$000
285
83
368
The general reserve for credit losses has been created to satisfy Australian Prudential and Regulation Authority (APRA)
prudential standards for Authorised Deposit-Taking Institutions (ADI) to maintain a general reserve for credit losses. The
Company applies an internal methodology to estimate the credit risk of its merchant customers and the maximum expected
losses based upon a number of assumptions concerning the performance of merchants in relation to the Company's credit risk
grading system and actual experience.
(iv) Available for Sale Revaluation Reserve
Balance at the beginning of the year
Total revaluations for the year
Balance at the end of the year
(v) Option Premium Reserve
Balance at the beginning of the year
Total premium received
Balance at the end of the year
2015
$000
210
150
360
480
-
480
2014
$000
178
32
210
480
-
480
In 2012 consideration of $313,600 was received by the Company to extend the life of some options. In 2011, the option
premium reserve revaluation corresponds to the fair value of the equity instruments issued in consideration for the $2.5 million
loan taken out by Tyro. The fair value of these options has been determined using the Black-Scholes option valuation model.
Total reserves at the end of the year
8,707
8,041
(vi) Accumulated losses
Movements in accumulated losses were as follows:
Retained losses at the beginning of the financial year
Net Profit attributable to shareholders of the Company
Transfer to general reserve for credit losses
Accumulated losses at the end of the financial year
(15,714)
811
(29)
(14,932)
(18,575)
2,944
(83)
(15,714)
Annual report for the year ended 30 June 2015
Page 35
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
14. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES
The Company's principal financial instruments include cash and cash equivalents, trade and other receivables, available-for-
sale financial assets and trade and other payables.
(i) Risk management
The Board is responsible for approving and reviewing the risk management strategy and risk framework and all risk
management policies. The Board has installed a Board Risk Committee to assist the Board in fulfilling its responsibilities in the
management of risk. The Board Risk Management Committee provides non-executive oversight of the implementation and on-
going operation of Tyro’s risk management framework. The Board Risk Committee provides recommendations to the Board on
risk appetite; reviews and approves the frameworks for managing risk; monitors the risk profile, exposures against limits and the
management and control of our risks. Various management committees, including the management risk committee, the ALCO
and the credit committee ensure appropriate execution of the Board’s risk appetite in day to day operations and regularly report
to the Board risk committee
(ii) Risk controls
Risks are controlled through a system that identifies key risks, establishes controls to manage those risks (with an emphasis on
preventive control), and maintains a regular review process to monitor the effectiveness of controls. Business risks are
controlled within tolerance levels approved by the Board Risk Committee and Board.
(iii) Internal audit
Tyro has an independent and adequately resourced internal audit function. The internal audit function provides independent
assurance to the Board on the adequacy and effectiveness of the control environment and risk framework. Internal Audit also
reviews the controls implemented by management to ensure compliance with APRA's prudential requirements. This program of
internal control and audit is reviewed and approved on a regular basis by the Audit Committee.
The internal auditor has unfettered access to Tyro’s business lines and support functions.
(iv) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. Tyro is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing
activities, including deposits with banks and financial institutions, foreign exchange transactions and held to maturity
investments.
The maximum exposure to credit risk is represented by the carrying amounts of the financial assets at reporting date. Tyro's
credit risk management principles define the framework and core values which govern its credit risk taking activities and reflect
the priorities established by the Board.
From these principles flow the development of target market strategies, underwriting standards and credit procedures which
define the operating processes. The operation of a credit risk grading system coupled with ongoing monitoring, reporting and
review allows Tyro to identify changes in credit quality at client and portfolio levels and to take corrective actions in a timely
manner.
In addition, Tyro is subject to the risk of credit card chargebacks (credit losses). The maximum period Tyro is potentially liable
for such chargebacks is 120 days after the date of the transaction. Tyro prudently manages credit risk associated with its
merchant portfolio both at an individual and a portfolio level, by monitoring the concentration of risk by industry and type of
counterparty.
It is Tyro's policy that all merchants are subject to credit verification procedures including an assessment of their independent
credit rating, financial position, past experience and industry reputation.
As part of equity, a general reserve for credit losses is raised to cover losses due to uncollectible chargebacks that have not
been specifically identified. The reserve is calculated based on expected future credit losses as described in Note 1(v). Tyro
does not hold any credit derivatives or collateral to offset its credit exposure. Tyro trades only with recognised, creditworthy third
parties and as such no collaterals are requested. Credit exposures are monitored on an ongoing basis with the result that Tyro's
exposure to bad debts is not significant at reporting date.
14. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Annual report for the year ended 30 June 2015
Page 36
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
Tyro Payments Limited
ABN 49 103 575 042
(iv) Credit risk (cont’d)
30 June 2015
Standard & Poor’s Credit Rating*
AAA
AA-
unrated
30 June 2014
Standard & Poor’s Credit Rating*
AAA
AA-
unrated
*Long-term credit rating
(v) Operational risk
Cash and balances with
financial institutions ($000)
Trade receivables ($000)
8,504
2,927
1,240
-
4,046
3,847
Cash and balances with
financial institutions ($000)
Trade receivables ($000)
6,980
2,031
-
-
1,380
10,719
Operational risk is the risk that arises from inadequate or failed internal processes and systems, human error or misconduct, or
from external events. It also includes, among other things, technology risk, model risk and outsourcing risk.
The Board Risk Committee is responsible for monitoring the operational risk profile, the performance of operational risk
management and controls, and the development and ongoing review of operational risk policies.
(vi) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such
as equity price risk. Tyro does not engage in financial market trading activities nor assume any foreign exchange, interest rate
or other derivative positions and does not have a trading book. The Company does not undertake any hedging around the
values of its financial instruments as any risk of loss is considered insignificant to the operations of the Company.
Any government securities, bank bills or other marketable instruments that the Company holds are for investment or liquidity
purposes and held in the normal course of business in line with investment and liquidity guidelines. Each component of market
risk is detailed below as follows:
1) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company has exposure to interest rate risk on its variable interest-bearing cash and cash equivalent
balances. Other interest bearing assets are held to maturity and carried at amortised cost.
The following table demonstrates the sensitivity to a reasonably possible change in interest. With all other variables held
constant, Tyro’s profit before tax is affected as follows:
(amounts in $’000s)
Cash and cash equivalents
Other Term Deposits
USD Term Deposit
Variable Interest Rate
8,750
Fixed Interest Rate
< 3 Months
3 to 12 Months > 1 Year
3,923
2,353
1,758
Total
12,673
2,353
1,758
Annual report for the year ended 30 June 2015
Page 37
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
1) Interest rate risk (cont’d)
Sensitivity Analysis:
An increase of 100 basis points for 12 months in the general cash rate (assuming every other factors being constant) will
increase the Company's profit after tax and increase equity by $167,839, (2014:$90,106). A decrease of 100 basis points in the
general cash rate will have an equal and opposite effect.
2) Foreign Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
Tyro is not exposed to foreign currency risk in the settlement of merchant transactions as all monies received and paid are in
Australian Dollars. The Company's settlement of fees with card schemes and the purchases of inventory from foreign suppliers
are transacted in foreign currencies at the exchange rate prevailing the balance sheet date. At reporting date the Company has
some US Dollar and Euro exposure.
FX Sensitivity analysis:
An appreciation of 15% of the US Dollar and EUR compared to the Australian Dollar (assuming every other factors being
constant) will increase the Company's profit after tax and increase equity by $291,866 (2014: $186,134). A depreciation of 15%
of the US Dollar and EUR compared to the Australian Dollar will reduce the company's profit after tax and reduce equity by
$215,727 (2014:$137,578).
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in the US dollar, Euro and AUD exchange
rates, with all other variables held constant
Available-for-sale investments-VISA shares
Trade Payables
Trade Payables
Trade Payables
USD Term Deposit
Union Pay Deposit
3) Other Price Risk
AUD
2015 ($000)
AUD
2014($000)
USD
EUR
NZD
USD
USD
USD
596
692
5
3
1,693
65
381
325
-
-
1,380
-
The Company's investment in available-for-sale financial assets is valued by way of reference to an underlying listed equity on
the New York Stock Exchange (NYSE) and as such its fair value will fluctuate in direct proportion with the quoted market price
indicated.
(vii) Capital Management
Tyro Payments Limited capital management objectives are to:
- Maintain a sufficient level of capital above the regulatory minimum to provide a buffer against loss arising from
unanticipated events, and allow Tyro to continue as a going concern; and
Ensure that capital management is closely aligned with Tyro’s business and strategic objectives.
-
Tyro manages capital adequacy according to the framework set out by APRA Prudential Standards.
APRA determines minimum prudential capital ratios (eligible capital as a percentage of total risk-weighted assets) that must be
held by all authorised deposit-taking institutions. Accordingly, Tyro is required to maintain a minimum prudential capital ratio
(eligible capital as a percentage of total risk-weighted assets) on a Level 1 basis as determined by APRA.
Annual report for the year ended 30 June 2015
Page 38
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(vii) Capital Management (cont’d)
The board considers Tyro’s strategy, financial performance objectives, and other factors relating to the efficient management of
capital in setting target ratios of capital above the regulatory required levels. These processes are formalised within Tyro’s
internal capital adequacy assessment process (ICAAP). Tyro operates under the specific capital requirements set by APRA.
Tyro has satisfied its minimum capital requirements throughout the 2015 financial year in the form of Tier 1 capital which is the
highest quality components of capital.
Capital Adequacy
Risk weighted capital ratios
Tier 1
Tier 2
Total capital ratio
Qualifying capital
Tier 1
Contributed capital
Accumulated Losses & reserves
Innovative Tier 1 capital
Less
Intangible assets
Net deferred tax assets
50/50 deductions
Other adjustments
Total Tier 1 capital
Tier 2
General reserve for credit losses
Subordinated debt
Asset revaluation reserves
Less
50/50 deductions
Total Tier 2 capital
Total qualifying capital
Total risk weighted assets
(viii) Liquidity risk
2015 ($000)
2014 ($000)
21,165
174
137%
34,013
(6,621)
27,392
19,915
124
174%
33,912
(8,040)
25,872
(6,227)
21,165
(5,956)
19,916
174
124
174
21,339
15,584
124
20,040
11,509
Tyro's liquidity risk is the risk that the Company will have insufficient liquidity to meet its obligations as they fall due. This could
potentially arise as a result of mismatched cash flows.
Tyro manages this risk by the Board Risk Committee approved liquidity framework. Responsibility for liquidity management is
delegated to the CFO and CEO. The CFO manages liquidity on a daily basis and submits weekly reports to the CEO and to
CRO, and bi-monthly reports to ALCO and the Board Risk Committee. The CFO is also responsible for monitoring and
managing capital planning. The capital plan outlines triggers for additional funding should liquidity be required.
Liquidity risk management framework models the ability to fund under both normal conditions and periods of stress. The capital
plan and liquidity management is reviewed at least annually.
At balance sheet date, the board of directors determined that there was sufficient cash available to meet its anticipated
expenditure and other financial liabilities.
Annual report for the year ended 30 June 2015
Page 39
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
Tyro Payments Limited
ABN 49 103 575 042
(viii) Liquidity risk (cont’d)
As at 30 June 2015
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables and other liabilities
Net inflow
Year ended 30 June 2014
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables and other liabilities
Net inflow
(ix) Fair values
< 6 months($000)
6-12 months($000)
Total($000)
12,673
3,847
16,520
(6,519)
(6,519)
10,001
-
4,046
4,046
-
-
4,046
12,673
7,893
20,566
(6,519)
(6,519)
14,047
< 6 months($000)
6-12 months($000)
Total($000)
9,011
10,719
19,730
(3,383)
(3,383)
16,347
-
1,380
1,380
-
-
1,380
9,011
12,099
21,110
(3,383)
(3,383)
17,727
The Company uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table
below.
Financial Asset
Available for sale assets
Financial Asset
Available for sale assets
Year ended 30 June 2015 ($000)
Level 1
Level 2
Level 3
596
-
-
Year ended 30 June 2014 ($000)
Level 1
Level 2
Level 3
381
-
-
Total
596
Total
381
Annual report for the year ended 30 June 2015
Page 40
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(ix) Fair values (cont’d)
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date
without any deduction for transaction costs.
Tyro does not own any financial instruments not quoted in active markets.
Transfer between categories
There were no transfers between Level 1, Level 2 or Level 3 during the current year.
15. COMMITMENTS AND CONTINGENCIES
Commitments relating to BECS
Tyro pays merchants through the BECS system (Bulk Electronic Clearing System). As a result of BECS Intra-day settlements
which went live in November 2013 all merchant settlements committed are processed on the same day.
On each settlement day, Tyro would have received a portion of the funds committed, thus the actual contingent asset and
corresponding liability would be less than the total amount committed.
Contingent liabilities - secured
(I) Irrevocable standby letters of credit in favour of:
- MasterCard International
- Visa International
- UnionPay International
(ii) Bank Guarantee in favour of:
- St Hilliers Pty Ltd, the lessor of 155 Clarence Street, Sydney
- Dukeville Pty Ltd, the lessor of 125 York Street, Sydney
2015
$000
3,093
60
65
3,576
-
6,794
2014
$000
2,780
140
-
-
454
3,374
The Company has provided an irrevocable standby letter of credit of $3,217,813 (in 2014: $2,920,042) secure through fixed
charges over term deposits with the Commonwealth Bank of Australia and Westpac Banking Corporation, to MasterCard
International, Visa International and Union Pay International. These are one-year arrangements that are subject to automatic
renewal on a yearly basis. MasterCard International and Visa International, at their discretion, may increase the required
amounts of the standby letters of credit upon written request to the Company. The required amounts of the standby letters of
credit are dependent on MasterCard International's and Visa International's view of their risk exposure to the Company.
A bank guarantee is held with the Westpac Banking Corporation in relation to the lease arrangement for the office premises.
The amount represents 9 month’s rent and is refundable on expiry of the lease agreement, subject to satisfactory vacation of
the leased premises.
Annual report for the year ended 30 June 2015
Page 41
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
16. LEASES
(a) Operating lease commitments - Company as lessor
Prior to April 2010, Tyro operated a "rent to own" model whereby ownership of the terminal would transfer to the merchant once
they had made 36 consecutive rental payments. However Tyro bears the risk of repairing or replacing the terminal over the 3
year period. The merchant would then continue to pay a service and maintenance fee after this period. There is no minimum
rental period for merchants and they are able to terminate with Tyro at any time with no penalty or buy out fees. From April
2010, the company has moved to a perpetual rental model whereby there will be no transfer of ownership of the asset and the
merchant will pay terminal rental for the duration that they are with Tyro.
Type of Terminals
Xenta & Xentissimo
Yomani, Yomani XR and Yoximo 3G
Accessories
Cost ($000)
5,071
6,274
215
11,560
Depreciation
Expense ($000)
4,703
1,611
215
6,529
Net Carrying
Value ($000)
368
4,663
-
5,031
(b) Operating lease commitments - Company as lessee
Future minimum rentals payable under the non-cancellable operating leases as at 30 June 2015 are as follows:
- Within one year
- After one year but not more than five years
- More than five years
2015
$000
2,191
9,990
4,403
16,584
2014
$000
605
361
-
966
The operating lease commitments relate to the lease of the Company's registered office located at 155 Clarence Street, Sydney
NSW. It is a non-cancellable lease with a term of 7 years ending 22 January 2021. The lease agreement provides the Company
with the option to extend the lease for another 3 years. Lease payments are subject to annual increases of 4%.
17. SEGMENT REPORTING
The Company operates in one geographical segment being Australia and within one business segment being the provision of
credit and debit card acquiring services to merchants.
18. AUDITOR'S REMUNERATION
Amounts received or due and receivable by Ernst & Young:
- an audit of the financial report of the Company
- other services in relation to the Company
2015
$000
208
149
357
2014
$000
194
61
255
The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm
on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
18. AUDITOR'S REMUNERATION (cont’d)
Annual report for the year ended 30 June 2015
Page 42
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
The Directors are of the opinion that the services as disclosed in note 18 to the financial statements do not compromise the
external auditor’s independence for the following reasons:
-
-
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct
APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards
Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for
the Company, acting as advocate for the Company jointly sharing economic risks and rewards.
19. RELATED PARTY DISCLOSURES
(a) Key Management Personnel
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.
Details of Key Management Personnel
Appointed
Resigned
Directors
Kerry Roxburgh
Mike Cannon-Brookes
Rebecca Dee-Bradbury
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Peter Haig
Justin Mitchell
Andrew Rothwell
Praveenesh Pala
Non-executive Chairman
Non-executive
Non-executive
Non-executive
Non-executive
Chief Executive Officer
Title
Chief Information Officer
Chief Risk Officer
VP Product & Channel Management
Chief Financial Officer
Compensation of Key Management Personnel
Short-term benefits
Termination benefits
Post-employment benefits (superannuation)
Share-based payments
Total
18-Apr-08
10-Dec-09
05-Feb-14
17-Nov-05
28-Aug-09
05-Apr-05
03-Feb-03
19-Mar-07
01-Jul-13
20-Oct-14
2015
$000
2,042
7
150
159
2,358
22-Aug-14
2014
$000
1749
254
115
236
2,354
Annual report for the year ended 30 June 2015
Page 43
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
19. RELATED PARTY DISCLOSURES (cont’d)
(a) Key Management Personnel (cont’d)
Interests held by Key Management Personnel
Share options held by Key Management Personnel to purchase ordinary shares have the following expiry dates and exercise
prices.
Issue Date
Expiry Date
FY06/07
FY07/08
FY07/08
FY08/09
FY09/10
FY09/10
FY09/10
FY10/11
FY10/11
FY10/11
FY13/14
FY14/15
FY16/17
FY17/18
FY17/18
FY18/19
FY16/17
FY16/17
FY16/17
FY17/18
FY17/18
FY20/21
FY20/21
FY21/22
Exercise
Price($)
$0.550
$0.300
$0.550
$0.060
$0.060
$0.080
$0.100
$0.060
$0.080
$0.080
$0.375
$0.450
2015
Number
Outstanding
2014
Number
Outstanding
466,641
958,735
244,002
5,608,695
9,070,528
3,446,821
669,044
6,231,891
4,621,301
4,875,000
2,624,744
1,235,212
466,641
958,735
244,002
5,608,695
9,070,528
3,446,821
669,044
6,231,891
4,621,301
4,875,000
2,624,744
-
(b) Transactions with related parties
The following table provides the total amount of transactions that were entered into with related parties for the relevant financial
year. These transactions were on commercial terms & conditions.
Related Party
Health Communications Network
Commissions Paid
2015
$000
1,894
2014
$000
1,928
Rob Ferguson, a director of Tyro Payments is also the Non-Executive Chairman of Primary Health Care Ltd. Health
Communications Network is a subsidiary of Primary Health Care Ltd.
(c) Loans with related parties
In November 2013 the company entered into a loan facility for 14 months of $8.55m with 8 lenders, 5 of whom are Directors or
related parties, for the purpose of funding operational liquidity requirements. Consideration paid consisted of the remaining
apportioned Line Fee of 1% of the maximum loan amount, for the period the agreement was in place in the current year. The
loan was not drawn upon in the current year.
Paul Rickard (Director)
Jost Stollmann (Director)
Abyla Pty Ltd ABN 92 119 827 593 related party of Michael Cannon-Brookes
(Director)
Rachel Ferguson related party of Robert Ferguson
Robert Alexander Ferguson (Director)
Euclid Capital Partners ABN 79 937 786 536 related party of David Fite
(Shareholder)
Dominique Hess related party of Sascha Hess
Cosmetic Cubed ABN 11 077 859 931 related party of Peter Wetenhall
(Shareholder)
Maximum Loan Amount
$250,000
$3,600,000
$2,000,000
$500,000
$1,000,000
$700,000
$250,000
$250,000
Line Fee
$878
$12,632
$7,018
$1,754
$3,509
$2,456
$878
$2,456
Annual report for the year ended 30 June 2015
Page 44
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
20. MATTERS SUBSEQUENT TO END OF THE FINANCIAL YEAR
No matter or circumstance has arisen subsequent to 30 June 2015 that has affected or may significantly affect:
(a) the Company's operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the Company's state of affairs in future financial years.
Annual report for the year ended 30 June 2015
Page 45
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of Tyro Payments Limited
Report on the financial report
We have audited the accompanying financial report of Tyro Payments Limited, which comprises the
statement of financial position as at 30 June 2015, the statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors' declaration.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation of the
financial report that gives a true and fair view 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 entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2
Opinion
In our opinion:
a.
the financial report of Tyro Payments Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the company's financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Ernst & Young
Clare Sporle
Partner
Sydney
20 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Corporate Information
Directors
Kerry Roxburgh (Chairman)
Mike Cannon-Crookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Company Secretary
Justin Mitchell
Registered Office
Level 1
155 Clarence Street
Sydney NSW 2000
(02) 8907 1700
Solicitors
Cowell Clarke
Level 5, 63 Pirie Street
Adelaide SA 5000
(08) 8228 1111
Auditors
EY
680 George Street
Sydney NSW 2000
(02) 9248 5555
Website
www.tyro.com
Tyro Payments Limited
ABN 49 103 575 042
Annual report for the year ended 30 June 2015
Page 49