Annual Report 2016
Tyro Payments Limited
ABN 49 103 575 042
Table of Contents
Chief Executive Officer’s Year in Review
Directors’ Report
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statement for the Year Ended 30 June 2016
Note 1 Statement of Accounting Policies
Note 2 Revenue and Expenses
Note 3 Income Tax
Note 4 Cash and Cash Equivalents
Note 5 Due from Other Financial Institutions
Note 6 Trade and Other Receivables
Note 7 Inventories
Note 8 Available-for-Sale Investments
Note 9 Property, Plant and Equipment
Note 10 Share-Based Payments
Note 11 Deposits
Note 12 Trade Payables and Other Liabilities
Note 13 Provisions
Note 14 Non-Current Liabilities
Note 15 Contributed Equity and Reserves
Note 16 Financial Risk Management Objectives, Policies and Processes
Note 17 Commitments and Contingencies
Note 18 Leases
Note 19 Segment Reporting
Note 20 Auditor’s Remuneration
Note 21 Related Party Disclosures
Note 22 Matters Subsequent to the End of Financial Year
Directors’ Declaration
Independent Auditor’s Report
Corporate Directory
Tyro Payments Limited
ABN 49 103 575 042
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Annual report for the year ended 30 June 2016
Page 2
Chief Executive Officer’s Year in Review
Tyro Payments Limited
ABN 49 103 575 042
Dear Shareholders,
While continuing to strongly grow the EFTPOS merchant base from 13,032 to 15,565 merchants over the past 12 months, Tyro
delivered an in-house developed cloud-based mobile core banking platform, obtained authority to carry on banking business in
Australia, raised $100 million and launched its first deposit product. Subsequent to year end, the first lending product went into
pilot.
Tyro has the critical pre-requisites in place to deliver nextGen banking to a population of over half a million Australian EFTPOS
merchants, small-to-medium enterprises (SME) that take credit, charge and debit cards in payment. This EFTPOS banking is
fully contained in the cloud, totally mobile, seamlessly integrated into Point of Sale (POS) and practice management solutions
as well as Xero cloud accounting. It means efficient banking.
This is important because efficient banking and access to cashflow-based lending are the two ingredients which are critical to
SME businesses. Tyro nextGen banking boosts their growth so that they can create the jobs, products and services that will
underpin Australia’s prosperity in the digital century.
It is our goal, once we have fulfilled all conditions, to obtain from the Australian Prudential Regulation Authority (APRA) the
naming right “Bank” to move from the category of Other ADIs to the list of Australian-owned Banks.
The journey of delivering nextGen banking to Australia’s SMEs
Eleven years ago on the 26 April 2005, when the term ‘Fintech’ had not yet been coined and Tyro was a start-up backed by
three Aussies and one German entrepreneur, the Reserve Bank of Australia (RBA) and APRA recognised that more
competition was needed in the Australian banking system. Tyro is their vision realised. Back then they granted our start-up a
special banking licence (SCCI) and ensured our access to the core banking system.
A year later, on 22 December 2006, Tyro was contracted by Medicare to provide the delivery of rebates in real-time through the
domestic debit card system. Today Tyro is the market leader. Medicare rebates are claimed on the spot and funds are
deposited into the patient’s account in 11 seconds.
On 19 August 2015, with Tyro having lived successfully for 10 years as a regulated entity and serving around 14,000 SMEs with
credit and debit card payment services, APRA granted the company an authority to carry on banking business to accept money
on deposit and to offer loans. This was an Australian first. Never before in this country had a banking licence been granted to a
technology company.
On 30 November 2015, Tyro secured a Tier One equity capital raising of $100 million from Tiger Global Management in New
York, TDM Asset Management in Sydney, Australian technology entrepreneur Mike Cannon-Brookes and existing shareholders
to fund the next stage of its ambitious growth strategy.
Tyro transaction and deposit account
In its quest to deliver efficient EFTPOS banking to its merchants, Tyro launched the first banking feature with the Tyro Smart
Account on 19 January 2016. It is an interest bearing and fee-free business account integrated into Xero cloud accounting.
This one bank account removes the frictions from today’s term deposit management and Xero batch bill, payroll and BPAY
payments. The nuisances of ABA file handling and sharing credentials of online banking are a thing of the past. Payments are
approved in the Tyro App on the smartphone anytime, anywhere. Deposits are at call, earn a daily interest with rates that
increase every 30, 60 and 90 days and are guaranteed by the Australian Government up to $250,000.
Tyro unsecured cash flow-based lending
The pilot for the second EFTPOS banking feature, Tyro Smart Growth Funding, started on 1 July 2016. This is a cashflow-
based lending solution offered to eligible EFTPOS merchants. Tyro Smart Growth Funding is easy to access on the Tyro App
on a smartphone anytime, anywhere. Tyro merchants borrow against their future EFTPOS sales and repay with a percentage of
their daily settlements. Applying for loans is frictionless, no collateral is required, and loans come with a fee locked in upfront,
thereby leaving no surprises for the merchant. The funds are made available in the interest-bearing Tyro Smart Account within
minutes.
Tyro EFTPOS banking is at an early stage. Tyro deploys new features early and frequently collects feedback from its customers
to continuously learn and improve. There is significant work ahead to complete the feature and function set and to expand the
product compatibility beyond Xero and Apple iOS to other accounting software and smartphone providers.
The Tyro vision is to remove the frictions in today’s banking and cash flow management, so that Australian SMEs can focus on
growing their businesses.
Annual report for the year ended 30 June 2016
Page 3
Chief Executive Officer’s Year in Review
Tyro Payments Limited
ABN 49 103 575 042
Performance highlights
As at 30 June 2016, Tyro was serving 15,565 SMEs, with a credit and debit card transaction volume growth rate of 26 percent
to $8.6 billion. Tyro’s revenue in 2016 grew 32 percent to $95.8 million. Being is business for over ten years, Tyro has
maintained a high-growth rate in revenue. Over the past five years, the Compound Annual Growth Rate has been 37 percent.
Tyro continued to improve its operating metrics. Total operating income grew 41 percent to $46.2 million, while operating
expenses grew 53 percent to $49.4 million. Significant drivers for the cost increase was an investment of approximately $12.5
million in 2016 ($10.0 million in 2015) into research and development, primarily for the mobile core banking platform including the
first deposit and lending features. The year finished with a loss before tax result of $3.2 million reflecting this significantly
accelerated reinvestment. Tyro has an accounting policy of not capitalising investments in product development.
Financial year ended 30 June
2008
2009
2010
2011
2012
2013
2014
2015
2016
Transactions ($M)
Revenue ($‘000)
116
511
1,310
1,983
2,951
4,074
5,250
6,800
8,590
1,510
6,283
14,298
19,913
28,440
39,091
52,644 72,358
95,767
Operating results before tax ($’000)
(5,855) (5,113)
(1,824)
(1,816)
(528)
3,293
3,852
691
(3,207)
Employees
Tyro had 297 employees as at 30 June 2016 (compared to 221 at 30 June 2015 and 127 at 30 June 2014). Among these, 186
staff worked in end-to-end product and software development, an increase of 37 percent over the previous year.
To cater for the growth, Tyro moved on 15 November 2014 to new premises at 155 Clarence Street, Sydney. During the fiscal
year, Tyro leased two additional floors bringing the total to five floors that offer the space to accommodate a staff capacity of
600 people. One floor is used for the Tyro Fintech Hub. Tyro invested $2.5m during the financial year to further fit out its 6,500
square metres of office space.
Tyro’s performance reflects the strength of the exceptional team it has built over the years. During the year, one of the co-
founders and Head of Product, Peter Haig announced his retirement effective 31 December 2016. Peter is one of these
exceptional self-taught and self-made leaders, whose insights and experience stretch from technology and innovation, to
banking and risk management, to start-ups, growth companies and broader business. He is the architect and thinker behind
Tyro’s promising next generation banking model.
Peter successfully transitioned the Head of Product role to his successor Paul Peterson who is a seasoned company and
technology leader with 30 years’ experience in large and small-sized technology companies and 15 years in senior
management positions.
Our people are critical to our continued success and Tyro endeavours to recruit, retain and suitably reward the best people in
the industry. All employees are invited to participate in the Employee Share Option Plan.
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 2016
Page 4
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 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 less than two 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 an extra revenue stream.
Tyro Hospitality
Tyro was the first 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 or Tap & Go. 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 Fintech Hub
The Tyro Fintech Hub supports fintech start-ups and high-growth companies with co-working space where founders work and
collaborate, companies accelerate, mentors contribute, experts teach, investors discover and the fintech community meets. In
February of 2016, exactly 12 months after opening, the Hub moved from Level 3 to Level 5 of Tyro’s offices with bespoke
finishes and a brand-new fit-out in February 2016.
It is now home to a broad spectrum of fintech start-ups innovating in areas as diverse as payments and lending, financial
literacy and superannuation, trading and exchanges, through to blockchain and behavioural finance, as well as host to a health
insurance accelerator.
Building the wider fintech ecosystem, the Tyro Fintech Hub is host to numerous events, conferences, meet-ups, and
hackathons with three events per week on average. This ranges from educational master classes with Venture Capitalists,
technical meet-ups to attract engineering talent, through to high profile events including the Federal Treasurer’s open Q&A with
the fintech community and international visitors from the wider fintech, banking, corporate, investor, regulatory and
governmental community including Canada, China, Hong Kong, Japan, Korea, Singapore, the UK and the United States.
Andrew Corbett-Jones assumes the role of Head of Tyro Fintech Hub joined by Sharon Lu as General Manager. Both are serial
entrepreneurs with the experience and credibility of leading a fintech hub by entrepreneurs, for entrepreneurs.
The internet and cloud architecture
The cloud-based Tyro architecture has brought EFTPOS into the internet age. Tyro removes constraints and enables
businesses, no longer tied to legacy technology, to radically improve the efficiency of their processes. Merchants can increase
transaction speed and lower communication expense by using the internet, or, for larger organisations, their corporate network.
Software vendors can integrate directly with Tyro eliminating the need for an expensive software and hardware middleware
layer and consequently points of failure. Tyro provides them with the capability to integrate payment and reconciliation
processes via a secure cloud infrastructure. At this stage, Tyro is not aware of any other acquirer that offers similar functionality.
Availability
Tyro has maintained 100 percent uptime of its core acquiring platform with its live-live infrastructure. Even during maintenance
downtime, merchants can continue to transact as our terminals will automatically connect to any available application switch
within either of our two data centres. When integrated, the merchant’s POS system also uses either data centre. During the
year Tyro regularly tested recovery of its infrastructure.
Annual report for the year ended 30 June 2016
Page 5
Information for shareholders
We report to Shareholders each year, following the end of financial year, with the Annual Report and then the Annual General
Meeting. During the financial year, the Company became a disclosing entity and publishes an Interim Financial Report for the
half-year ended 31 December. 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 will be held at the Tyro premises, 155 Clarence Street, Sydney NSW 2000 on Wednesday 19
October 2016, commencing at 3pm.
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 2016
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 2016.
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, Catherine Harris, 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 Ltd and is also a
member of the Advisory Board of AON Risk Solutions Australia.
Kerry is a Member Practitioner of the Stockbrokers Association of 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 Kerry practiced 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 Non-Executive Directorships held in the last three years:
Charter Hall Group Ltd - Chairman (ceased November 2014)
Tasman Cargo Airlines Ltd - Chairman (ceased December 2015)
Marshall Investments Pty Ltd (ceased December 2015)
Ramsay Healthcare Limited
Eclipx Group Ltd - Chairman
Medical Indemnity Protection Society Ltd
MIPS Insurance Ltd
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.
Other Directorships held during the past three years:
Atlassian Corporation Pty Limited & Subsidiaries
Annual report for the year ended 30 June 2016
Page 8
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
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.
Other Directorships held during the past three years:
Chairman of GPT Management Holdings Limited
Non-executive Chairman of Primary Health Care Limited
Chairman of SmartWard Holdings Pty Ltd (appointed February 2012)
Non-executive Director of Watermark Market Neutral Fund Limited (appointed May 2013)
Catherine Harris
Non-executive Director since 17 December 2015
Catherine Harris is the Chair of Harris Farm Markets Pty Ltd and her previous roles have included Federal Director of
Affirmative Action and Deputy Chancellor of the University of NSW. Board positions include Trustee of the Sydney Cricket
Ground Trust, The Australian Defence Force Academy, The MCA, and the Australia Japan Foundation. Catherine is also the
Honorary Consul for Bhutan.
Catherine is an Officer in the Order of Australia and was awarded the Australian Public Service Medal, The Centenary
Medal and has an Honorary Doctorate in Business from UNSW.
Other Directorships held during the past three years:
The Australian Rugby League Commission
The Australian Ballet
Sport Australia Hall of Fame
The Australian School of Business of UNSW
The National Gallery of Australia (ceased June 2015)
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.
Other Directorships held during the past three years:
Property Exchange Australia Limited
Switzer Financial Group Pty Ltd
Switzer 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.
No other Directorships were held during the past three years.
Annual report for the year ended 30 June 2016
Page 9
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
Company Secretary
Our Company Secretary as at 30 June 2016 was 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 addition, Justin is the Chief Risk Officer, 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
Rob Ferguson3
Catherine Harris
Paul Rickard
Jost Stollmann4
1,352,041
15,899,558
30,152,950
200,000
811,490
59,336,874
1,899,289
2,810,324
4,661,691
-
1,407,548
12,321,626
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 an Authorised Deposit-taking Institution (ADI) providing EFTPOS banking 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, settlement and EFTPOS banking activities within the Australian Payments System.
Annual report for the year ended 30 June 2016
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 income
Operating (loss)/profit before tax expense
Net (loss)/profit
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
2016
2015
$95,767
$72,358
$46,183
$32,768
($3,207)
($746)
$691
$811
Tyro had a $0.7m net loss result for the year ended 30 June 2016. Tyro continues its phase of high growth and scaling up of the
banking business as part of strategy. Tyro had interest income of $2.0m for the period
Capital Structure and Funding
Tyro holds an authority under the Banking Act to carry on a banking business as an ADI and is subject to prudential capital
requirements set by the Australian Prudential Regulation Authority (APRA). Tyro is fully compliant with the prudential capital
requirements prescribed by APRA and has sufficient capital to fund on-going operations.
During the period, 10,240,643 ordinary shares were issued upon exercise of options raising a total of $0.7m in fully paid capital.
In addition, 96,638,869 ordinary shares were issued as part of the capital raising program to fund the next stage of Tyro’s
growth strategy to carry on a banking business, raising a total of $100.1m in fully paid capital. Total Tier 1 capital held as at 30
June 2016 was $118.9 million. Tyro has always held sufficient capital to meet its internal targets above APRA’s prudential
capital requirements.
Tyro had cash and cash equivalents of $82.2m at the end of the reporting period.
Risk Management
The Board is responsible for reviewing and approving the risk management strategy, including determining Tyro’s appetite for
risk. The Board has delegated to the Management 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 Management Risk Committee monitors the alignment of Tyro’s risk profile with our risk appetite, and with its current and
future capital planning. The Board Risk Committee receives regular reports from Management to oversee the effectiveness
business risk management.
The CEO and Management team are responsible for implementing our risk management strategy and framework, and for
developing policies, controls, processes and procedures for identifying and managing risk.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 19 August 2015, APRA approved Tyro’s application for authorisation to carry on a banking business, revoking its prior
restrictive conditions. Immediately following this, Tyro commenced its fund raising program to continue pursuing its growth
strategy.
On 28 October 2015, ASIC issued Tyro an Australian financial services licence, authorising Tyro to deal in and provide general
financial product advice on basic deposit products and non-cash payment products to retail and wholesale clients.
On 29 October 2015, Tyro commenced the Pilot program for the Tyro “Smart Account” which offers an EFTPOS banking
deposit solution to merchants. The Smart Account was a result of Tyro’s development of a core banking platform, and is an
early feature of Tyro’s fully integrated and mobile EFTPOS banking offering to Australia’s growth merchants.
On 30 October 2015, Tyro was entered on the Australian Transaction Reports and Analysis Centre (AUSTRAC) Reporting Entities
Roll.
Annual report for the year ended 30 June 2016
Page 11
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
On 22 December 2015, all existing Tyro shareholders received the opportunity to participate in a $5.5m pari passu offer for fully
paid ordinary shares. This Pro Rata Raising was open until 10 February 2016 and was fully paid.
On 19 January 2016, Tyro launched the Smart Account providing an EFTPOS banking deposit solution to merchants after a
successful pilot period.
On 2 March 2016, Tyro completed a Tier 1 capital fund raising of $100.1m.
Significant events after balance date
On 1 July 2016, Tyro commenced pilot for the Smart Growth Funding product, which was offered to existing Tyro EFTPOS
merchants.
Likely developments and expected results
The Directors expect that in the 2017 financial year, Tyro will continue to grow the business in line with its strategy and expand
the features and products offered to merchants to facilitate EFTPOS banking solutions.
SHARE OPTIONS
Unissued shares
As at 30 June 2016, there were 76,831,955 unissued 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
Rob Ferguson
Catherine Harris *
Paul Rickard
Jost Stollmann
10
10
7
9
4
10
10
4
4
3
3
2
4
4
6
6
5
5
4
6
6
2
2
2
2
1
1
2
*Catherine has attended all meetings since appointment. Membership of committees changed during the period.
Annual report for the year ended 30 June 2016
Page 12
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
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
Remuneration Committee
Risk Committee
P. Rickard (Chairman)
R. Ferguson
K. Roxburgh
M. Cannon-Brookes (Chairman)
R. Ferguson
C. Harris
K. Roxburgh (Chairman)
M. Cannon-Brookes
C. Harris
P. Rickard
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration is set out on page 14 and forms part of the Directors’ report for the year ended 30
June 2016.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Class Order 2016/191 and therefore the amounts contained in this report and in the
financial report have been rounded to the nearest $1,000 (where rounding is applicable), or in certain cases, to the nearest dollar
under the option permitted in the class order.
Annual report for the year ended 30 June 2016
Page 13
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
As lead auditor for the audit of Tyro Payments Limited for the financial year ended 30 June 2016, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
Ernst & Young
Andrew Price
Partner
29 August 2016
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 2016
Continuing Operations
Fees and commission income
Interchange, integration and support fees expense
Net fees and commission income
Interest expense on deposits
Net banking operating expense
Terminal and accessories sale
Terminals and accessories COGS
Net terminal and accessories sale (expense)/income
Interest income
Other income
Total operating income
Less: Expenses
Employee benefits expenses
Administrative expenses
Depreciation
Impairment of inventories
Other expenses
Total operating expenses
Foreign currency gain
Operating (loss)/profit before tax expense
Income tax benefit
Net (loss)/profit
Other Comprehensive Income
Net fair value gain on available-for-sale financial instrument
Total comprehensive (loss)/income
Tyro Payments Limited
ABN 49 103 575 042
Note
2
2
2016
$000
2015
$000
92,683
(48,876)
43,807
70,850
(39,082)
31,768
(3)
(3)
212
(705)
(493)
2,010
862
-
-
573
(508)
65
805
130
46,183
32,768
32,181
12,946
4,025
14
234
49,400
10
(3,207)
2,461
(746)
60
(686)
21,429
8,348
2,436
8
89
32,310
233
691
120
811
150
961
2
2
9
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 2016
Page 15
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
ASSETS
Current assets
Cash and cash equivalents
Due from other financial institutions
Trade and other receivables
Prepayments
Inventories
Total current assets
Non-current assets
Available-for-sale investments
Property, plant and equipment
Net deferred tax assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Deposits
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
Note
2016
$000
Tyro Payments Limited
ABN 49 103 575 042
2015
$000
9,990
6,794
3,782
492
855
21,913
596
7,673
5,631
13,900
82,224
27,803
7,191
966
923
119,107
681
12,557
8,174
21,412
140,519
35,813
459
9,542
1,526
11,527
685
685
12,212
128,307
134,566
9,572
(15,831)
-
6,519
1,088
7,607
418
418
8,025
27,788
34,013
8,707
(14,932)
128,307
27,788
4
5
6
7
8
9
3
11
12
13
14
15
15
15
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2016
Page 16
Note
4
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Interest, fee and rental income received
Payments to suppliers and employees
Cash inflow from retail deposits
Receipts from terminals & accessories sale
Dividend income received
Net cash flows from operating activities
Cash flows from investing activities
Investments in term deposits1
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Lease incentive received
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from fund raising, net of related costs
Proceeds from exercise of share options
Proceeds from shareholder loans
Shareholder loan repayment
Interest and fees paid on shareholder loans
Net cash flows from financing activities
Net increase in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
4
Tyro Payments Limited
ABN 49 103 575 042
2016
$000
91,101
(92,848)
459
212
3
(1,073)
(20,000)
(8,941)
139
2,080
(26,722)
99,720
412
4,600
(4,600)
(113)
100,019
72,224
10
9,990
82,224
2015
$000
71,970
(66,102)
-
573
2
6,443
-
(7,138)
112
1,229
(5,797)
-
101
-
-
-
101
747
232
9,011
9,990
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
1. Term deposits which have a contractual maturity greater than three months from date of acquisition.
Annual report for the year ended 30 June 2016
Page 17
Tyro Payments Limited
ABN 49 103 575 042
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Attributable to equity holders of Tyro Payments Limited
Contributed
Equity
$000
Note
Available
for Sale
Revaluation
Reserve
$000
Share
Based
Payments
Reserve
S000
Accumulated
Losses
$000
Option
Premium
Reserve
$000
General
Reserve
for Credit
Losses
$000
Total
$000
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 –
from options exercised
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
34,013
360
7,470
(14,932)
480
397
27,788
Loss for the year
Other Comprehensive
income
Total comprehensive
income
Issue of share capital –
from options exercised
Issue of share capital –
from capital raising1
Share-based payments
Transfer to general
reserve for credit losses
60
60
-
725
99,828
(746)
(746)
60
-
(746)
-
-
(686)
965
(313)
725
99,828
652
(153)
153
-
At 30 June 2016
15
134,566
420
8,435
(15,831)
167
550
128,307
1 Net of related capital raising costs of $299k (net of tax)
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2016
Page 18
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
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 25 August 2016.
The Company is an unlisted public company, incorporated and domiciled in Australia. The Company became a Disclosing
Entity during the year as defined by the Corporations Act 2001.
The nature of the operations and principal activities of the Company 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.
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.
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. 2016/191, unless otherwise stated.
(b) 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 and Interpretations issued by the International Financial Reporting
Standards Board.
(c) Going concern
The Company had net current assets of $107.6m as at 30 June 2016 (2015: $14.3m).
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) 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, apart
from the treatment of the new Tyro Smart Account deposits which previously did not exist. The treatment for deposits is covered
below.
(ii) New or amended accounting standards
The Company has adopted the following new and amended Australian Accounting Standards and AASB Interpretations during
the financial year.
AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
The adoption of the above Standards is deemed not to have a material impact on the financial statements or performance of the
Company.
Annual report for the year ended 30 June 2016
Page 19
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(iii) 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 2016:
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.
simplifies hedge accounting requirements, including hedge effectiveness testing.
For financial liabilities, where the fair value option is used, changes in fair value attributable to the issuer’s own credit
risk are presented in other comprehensive income, removing the volatility in profit or loss. A new impairment model is
also included which requires more timely recognition of expected credit losses from when financial instruments are first
recognised, and recognition of full lifetime expected losses on a more timely basis.
AASB 9 applies to annual reporting periods on or after 1 January 2018. The new requirements of AASB 9 will be
assessed closer to the effective date.
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 16 Leases – introduces a single lessee accounting model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. For lessors,
enhanced disclosures are required to improve information about the lessor’s risk exposure, particularly to low value
risk. AASB 16 applies to annual reporting periods beginning on or after 1 January 2019. The new requirements of
AASB 16 will be assessed closer to the effective date.
AASB 107 Statement of Cash Flows – requires entities preparing financial statements in accordance with Tier 1
reporting requirements, to provide disclosures that enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.
AASB 107 applies to annual reporting periods beginning on or after 1 January 2017. The new requirements of AASB
107 will be adopted in the financial year ending 30 June 2018.
(e) 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.
Annual report for the year ended 30 June 2016
Page 20
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
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. An impairment
assessment is conducted and reviewed by Management at least annually as to whether indicators of impairment such as
technical obsolescence exist.
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.
Taxation – Provisions for taxation require significant judgement with respect to outcomes that are uncertain. The Company has
estimated its tax provisions based on expected outcomes. Deferred tax assets are recognised for deductible temporary
differences as Management considers that it is probable that future taxable profits will be available to utilise those temporary
differences. In forming their view, Management considers the probability of forecast future taxable income and performs stress
testing on expecting budgets to assess the likelihood of deferred tax assets being utilised. Management does not recognise
deferred tax assets where utilisation is not considered probable. An assessment of research and development (R&D) activities
and associated expenditure that is considered claimable, is conducted and reviewed by Management at least annually as part
of the annual R&D tax incentive application.
Software capitalisation – The Company does not capitalise any investments on in-house product development, with such costs
being expense to the Statement of Comprehensive Income.
(f) 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 rate 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.
Annual report for the year ended 30 June 2016
Page 21
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(g) 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 does not retain 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.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and term 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.
(i) Due from other financial institutions
Includes term deposits with a remaining maturity greater than three months, and term deposits pledged to counterparties as
collateral. These are initially measured at fair value and subsequently measured at amortised cost using a method that
approximates the effective interest method.
(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.
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.
Annual report for the year ended 30 June 2016
Page 22
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(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).
(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 non-financial 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.
Annual report for the year ended 30 June 2016
Page 23
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(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:
2016
2015
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
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.
(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) Deposits from customers
Deposits from customers are initially recognised at fair value. Subsequent to initial recognition, these liabilities are measured at
amortised cost. Interest expense on deposits is recognised on an accruals basis in the Statement of Comprehensive Income
using a method that approximates the effective interest method.
(t) 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.
Annual report for the year ended 30 June 2016
Page 24
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(u) Interest-bearing loans 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.
(v) 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.
(w) General reserve for credit losses
The Company provides for estimated future credit losses primarily from chargebacks, with a general reserve for credit losses.
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 the general reserve for credit losses required are reviewed regularly.
(x) 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.
Annual report for the year ended 30 June 2016
Page 25
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
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.
(y) 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 10.
(z) 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.
(aa) Foreign currency translation
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.
(ab) 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 2016
Page 26
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
2. REVENUE AND EXPENSES
The operating loss or 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
Interchange, integration and support fees expense
Interchange and scheme fees
Integration and support fee expense
Other settlement fees and expenses
Other income
Sublease and other rental income
Gain on disposal of PPE
Dividend income on financial instruments and other
Employee benefits expense
Wages, salaries and bonuses
Superannuation
Share-based payments expense
Other employee benefits expense
Other expenses
Interest, fees and other expenses
Bad debt and credit loss expense
Other write-offs
2016
$000
79,823
7,404
5,456
92,683
42,913
5,363
600
48,876
743
107
12
862
27,984
2,608
965
624
32,181
138
96
-
234
2015
$000
60,596
5,246
5,008
70,850
33,411
4,647
1,024
39,082
-
88
42
130
18,690
1,790
487
462
21,429
30
43
16
89
Annual report for the year ended 30 June 2016
Page 27
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
3. INCOME TAX
a) Income tax expense
Major components of income tax expense for the period ended 30 June 2016:
Current income tax
Current income tax charge
Deferred income tax
Relating to origination and reversal of temporary differences
Derecognition of deferred income tax from temporary differences
Income tax benefit in the statement of comprehensive income
Amount reported directly in other comprehensive income
Deferred tax related to items recognised in equity during the year
Deferred tax on unrealised gain on available-for-sale investment
Income tax benefit/(expense) reported in equity
b) Reconciliation of income tax expense and prima facie tax:
Operating (loss)/profit before tax
At the statutory income tax rate of 30%
Research and development incentive
Share-based payment remuneration
Entertainment expenses
Adjustment in respect to previous year’s tax balances
Total income tax benefit
Tyro Payments Limited
ABN 49 103 575 042
2016
$000
-
(2,461)
-
(2,461)
(108)
25
(83)
(3,207)
(962)
(1,247)
289
32
(573)
(2,461)
2015
$000
592
-
(712)
(120)
-
64
64
691
207
(600)
147
16
110
(120)
Annual report for the year ended 30 June 2016
Page 28
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
c) Deferred income tax assets and liabilities
2016
2015
Statement
of Financial
Position
$000
Deferred income tax assets
Fixed assets
Provisions & accruals
Other (legal fees)
Lease break fee
Unrealised FX loss
R&D credits *
Tax Losses *
Deferred income tax liabilities
Available-for-sale
investments
Unrealised FX gain
Total
701
2,110
87
63
-
5,459
-
8,420
(180)
(66)
(246)
8,174
SOCI
$000
(155)
(876)
22
21
-
(5,459)
4,010
(2,437)
-
(24)
(24)
(2,461)
OCI
$000
Share
Capital
$000
Statement
of Financial
Position
$000
-
-
-
-
-
-
-
-
(25)
-
(25)
(25)
-
-
108
-
-
-
-
108
-
-
-
108
545
1,235
-
84
-
-
4,010
5,874
(154)
(89)
(243)
5,631
SOCI
$000
10
(636)
-
(84)
24
-
(115)
(801)
-
89
89
(712)
OCI
$000
Share
Capital
$000
-
-
-
-
-
-
-
-
(64)
-
(64)
(64)
-
-
-
-
-
-
-
-
-
-
-
-
* During the year ended 30 June 2016, the Company submitted requests for amended assessments to the Commissioner of
Taxation in respect to the 30 June 2013 and 2014 income years. The effect of these amendments was to deduct prior year
carried forward tax losses, and to carry forward Research and Development tax credits. There was no net change to the tax
payable of the Company as a consequence of these amendments.
4. CASH AND CASH EQUIVALENTS
Deposits at call
Short term deposits
2016
$000
15,497
66,727
82,224
2015
$000
9,990
-
9,990
Deposits at call include cash at banks, cash held in the exchange settlement account with the Reserve Bank of Australia, and
cash in hand. Short term deposits are those with maturities of three months or less from date of acquisition.
Comparatives for the prior period have been restated due to the reclassification of deposits held as collateral, from “cash and
cash equivalents” to “due from other financial institutions” in Note 5.
Annual report for the year ended 30 June 2016
Page 29
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
4. CASH AND CASH EQUIVALENTS (cont’d)
Reconciliation of operating loss after tax to net cash flows used in operations
Operating (loss)/profit
Adjustments for:
Depreciation
Share-based payments expense
Gain on disposal of property plant and equipment
Deferred tax benefits
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase) in term deposits held as collateral
(Increase) in prepayments
(Increase) in inventories
Increase in trade and other payables
Increase in provisions
Increase in deposits
Net cash from operating activities
5. DUE FROM OTHER FINANCIAL INSTITUTIONS
Term deposits
Deposits held as collateral
Tyro Payments Limited
ABN 49 103 575 042
2016
$000
(746)
4,025
965
(107)
(2,461)
(3,430)
(1,009)
(472)
(69)
1,060
712
459
(1,073)
20,000
7,803
27,803
2015
$000
811
2,436
487
(88)
(120)
1,494
-
(184)
(561)
1,682
486
-
6,443
-
6,794
6,794
Includes term deposits with a remaining maturity greater than three months and deposits pledged to counterparties as
collateral.
Comparatives for the prior period have been restated due to the reclassification of deposits held as collateral, from “cash and
cash equivalents” to “due from other financial institutions” in Note 5.
Refer to Note 17 for details of deposits held as collateral.
6. TRADE AND OTHER RECEIVABLES
Scheme and other trade receivables
Interest receivable
Other receivables
6,972
191
28
7,191
3,688
85
9
3,782
The Company's ageing of trade debtors and receivables (schemes and merchants) is as follows:
Total
$000
Current
$000
Scheme and other trade receivables before impairment:
Carrying value 2016
Carrying value 2015
$6,972
$3,688
6,303
3,534
1-30
days
$000
426
127
31-60
days
$000
61-90
days
$000
>90
days
$000
6
13
204
5
Annual report for the year ended 30 June 2016
Page 30
33
9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
7. INVENTORIES
Terminals and accessories
8. AVAILABLE-FOR-SALE INVESTMENTS
Investment in VISA shares
Tyro Payments Limited
ABN 49 103 575 042
2016
$000
923
2016
$000
681
2015
$000
855
2015
$000
596
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.
9. PROPERTY, PLANT AND EQUIPMENT
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
Year ended 30 June 2016
At 30 June 2015 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers
Depreciation for the year
At 30 June 2016 net of accumulated
depreciation and impairment
At 30 June 2015
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2016
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
5,031
4,415
(32)
(3,050)
679
743
-
(210)
6,364
1,212
957
1,272
-
(513)
1,716
1,006
2,511
-
(252)
7,673
8,941
(32)
(4,025)
3,265
12,557
11,560
(6,529)
5,031
919
(240)
679
2,390
(1,433)
957
1,096
(90)
1,006
15,965
(8,292)
7,673
15,853
(9,489)
6,364
1,662
(450)
1,212
3,662
(1,946)
1,716
3,607
(342)
3,265
24,784
(12,227)
12,557
Annual report for the year ended 30 June 2016
Page 31
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
9. 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
2,505
4,545
(23)
(1,996)
76
690
(1)
(86)
415
807
-
(265)
-
1,096
-
(90)
2,996
7,138
(24)
(2,437)
5,031
679
957
1,006
7,673
7,145
(4,640)
2,505
11,560
(6,529)
5,031
254
(178)
76
919
(240)
679
2,133
(1,718)
415
2,390
(1,433)
957
-
-
-
9,532
(6,536)
2,996
1,096
(90)
1,006
15,965
(8,292)
7,673
Year ended 30 June 2015
At 30 June 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 30 June 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
10. 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 (ESOP) 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 ESOP 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 that 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.
Annual report for the year ended 30 June 2016
Page 32
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
10. SHARE-BASED PAYMENTS (cont’d)
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.
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 under the ESOP
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 2016:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price ($)
2016
0%
52%
2.2%
$0.40
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 3,840,607 options exercised during the year ended 30 June 2016 (2015: 450,858).
The weighted average remaining contractual life for share options outstanding as at 30 June 2016 was 3 years (2015: 3 years).
The following table summarises further details of the share options outstanding at 30 June 2016:
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
6 cents to 55 cents
Total
10 years or less
5 years and 10 years
3, 5 and 10 years
10 years or less
5 year linear vesting
12 months service
12 months linear vesting
Fully vested at time of grant
2016
2015
35,158,554
1,043,478
11,445,679
21,684,244
69,331,955
30,193,725
1,043,478
11,454,189
23,314,679
66,006,071
Annual report for the year ended 30 June 2016
Page 33
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
10. 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:
2016
No
2016
WAEP (cents)
2015
No
2015
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
41,647,914
9,138,435
(2,210,172)
(1,971,944)
46,604,233
25,510,673
23,314,679
-
(1,630,435)
-
21,684,244
21,684,244
1,043,478
-
-
-
1,043,478
1,043,478
69,331,955
48,238,398
21
60
14
47
28
12
7
-
1
-
10
10
6
-
-
-
6
6
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
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments is disclosed in
Note 2.
Refer to Note 21, for outstanding share options at the end of the year that are not part of ESOP.
11. DEPOSITS
Deposits
2016
$000
459
459
2015
$000
-
-
In January 2016, the Company launched its first banking product being the Tyro Smart Account (deposits). The deposits are at
call, earn a daily interest with rates that increase every 30, 60 and 90 days, and are guaranteed by the Australian Government
up to $250,000.
Annual report for the year ended 30 June 2016
Page 34
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
12. TRADE PAYABLES AND OTHER LIABILITIES
Tyro Payments Limited
ABN 49 103 575 042
Accounts payable and other
Deferred lease incentive
Accruals
Other liabilities
13. PROVISIONS
Annual leave liability
Balance at the beginning of the year
Provided for during the year
Released during the year
Balance at the end of the year
Long service leave liability
Balance at the beginning of the year
Provided for during the year
Released during the year
Balance at the end of the year
Provision for credit losses
Balance at the beginning of the year
Released during the year
Balance at the end of the year
Total provisions – current liabilities
14. NON-CURRENT LIABILITIES
Provisions:
Annual leave liability
Balance at the beginning of the year
Provided for during the year
Released during the year
Balance at the end of the year
Long service leave liability
Balance at the beginning of the year
Provided for/(released) 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
Total provisions – non-current liabilities
2016
$000
1,319
3,345
3,349
1,529
9,542
2016
$000
850
478
(88)
1,240
231
89
(34)
286
7
(7)
-
1,526
2016
$000
103
136
(17)
222
290
59
349
25
89
114
685
2015
$000
1,963
1,265
2,119
1,172
6,519
2015
$000
504
417
(71)
850
85
146
-
231
30
(23)
7
1,088
2015
$000
105
7
(9)
103
319
(29)
290
-
25
25
418
Annual report for the year ended 30 June 2016
Page 35
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
15. 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
Ordinary shares paid at 60 cents each
Ordinary shares paid at 1.0361 dollars each
2016
Number of
Shares
2015
Number of
Shares
61,018,733
158,561,386
1,925,274
5,774,963
21,311
10,475,433
32,767,214
128,803
8,286,412
11,357,777
22,918
96,638,869
386,979,093
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
-
-
280,099,581
Costs directly attributable to the capital raising (net of tax)
Ordinary shares
Tyro Payments Limited
ABN 49 103 575 042
2016
$000
3,051
9,513
154
577
3
1,571
9,830
48
3,729
6,247
14
100,128
134,865
299
134,566
2015
$000
2,732
9,379
102
517
3
1,571
9,830
20
3,654
6,205
-
-
34,013
-
34,013
Shares issued at $1.0361 relate to the capital raising of $100.1m during the year, $0.4m from the exercise of share options
and $0.3m from the release and exercise of options from the option premium reserve.
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.
(ii) Share-based payments reserve
Balance at the beginning of the year
Share-based payments expensed
Balance at the end of the year
2016
$000
7,470
965
8,435
The share-based payments reserve is used to record the value of share-based payments or 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
2016
$000
397
153
550
2015
$000
6,983
487
7,470
2015
$000
368
29
397
Annual report for the year ended 30 June 2016
Page 36
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
15. CONTRIBUTED EQUITY AND RESERVES (cont’d)
The general reserve for credit losses has been created to satisfy APRA’s prudential standards for ADIs. 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 option transferred to shares
Balance at the end of the year
During the year, $313,600 was released from the option premium reserve into ordinary equity.
Total reserves at the end of the year
(vi) Accumulated losses
Movements in accumulated losses were as follows:
Accumulated losses at the beginning of the financial year
Net (loss)/profit attributable to shareholders of the Company
Transfer to general reserve for credit losses
Accumulated losses at the end of the financial year
2016
$000
360
60
420
2016
$000
480
(313)
167
2016
$000
9,572
2016
$000
2015
$000
210
150
360
2015
$000
480
-
480
2015
$000
8,707
2015
$000
(14,932)
(746)
(153)
(15,831)
(15,714)
811
(29)
(14,932)
Annual report for the year ended 30 June 2016
Page 37
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
16. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES
The Company's principal financial instruments include cash and cash equivalents, due from other financial institutions, trade
and other receivables, available-for-sale financial assets, deposits 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 Management Risk Committee (MRC) to assist the Board in fulfilling its
responsibilities in the management of risk. The MRC provides non-executive oversight of the implementation and on-going
operation of Tyro’s risk management framework. The MRC provides recommendations to the Board on risk appetite, reviews
and approves the frameworks for managing risk, monitors the Company’s risk profile, exposures against limits and the
management and control of its risks. Various Management committees, including the MRC, the Asset and Liability Management
Committee 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 MRC and the 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 Board Audit Committee.
Internal Audit 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 available-for-sale
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 losses via chargebacks. 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(x). 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.
Annual report for the year ended 30 June 2016
Page 38
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
16. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
30 June 2016
Standard & Poor’s Credit Rating*
Cash and balances with
financial institutions
($000)
Due from other
financial institutions
($000)
Trade receivables
($000)
AAA
AA
A+
A
A-
unrated
30 June 2015
Standard & Poor’s Credit Rating*
AAA
AA-
unrated
*Long-term credit rating
6,731
75,493
-
-
-
-
82,224
-
7,736
67
10,000
10,000
-
27,803
649
67
4
-
185
6,286
7,191
Cash and balances with
financial institutions
($000)
Due from other
financial institutions
($000)
Trade receivables
($000)
8,505
244
1,241
9,990
-
6,794
-
6,794
-
-
3,782
3,782
Comparatives for the prior period have been restated due to the reclassification of deposits held as collateral, from “cash and
cash equivalents” to “due from other financial institutions” in Note 5.
(v) Operational risk
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, amongst 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.
Annual report for the year ended 30 June 2016
Page 39
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
16. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Interest rate sensitivity analysis
The following 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:
An increase of 50 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 $549,796 (2015: $83,839). A decrease of 50 basis points in the
general cash rate will have an equal and opposite effect.
The following table shows the financial assets and liabilities on which the interest rate sensitivity analysis has been performed.
(amounts in $’000s)
Variable Interest Rate
< 3 Months
3 to 12 Months > 1 Year
Fixed Interest Rate
Total
Financial assets
Cash and cash equivalents
Deposits
USD term deposit
Financial liabilities
Deposits from customers
2) Foreign currency risk
15,496
1,460
-
66,728
1,547
-
-
22,978
1,751
(459)
-
-
-
-
-
-
82,224
25,985
1,751
-
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 Dollar exposure.
Foreign currency sensitivity analysis
The following demonstrates the sensitivity to a reasonably possible change in the US dollar, Euro and AUD exchange rates,
with all other variables held constant.
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 $362,192 (2015: $291,866). 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
$267,707 (2015: $215,727).
Foreign currency sensitivity
The following table shows the financial assets and liabilities on which the foreign currency sensitivity analysis has been
performed.
USD Term Deposit
Union Pay Deposit
Available-for-sale investments-VISA shares
Trade Payables
Trade Payables
Trade Payables
AUD
2016
($000)
1,751
67
681
446
-
1
AUD
2015
($000)
1,693
65
596
692
5
3
Annual report for the year ended 30 June 2016
Page 40
USD
USD
USD
EUR
NZD
USD
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
16. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
3) Other price Risk
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 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 ADIs. 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.
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 2016 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
Common equity tier 1 capital
Less
Net deferred tax assets
Other adjustments
Total Tier 1 capital
Tier 2
General reserve for credit losses
Total Tier 2 capital
Total qualifying capital
Total risk weighted assets
2016
($000)
249%
249%
250%
134,566
(6,809)
127,757
(8,174)
(681)
118,902
550
550
119,452
43,971
2015
($000)
136%
136%
137%
34,013
(6,621)
27,392
-
(6,227)
21,165
174
174
21,339
15,584
Annual report for the year ended 30 June 2016
Page 41
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
16. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
(viii) Liquidity risk
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 Management 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 Management 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.
Maturity analysis
Amounts in the table below are based on contractual undiscounted cash flows for the remaining contractual maturities.
< 6 months
($000)
6-12 months
($000)
Total
($000)
As at 30 June 2016
Financial assets
Cash and cash equivalents
Due from other financial institutions
Trade and other receivables
Financial liabilities
Deposits at call
Trade payables and other liabilities
Net inflow
Year ended 30 June 2015
Financial assets
Cash and cash equivalents
Due from other financial institutions
Trade and other receivables
Financial liabilities
Trade payables and other liabilities
Net inflow
82,224
10,000
7,191
99,415
(459)
(9,542)
(10,001)
89,414
-
17,803
-
17,803
-
-
-
17,803
< 6 months
($000)
6-12 months
($000)
9,990
2,748
3,782
16,520
(6,519)
(6,519)
10,001
-
4,046
-
4,046
-
-
4,046
82,224
27,803
7,191
117,218
(459)
(9,542)
(10,001)
107,217
Total
($000)
9,990
6,794
3,782
20,566
(6,519)
(6,519)
14,047
Comparatives for the prior period have been restated due to the reclassification of deposits held as collateral, from “cash and
cash equivalents” to “due from other financial institutions” in Note 5.
Annual report for the year ended 30 June 2016
Page 42
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
16. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
(ix) Fair values
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 table below shows the Company’s financial assets that are measured at fair value. Management has assessed that for
other financial assets and liabilities not disclosed in the table below, that due to their short term maturity profile, the carrying
amount is an approximation of fair value.
Year ended 30 June 2016 ($000)
Financial Asset
Available-for-sale assets
Level 1
Level 2
Level 3
681
-
-
Total
681
Year ended 30 June 2015 ($000)
Level 1
Level 2
Level 3
Total
Financial Asset
Available-for-sale assets
596
-
-
596
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.
17. 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.
Contingent liabilities arising from commitments are secured by way of standby letters of credit or bank guarantees as follows:
Contingent liabilities - secured
(I) Irrevocable standby letters of credit in favour of:
MasterCard International
Visa International
UnionPay International
(ii) Bank Guarantee in favour of:
UIR Australia, the lessor of 155 Clarence Street, Sydney
(St Hilliers Pty Limited as lessor until November 2015)
2016
$000
3,151
60
67
4,525
7,803
2015
$000
3,093
60
65
3,576
6,794
Annual report for the year ended 30 June 2016
Page 43
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
17. COMMITMENTS AND CONTINGENCIES (cont’d)
The Company has provided an irrevocable standby letter of credit of $3.3m (in 2015: $3.2m) secured 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 an
annual 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, includes all annual increases of 4% until lease maturity and is refundable on expiry of
the lease agreement, subject to satisfactory vacation of the leased premises.
18. 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 carried 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.
From April 2010, Tyro 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. 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.
Type of Terminals
Xenta & Xentissimo
Yomani, Yomani XR and Yoximo 3G
Accessories
Cost
($000)
5,009
10,629
215
15,853
4,949
4,325
215
9,489
Accumulated
Depreciation
($000)
Net Carrying
Value
($000)
(b) Operating lease commitments - Company as lessee
Future minimum rentals payable under the non-cancellable operating leases as at 30 June 2016 are as follows:
Within one year
After one year but not more than five years
More than five years
2016
$000
3,725
16,888
2,549
23,162
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 up to 7 years ending 22 January 2022. 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%.
Annual report for the year ended 30 June 2016
Page 44
60
6,304
0
6,364
2015
$000
2,191
9,990
4,403
16,584
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
19. 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, and EFTPOS banking solutions to EFTPOS merchants.
20. AUDITOR'S REMUNERATION
Received or due and receivable by Ernst & Young:
Audit of the financial reports of the Company
Other services in relation to the Company
2016
$000
354
160
514
2015
$000
208
149
357
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.
The Directors are of the opinion that the services as disclosed in Note 20 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.
21. 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
Directors
Kerry Roxburgh
Mike Cannon-Brookes
Rob Ferguson
Catherine Harris
Paul Rickard
Jost Stollmann
Executives
Peter Haig
Justin Mitchell
Praveenesh Pala
Paul Peterson
Andrew Rothwell
Title
Non-Executive Director, Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director, Chief Executive
Officer
Title
Head of Product*
Chief Risk Officer
Chief Financial Officer
Head of Product
VP Product & Channel Management
* Resigned as Head of Product on 1 July 2016
Appointed
18-Apr-08
10-Dec-09
17-Nov-05
17-Dec-15
28-Aug-09
05-Apr-05
Appointed
03-Feb-03
19-Mar-07
20-Oct-14
06-Jun-16
03-Feb-03
Annual report for the year ended 30 June 2016
Page 45
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
21. RELATED PARTY DISCLOSURES (cont’d)
Compensation of Key Management Personnel
Short-term benefits
Termination benefits
Post-employment benefits (superannuation)
Share-based payments
Total
Interests held by Key Management Personnel
Tyro Payments Limited
ABN 49 103 575 042
2016
$000
2,217
-
165
158
2,540
2015
$000
2,042
7
150
159
2,358
Share options held by Key Management Personnel to purchase ordinary shares have the following expiry dates and exercise
prices.
Issue Year
Expiry Year
Exercise
Price($)
FY06/07
FY07/08
FY07/08
FY08/09
FY09/10
FY09/10
FY09/10
FY10/11
FY10/11
FY10/11
FY13/14
FY14/15
FY15/16
FY16/17
FY17/18
FY17/18
FY18/19
FY16/17
FY16/17
FY16/17
FY17/18
FY17/18
FY20/21
FY20/21
FY21/22
FY22/23
$0.550
$0.300
$0.550
$0.060
$0.060
$0.080
$0.100
$0.060
$0.080
$0.080
$0.375
$0.450
$0.600
2016
Number
Outstanding
2015
Number
Outstanding
466,641
958,735
244,002
4,956,521
7,964,639
3,319,193
541,416
6,231,891
4,621,301
3,250,000
2,624,744
1,235,212
1,011,288
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
-
(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
Atlassian Pty Ltd
Atlassian Pty Ltd
Commissions paid
Software purchased
Sub-lease rental income
2016
$000
(1,841)
(43)
132
2015
$000
(1,894)
(29)
-
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.
Mike Cannon-Brookes, a Non-Executive Director of Tyro Payments is Co-Founder, CEO and Director of Atlassian Pty Ltd.
Tyro entered into an agreement with Atlassian to sublease Level 4 of 155 Clarence Street, commencing 1 April 2016 to 31
December 2016, with an option to renew for up to two months. As part of the agreement, Atlassian has taken out a bank
guarantee equivalent to one month’s rent.
Annual report for the year ended 30 June 2016
Page 46
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
21. RELATED PARTY DISCLOSURES (cont’d)
(c) Loans with related parties
In October 2015, the Company entered into on a loan facility of $4.6m with 7 lenders, all of whom are either Directors and/or
shareholders of the Company. The draw down was for the purposes of funding operational liquidity requirements. This loan
facility was both drawn upon and repaid in full in November 2015. Consideration paid for the loan facility consisted of interest
and fee expenses totalling $113k. This facility expires on 30 April 2017.
Jost Stollmann (Director)
Euclid Capital Partners, related party of David Fite (Shareholder)
Lumus Financial Services Pty Ltd, related party of Paul Rickard (Director)
Rachel Ferguson, related party of Robert Ferguson (Director)
Dominique Hess, related party of Sascha Hess (Shareholder)
Lin-Lily Wong (Shareholder)
Circle Square Pty Ltd, related party of Peter Wetenhall (Shareholder)
Total
Maximum Loan
Amount
Interest and Fee
Expenses
$1,950,000
$1,400,000
$250,000
$250,000
$250,000
$250,000
$250,000
$4,600,000
$48,577
$35,364
$5,833
$5,877
$5,877
$5,822
$5,822
$113,172
In December 2010, the Company granted 7.5 million share options for draw down on a now expired loan facility. These options
are not under ESOP. As at 30 June 2016, all of these options were outstanding with a WAEP of 8 cents.
Euclid Capital Partners, related party of David Fite (Shareholder)
Abyla Pty Ltd, related party of Mike Cannon-Brookes (Director)
Robert Ferguson (Director)
Fiona Stollmann, related party of Jost Stollmann (Director)
Total
22. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
Outstanding options at
the end of the year
2,625,000
1,625,000
1,625,000
1,625,000
7,500,000
On 1 July 2016, Tyro commenced pilot for the Smart Growth Funding product, which was offered to existing Tyro EFTPOS
merchants.
No matter or circumstance other than those already disclosed in the financial report, has arisen subsequent to 30 June 2016
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 2016
Page 47
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 2016, 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 2016 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
Andrew Price
Partner
Sydney
29 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Corporate Directory
Directors
Kerry Roxburgh (Chairman)
Jost Stollmann (CEO)
Mike Cannon-Brookes
Rob Ferguson
Catherine Harris
Paul Rickard
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
Ernst & Young
200 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 2016
Page 51