Annual Report 2017
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 Statements for the Year Ended 30 June 2017
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 Loans
Note 9 Available-for-Sale Investments
Note 10 Property, Plant and Equipment
Note 11 Share-Based Payments
Note 12 Deposits
Note 13 Trade Payables and Other Liabilities
Note 14 Provisions
Note 15 Non-Current Liabilities
Note 16 Contributed Equity and Reserves
Note 17 Financial Risk Management Objectives, Policies and Processes
Note 18 Commitments and Contingencies
Note 19 Leases
Note 20 Segment Reporting
Note 21 Auditor’s Remuneration
Note 22 Related Party Disclosures
Note 23 Matters Subsequent to the End of Financial Year
Directors’ Declaration
Independent Auditor’s Report
Additional Information for Shareholders
Corporate Directory
Tyro Payments Limited
ABN 49 103 575 042
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Annual report for the year ended 30 June 2017
Page 2
Chief Executive Officer’s Year in Review
Tyro Payments Limited
ABN 49 103 575 042
Dear Shareholders,
In the previous financial year, Tyro raised $100m in core Tier 1 equity and was granted an unrestricted Authorised Deposit-
taking Institution (ADI) licence, setting itself up for its next phase of growth. The results of 2017 reflect this stage of growth as
Tyro continues to build upon its in-house, cloud-based mobile core banking platform. The EFTPOS merchant base grew from
15,565 to 18,329 over the past year, and the unsecured lending product launched during the year originating greater than $11m
in loans. Tyro carried $4.5m in loans and $4.0m in deposits on the Balance sheet at 30 June 2017.
During the year, Tyro obtained from the Australian Prudential Regulation Authority (APRA) the right to use the word “Bank” in its
name and in describing its activities, and has been added to the list of “Australian-owned Banks” on APRA’s website.
Delivering banking to Australia’s SMEs
Tyro has continued to invest heavily in its banking platform, launching a fee-free and interest paying Tyro Smart Account on
19 January 2016 and its unsecured lending product on 1 July 2016. Both of these are in a nascent stage at the date of
reporting, however, enhanced with new features and capabilities during the year we saw a number of key milestones:
•
•
•
Tyro processed greater than $1b in payments transaction volume in any single month (December 2016)
This was the first financial year that Tyro processed greater than $10b in payments transaction volume for the full year
Tyro originated greater than $10m in lending within its pilot year.
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 business.
Deposits
In its quest to deliver efficient EFTPOS banking to its merchants, Tyro’s Smart Account is an interest bearing and fee-free
business account integrated with Xero cloud accounting.
This one bank account removes the frictions from today’s term deposit management and batch bill, payroll and BPAY
payments. The inconvenience 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. Deposits are at call, earn a daily interest with rates that increase for
every dollar held for longer than 30 days, 60 days and 90 days, and are government guaranteed up to $250,000.
Tyro’s Smart Account is also the first transaction account in Australia which allows payments to be made using Apple’s
smartphone assistant, Siri.
Lending
The pilot for unsecured lending started on 1 July 2016. This is a cash-flow based lending solution offered to eligible Tyro
merchants. Loan offer and acceptance is via the Tyro App on a smartphone. Tyro merchants borrow based upon their future
EFTPOS sales and repay out of their daily settlements. No security is required, and loans come with a fixed 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.
Performance highlights
As at 30 June 2017, Tyro was serving 18,329 SMEs, with a credit, debit and charge card transaction volume growth rate of
23 percent to $10.6 billion. Revenue in 2017 grew 26 percent to $120.6 million. Being in 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 34 percent.
Total operating income grew 21 percent to $56.1 million, while operating expenses grew 43 percent to $70.8 million. Significant
drivers for the cost increase was an investment of approximately $16.3 million in 2017 ($12.5 million in 2016) into product
development and delivery, primarily for the mobile core banking platform including the first deposit and lending features. The year
finished with a loss before tax result of $15 million reflecting this significant accelerated reinvestment. Tyro has an accounting
policy of not capitalising investments in product development.
Financial year ended 30 June 17
2009
2010
2011
2012
2013
2014
2015
2016
2017
Transactions ($M)
Revenue ($‘000)
511
1,310
1,983
2,951
4,074
5,250
6,800
8,590
10,607
6,283
14,298
19,913
28,440 39,091 52,644 72,342 95,767 120,628
Operating results ($’000)
(5,113)
(1,824)
(1,816)
(528)
3,293
3,852
691
(3,207)
(14,988)
Annual report for the year ended 30 June 2017
Page 3
Chief Executive Officer’s Year in Review
Tyro Payments Limited
ABN 49 103 575 042
Employees
Tyro had 371 employees as at 30 June 2017 (compared to 297 at 30 June 2016 and 221 at 30 June 2015). Among these, 228
staff worked in end-to-end product and software development, an increase of 23 percent over the previous year.
Tyro’s success reflects the strengths of its exceptional team and during the period we saw some renewal of leadership to
continue our success over the coming years:
•
Jost Stollmann, who was appointed CEO on 5 April 2005, and was instrumental in obtaining the full ADI licence and
the $100m equity-raising, stepped down and continues as a director. Gerd Schenkel joined as CEO in October 2016
until his resignation in June 2017. Rob Ferguson, Director, has taken on the Acting CEO role.
• Peter Haig, Co-Founder and then Head of Product, announced his retirement effective 31 December 2016. Peter is
the architect and innovator behind Tyro’s banking model.
• Andrew Rothwell, Co-Founder and then Head of Sales, resigned in May 2017 to focus more on his passion for smaller
start-ups.
A number of significant appointments were made over the year:
• Kareem Al-Bassam joined Tyro on 16 January 2017 as Director of Product. Kareem has more than 15 years of
experience in a range of Product, Innovation and leadership roles for financial technology companies in Australia,
America, Europe and the Asia-Pacific region.
• Natalie Dinsdale joined Tyro on 23 January 2017 as Director of Marketing. Natalie has more than 17 years of
experience as an entrepreneur and marketer across a range of Australian and UK financial services challenger
organisations.
•
Joshua Walther joined Tyro on 25 May 2017 as Director of Sales. Joshua has more than 18 years of experience in
financial services and management consulting.
• Dave Coombes joined Tyro on 3 July 2017 as Director of Engineering. Dave has nearly twenty years of experience
building and leading teams that develop and operate large-scale mission-critical systems for high profile organisations
across a range of industries including financial services, wagering, retail and telecommunications.
Investments for future performance
Tyro has maintained 99.98 percent uptime of its core acquiring platform with its live-live infrastructure. Tyro will continue to
invest significantly to expand its EFTPOS banking platform and to deliver features and functions tailored to the specific needs of
Australia’s diverse SME community. In parallel, Tyro has been building the non-engineering capability of the business to
support the sales and operational capability necessary to continue to scale up its product offerings.
Delivering simplicity
Hype around new mobile payment technologies, mainly capitalising on the propagation of smartphones, is invigorating
innovation and investment. With NFC, Apple Pay, Android Pay, Square, PayPal and others, consumers and merchants are fed
daily with news on new developments in mobile payments and mobile-pass technology.
As these new innovations get adopted, SMEs will struggle to offer their consumers these payment choices while maintaining
the required reliability, efficiency and security of their payment and reconciliation processes. Tyro will use its platform,
partnerships and integration architecture to offer SMEs simplicity: ONE account, ONE settlement, ONE point of contact.
Tyros and the Tyro world
Tyro stands for challenger. Against the backdrop of all the opportunities arising from new technologies, rapid growth in itself has
challenges, but Tyro is a very special and attractive place for people that want to challenge the status quo.
The Tyro team, the Tyros, embrace agile and lean methods. They marry deep banking knowledge, strong risk management and
regulatory compliance with creative and innovative solutions. Tyros live in all these different worlds and most importantly have
an opportunity to make a major difference for the Australian SME community.
Rob Ferguson
Acting Chief Executive Officer
23 August 2017
Annual report for the year ended 30 June 2017
Page 4
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
Directors’ Report
The Board of Directors of Tyro Payments Limited (the Company) present their report together with the financial statements for the
financial year ended 30 June 2017.
Directors
The names and details of the Company’s Directors holding 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.
Kerry is a Member Practitioner of the Stockbrokers and Financial Advisers 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 and subsequently re-named ANZ Share Investing. 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 of the Tyro Risk Committee, and a member of the Tyro Audit
Committee.
Other 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 Ltd
• Eclipx Group Ltd - Chairman
• Medical Indemnity Protection Society Ltd
• MIPS Insurance Ltd
Mike Cannon-Brookes
Non-executive Director since 10 December 2009
Mike Cannon-Brookes is the co-founder and co-CEO of Atlassian, a collaboration software company that helps teams organise,
discuss and complete shared work. More than 89,000 large and small organisations around the world use Atlassian’s tracking,
collaboration, communication, service management and development products to work smarter and faster every day.
Mike has received international recognition for his work, including Ernst & Young’s Australian Entrepreneur Of The Year in 2006
and Australian Business Person of the Year by the Australian Financial Review in 2017. He’s also been honoured by the World
Economic Forum as a Young Global Leader in 2009 and was named on the 2017 Forbes Global Game Changers list for
reshaping the business world.
Outside Atlassian, Mike is an active angel investor. He serves as an adjunct professor at the University of New South Wales’
School of Computer Science and Engineering, as well as chair of the Computer Science and Engineering Industry Advisory
Board. Mike holds a Bachelor of Commerce in information systems from the University of New South Wales, Australia.
Mike is Chair of the Tyro Nominations and Remuneration Committee and a member of the Tyro Risk Committee.
Other Directorships held during the past three years:
• Atlassian Corporation & subsidiaries
Annual report for the year ended 30 June 2017
Page 5
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
Rob Ferguson
Acting Chief Executive Officer, appointed 14 June 2017.
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 from the position in 2002. He was previously Non-Executive Director of IMF Bentham
Ltd and Westfield. Rob stepped down from the Tyro Committees upon appointment to the role of Acting Chief Executive Officer.
Other Directorships held during the past three years:
• Non-executive Chairman of Primary Health Care Ltd
• Non-executive Chairman of The GPT Group Ltd
• Smartward Pty Ltd
• Watermark Market Neutral Fund Ltd
Prior to taking up the Acting Chief Executive Officer role, Rob held the position of Non-executive Director since 14 November
2005, and was a member of the Tyro Audit Committee and the Tyro Nominations and Remuneration Committee.
Catherine Harris
Non-executive Director since 17 December 2015
Catherine Harris is the Chair of Harris Farm Markets Pty Ltd. Her previous roles have included Federal Director of Affirmative
Action and Deputy Chancellor of the University of NSW, Trustee of the Sydney Cricket Ground Trust, The National Gallery of
Australia, The Australian Defence Force Academy, The MCA, St Margaret's Public Hospital and the Australia Japan
Foundation.
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.
Catherine is a member of the Tyro Nominations and Remuneration Committee and the Tyro Risk Committee.
Other Directorships held during the past three years:
•
•
•
•
•
The Australian Rugby League Commission
The Australian Ballet
The Sports 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 Chair of the Tyro Audit Committee and member of the Tyro Risk Committee.
Other Directorships held during the past three years:
• Property Exchange Australia Ltd
• Contango Global Growth Ltd
• Switzer Financial Group Pty Ltd
• Switzer Asset Management Ltd
• Lumus Financial Services Pty Ltd
Annual report for the year ended 30 June 2017
Page 6
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
Jost Stollmann
Non-executive Director, appointed 14 June 2017
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.
Prior to taking up the Non-executive Director position, Jost held the position of Executive Director and Chief Executive Officer of
Tyro Payments Limited since 5 April 2005. Jost retired as Chief Executive Officer, effective 24 October 2016 and as Executive
Director, effective 14 June 2017.
Company Secretary
Our Company Secretary as at 30 June 2017 was Justin Mitchell.
Justin was appointed on 19 March 2007 to build and manage the compliance and risk frameworks and oversee all 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 is an unlisted public company. It is incorporated and domiciled in Australia. The registered office of the
Company is 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 the Company were:
Director
Shares
Options
Kerry Roxburgh1
Mike Cannon-Brookes2
Rob Ferguson3
Catherine Harris4
Paul Rickard
Jost Stollmann5
3,140,008
17,010,668
22,205,282
400,000
1,478,157
64,447,496
137,032
1,716,354
3,426,499
17,140
758,021
7,634,302
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 ordinary shares held by HFM Superannuation Pty Ltd and Angus and Louisa Harris Family Superannuation
Fund being associates of Catherine Harris
5 Includes options held by Fiona Stollmann being an associate of Jost Stollmann
Annual report for the year ended 30 June 2017
Page 7
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
Nature of operations and principal activities
The Company is an Authorised Deposit-taking Institution (ADI) providing EFTPOS banking solutions to Australian merchants.
The Company has implemented appropriate systems and controls to comply with the stringent prudential and regulatory
requirements to perform transaction processing, clearing and settlement as well as deposit-taking and lending for EFTPOS
merchants within the Australian Banking System.
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
The Company reported the following operating results for the year and the comparative period:
(amounts in $’000s)
Revenues
Operating income
Operating loss before tax expense
Net loss
2017
2016
$120,628
$95,767
$56,090
$46,183
($14,988)
($3,207)
($12,775)
($746)
The Company had a net loss of $12.8m for the year ended 30 June 2017. The Company continued to scale up its investment in
building a banking business and embarked on a significant growth program including new product design, improved operating
systems and distribution. The Company had interest income of $3.3m for the year.
Capital Structure and Funding
The Company 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). The Company is fully compliant with the
prudential capital requirements prescribed by APRA and has sufficient capital to fund on-going operations.
During the period, 37,612,657 ordinary shares were issued upon exercise of options, raising a total of $3.8m in fully paid
capital. Total Tier 1 capital held as at 30 June 2017 was $109.2m. The Company has always held sufficient capital to meet its
internal targets above APRA’s prudential capital requirements.
The Company had cash and cash equivalents of $24.1m at the end of the reporting period.
Risk Management
The Board is responsible for reviewing and approving the risk management strategy, including determining the Company’s
appetite for risk. The Chief Executive Officer and Management team are responsible for implementing the 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 1 July 2016, the Company commenced the pilot for the Smart Growth Funding product, which was offered to existing Tyro
EFTPOS merchants. On 1 January 2017, the Tyro Smart Growth Funding product exited pilot into wider availability with offers
to Tyro EFTPOS and Smart Account merchants.
On 24 October 2016, Gerd Schenkel was appointed Chief Executive Officer. Jost Stollmann, the outgoing Chief Executive
Officer continued as an Executive Director on the Board, as well as heading up Public Affairs for the Company.
On 13 June 2017, Gerd Schenkel resigned as Chief Executive Officer.
On 14 June 2017, Rob Ferguson was appointed Acting Chief Executive Officer and ceased the role as Non-executive Director.
Jost Stollmann was appointed Non-executive Director and ceased the role as Executive Director and Head of Public Affairs.
Annual report for the year ended 30 June 2017
Page 8
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
Significant events after balance date
There were no significant events after balance date.
Likely developments and expected results
The Directors expect the investment phase will continue for some time into the future and is designed to capitalise on our
market opportunities.
SHARE OPTIONS
Unissued shares
As at 30 June 2017, there were 47,548,390 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
Nominations &
Remuneration
Committee
9
9
7
9
8
9
9
4
4
1
4
1
4
4
6
6
6
5
6
6
6
4
4
4
4
4
3
4
Meetings held during the year
Director
Kerry Roxburgh
Mike Cannon-Brookes
Rob Ferguson
Catherine Harris
Paul Rickard
Jost Stollmann
Committee Membership
As at the date of this report, the Company had an Audit Committee, a Risk Committee and a Nominations and Remuneration
Committee of the Board of Directors.
Members acting on the Committees of the Board during the year were:
Audit Committee
Risk Committee
Nominations & Remuneration Committee
P. Rickard (Chair)
R. Ferguson
K. Roxburgh
K. Roxburgh (Chair)
M. Cannon-Brookes
C. Harris
P. Rickard
M. Cannon-Brookes (Chair)
R. Ferguson
C. Harris
Annual report for the year ended 30 June 2017
Page 9
Directors’ Report
Tyro Payments Limited
ABN 49 103 575 042
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration is set out on page 11 and forms part of the Directors’ report for the year ended
30 June 2017.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations Instrument 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 ASIC Corporations Instrument.
Annual report for the year ended 30 June 2017
Page 10
Ernst & Young
200 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 2017, 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
23 August 2017
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 2017
Continuing Operations
Fees and commission income
Interchange, integration and support fees expense
Net fees and commission income
Interest income on loans
Interest expense on deposits
Net banking operating income/(expense)
Terminal and accessories sale
Terminal and accessories COGS
Net terminal and accessories sale expense
Note
2
2
Tyro Payments Limited
ABN 49 103 575 042
2017
$000
2016
$000
115,453
(63,761)
51,692
450
(33)
417
327
(744)
(417)
92,683
(48,876)
43,807
-
(3)
(3)
212
(705)
(493)
Interest income on treasury investments
2,866
2,010
Other income
Total operating income
Expenses
Employee benefits expense
Administrative expenses
Depreciation
Interest and fee expenses
Impairment of inventories
Other expenses
Total operating expenses
Loan impairment expense
Foreign currency (loss)/gain
Operating loss before tax expense
Income tax benefit
Net loss for the year
Other comprehensive income
2
1,532
862
56,090
46,183
2
2
10
8
3
(47,661)
(16,920)
(5,984)
(180)
(16)
(34)
(70,795)
(32,181)
(12,946)
(4,025)
(113)
(14)
(121)
(49,400)
(230)
-
(53)
10
(14,988)
(3,207)
2,213
2,461
(12,775)
(746)
Net fair value gain on available-for-sale investments, net of tax
203
Total comprehensive loss for the period
(12,572)
60
(686)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2017
Page 12
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
ASSETS
Current assets
Cash and cash equivalents
Due from other financial institutions
Trade and other receivables
Prepayments
Inventories
Loans
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
Tyro Payments Limited
ABN 49 103 575 042
Note
2017
$000
2016
$000
4
5
6
7
8
9
10
3
12
13
14
15
24,052
52,438
10,489
1,992
1,148
4,511
94,630
82,224
27,803
7,191
966
923
-
119,107
21,097
13,482
10,300
44,879
681
12,557
8,174
21,412
139,509
140,519
3,948
11,430
2,064
17,442
459
9,542
1,526
11,527
676
676
685
685
18,118
12,212
121,391
128,307
16
16
16
138,381
12,157
(29,147)
134,566
9,572
(15,831)
121,391
128,307
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Annual report for the year ended 30 June 2017
Page 13
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Interest, fee and rental income received
Payments to suppliers and employees
Net inflow from retail deposits
Net outflow from customer lending
Receipts from terminals & accessories sale
Dividend income received
Tyro Payments Limited
ABN 49 103 575 042
Note
2017
$000
2016
$000
117,112
(126,378)
3,489
(4,741)
327
-
91,101
(92,848)
459
-
212
3
Net cash flows from operating activities
4
(10,191)
(1,073)
Cash flows from investing activities
Investments in term deposits1
Investments in available-for-sale assets
Purchase of property, plant and equipment
10
Proceeds from disposal of property, plant and equipment
Lease incentive received
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from exercise of share options
16
Proceeds from fund raising, net of related costs
Proceeds from shareholder loans
Shareholder loan repayment
Interest and fees paid on shareholder loans
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at beginning of year
(24,698)
(20,125)
(6,945)
24
-
(51,744)
3,815
-
-
-
-
3,815
(58,120)
(52)
82,224
(20,000)
-
(8,941)
139
2,080
(26,722)
412
99,720
4,600
(4,600)
(113)
100,019
72,224
10
9,990
Cash and cash equivalents at end of year
4
24,052
82,224
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 2017
Page 14
Tyro Payments Limited
ABN 49 103 575 042
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Attributable to equity holders of Tyro Payments Limited
Contributed
Equity
$000
Note
Available-
for-Sale
Revaluation
Reserve
$000
Share-
Based
Payments
Reserve
$000
Accumulated
Losses
$000
Option
Premium
Reserve
$000
General
Reserve
for Credit
Losses
$000
Total
$000
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 fund raising1
Issue of share capital –
from options exercised
Share-based payments
Transfer to general reserve
for credit losses
-
-
-
(746)
-
-
(746)
-
60
-
-
-
-
60
-
60
-
(746)
-
-
(686)
99,828
-
-
-
-
-
99,828
725
-
-
-
-
-
725
-
-
965
-
(313)
-
652
-
-
-
(153)
-
153
-
At 30 June 2016
134,566
420
8,435
(15,831)
167
550 128,307
Loss 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
-
-
-
(12,775)
-
- (12,775)
-
203
-
-
-
-
203
-
203
-
(12,775)
-
- (12,572)
3,815
-
-
-
-
-
3,815
-
-
1,841
-
-
-
1,841
-
-
-
(541)
-
541
-
At 30 June 2017
16
138,381
623
10,276
(29,147)
167
1,091 121,391
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
1. Net of related capital raising after-tax costs of $299k
Annual report for the year ended 30 June 2017
Page 15
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
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 23 August 2017.
The Company is an unlisted public company, incorporated and domiciled in Australia. 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 Corporations Instrument 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 Accounting Standards
Board.
(c) Going concern
The Company had net current assets of $77.2m as at 30 June 2017 (2016: $107.6m).
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 and the Tyro Smart Growth Funding loans which previously did not
exist. The treatment for these items is covered within this report.
(ii) Accounting standards and interpretations issued but not yet effective
The following Australian Accounting Standards and Interpretations, which have recently been issued or amended but are not
yet effective have not been adopted by the Company for the annual reporting period ended 30 June 2017:
• 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.
Annual report for the year ended 30 June 2017
Page 16
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
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. AASB 9 is not mandatory until 1 July 2018 for the Company.
• 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. AASB 15 is not mandatory until 1 July 2018 for the Company.
• 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. AASB 16 is not mandatory
until 1 July 2019 for the Company.
The potential financial impacts of the above to the Company have not yet been determined. The Company does not intend to
early adopt AASB 9 and AASB 15, but may early adopt AASB 16 to align with the adoption of AASB 9 and AASB 15.
Other amendments to existing standards that are not yet effective are not expected to result in significant changes to the
Company’s accounting policies.
(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 11.
Classification of and valuation of investments - The Company classifies its investments in listed securities and floating rate
notes 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. Where no active market exists for a
particular asset, the Company uses a valuation technique to arrive at the fair value. The fair value of floating rate notes has
been estimated using pricing data inputs provided by an independent third party pricing service which factors in recent arm’s
length transactions into their valuation methods. This makes maximum use of observable market inputs and places minimal
reliance on entity specific inputs.
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 10. 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 non-current long service leave 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 2017
Page 17
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
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 expensed to the Statement of Comprehensive Income based on Management’s assessment of the recognition criteria in
AASB 138.
Loan impairment – Individually assessed provisions are made against loans that have been individually assessed as impaired.
The Company raises specific provisions for impairment of these loans when there is objective evidence of impairment (i.e. when
an event of default is triggered). The specific provision raised is based on the exposure amount at the date of default.
Loans that do not have an individually assessed provision are assessed collectively for impairment. A collective provision is
raised based on a risk rating system that considers the probability of default (based on an externally rated business score), loss
given default rates (using an internally derived probability factor that takes into consideration the loans being unsecured), and
the exposure at default.
(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, debit and charge 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 using a method that approximates the effective
interest method. The effective interest 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 2017
Page 18
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
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 from the date of acquisition.
(i) Due from other financial institutions
Includes term deposits with maturities greater than three months from the date of acquisition, 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) 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.
Annual report for the year ended 30 June 2017
Page 19
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
Net realisable value is an estimate, based on the most reliable evidence at the time, of the amount the inventories are expected
to realise.
(m) Loans
(i) Recognition and measurement
Loans to merchants are initially recognised at fair value. Subsequent to initial recognition, these assets are measured at
amortised cost, less any provisions for impairments. As the merchant receives daily settlements, a percentage is taken towards
loan repayments. The loan repayment includes a portion which recycles the upfront unearned fee charged to the merchant into
the Statement of Comprehensive Income as interest income. This method of recognition approximates the effective interest
method.
(ii) Provisions for loan impairments
Individually assessed provisions are made against loans that have been individually assessed as impaired. The Company
raises specific provisions for impairment of these loans when there is objective evidence of impairment (i.e. when an event of
default is triggered). The specific provision raised is based on the exposure amount at the date of default.
Loans that do not have an individually assessed provision are assessed collectively for impairment. A collective provision is
raised based on a risk rating system that considers the probability of default (based on an externally rated business score), loss
given default rates (using an internally derived probability factor that takes into consideration the loans being unsecured), and
the exposure at default.
When a loan is uncollectible, it is written off against the related provision for impairment. Such loans are written off after all the
necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of
amounts previously written off go to the Statement of Comprehensive Income.
(n) 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.
(o) 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.
(p) 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).
(q) 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
Annual report for the year ended 30 June 2017
Page 20
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
•
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.
(r) 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.
(s) 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:
2017
2016
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 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.
Annual report for the year ended 30 June 2017
Page 21
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(t) 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 in the Statement of Comprehensive Income using a method that
approximates the effective interest method.
(u) 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.
(v) 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.
(w) 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 may 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.
(x) 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.
Annual report for the year ended 30 June 2017
Page 22
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
The Company also provides for estimated future credit losses from loans to ensure the Company has sufficient capital to cover
credit losses estimated to arise over the full life of the loans as required by APRA Prudential Standard APS 220.
The methodology and assumptions used for estimating the general reserve for credit losses required are reviewed regularly.
(y) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave and long service leave.
Entitlements arising in respect of salaries and wages, annual leave and other employee benefits that are expected to be settled
within one year have been measured at their nominal amounts. Employees are entitled to 20 days annual leave each year. The
company classes as a current liability the portion that is expected will be taken by the employees in the next 12 months.
Entitlements that arise in respect of long service leave which are expected to be settled more than 12 months after the reporting
date have been measured at their present values of expected future payments. Long service leave is calculated based on
assumptions and estimates of when employees will take leave and the prevailing wage rates at the time the leave will be taken.
Long service leave liability also requires a prediction of the number of employees that will achieve entitlement to long service
leave.
No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave to be taken in the future
by all employees at reporting date is estimated to be less than the annual entitlement for sick leave.
(z) 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 11.
(aa) 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.
(ab) 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.
Annual report for the year ended 30 June 2017
Page 23
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(ac) De-recognition of assets and liabilities
Assets and liabilities are derecognised from the Statement of Financial Position upon sale, maturity or settlement. The
Company de-recognises scheme receivables against associated merchant payables as the risks and rewards are passed
through in line with contractual obligations.
2. REVENUE AND EXPENSES
The operating loss before tax expense has been arrived at after accounting for the following items:
Fees and commission income
Merchant service fee
Terminal rental income
Other fee income
Interchange, integration and support fees expense
Interchange fees and scheme fees
Integration and support fee expense
Other settlement fees and expenses
Other income
Sublease and other rental income
Gain on disposal of property, plant and equipment
Other income
Employee benefits expense
Wages, salaries and bonuses
Superannuation
Share-based payments expense
Other employee benefits expense
Administrative expenses
Rent
Communications, hosting and licencing costs
Marketing
Contractor and consulting costs
Recruitment
Accounting and legal
Terminal management and logistics
Other administrative expenses
2017
$000
101,092
9,643
4,718
115,453
57,656
5,905
200
63,761
1,310
-
222
1,532
41,693
3,747
1,841
380
47,661
4,013
3,098
1,690
1,532
1,453
1,384
1,162
2,588
16,920
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
3,164
2,070
557
1,176
2,053
1,645
613
1,668
12,946
Annual report for the year ended 30 June 2017
Page 24
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
3. INCOME TAX
a) Income tax expense
Major components of income tax expense for the period ended 30 June 2017:
Current income tax
Current income tax charge
Deferred income tax
Relating to origination and reversal of 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 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
Current year losses for which no deferred tax asset is recognised
Total income tax benefit
c) Deferred income tax assets and liabilities
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)
2017
$000
-
(2,213)
(2,213)
-
87
87
(14,988)
(4,496)
(435)
551
62
711
1,394
(2,213)
2016
Statement
of Financial
Position
$000
Deferred income tax assets
Fixed assets
Provisions & accruals
Other (legal fees)
Lease break fee
R&D credits 2
Tax losses 1, 2
Prepayments
Available-for-sale
investments
Unrealised FX gain
Total
925
2,508
83
42
6,641
416
10,615
(6)
(267)
(42)
(315)
10,300
2017
SOCI
$000
(224)
(398)
4
21
(1,182)
(416)
(2,195)
6
-
(24)
(18)
(2,213)
Statement
of Financial
Position
$000
OCI
$000
-
-
-
-
-
-
-
(87)
-
(87)
(87)
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
-
-
-
-
-
-
-
-
(25)
-
(25)
(25)
-
-
108
-
-
-
108
-
-
-
-
108
Annual report for the year ended 30 June 2017
Page 25
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
3. INCOME TAX (cont’d)
1. The Company had $6.0m of benefits relating to tax losses in the year ending 30 June 2017. $4.6m of these tax losses ($1.4m
DTA) was not recognised resulting in a net DTA of $10.3m.
2. During the prior 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
2017
$000
24,052
-
24,052
2016
$000
15,497
66,727
82,224
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.
Reconciliation of operating loss after tax to net cash flows used in operations
Operating loss
Adjustments for:
Depreciation
Share-based payments expense
Loan impairment expense
Loss/(gain) on disposal of property plant and equipment
Deferred tax benefits
Changes in assets and liabilities
(Increase) in loans
(Increase) in trade and other receivables
(Increase) in prepayments
(Increase) in inventories
Decrease/(increase) in term deposits held as collateral
Increase in deposits
Increase in trade and other payables
Increase in provisions
Net cash from operating activities
5. DUE FROM OTHER FINANCIAL INSTITUTIONS
Term deposits
Deposits held as collateral
2017
$000
(12,775)
5,984
1,841
230
12
(2,213)
(4,741)
(3,188)
(1,026)
(225)
63
3,489
1,829
529
(10,191)
2016
$000
(746)
4,025
965
-
(107)
(2,461)
-
(3,430)
(472)
(69)
(1,009)
459
1,060
712
(1,073)
2017
$000
44,698
7,740
52,438
2016
$000
20,000
7,803
27,803
Includes term deposits with maturities greater than three months from the date of acquisition and deposits pledged to
counterparties as collateral. Refer to Note 18 for details of deposits held as collateral.
Annual report for the year ended 30 June 2017
Page 26
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
6. TRADE AND OTHER RECEIVABLES
Merchant acquiring fees
Scheme and other receivables
Interest receivable
Tyro Payments Limited
ABN 49 103 575 042
2017
$000
3,192
6,897
400
10,489
2016
$000
2,730
4,270
191
7,191
The Company's ageing of trade debtors and receivables (schemes and merchants) is as follows:
Scheme and other trade receivables before impairment:
Carrying value 2017
Carrying value 2016
7. INVENTORIES
Terminals & accessories
8. LOANS
Loans (net of unearned fees)
Collective provision for impairment
Specific provision for impairment
Net loans
Total
$000
6,897
4,270
Current
$000
6,013
3,601
1-30
days
$000
476
426
31-60
days
$000
23
6
61-90
days >90 days
$000
$000
292
33
93
204
2017
$000
1,148
1,148
2017
$000
4,647
(112)
(24)
4,511
2016
$000
923
923
2016
$000
-
-
-
-
In July 2016, the Company launched in pilot the Smart Growth Funding product, which was offered to existing Tyro EFTPOS
merchants. The loans are unsecured, with an upfront (“unearned”) fee charged to the merchant. As the merchant receives daily
settlements, a percentage is taken towards loan repayments. The loan repayment includes a portion which recycles the
unearned fee into the Statement of Comprehensive Income as interest income. This method of recognition approximates the
effective interest method.
During the year, six loans were assessed as impaired due to reasonable doubt over collectability, out of which two loans were
written off.
Provision for impairment
Specific provisions
Opening balance
Net movement in provision
Sub-total
Bad debts written off
Closing balance – specific provisions
2017
$000
-
118
118
(94)
24
2016
$000
-
-
-
-
-
Annual report for the year ended 30 June 2017
Page 27
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
8. LOANS (cont’d)
Collective provisions
Opening balance
Net movement in provision
Closing balance – collective provisions
Total provision for impairment
9. AVAILABLE-FOR-SALE INVESTMENTS
Floating rate notes
Investment in VISA shares
Tyro Payments Limited
ABN 49 103 575 042
2017
$000
-
112
112
136
2017
$000
20,265
832
21,097
2016
$000
-
-
-
-
2016
$000
-
681
681
VISA shares were acquired following the demutualisation of VISA International, as a result of which listed VISA shares were
issued to members of the VISA network.
10. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of net carrying amounts at the beginning and end of the year:
Year ended 30 June 2017
At 30 June 2016 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers
Depreciation for the year
At 30 June 2017 net of accumulated
depreciation and impairment
At 30 June 2016
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2017
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
EFTPOS
Terminals
$000
Furniture
and Office
Equipment
$000
Computer
Equipment
$000
Leasehold
Improvements
$000
6,364
4,871
(36)
(4,266)
1,212
444
-
(314)
1,716
1,242
-
(802)
3,265
388
-
(602)
Total
$000
12,557
6,945
(36)
(5,984)
6,933
1,342
2,156
3,051
13,482
15,853
(9,489)
6,364
20,484
(13,551)
6,933
1,662
(450)
1,212
2,113
(771)
1,342
3,662
(1,946)
1,716
4,909
(2,753)
2,156
3,607
(342)
3,265
3,995
(944)
3,051
24,784
(12,227)
12,557
31,501
(18,019)
13,482
Annual report for the year ended 30 June 2017
Page 28
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
10. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Tyro Payments Limited
ABN 49 103 575 042
EFTPOS
Terminals
$000
Furniture
and Office
Equipment
$000
Computer
Equipment
$000
Leasehold
Improvements
$000
5,031
4,415
(32)
(3,050)
679
743
-
(210)
957
1,272
-
(513)
1,006
2,511
-
(252)
Total
$000
7,673
8,941
(32)
(4,025)
6,364
1,212
1,716
3,265
12,557
11,560
(6,529)
5,031
15,853
(9,489)
6,364
919
(240)
679
1,662
(450)
1,212
2,390
(1,433)
957
3,662
(1,946)
1,716
1,096
(90)
1,006
15,965
(8,292)
7,673
3,607
(342)
3,265
24,784
(12,227)
12,557
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
11. 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.
All option grants must be held for a minimum period commencing on the date on which the options are granted and continuing
until the earlier of:
-
-
the date which is 3 years after the date on which options are granted; or
the date on which the participant ceases employment with the Company.
Annual report for the year ended 30 June 2017
Page 29
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
11. SHARE-BASED PAYMENTS (cont’d)
Other relevant terms and conditions applicable to options granted under the Employee Share Option Plan include:
-
the term of each option grant shall be 7 years from the date of grant or such shorter term as provided in the Employee
Share Option Plan agreement.
- Each option entitles the holder to one ordinary share.
- All awards granted under the Employee Share Option Plan are equity-settled.
(b) Fair value of options 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 2017:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price ($)
Nov 2016
Apr 2017
Jun 2017
0%
40%
1.87%
$0.995
0%
42%
2.19%
$1.08
0%
42%
1.91%
$1.08
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
options 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 37,612,657 options exercised during the year ended 30 June 2017 (2016: 3,840,607).
The weighted average remaining contractual life for share options outstanding as at 30 June 2017 was 4 years (2016: 3 years).
The following table summarises further details of the share options outstanding at 30 June 2017:
Range of Exercise Prices Contractual life
Vesting conditions
No. of Outstanding Options
162 cents
10 years or less
6 cents to 162 cents
10 years or less
No vesting in first 6 months of 5
year linear vesting period
5 year linear vesting
6 cents to 45 cents
5 years and 10 years
12 months service
6 cents to 55 cents
3, 5 and 10 years
12 months linear vesting
6 cents to 55 cents
10 years or less
Fully vested at time of grant
Total
2017
700,000
2016
-
30,455,628
35,158,554
1,043,478
3,208,697
4,640,587
1,043,478
11,445,679
21,684,244
40,048,390
69,331,955
Annual report for the year ended 30 June 2017
Page 30
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
11. 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:
2017
No
2017
WAEP (cents)
2016
No
2016
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
46,604,233
11,782,640
(20,686,087)
(3,336,461)
34,364,325
8,819,708
21,684,244
-
(16,926,570)
(117,087)
4,640,587
4,640,587
1,043,478
-
-
-
1,043,478
1,043,478
40,048,390
14,503,773
12
150
13
110
70
19
10
-
7
55
8
8
6
-
-
-
6
6
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
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments is disclosed in
Note 2.
Refer to Note 22, for outstanding share options at the end of the year that are not part of ESOP.
12. DEPOSITS
Deposits
2017
$000
3,948
3,948
2016
$000
459
459
The deposits are at call, earn a daily interest with rates that increase for every dollar held for longer than 30 days, 60 days and
90 days, and are guaranteed by the Australian Government up to $250,000 per customer.
Annual report for the year ended 30 June 2017
Page 31
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
13. TRADE PAYABLES AND OTHER LIABILITIES
Accounts payable
Deferred rent incentive
Accruals – scheme fees, commissions, bonuses and others
Other liabilities
14. PROVISIONS
Annual leave provision
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 Liability
Balance at the beginning of the year
Provided for during the year
Released during the year
Balance at the end of the year
Total provisions - current liabilities
15. 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 during the year
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
Tyro Payments Limited
ABN 49 103 575 042
2017
$000
2,340
3,239
3,971
1,880
11,430
2017
$000
1,240
2,885
(2,360)
1,765
286
258
(245)
299
2,064
2017
$000
222
111
(191)
142
349
117
(194)
272
114
148
262
676
2016
$000
1,319
3,345
3,349
1,529
9,542
2016
$000
850
1,827
(1,437)
1,240
231
79
(24)
286
1,526
2016
$000
103
136
(17)
222
290
135
(76)
349
25
89
114
685
Annual report for the year ended 30 June 2017
Page 32
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
16. 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
2017
Number of
Shares
2016
Number of
Shares
61,018,733
182,642,334
9,355,246
8,089,164
112,037
10,475,433
34,055,009
1,146,511
8,347,550
12,562,168
148,696
96,638,869
424,591,750
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
2017
$000
2016
$000
3,051
10,959
748
809
13
1,571
10,217
430
3,756
6,909
89
100,128
138,680
3,051
9,513
154
577
3
1,571
9,830
48
3,729
6,247
14
100,128
134,865
Costs directly attributable to the capital raising (net of tax)
Ordinary shares
(299)
138,381
(299)
134,566
During the year ended 30 June 2017, 37,612,657 ordinary shares were issued upon exercise of options, raising a total of
$3,815k in fully paid capital.
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
2017
$000
8,435
1,841
10,276
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:
Provision for chargeback losses
Provision for lending losses
Balance at the end of the year
2017
$000
550
146
395
1,091
2016
$000
7,470
965
8,435
2016
$000
397
153
-
550
Annual report for the year ended 30 June 2017
Page 33
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
16. CONTRIBUTED EQUITY AND RESERVES (cont’d)
The general reserve for credit losses has been created to satisfy APRA’s prudential standards for ADIs as described in Note
1(x). The Company applies an internal methodology to estimate the credit risk of its merchant customers and the maximum
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 options transferred to shares
Balance at the end of the year
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 attributable to shareholders of the Company
Transfer to general reserve for credit losses
Accumulated losses at the end of the financial year
2017
$000
420
203
623
2017
$000
167
-
167
2017
$000
12,157
2017
$000
2016
$000
360
60
420
2016
$000
480
(313)
167
2016
$000
9,572
2016
$000
(15,831)
(12,775)
(541)
(29,147)
(14,932)
(746)
(153)
(15,831)
Annual report for the year ended 30 June 2017
Page 34
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES
The Company's principal financial instruments include cash and cash equivalents, deposits due from other financial institutions,
trade and other receivables, loans, available-for-sale investments, deposits and trade and other payables.
(i) Risk management
The Board is responsible for approving and reviewing the risk management strategy, including determining the Company’s
appetite for risk. The CEO and Management team are responsible for implementing the risk management strategy and
framework, and for developing policies, controls, processes and procedures for identifying and managing risk.
Various Management committees, including the Management Risk Committee (MRC) and the Asset and Liability Management
Committee (ALCO), ensure appropriate execution of the risk management strategy and framework is applied in the 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
preventative control), and maintains a regular review process to monitor the effectiveness of controls. Business risks are
controlled within tolerance levels approved by the MRC, ALCO and the Board.
(iii) Internal Audit
The Company 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.
(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. The Company 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. The
Company’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 the Company to identify changes in credit quality at client and portfolio levels and to take corrective actions in a
timely manner.
Credit losses from chargebacks
In addition, the Company is subject to the risk of credit card losses via chargebacks. The maximum period the Company is
potentially liable for such chargebacks is 120 days after the date of the transaction. The Company 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 the Company’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 estimated future credit losses as described in Note 1(x). The
Company does not hold any credit derivatives or collateral to offset its credit exposure. The Company 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 the Company’s exposure to bad debts is not significant at reporting date.
Annual report for the year ended 30 June 2017
Page 35
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Credit losses from loans
The Company is also subject to the risk of credit losses from its unsecured loan product which commenced on 1 July 2016. The
Company manages this risk in accordance with the Board approved Lending Credit Risk policy. Responsibility for monitoring
and management of this risk is delegated to the CRO. The CRO is also responsible for ensuring the Lending Credit Risk policy
is reviewed regularly and submitted to the Board Risk Committee for approval.
To manage the risk of credit losses, various underwriting criteria is in place before a loan can be offered, which includes
assessment of credit bureau scores, age of credit files and no adverse records, time in business, and an internal credit risk
grading. A merchant must also have an acquiring transaction history to be eligible for a loan offer. A personal guarantee is
required.
The Company provides for credit losses from these loans to ensure the Company has sufficient provisions and capital to cover
credit losses estimated to arise over the full life of the loans as described in Note 1(x).
30 June 2017
Standard & Poors Credit
Rating*
AAA
AA
A+
A
A-
BBB+
unrated
30 June 2016
Standard & Poors Credit
Rating*
AAA
AA
A+
A
A-
unrated
*Long-term credit rating
(v) Operational risk
Cash and
balances with
financial
institutions
($000)
Due from
other
financial
institutions
($000)
Trade
receivables
($000)
Available-for-
sale
investments
($000)
Loans and
advances
($000)
15,336
-
39,340
8,716
- 65
-
-
-
48
- -
13,033
-
-
- 9,468
-
10,489
24,052
-
951
-
-
5,114
22
-
- 5,020
3,927
-
- -
7,036
-
- 4,511
4,511
21,097
52,438
Cash and
balances with
financial
institutions
($000)
Due from
other
financial
institutions
($000)
Trade
receivables
($000)
Available-for-
sale
investments
($000)
Loans and
advances
($000)
6,731
75,493
-
-
-
-
82,224
649
-
67
7,736
4
67
-
10,000
10,000
185
- 6,286
7,191
27,803
-
-
-
-
-
681
-
-
- -
- -
-
681
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.
Annual report for the year ended 30 June 2017
Page 36
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
(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, foreign currency risk, commodity price risk and other price
risk, such as equity price risk. The Company 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 primarily on its variable interest-bearing cash and cash
equivalent balances, floating rate notes, term deposits and variable Smart Account deposits.
Interest rate sensitivity analysis
The following demonstrates the sensitivity to a reasonably possible change in interest rates. With all other variables held
constant, the Company’s profit after tax is affected as follows:
An increase of 50 basis points for 12 months in the general cash rate (assuming other factors remain constant) will increase the
Company's profit after tax and increase equity by $486,949 (2016: $549,796). 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
Fixed Interest Rate
Total
< 3 Months
3 to 12
Months
> 1 Year
Financial assets
Cash and cash equivalents
Other term deposits
USD term deposit
Loans (before impairment)
Floating rate notes
Financial liabilities
Smart Account deposits
2) Foreign currency risk
24,052
1,460
-
-
-
35,380
-
993
-
-
13,843
1,690
3,354
-
-
-
-
300
-
24,052
50,683
1,690
4,647
20,265
20,265
(3,948)
-
-
-
(3,948)
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.
The Company 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 at the transaction date. At reporting date
the Company has some US Dollar and Euro exposure.
Annual report for the year ended 30 June 2017
Page 37
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Foreign currency sensitivity analysis
The following demonstrates the sensitivity to a reasonably possible change in the US dollar and Euro exchange rates, with all
other variables held constant.
An appreciation of 15% of the US Dollar and Euro compared to the Australian Dollar (assuming other factors remain constant),
will increase the Company's profit after tax and increase equity by $396,464 (2016: $362,192). A depreciation of 15% of the US
Dollar and Euro compared to the Australian Dollar will reduce the Company's profit after tax and reduce equity by $293,038
(2016: $267,707).
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
3) Other price risk
AUD
2017
($000)
1,690
65
832
254
86
AUD
2016
($000)
1,751
67
681
446
1
USD
USD
USD
EUR
USD
The Company's investment in available-for-sale financial investments (Visa shares) 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
The Company’s 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 the Company to continue as a going concern; and
• Ensure that capital management is closely aligned with the Company’s business and strategic objectives.
The Company 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, the Company 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 the Company’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 the Company’s Internal Capital Adequacy Assessment Process (ICAAP). The Company operates under the specific
capital requirements set by APRA. The Company has satisfied its minimum capital requirements throughout the 2017 financial
year in the form of Tier 1 capital which is the highest quality components of capital.
Annual report for the year ended 30 June 2017
Page 38
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Capital Adequacy
Risk weighted capital ratios
Common equity tier 1
Tier 1
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 losses1
Total Tier 2 capital
Total qualifying capital
Total risk weighted assets
Tyro Payments Limited
ABN 49 103 575 042
2017
($000)
178%
178%
179%
138,381
(18,081)
120,300
(10,300)
(831)
109,169
2016
($000)
249%
249%
250%
134,566
(6,809)
127,757
(8,174)
(681)
118,902
695
695
550
550
109,864
119,452
61,494
47,765
1. Standardised approach (to a maximum of 1.25% of total credit risk weighted assets)
(viii) Liquidity risk
The Company’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.
The Company manages this risk by the ALCO 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 Management
team, and bi-monthly reports to ALCO. 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 reporting date, the Board of Directors determined that there was sufficient cash available to meet its anticipated expenditure
and other financial liabilities.
Annual report for the year ended 30 June 2017
Page 39
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Maturity analysis
Amounts in the table below are based on contractual undiscounted cash flows for the remaining contractual maturities.
(amounts in $’000s)
< 3 months
3-6 months
6-12
months
1-2 years
2-5 years
Total
As at 30 June 2017
Financial assets
Cash and cash equivalents
Due from other financial institutions
Loans (before impairment)
Trade and other receivables
Floating rate notes
Financial liabilities
Deposits
Trade payables and other liabilities
Net inflow
Year ended 30 June 2016
Financial assets
Cash and cash equivalents
Due from other financial institutions
Trade and other receivables
Financial liabilities
Trade payables and other liabilities
Interest-bearing loans and borrowings
Net inflow
(ix) Fair values
24,052
35,380
993
10,489
-
70,914
(11,430)
(3,948)
(15,378)
55,536
-
10,865
1,707
-
-
12,572
-
-
-
12,572
-
4,668
1,646
-
-
6,314
-
-
-
6,314
-
-
301
-
2,020
2,321
-
-
-
2,321
-
1,525
-
-
18,245
19,770
24,052
52,438
4,647
10,489
20,265
111,891
-
-
-
19,770
(11,430)
(3,948)
(15,378)
96,513
< 3 months 3-6 months
6-12
months
1-2 years
2-5 years
Total
82,224
1,547
7,191
90,962
(9,542)
(459)
(10,001)
80,961
-
10,000
-
10,000
-
-
-
10,000
-
14,729
-
14,729
-
-
-
14,729
-
-
-
-
-
-
-
-
-
1,527
-
1,527
82,224
27,803
7,191
117,218
-
-
-
1,527
(9,542)
(459)
(10,001)
107,217
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.
Annual report for the year ended 30 June 2017
Page 40
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
17. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
Financial Asset
Floating rate notes
VISA shares
Financial Asset
VISA shares
Year ended 30 June 2017 ($000)
Level 1
Level 2
Level 3
Total
-
832
20,265
-
-
-
20,265
832
832
20,265 -
21,097
Year ended 30 June 2016 ($000)
Level 1
Level 2
Level 3
Total
681
-
-
681
681
-
-
681
Quoted market price represents the fair value determined based on quoted prices in active markets as at the reporting date
without any deduction for transaction costs.
In the year ended 30 June 2017, the Company invested in floating rate notes which have a short-term repricing profile and are
of high credit quality. The fair value of floating rate notes has been estimated using pricing data inputs provided by an
independent third party pricing service, which factors in recent arm’s length transactions into their valuation methods.
Transfer between categories
There were no transfers between Level 1, Level 2 or Level 3 during the current year.
18. COMMITMENTS AND CONTINGENCIES
Commitments relating to BECS
The Company 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
2017
$000
3,090
60
65
4,525
7,740
2016
$000
3,151
60
67
4,525
7,803
Annual report for the year ended 30 June 2017
Page 41
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
18. COMMITMENTS AND CONTINGENCIES (cont’d)
The Company has provided an irrevocable standby letter of credit of $3.2m (in 2016: $3.3m) 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.
19. LEASES
(a) Operating lease commitments - Company as lessor
Prior to April 2010, the Company 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, the Company 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, the Company has moved to a perpetual rental model whereby there will be no transfer of ownership of the
asset, and the merchant will pay terminal rental for the duration that they are with the Company. There is no minimum rental
period for merchants and they are able to terminate with the Company at any time with no penalty or buy out fees.
Type of Terminals
Yomani, Yomani XR and Yoximo 3G (including accessories)
Xenta and Xentissimo
(b) Operating lease commitments - Company as lessee
Cost
($000)
15,554
4,930
20,484
Accumulated
Depreciation
($000)
Net Carrying
Value
($000)
8,621
4,930
13,551
6,933
-
6,933
Future minimum rentals payable under the non-cancellable operating leases as at 30 June 2017 are as follows:
Within one year
After one year but not more than five years
More than five years
2017
$000
4,212
16,424
-
20,636
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%.
20. SEGMENT REPORTING
The Company operates in one geographical segment being Australia. Currently the acquiring business segment which provides
EFTPOS solutions to merchants (transaction processing, clearing and settlement activities within the Australian Payments
System) comprises the only material contributor to the Company’s Statement of Comprehensive Income.
Annual report for the year ended 30 June 2017
Page 42
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
21. 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
Tyro Payments Limited
ABN 49 103 575 042
2017
$000
347
223
570
2016
$000
354
160
514
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 21 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.
22. RELATED PARTY DISCLOSURES
(a) Compensation of 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 Ferguson1
Catherine Harris
Paul Rickard
Jost Stollmann2
Title
Non-Executive Director, Chairman
Non-Executive Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointed
18-Apr-08
10-Dec-09
14-Jun-17
17-Dec-15
28-Aug-09
14-Jun-17
1. Non-Executive Director since 14 November 2005. Appointed to Acting Chief Executive Officer on 14 June 2017.
2. Executive Director since 5 April 2005. Appointed to Non-Executive Director on 14 June 2017.
Executives
Kareem Al-Bassam
Justin Mitchell
Praveenesh Pala
Paul Peterson1
Andrew Rothwell2
Gerd Schenkel3
Joshua Walther
Title
Director of Product
Chief Risk Officer
Chief Financial Officer
Head of Product
VP Product & Channel Management
Chief Executive Officer
Director of Sales
Appointed
16-Jan-17
19-Mar-07
20-Oct-14
6-Jun-16
3-Feb-03
24-Oct-16
25-May-17
1. Resigned as Head of Product on 7 April 2017
2. Resigned as VP of Sales on 19 May 2017
3. Resigned as the CEO on 13 June 2017
Annual report for the year ended 30 June 2017
Page 43
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
22. RELATED PARTY DISCLOSURES (cont’d)
Compensation of Key Management Personnel
Short-term benefits
Long-term benefits (long service leave)
Post-employment benefits (superannuation)
Termination benefits
Share-based payments
Total
Interests held by Key Management Personnel
Tyro Payments Limited
ABN 49 103 575 042
2017
$000
2,661
71
254
924
330
4,240
2016
$000
2,217
14
165
-
158
2,554
Share options held by Key Management Personnel to purchase ordinary shares have the following expiry dates and exercise
prices.
Issue Year
Expiry Year
Exercise
Price($)
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
FY16/17
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
FY23/24
FY23/24
$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
$1.490
$1.620
2017
Number
Outstanding
2016
Number
Outstanding
-
436,996
-
1,043,478
-
-
-
2,940,587
5,250,001
-
1,758,644
1,140,846
929,030
932,051
400,000
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
-
-
(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
Atlassian Pty Ltd
Atlassian Pty Ltd
Software purchased
Sub-lease rental income
2017
$000
(73)
560
2016
$000
(43)
132
Mike Cannon-Brookes, a Non-Executive Director of Tyro Payments is Co-Founder, CEO and Director of Atlassian. The
Company 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. Atlassian vacated the premises in March 2017.
Annual report for the year ended 30 June 2017
Page 44
Tyro Payments Limited
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
22. RELATED PARTY DISCLOSURES (cont’d)
(c) Loans with related parties
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 2017, 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
Outstanding options at
the end of the year
2,625,000
1,625,000
1,625,000
1,625,000
7,500,000
In October 2015, the Company entered into a loan facility of $4.6m with 7 lenders, all of whom are either Directors and/or
shareholders of the Company. That facility was not drawn upon in the year ending 30 June 2017 and expired on 30 April 2017.
23. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
No matter or circumstance other than those already disclosed in the financial report, has arisen subsequent to 30 June 2017
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 2017
Page 45
Tyro Payments Limited
ABN 49 103 575 042
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Tyro Payments Limited, I state that:
In the opinion of the Directors:
a)
the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:
I. giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance
for the year ended on that date; and
II. complying with Accounting Standards and Corporations Regulations 2001;
b)
c)
d)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable; and
this declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2017.
On behalf of the Board
Kerry Roxburgh
Chairman
Sydney, 23 August 2017
Annual report for the year ended 30 June 2017
Page 46
Ernst & Young
200 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
Opinion
We have audited the financial report of Tyro Payments Limited (the Company), which comprises the
statement of financial position as at 30 June 2017, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
a)
giving a true and fair view of the Company's financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Company in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the annual report, but does not include the financial report and our auditor’s
report thereon. The other information comprises the Chief Executive Officer’s Year in Review and
Directors’ Report accompanying the financial report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
Responsibilities of the Directors 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 control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar3.pdf.
This description forms part of our auditor’s report.
Ernst & Young
Andrew Price
Partner
Sydney
23 August 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Tyro Payments Limited
ABN 49 103 575 042
ADDITIONAL INFORMATION FOR SHAREHOLDERS
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. A hard copy of the Annual Report can be obtained by contacting the Company Secretary. The Company became a
disclosing entity in the 2016 financial year and publishes an Interim Financial Report for each half-year ended 31 December.
Annual General Meeting
The Tyro Annual General Meeting will be held at the Company premises, 155 Clarence Street, Sydney NSW 2000 on Tuesday
17 October 2017, 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
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
155 Clarence Street
Sydney NSW 2000
Phone: (02) 8907 1714
Email: jmitchell@tyro.com
Annual report for the year ended 30 June 2017
Page 49
CORPORATE DIRECTORY
Directors
Kerry Roxburgh (Chairman)
Mike Cannon-Brookes
Rob Ferguson
Catherine Harris
Paul Rickard
Jost Stollmann
Company Secretary
Justin Mitchell
Registered Office
155 Clarence Street
Sydney NSW 2000
(02) 8907 1700
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 2017
Page 50