Annual
Report 2020
TYRO PAYMENTS LIMITED - ABN 49 103 575 042
CONTENTS
HIGHLIGHTS
CHAIR’S LETTER
CEO & MANAGING DIRECTOR’S REPORT
SUSTAINABILITY REPORT
PROFILES
Board of Directors
Executive Leadership Team
TRACK RECORD
DIRECTORS’ REPORT
Directors’ Report
Audited Remuneration Report
Auditor’s Independence Declaration
FINANCIAL REPORT
ADDITIONAL INFORMATION
Shareholder Information
Corporate Directory
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31
55
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60
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67
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167
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Highlights
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
5
Highlights
AUSTRALIA’S
5TH LARGEST
MERCHANT
ACQUIRING BANK
BY TERMINAL COUNT
Rapid Response to the
risks of the COVID-19
outbreak across Australia by
implementing initiatives to
support our merchants, our
team, and our community to
better deal with the crisis
22%
(FY20: 62,722)
SUCCESSFUL TRIAL
OF NEW TERM
DEPOSIT PRODUCT
- MADE AVAILABLE
TO ALL ELIGIBLE
MERCHANTS FROM 1
JULY 2020
32,176
MERCHANTS
CHOOSING
TYRO AS THEIR
PAYMENTS
SOLUTION
11%
(FY19: 29,031)
$202.8 M
PAYMENTS REVENUE
TRANSACTION & MERCHANT
GROWTH DRIVING RECORD
PAYMENTS REVENUE OF
$202.8 MILLION
10%
(FY19: $183.7M)
$20.1B
RECORD
TRANSACTIONS
PROCESSED BY
TYRO MERCHANTS
15%
(FY19: $17.5B)
Strong Balance Sheet $188.3 million in cash and
financial investments available for future growth
Tyro Connect
launched
Telehealth payment
solution launched, and
successful renewal of
Medicare Easyclaim
N O W
O N L I N E
NPS
IMPROVEMENT
TO 43
HIGHLIGHTING
CUSTOMER
SATISFACTION
AND APPROVAL
OF OUR
PRODUCTS
(FY19: 37)
Largest
successful IPO
by market
capitalisation on
ASX in 2019
$60.1M
RECORD
MERCHANT LOAN
ORIGINATIONS IN
THE YEAR
15%
(FY19: $52.2M)
EBITDA LOSS OF $4.4 MILLION
NARROWING 49.2%
FROM $8.6 MILLION IN FY19
HIGHLIGHTING THE OPERATING
LEVERAGE OF THE BUSINESS
MORE THAN
31,900
MERCHANTS
ENABLED WITH
ALIPAY AS A
PAYMENTS OPTION
eCommerce solution in roll-out phase and
fast-tracked to merchants in response to
COVID-19 adaption and innovation
ONLINE
SHOP
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020 Chair’s Letter
The team achieved this whilst also staying
focused on performance - delivering strong
growth in challenging conditions and entrenching
our position as Australia’s fifth largest merchant
acquiring bank by terminal count.
Your CEO and Managing Director, Robbie
Cooke, will provide more details on the steps we
have taken and how our operations, team and
merchants have traversed this most unusual
of years. However let me acknowledge the
determination, passion and huge commitment
from the Tyro team in looking after our merchants
and our business. I would like to thank each and
every team member for their efforts in FY20 –
living our values has never held truer.
Our priority since mid-
March has been to do all that
we could to work with our
impacted merchants to assist
them in navigating this crisis...
Dear Shareholder,
On behalf of your Directors and the team at Tyro,
I am pleased to present our first annual report
as an ASX listed company for the financial
year ended 30 June 2020. As I am sure is well
understood it has been a very challenging year,
particularly for our merchants with the impact of
COVID-19 and the bushfires wreaking havoc on
their businesses and ambitions. Our priority since
mid-March has been to do all that we could to
work with our impacted merchants to assist them
in navigating this crisis.
We moved quickly to develop a range of
responses to COVID-19 to provide assistance to
our merchants and to ensure our business was
positioned to rebound as quickly as possible on
return to a more normal environment, including:
•
loan repayment holidays for merchants with
cash advance loans;
•
terminal rental relief to impacted merchants;
• providing access to the Federal Government
Coronavirus SME Guarantee Scheme;
• ensuring the safety of our team;
• doing all that we could to keep our team
intact;
• maintaining our high service standards and
reliability for our merchants;
•
•
fast-tracking merchant access to the Tyro
eCommerce platform;
implementing a telehealth payments system
for our health practitioner merchants to
ensure continued service for their patients.
Our COVID-19 actions rightly overshadowed other
major achievements of the team, not least being
the accomplishment of the largest successful
listing on the ASX by market capitalisation in
calendar year 2019 - at a time when many other
planned listings failed.
FY20 FINANCIAL
PERFORMANCE OVERVIEW
Pleasingly we maintained the growth of our
payments business, even with the significant
challenges posed by COVID-19. For FY20,
transaction value increased by 15% to $20.1
billion (FY19: $17.5 billion). While this is down on
our record 30% transaction value growth in the
first half of FY20, it is nonetheless impressive
considering Australia was in effective lockdown
from late March 2020 to the end of May 2020.
This growth in transaction value translated into:
•
total revenue increasing 11.0% to $210.7
million (FY19: $189.8 million);
• gross profit increasing 12.3% to $93.5 million
(FY19: $83.3 million); and
• EBITDA loss reducing 49.2% (before share-
based payments and IPO costs) to $4.4
million (FY19 loss of $8.6 million).
Our Banking business also performed strongly
with an 15% increase in loan originations in the
year reaching total originations of $60.1 million
(FY19: $52.2 million) translating into interest
income on loans of $4.2 million (FY19: $2.9
million). Our deposit balances ended the year at
$50.5 million (FY19: $26.9 million).
Our net loss after tax of $38.1 million was
higher than forecast in our Prospectus due to
the impact of COVID-19 on transaction value
growth, merchant growth and operating margins
due to a shift in card mix. Excluding the cost of
the IPO and share-based payment expenses
directly linked to our IPO, proforma loss before
tax of $25.9 million was recorded compared to a
proforma net loss in FY19 of $19.1 million.
FINANCIAL POSITION
We maintained our strong liquidity position
through COVID-19 by reducing non-essential
operational expenditure, along with putting a
freeze on new employee hires and deferring
salary reviews. Balancing against these cost
control activities was our need to continue
fully serving our SME merchants, which was
much assisted by gaining access to the Federal
Government’s ‘JobKeeper’ support package which
enabled us to keep the full Tyro team intact.
At 30 June 2020, we had $188.3 million in cash
and cash equivalents and investments, up from
$68.8 million as at 30 June 2019.
We moved quickly to develop a range
of responses to COVID-19 to provide
assistance to our merchants and to
ensure our business was positioned to
rebound as quickly as possible...
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
SUSTAINABILITY
THE YEAR AHEAD
Working with over 32,000 merchants across
Australia, it is important that we fulfil our
mission by delivering our solutions in a manner
that creates a sustainable future for all our
stakeholders. This includes our shareholders, our
team, our merchants, the broader community in
which we operate, our suppliers, business partners
and regulatory bodies. A sustainable future also
includes our environmental footprint and our
impact on the planet and the strategies we have
in place to minimise this impact.
We have made good progress in FY20 by
establishing our first sustainability framework
and presenting our first sustainability report to
shareholders. However, we recognise that as we
continue to grow as a listed business, we will need
to enhance our sustainability reporting and as
such plans are in place to further strengthen this
aspect of our business from FY21 onwards.
Finally, I would like to sincerely thank our
dedicated team, our merchants, shareholders and
all our other partners for their ongoing support
through this challenging year. We will continue
throughout FY21 to support our merchants in
whatever way we can to get their businesses back
to normal with an expectation that there could
well be additional challenges as we all seek to
navigate our way out of the COVID crisis.
I look forward to joining you at our FY20 Annual
General Meeting and providing you with more
detail of our results. This year’s AGM will be
managed quite differently due to the restrictions
on physical gatherings, and the need to ensure
the health and safety of all attendees. We will, as
a result, be conducting for the first time a fully
virtual AGM. Details of how you can participate in
the AGM will be included in our upcoming Notice
of Meeting.
Sincerely,
David Thodey
Chair
18 August 2020
BOARD COMPOSITION
We farewelled Kerry Roxburgh, our former Chair,
at the FY19 Annual General Meeting. I would
like to take this opportunity again to thank Kerry
for the significant contribution he made to the
growth of Tyro during his tenure as Chair. In
September 2019 we welcomed Fiona Pak-Poy to
Tyro’s Board as a non-executive director. Fiona’s
career in technology and financial services
management consulting, venture capital
investment in high tech start-ups, founding and
running an online retail operation, coupled with
public company board experience made Fiona a
standout candidate for us.
We will continue throughout FY21 to
support our merchants in whatever
way we can to get their businesses
back to normal with an expectation
that there could well be additional
challenges as we all seek navigate our
way out of the COVID crisis.
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CEO &
Managing
Director’s
Report
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
13
OPERATING & FINANCIAL REVIEW
Looking back at FY20 it is difficult to imagine a year with more contrast. From the exhilarating highs of successfully
undertaking our IPO in tumultuous markets. To the gut-wrenching lows caused by the combination of the devastating
bushfires in January and the onset of COVID-19 from mid-March. As a team our hearts went out to our merchants as we
tried to offer what assistance we could as they fought the challenges nature threw at them.
Most of our efforts in the second half of the financial year were focused on actions and initiatives designed to help our
merchants on their recovery journeys, along with ensuring our business was able to continue providing the high service
standards and reliability for which we are renown. David has outlined many of these actions in his letter to you and I will
not repeat them here, except to call out the tremendous efforts of all Tyros in ensuring these goals were met.
Before delving into our financial performance and position, I thought it useful to provide a ‘snapshot’ review of the 2020
financial year, including highlighting some of the more significant actions undertaken by the team over the course of the
year. This is followed by a more in-depth review of our payments and banking businesses.
FY20 Snapshot
RESULTS
Considering the impacts of COVID-19 in the second half of the year our overall result was strong in the circumstances, but
clearly behind where we had forecast to be at the time of our IPO.
We exited the first half of the year with transaction values up 30% over H1 FY19. This momentum continued into January
and February 2020 with year-to-date transaction value growth up to 29 February 2020 lifting 29% over the comparable
prior period. However, with the introduction of mandatory lockdowns across Australia from mid-March, we saw our overall
transaction value growth rate moderate back to 15% for the full year.
Despite the COVID induced slowdown we still delivered an all-time record annual transaction value of $20.1 billion with
more than 32,000 merchants trusting Tyro with their payments needs. We lifted revenue 11% to a new record $210.7
million and we also booked a record level of loan originations of $60.1 million increasing 15% over the prior year. All this
was achieved at a time when considerable organisational focus was on our IPO, reacting to the devastating bushfires and
working with our merchants to assist them through the COVID-19 pandemic. Maintaining our operating rhythm in such a
frenetic year demonstrates the robustness of our business and the depth of talent in our team.
With close to 63,000 terminals now in the field, we remain the fifth largest merchant acquiring bank in Australia with the
‘big four’ holding the top slots. We are gaining traction by providing functionality and features that merchants want from
our proprietary payments platform. Features such as being the first bank to provide our merchants cost savings available
from least cost routing, being first to market with a fully integrated Alipay solution, and providing eCommerce payments
to simplify the day-to-day for merchants by providing a seamless in-store and online transaction solution with the one
provider. As a tech company we are able to stay at the front of the curve when it comes to delivering payments solutions
responding to our customers’ needs.
Our banking operation continues to track well with all products offered to merchants growing strongly albeit from low bases.
Our merchant cash advance loan achieved a record level of originations in the year increasing 15% over the prior year to
$60.1 million in an environment where we switched our loan decisioning process to a manual assessment to better address
the significant lending risks posed by COVID-19. Tyro was selected by the Commonwealth Government to participate in
the Coronavirus SME Guarantee Scheme (Scheme). The Scheme is designed to help provide businesses access to working
capital and assist them through the impact of COVID-19. It has the benefit of a partial Government guarantee and all loans
provided to our merchants from 12 May 2020 were made under the provisions of this new Scheme.
Our fee-free, interest-paying bank account now has over 3,600 active accounts representing an increase of 53% over
last year with $49.7 million held in deposits at 30 June 2020. We have also launched our new term deposit account to our
entire merchant base with close to $1.0 million held in these term deposit accounts at year end.
It was also pleasing to see the improvement in both our Net Promotor Score (NPS) and our prompted brand awareness.
At 30 June 2020, we achieved an NPS score of 43, up 6 points from the 37 at 30 June 2019. This clearly reflects the
satisfaction of our merchants in both our products offered and the level of service provided. Our prompted brand
awareness improved to 14% from 10% a year prior. Although we have ambitions for this to be significantly higher, it
provides confidence that our marketing approach and brand campaigns are resonating with merchants.
IMPACT OF COVID-19 ON RESULTS
From March 2020, with the outbreak of COVID-19 intensifying across Australia, state and territory governments mandated
social distancing and lockdown policies, which forced many of our merchants, specifically in our Hospitality and Health
verticals, to close their operations, either partially or completely. Although many of our merchants found innovative ways
to adapt to these new trading restrictions, our payments business still experienced a rapid decline in transaction value
from March 2020 (see chart 1). The low point arrived in April with transaction values down 38% and this gradually improved
through the balance of the year with June seeing a return to growth (up 7%). Despite this severity of the decline, we exited
FY20 with overall transaction value growth at 15% which demonstrates the strength and robustness of our business model.
CHART 1 – FY20 TRANSACTION VALUE GROWTH RATES
Average Growth Rate
H1 FY16 - H1 FY20 CAGR +27%
Monthly Analysis
1 January 2020 to 30 June 2020
35%
30%
25%
26.5% 26.2%
23.4% 23.5%
23.8%
28.0%
31.1%
30.7%
29.7%
29.6%
26.7%
20%
15%
10%
5%
0
H1
FY16
H2
FY16
H1
FY17
H2
FY17
H1
FY18
H2
FY18
H1
FY19
H2
FY19
H1
FY20
1.2%
H2
FY20
2.6%
6.7%
Jan
2020
Feb
2020
Mar
2020
Apr
2020
May
2020
Jun
2020
17.7%
37.9%
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IMPACT OF COVID-19 ON RESULTS (cont’d)
Impact on merchant acquisition
A further impact of COVID-19 has been the shift in the mix of card usage experienced across our network. International
card usage, which carries a high merchant service fee, reduced to 0.8% of our overall mix in April through to June 2020 as
international tourist numbers reduced. Conversely, debit cards, which carry a lower merchant service fee, increased from
an average share of 57% pre COVID-19 to an average of 61% from April through to June 2020. Our net margin however
remained stable as net merchant acquiring margins on debit cards are higher than the margins on international cards.
We also experienced a slowdown in our merchant acquisition from 1 March to 30 June 2020 due to the lockdown of many
businesses and the focus of businesses owners on surviving through the crisis rather than reviewing their payments
provider. At 29 February 2020, we were adding on average 1,050+ new merchants per month. This slowed considerably
in April and May with only 614 and 747 new merchants being signed. We did however see a marked improvement in June
with 907 new merchants added in the month.
CHART 2 – CARD MIX TRENDS FY20
Impact on loan originations
Period prior to the impact of COVID-19
COVID-19 impacted period
Proportion of
International
Transaction Vaue
3.7%
3.7%
3.3%
3.9%
5.0%
4.2%
4.4%
4.2%
3.4%
Up to 31 March 2020, we generated $58.5 million in loan originations, up 60% on the comparable prior period and we
were on track to meet our target for the year. With the onset of COVID-19, we adjusted our loan decisioning process to a
manual assessment to ensure credit risk in the new operating environment did not exceed our internal risk appetite. This
change in approach saw originations reduce significantly with the total originations in the last quarter of the financial year
totalling $1.6 million (pcp: $15.6 million). Our FY20 loan originations totalled $60.1 million (pcp: $52.2 million) – up 15% on
the prior year.
CHART 3 – LOAN ORIGINATIONS
0.8%
0.7%
0.8%
61%
62%
61%
Average Growth Rate
H1 FY17 - H1 FY20 CAGR +127.1%
Monthly Analysis
1 January 2020 to 30 June 2020
Proportion of
Debit Card
Transaction Vaue
57%
57%
58%
57%
57%
58%
56%
56%
Jul
2019
Aug
2019
Sep
2019
Oct
2019
Nov
2019
55%
Dec
2019
Jan
2020
Feb
2020
Mar
2020
Apr
2020
May
2020
Jun
2020
As previously mentioned, our Hospitality and Health verticals experienced the most significant impact from the mandated
social distancing and lockdowns. Hospitality, which was growing at 47% prior to COVID-19, decreased 32% from March to
June 2020. Health, which was growing at 15% prior to COVID-19, decreased 15% from March to June 2020.
TABLE 1 – TRANSACTION VALUE ANALYSIS BY VERTICAL
VERTICAL
TRANSACTION VALUE
Hospitality
Retail
Health
Service
TOTAL
FOR THE 8 MONTHS
TO 29 FEB 2020
GROWTH
OVER PCP
FOR THE 4 MONTHS
TO 30 JUNE 2020
GROWTH RATE
OVER PCP
$6.6 billion
$5.0 billion
$1.8 billion
$1.3 billion
$14.7 billion
47%
16%
15%
31%
29%
$1.8 billion
$2.3 billion
$0.7 billion
$0.7 billion
$5.4 billion
(32%)
8%
(15%)
23%
(11%)
$37.4m
$31.7m
$20.6m
$22.7m
$14.7m
$10.5m
$7.9m
$3.2m
$6.4m
$7.3m $7.4m
$0.8m
6.6%
$0.4m $0.4m
H1
FY16
H2
FY16
H1
FY17
H2
FY17
H1
FY18
H2
FY18
H1
FY19
H2
FY19
H1
FY20
H2
FY20
Jan
2020
Feb
2020
Mar
2020
Apr
2020
May
2020
Jun
2020
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional InformationCEO and Managing Director’s Report (cont’d) OUR RESPONSE TO THE CHALLENGES OF COVID-19 ON OUR BUSINESS
The last six months have been intense and challenging both for our merchants and our team. The resilience of the
organisation and our values-driven culture came to the fore over this period as we have navigated with our merchants the
significant impacts of the bushfires and COVID-19. As the severity of the COVID-19 outbreak across Australia became
apparent, our first response was to implement initiatives to support our merchants, our team, and our community to
better deal with this crisis.
We undertook the following actions to effectively respond to the impacts of COVID-19 from March 2020:
•
•
•
•
•
loan repayment holidays for merchants with cash advance loans;
terminal rental relief to impacted merchants;
providing access to the Federal Government Coronavirus SME Guarantee Scheme;
ensuring the safety of our team;
doing all that we could to keep our team intact;
• maintaining our high service standards and reliability;
•
•
•
•
fast-tracking access to the Tyro eCommerce platform;
implementing a telehealth payments system for our medical and health practitioner merchants to ensure continued
service for their patients;
a crisis management team met on a daily basis, chaired by our CEO and Managing Director and weekly updates on
initiatives, plans and strategies to combat the COVID-19 crisis were reported to the Board as part of their weekly
meetings; and
reducing discretionary expenditure, freezing hiring and suspending all remuneration increases to best position and
protect the business from the considerable uncertainty it faced.
Of particular significance were the financial assistance measures we put in place to support our merchants. Loan
repayment holidays were provided for merchants affected by COVID-19 through reactive and proactive engagement.
Inbound requests seeking to defer loan repayments were prioritised for immediate assessment and action, whilst an
outbound contact programme provided merchants with awareness of the support available. We also provided terminal
rental relief to merchants who were significantly impacted by COVID-19 by deferring rental charges.
We fast-tracked the roll-out of our eCommerce solution to our merchants to assist them to innovate and adapt to the
changing ways of doing business, specifically allowing their customers to acquire goods and services through our newly
introduced eCommerce payments solution. In addition we assisted our hospitality merchants in introducing mail order/
telephone order processing for those wishing to introduce take-away services.
We introduced telehealth support for our Health vertical by processing both Medicare Benefits Schedule bulk-billed
telehealth claims through Tyro EFTPOS and gap fee payments through Tyro EFTPOS, mail order/telephone order
processing, direct invoicing and via a virtual terminal on the Tyro eCommerce platform.
Tyro was also selected by the Commonwealth Government to participate in the Coronavirus SME Guarantee Scheme
(Scheme). The Scheme being designed to help provide businesses access to working capital to assist them through the
impact of COVID-19 and has the benefit of a partial Government guarantee. All loans provided to our merchants from 12
May 2020 were made under the provisions of this new Scheme.
To protect the safety of our team we moved swiftly in March to make the necessary arrangements for our team to
effectively work from home. These arrangements covered approximately 99% of our team members with the only
employees still required in office limited to certain new merchant roll-out activities. Our work from home transition was
seamless and our team did not miss a beat during the lockdown. We continued to service all our merchants to our usual
high standard, whilst also providing all assistance we possibly could to support those of our merchants experiencing
hardship during the depths of the crisis and being there for them as their businesses started re-opening post lockdown.
The high level of service and dedication of our team through this pandemic is well demonstrated by our NPS score of 43
for June 2020 which is 6 points higher than the level achieved prior to COVID-19 in June 2019. The team’s focus on our
operations is also evidenced by the maintenance of our leading 99.99% average availability during April through to June
2020 and our average processing time of sub 1.5 seconds per transaction.
We took all steps we could to reduce non-essential operational expenditure and this was coupled with placing a freeze on
new employee hires and deferring all remuneration increases. This approach importantly enabled us to avoid having to
make any organisational changes, enforced redundancies or standing-down of any team members due to the financial
impact of COVID-19. This ensured we were able to maintain full operational capacity in all our teams, including our
call centre and product support teams and best positioned the business to continue its focus on the growth projects
and initiatives in train pre the crisis. Our approach to our team was much assisted by gaining access to the Federal
Government’s ‘JobKeeper’ support package.
We will continue to do everything we can to support our merchants and our team into FY21. We believe both Tyro and our
merchants will come out stronger after the pandemic as confidence returns to the economy and the payments landscape
becomes even more critical to doing business.
SIGNIFICANT BUSINESS OUTCOMES
Beyond the financial outcomes and impact of COVID-19, we have made great progress in FY20 on the following
strategic initiatives:
Expansion into new verticals
We have developed our Services vertical in FY20 with the addition of over 1,850 merchants generating transaction value
of $2.0 billion, up 28% from $1.5 billion in FY19. Some of the key merchants acquired in this vertical include National
Billing Group, Vet Partners Australia and Belgravia Leisure Group. Merchants in our newly created Service vertical benefit
from our technical capability to produce specialised solutions and domain expertise, including in eCommerce.
We are also in the pilot phase of trialling a new mobile terminal, specifically designed to meet the demands of this and other
verticals by being mobile, light, easy to use and retaining the key features our merchants have come to expect from us.
Unified payments solution including eCommerce roll-out
We continued to drive the take-up of our unified payments solution by our merchants, with many of our merchants seeing
the benefits of an eCommerce solution in the current operation environment and its importance for their future existence
and success. We generated $10.6 million in transaction value (FY19: Nil million) from 384 merchants who now use this
solution.
Our unified payments solution provides single-settlement and reporting across ‘card-present’ and ‘card-not-present’
and typically a faster settlement period compared to our competitors with T+1 day settlement compared to the industry
norm of T+3 days.
Initial feedback from our merchants is that they find our eCommerce solution attractive as it enables them to provide their
customers with a more seamless experience across online and offline channels (for example, where customers purchase
online and seek a refund in-store). It also allows them to manage their online and offline transactions in the Tyro App or
Tyro Portal in real time.
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional InformationCEO and Managing Director’s Report (cont’d) SIGNIFICANT BUSINESS OUTCOMES (cont’d)
Launch of Tyro Connect
We went live with Tyro Connect in FY20. Tyro Connect is an integration hub that plugs a range of different apps that
may be required by a merchant to conduct their business into the merchant POS system, making the apps easier for
the merchant to use and manage. Tyro Connect works with POS software designed for cafes, restaurants, quick service
restaurants, pubs, clubs, and bars.
Currently Tyro Connect is integrated to me&u, a restaurant order and payment app, Marsello, a targeted marketing app
and Goggle Food to enable location-based marketing and ordering. We will continue to integrate new apps into Tyro
Connect into FY21.
Release of new banking products
We expanded our merchant cash advance as a loan offering in FY20 by streamlining the loan application process with all
Tyro merchants now having the ability to check their eligibility for a loan through the Tyro app. Additionally, if eligibility
is not automatically satisfied through the app, a manual review can be conducted by our loans team by collecting
additional information from the merchant and assessing the application with the benefit of the additional data. In the
year the amount that a merchant can borrow as a first loan was increased to $100,000 with the ability to increase to
$120,000 for subsequent loans. This streamlined process was impacted with the onset of COVID-19 and our focus on risk
management, however we will return to the streamlined process once the impact of COVID-19 reduces.
In December 2019, we commenced a pilot of a new term deposit account. This pilot was successful, and the term deposit
account became available to all Tyro merchants from 1 July 2020. At 30 June 2020, we had 38 term deposit accounts and
$0.9 million held on our balance sheet.
Launch of our telehealth solution
Telehealth offers a new way to keep health practitioners and their patients in touch outside of the typical physical
consultation. Tyro introduced a payment and rebating solution to facilitate telehealth by processing both Medicare
Benefits Schedule bulk-billed telehealth claims through the Tyro terminal and gap fee payments through either the Tyro
terminal or our eCommerce solution. It is our belief that telehealth will continue to be offered by health practitioners even
after the risk of COVID-19 has reduced.
Least-cost routing
Tyro was the first Australian bank to launch least cost routing, doing so ahead of the recommended deadline date of 1
April 2018. We saw the introduction of this innovative feature, which reduces costs for merchants, as an opportunity to
differentiate ourselves in the market in a way that aligns with our organisational values - specifically in doing the right
thing for our merchants.
Our least-cost routing feature, ‘Tap & Save’, allows merchants to save money by processing each eligible contactless dual
network debit card payment through the scheme that we determine to cost the merchant the least – whether that be the
domestic eftpos scheme or one of the international schemes, with this determination being based on transaction size.
Tap & Save is available on over 98% of our terminals on an opt-in basis - at 30 June 2020, close to 27% of our terminal
fleet had opted into least-cost routing.
Financial Performance
REVENUE
Total revenue of $210.7 million was up 11.0% on FY19 ($189.8 million). The key factors driving this uplift in revenue at a
segmental level are described below:
Payments Business
Our Payments business lifted revenue by 10.4% to $202.8 million (FY19: $183.7 million). The increase in revenue
reflected the 15.1% increase in transaction value and a 10.8% increase in the number of merchants, although the
merchant service fee (MSF) margin achieved was lower compared to FY19. In FY20 an MSF of 0.8953% was achieved
compared to 0.9269% achieved in FY19. The FY20 MSF was impacted by the shift to debit cards which carries a lower
MSF and the significant reduction in transaction value generated from international cards that generates a higher MSF,
due to the travel restrictions in Australia.
Our Payments business revenue was also impacted by a 24.9% decrease in other fee income at $3.9 million (FY19:
$5.2 million). $2.3 million of other fee income relates to Medicare Easyclaim revenue which decreased from $3.5
million in FY19 due to the Department of Human Services no longer paying a fee per transaction for Medicare claims
processed under the terms of our new contract since February 2020.
Banking Business
Our Banking business revenue declined 38.1%. The decline was due to a fair value adjustment of $2.4 million
recognised on our business loans under accounting standards due to management’s conservative estimate of the
potential impact of COVID-19 on future loan balances. Excluding the fair value adjustment which provides a more
realistic view of banking performance, interest income on our business loans increased 43.5% to $4.2 million (FY19:
$2.9 million) driven by a 15% increase in loan originations (60.0% increase prior to the onset of COVID-19).
Other Revenue
Other revenue increased 91.6% to $6.0 million (FY19: $3.1 million) principally as a result of the ‘JobKeeper’ subsidy of
$3.9 million received from the Federal Government from 1 April 2020 to 30 June 2020.
GROSS PROFIT
Gross profit of $93.5 million was generated in FY20, up 12.3% from FY19 ($83.3 million). Our Payments business
contributed $86.1 million to total gross profit, up 11.2% on FY19 ($77.5 million) at a Merchant Acquiring Fee (MAF) margin
of 0.3205% to transaction value compared to a margin of 0.3240% in FY19. Interchange, integration, and support fees for
our payments business was up 9.8%, slightly lower than the 10.4% increase in payments revenue due to the lower direct
costs incurred on debit cards.
Our banking business contributed $1.3 million to gross profit from revenue of $1.8 million at a gross profit margin of 71.6%
(FY19: $2.7 million gross profit at a margin of 90.6%). The reduction in margin and gross profit from our banking business
reflects the fair value adjustment of $2.4 million that directly impacts gross profit.
21
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional InformationCEO and Managing Director’s Report (cont’d) GROSS PROFIT (cont’d)
CHART 4 – OPERATING METRICS CHART
1.0000%
0.9500%
0.9000%
0.8500%
0.8000%
0.7500%
0.7000%
0.6500%
0.6000%
0.5500%
0.5000%
0.4500%
0.4000%
EBITDA
0.9292%
0.9531%
0.9403%
0.9269%
0.8911%
0.8953%
0.6151%
0.5436%
0.5283%
0.5905%
0.5379%
0.5170%
0.5377%
0.5170%
0.5065%
0.5559%
0.5365%
0.5251%
0.4861%
0.4759%
0.4643%
FY16
FY17
FY18
FY19
FY20
0.5064%
0.4819%
0.4322%
FY15
MSF as a % of Transac�on Value
Opera�ng expenses as a % of Transac�on Value
Interchange + Scheme Fees as a % of Transac�on Value
Gross Profit as a % of Transac�on Value
Our EBITDA loss (before share-based payments and IPO costs) of $4.4 million was a 49.2% improvement on the
EBITDA loss of $8.6 million incurred in FY19. We generated a positive EBITDA result of $1.5 million for the first half of
FY20, however the impact of COVID-19 in the second half of FY20 resulted in lower gross profit resulting in an EBITDA
loss outcome for the full year. As mentioned and to protect our business during COVID-19, we did curtail spending on
marketing, travel, and certain other costs, however these savings were not sufficient to offset the lower revenue achieved.
STATUTORY EBIT
Our statutory EBIT loss for the reporting period was $37.5 million, up 85.2% from FY19 ($20.3 million). Depreciation and
amortisation was up 59.3% at $12.5 million, a key component of this increase relates to the transitioning to AASB16 Leases
and new terminal purchases to meet the growth in merchant numbers.
Further increasing the EBIT loss was IPO costs of $9.7 million and share-based payment expenses of $10.9 million of
which $2.4 million directly related to the expensing of liquidity event performance rights arising as a result of the IPO.
On a proforma basis, excluding the impact of the IPO, our EBIT loss was $25.4 million, up 33.1% from FY19.
NET LOSS AFTER TAX
Net loss after tax on a statutory basis was $38.1 million, up 106.4% from FY19 ($18.4 million). On a proforma basis, net loss
before tax was $25.9 million, up 35.9% from FY19.
No tax benefit was recognised in FY20 compared to a tax benefit of $1.8 million recognised in FY19, however at 30 June
2020 we have $29.3 million in recognised and unrecognised tax losses potentially available for future use.
TABLE 2 – SUMMARY FINANCIAL PERFORMANCE
FY2020
($’000)
FY2019
($’000)
Transaction Value
20,131,045
17,496,322
Payments revenue and income
202,826
183,685
Lending and investment income
Other revenue and income
Total Revenue
3,600
4,249
5,271
814
210,675
189,770
Payments direct expenses
(116,684)
(106,234)
Interest expenses on deposits
(516)
(276)
Total direct expenses
(117,200)
(106,510)
Gross profit
Operating expenses:
Employee benefits expense
(excl. share-based payments)
93,475
83,260
(67,662)
(60,813)
Administrative expenses
(16,598)
(17,775)
Contractor and consulting expenses
Marketing expenses
Lending and non-lending losses
(5,913)
(5,716)
(1,958)
(7,715)
(4,771)
(797)
Total operating expenses
(97,847)
(91,871)
EBITDA
Share-based-payments expense
IPO expenses
EBITDA after share-based payments and
IPO expenses
(4,372)
(10,896)
(9,730)
(8,611)
(3,788)
-
(24,998)
(12,399)
Net lease interest expense
(535)
-
Depreciation and amortisation
(12,524)
(7,864)
Loss before tax
Income tax
Net loss after tax
(38,057)
(20,263)
-
1,824
(38,057)
(18,439)
CHANGE
(%)
15.1%
10.4%
31.7%
422.0%
11.0%
9.8%
87.0%
10.0%
12.3%
11.3%
6.6%
23.4%
19.8%
145.7%
6.5%
49.2%
187.6%
100.0%
101.6%
100.0%
59.3%
87.8%
100.0%
106.4%
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional InformationCEO and Managing Director’s Report (cont’d)
NET LOSS AFTER TAX (cont’d)
TABLE 3 – RECONCILIATION TO PROFORMA LOSS BEFORE TAX
FY2020
($’000)
FY2019
($’000)
Loss before tax (statutory)
(38,057)
(20,263)
Add back:
IPO costs
Share-based payments expense relating to IPO
9,730
2,411
-
1,195
Loss before tax (proforma)
(25,916)
(19,068)
CHANGE
(%)
87.8%
100.0%
101.8%
35.9%
Financial Position
Notwithstanding the impacts of COVID-19 on our business, Tyro remains in a position of financial strength enhanced
by funds raised in our IPO in December 2019 which positions us strongly for pursuing our growth plans into FY21.
Cash, cash equivalents and financial investments available at 30 June 2020 totalled $188.3 million, up from $68.8
million at 30 June 2019.
At year end we held $11.9 million in merchant loans as current assets, against merchant deposits of $50.5 million
(FY19: $26.9 million) as current liabilities on the balance sheet. The 87.8% increase in merchant deposit balances
provides further scope to scale our loan product into FY21 once the risks of COVID-19 have subsided.
Our net asset position increased to $189.7 million at 30 June 2020, up from $93.1 million at 30 June 2019. Total assets
were $263.8 million, an increase of $115.2 million which is primarily due to the funds raised in our IPO. Total liabilities
at 30 June 2020 were $74.1 million, an increase of $18.5 million from the prior year primarily relating to the increased
merchant deposits held.
Total capital held at 30 June 2020 was $165.8 million with a total capital ratio of 162% (FY19: $76.4 million with a
capital ratio of 89%). Tyro has always held sufficient capital to meet its internal targets above APRA’s prudential
capital requirements.
Total capital expenditure for FY20 was $11.9 million (FY19: $11.7 million) principally made up of terminal purchases and
investment in software, including capitalised internal development costs of $2.8 million.
SEGMENT FINANCIAL PERFORMANCE
PAYMENTS BUSINESS REVIEW
FY20 Highlights
Record $20.1 billion in transactions processed by Tyro merchants – up 15.1% (FY19: $17.5 billion).
32,176 merchants choosing Tyro as their payments’ solution – up 10.8% (FY19: 29,031).
Transaction and merchant growth driving record payments revenue of $202.8 million – up 10.4% (FY19: $183.7 million).
Australia’s 5th largest merchant acquiring bank by terminal count – 62,722 terminals up 22.2% (FY19: 51,317).
NPS score for June 2020 of 43 – up 6 points from June 2019.
Transaction churn rate of 8% – FY19: 9.3%
Roll-out of eCommerce solution accelerated – 384 merchants now using eCommerce in their business generating
transaction value of $10.6 million.
Pilot of new mobile terminal launched – ideal form factor for our new Services vertical.
More than 31,900 merchants enabled with Alipay as a payments option generating transaction value of $24.1 million.
Telehealth payment solution launched, and successful renewal of Medicare Easyclaim.
Tyro Connect launched.
17% investment in me&u, an app-based ordering and payment solution for the Hospitality vertical.
Payments Business Financial Performance
FY2020
($’000)
FY2019
($’000)
Transaction value
20,131,045
17,496,322
Payments revenue and income
202,826
183,685
Payments direct expenses
(116,684)
(106,234)
Payments gross profit
Gross profit margin
86,142
42.5%
77,451
42.2%
Net merchant acquiring fee to transaction value
0.3205%
0.3240%
CHANGE
(%)
15.1%
10.4%
9.8%
11.2%
30 bps
0.35 bps
Performance Review
The value of transactions processed reached $20.1 billion, up 15.1% (FY19: $17.5 billion) from 32,176 merchants, up 10.8%
(FY19: 29,031). Year-to-date up to 29 February 2020, transaction value growth was tracking at 29%, however with the
impact of the mandated lockdowns from March to June 2020, growth for the full year moderated back to 15.1%.
New merchant acquisition was also impacted by COVID-19. Year-to-date up to 29 February 2020, we acquired an
additional 8,526 merchants with our total merchant numbers at 33,315, on track to meet our full-year target. Through the
period 1 March to 30 June 2020, we only acquired an additional 3,129 merchants with application numbers decreasing
18% over the prior comparable period due to merchants focussing on trying to keep their businesses open rather than
considering a change in payment providers.
Our Hospitality vertical delivered strong growth of 17.5% in transaction value, with our Retail vertical delivering 13.1%
growth and our Health vertical achieving 4.6% transaction value growth. A standout performer for the year was our new
Services vertical that delivered 27.8% transaction value growth.
25
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional InformationCEO and Managing Director’s Report (cont’d) PAYMENTS BUSINESS REVIEW (cont’d)
CHART 5 – TRANSACTION VALUE AND MERCHANT COUNT BY VERTICAL
BANKING BUSINESS REVIEW
FY20 Highlights
Record merchant loan originations of $60.1 million – up 15% (FY19: $52.2 million).
Streamlining of loan application process – ability to apply for a loan made available to all merchants in FY20.
Roll-out of new term deposit product for merchants.
Record deposit balances of $50.5 million (FY19: $26.9 million).
Targeted response to assist merchants in need through the COVID-19 period including loan repayment holiday.
New government guaranteed loans provided to merchants from 12 May 2020.
26%
(8,433)
31%
(9,855)
26%
(8,518)
17%
(5,370)
Banking Business Financial Performance
t
n
a
h
c
r
e
M
t
n
u
o
C
n
o
i
t
c
a
s
n
a
r
T
l
e
u
a
V
12%
($2.5b)
42%
($8.4b)
36%
($7.3b)
10%
($2.0b)
From a geographical standpoint, Queensland delivered impressive transaction value growth with that state delivering
a 26.0% increase. Against this, New South Wales and Victoria, our largest states by merchant numbers achieved
transaction value growth of 13.0% and 10.1% respectively reflecting the impact of COVID-19.
Hospitality
Services
Health
Retail
As mentioned we fast-tracked the roll-out of our new eCommerce solution to merchants during lockdown to assist them
to adapt and innovate their businesses to cope with the challenges posed by COVID-19. This eCommerce solution now
means merchants can work with us both for their in-store and online transactions and simplifies the day-to-day for our
merchants by providing one point of contact together with single settlement and reconciliation, removing the need to
manage multiple payment providers. At 30 June 2020, we had 384 merchants utilising our eCommerce solution with $10.6
million generated in transaction value (FY19: Nil).
Our integrated Alipay offering also remains in the roll-out phase with more than 31,900 merchants now enabled to switch
on Alipay as a payment option and generated $24.1 million in the year (FY19: $12.6 million). Our Alipay offering has been
significantly impacted by the lockdown of Australia’s international borders, however we are confident this payment type
will exhibit a strong growth profile over the coming years once the impact of COVID-19 reduces and international travel
resumes.
In March 2020, we launched our telehealth payments solution in response to the requirement to keep health practitioners
and patients in touch for consultations outside of the typical physical visit. Tyro introduced a payment and rebating
solution to facilitate telehealth by processing both Medicare Benefits Schedule bulk-billed telehealth claims through the
Tyro terminal and gap fee payments through either their Tyro terminal or our eCommerce solution. It is our belief that
telehealth will continue to be offered by health practitioners even after the risk of COVID-19 has reduced.
Late in 2019 the Federal Government announced that the Medicare Easyclaim service would be put to tender. Tyro was
successful in securing the right to continue providing this important service for our healthcare practitioners. For FY20
we earned $2.3 million in Medicare Easyclaim revenue (FY19: $3.5 million). As noted in our 11 December 2019 ASX release
announcing our successful tender, under the terms of our new contract the Department of Human Services will no longer
pay a fee per transaction for Medicare claims processed.
The growth in our transaction value and merchant numbers saw us deliver record revenue from our Payments operation
of $202.8 million, up 10.4% on the $183.7 million achieved in FY19. This translated into gross profit of $86.1 million at a
gross profit margin of 42.5% (FY19: 42.2%). Our Merchant Acquiring Fee (MAF) margin of 0.3205% to transaction value was
slightly down from the 0.3240% achieved in FY19 due, in combination, to eCommerce fixed costs, lower margins achieved
on larger merchants and least cost routing.
Loan originations
Interest income on loans
Fair value adjustment
Interest expense on deposits
Banking gross profit
Performance Review
FY2020
($’000)
60,107
4,179
(2,361)
(516)
1,302
FY2019
($’000)
52,249
2,912
26
(276)
2,662
CHANGE
(%)
15.0%
43.5%
9,180.8%
87.0%
51.1%
Revenue from our merchant loans grew 43.5% to $4.2 million with record loan originations in the year of $60.1 million
(FY19: $52.2 million) – up 15%. We achieved loan originations of $58.5 million for the 9-months to 31 March 2020, up 60%
over the prior comparable period. Since 1 April 2020 only $1.6 million in new loan originations were written, highlighting
the significant impact of COVID-19 on our lending business.
Prior to the onset of COVID-19, the process was improved for Tyro merchants who check their eligibility for a loan. If
additional information is required to assess their eligibility, a manual assessment request can be triggered in the Tyro App.
This allows our Banking Specialist team to respond promptly and collect any additional information from the merchant
that may be required to support their assessment. During the current COVID-19 period from 1 April 2020, our assessment
process was adjusted making use of the manual assessment process improvements. As a participating lender in the SME
Guarantee Scheme, from May 2020, the automated assessment process would apply up to a maximum of $30,000 per
loan and a manual assessment processes for anything above $30,000 to ensure any new lending met our internal risk
tolerances and recognising the impact of the lockdowns on the ability of merchants to repay any new loans. We continue
to monitor the impact of COVID-19 and will return to a higher-limit automated assessment process once the impact
reduces.
The increase in loan originations and the offering of our loan product to a wider merchant base has seen loss rates remain
well within our risk appetite. Loan losses as a percentage of originations at 30 June 2020 amounted to 1.8% ($1.1 million)
compared to 1.0% ($0.5 million) in FY19.
Our fee free, interest paying bank account now has over 3,600 active accounts representing an increase of 52.9% with
$49.7 million held in deposits at 30 June 2020 (FY19: $26.9 million). We also, in December 2019, commenced a pilot of a
new term deposit account which has proved to be successful and well accepted by our merchants in the pilot phase. Off
the back of the successful conclusion of the pilot, we have rolled-out the account to all eligible merchants from 1 July
2020.
The growth in loan originations delivered gross profit of $1.3 million for our banking operation representing a gross profit
margin of 71.6% (FY19: 90.6%). Gross profit in FY20 was impacted by an accounting fair value adjustment against our loan
balance of $2.4 million. Excluding the impact of the accounting fair value adjustment, normalised gross profit was up
39.0% to $3.7 million (FY19: $2.6 million).
Although our banking operation still only represents a small part of the overall Tyro business, it presents an alternative to
the major banks and has strong prospects for continued growth.
Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
27
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020CEO and Managing Director’s Report (cont’d)
The Road Ahead
Since the establishment of Tyro 17 years ago, we have focussed on instilling a high performance, values-
driven culture in our team. It is a testament to this culture that Tyro has been able to perform so strongly
in these challenging times and we are more confident than ever in our future success.
Whilst we are not immune to the pressures facing the Australia economy, we have a resilient business
model and plan to continue on our journey of building an ecosystem centred around payments,
enhanced by value-adding features and products designed to attract new merchants and retain existing
merchants. We remain focused on capturing market share in our existing verticals as businesses come
back online and are looking for ways to improve their existing payments and banking solutions. As
normality returns we also intend to step up our efforts in the Services and Accommodation verticals while
also continuing the roll out of our relatively new eCommerce solution, which is a key element for many
merchants in the post COVID environment. Our new Tyro Connect platform will be expanded with new
apps added to the platform and we will accelerate the roll-out of this platform to our merchants as it
continues to develop.
I look forward to providing you with more detail on the progress of our trading to-date for the first half of
FY21 at our Annual General Meeting on 27 October 2020.
Robbie Cooke
Chief Executive Officer | Managing Director
Whilst we are not immune to the pressures
facing the Australia economy, we have
a resilient business model and plan to
continue on our journey of building an
ecosystem centred around payments,
enhanced by value-adding features
and products designed to attract new
merchants and retain existing merchants.
29
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional InformationCEO and Managing Director’s Report (cont’d) Sustainability
Report
Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
31
Sustainability
Report
TYRO SUSTAINABILITY SCORECARD
Social – Merchant and Community Investment
CONTRIBUTIONS
FY20 PERFORMANCE
Merchant assistance programmes:
• Merchants impacted by COVID-19 who requested assistance were
Value of assistance:
• $4.9 million in deferred loan
provided with:
• 1 to 3 months of free terminal rental;
• a Merchant Service Fee payment holiday in selected cases where the
merchant failed either their March or April billing cycle; and
repayments to COVID-19 impacted
merchants.
• $1.6 million in free terminal rental to
COVID-19 impacted merchants.
• a 90-day loan repayment holiday for merchants with loans prior to
the implementation of the new Government Coronavirus SME Loan
Guarantee Scheme.
• $22,357 in deferred Merchant Service
Fee payments to COVID-19 impacted
merchants.
• Merchants impacted by the bushfires in January 2020 were provided
• Free terminal rental to bushfire
impacted merchants for 45 terminals.
• Total contributions of $11,214 made in
addition to employee led donations
of goods and services to the
community.
with 3-months of free terminal rental.
Community charitable donations:
• Contributions were made to the following causes in FY20:
• Dementia Australia
• Black Dog
• Equine Welfare Fund Trust
• Local community groups
• Westmead Children’s Hospital
• Dandelion Support Network
• Sydney Dogs and Cats Home
Social – Diversity in our Team
GENDER EQUALITY
FY20 PERFORMANCE
Women in key management:
Key Management Personnel (including board members)
3 of 9 KMP including board members (33%)
Executive Leadership Team (XLT)
Senior Managers
Other Managers
EQUAL PAY AND EQUAL OPPORTUNITY:
Conduct a pay equity audit
Conduct an equal opportunity audit
5 of 12 (42%)
11 of 31 (35%)
23 of 67 (34%)
An internal audit of pay equity was completed as part of
the annual remuneration review process. The results of
this internal audit concluded that there is no discrepancy
in remuneration on the basis of gender.
No audit was conducted in FY20. However, an equal oppor-
tunity audit will be conducted in FY21.
DIVERSITY TRAINING:
Conduct diversity training for all Team Members
Social – Team Health and Safety
SAFETY OF OUR TEAM
Reportable incidents:
Number of total incidents
Number of lost time incidents
Total recordable injury frequency rate
Lost time injury frequency rate
Environment – Our environmental footprint
SAFETY OF OUR TEAM
Scope 1, 2 and 3 emissions
Water consumption
Recycling
Waste management
Governance
GOVERNANCE TARGETS
A pilot in-person training session on
unconscious bias in the workplace was
conducted for 20 employees who were
deemed to play critical roles in hiring at
Tyro. This training will be rolled out to all
employees in FY21.
FY20 PERFORMANCE
Nil
Nil
Nil
Nil
Nil
FY20 PERFORMANCE
We have implemented procedures
for tracking our carbon emissions,
water consumption and recycling
and waste management initiatives
for FY21 going forward. For FY20,
no tracking was conducted.
FY20 PERFORMANCE
Continue to comply with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (4th edition)
Achieved
Maintain a compliance record of receiving no fines or penalties for non-
compliance with any of the laws, regulations or rules.
Achieved
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
DELIVERING ON OUR MISSION STATEMENT
SECTION 1 - TYRO SUSTAINABILITY FRAMEWORK
Tyro’s mission is simple – we exist to set businesses free to get
on with business by simplifying payments and banking. We are
a technology-focused and values-driven company providing
Australian businesses with payment solutions and value-adding
business banking products.
Working with over 32,000 merchants across Australia, it is important that we fulfil our mission by delivering our solutions
in a such a manner that we create a sustainable future for all our stakeholders. This includes our shareholders, our people,
our merchants, the broader community in which we operate, our suppliers and business partners and regulatory bodies. A
sustainable future also includes our environmental footprint, our impact on the planet and the strategies we have in place
to minimise this impact.
FY20 is our first year as a listed company, and the challenges from the bushfires, the floods and COVID-19 in FY20
highlights the need for our business to ensure that sustainability risks are considered by the Board and management
and that appropriate strategies are put in place to address the risks posed by environmental impacts, social issues and
governance responsibilities.
As we continue to grow as a listed business, we will refine our sustainability reporting with the objective of reporting with
reference to the Global Reporting Initiative (GRI) standards from FY21 onwards.
Our team members come from 43
countries, speak 56 languages, and have
an average age of 34 years. 35% of our
managers and 42% of our Executive
Leadership Team are female.
The Board and management is committed to having
a sustainability framework in place that reflects the
reason why we exist now and into the future. We
recognise that to continue growing a strong business
requires consideration of all our stakeholders and the
impact of our business on those stakeholders. We are
therefore committed to ensuring sustainability risks and
opportunities are integrated into our purpose, strategic
objectives, culture, and values.
In order to facilitate our response to sustainability issues,
we have developed a sustainability framework applicable
to Tyro’s business that focusses on the three principal
pillars of sustainability, namely:
• social issues;
• governance issuess; and
• environmental issues.
c i a l
S o
unity
m
m
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s
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SUSTAINABILITY
FRAMEWORK
S
h
areholders
e
c
n
e
n
M
Team
Gover
These three pillars are then applied to our dealings with our stakeholders (both internal and external). Tyro has identified
the following stakeholders in our business model:
STAKEHOLDER
RELATIONSHIP
Shareholders
External: These are our Investors. They own the company and ultimately the Board is appointed
to act on behalf of shareholders and is accountable to shareholders.
Team
Merchants
Community
Regulators
Suppliers
Internal: Our employees create and deliver the products and services that our merchants need to
set them free to get on with business. Our team is the reason we excel at what we do.
External: Our merchants always come first. They are the reason we exist and they can always
choose to take their business to a competitor so it is essential that we continue to innovate, to
offer great products, excellent service and value for money.
External: We want to be a good corporate citizen with positive links to the local communities in
which we operate. We want to be seen as a responsible business, a responsible employer who
is providing a great place to work and a responsible participant in doing our part to protect the
planet.
External: We need to be compliant with all laws and regulations and ensure that our business
practices meet those requirements, as well as community expectations.
External: We collaborate with our suppliers to run the business. We aim to build good long-term
relationships with suppliers and business partners, in turn ensuring they live-up to our values.
We engage with our network of integrated point-of-sale system partners and independent sales
organisations as part of our sales strategy.
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SECTION 1 - TYRO SUSTAINABILITY FRAMEWORK (cont’d)
Governance of our Sustainability Framework
We currently operate under the following sustainability governance structure.
Board
REVIEW AND APPROVE TYRO’S SUSTAINABILITY FRAMEWORK AND
ENSURE SUSTAINABILITY RISKS ARE INTEGRATED INTO OUR OVERALL
RISK FRAMEWORK
CEO and Managing Director
• Develops the approach as to how Tyro strategically integrates, reports
and discloses the benefit from operating a sustainable business strategy
• Responsible for the performance of the sustainable business strategy
• Engage with key external stakeholders (shareholders and regulators)
Executive Leadership Team
• Perform an annual sustainability risk assessment
• Implement the sustainable business strategy
• Engage with and support the business through leadership of teams
• Engage with our merchants, community and suppliers to ensure our
sustainable business strategy meets our performance targets
Internal Stakeholders
Team
External Stakeholders
Merchants
Community
Shareholders
Suppliers
Regulators
Tyro’s sustainability framework has been approved by the Board and responsibility for the framework has been delegated
to the CEO and Managing Director, who leads Tyro’s Executive Leadership Team (XLT) which is responsible for reviewing
Environmental, Social and Governance (ESG) risks and opportunities, developing a sustainability strategy and overseeing
the delivery of Tyro’s sustainability framework. The XLT is also responsible for communicating sustainability matters with
team members and other key stakeholders.
As part of our sustainability framework, we will also be performing a sustainability risk assessment from FY21 onwards on
an annual basis to ensure we:
•
•
•
•
•
identify the environmental, social and governance issues and risks that may have a material impact on our value over
the short, medium, and long term;
provide both data and a supporting narrative explaining why the issue is material and how it impacts our business
value chain;
recognise the impact that our business has on stakeholders such as team members, merchants, communities,
shareholders, regulators and suppliers and describe how we take the views of our stakeholders into account as part of
our risk assessment;
describe our policies and procedures for managing our environmental and social impact over the short, medium and
long term; and
develop a system to evaluate whether our sustainability policies and procedures are effective, including performance
against set annual metrics and targets.
Before providing details around the management of our individual stakeholder groups, below is a summary of our
response to COVID-19 in FY20.
SECTION 2 – OUR RESPONSE TO COVID-19
Many of our merchants found the impact of COVID-19 extremely challenging despite all their efforts to innovate and
adapt, and notwithstanding the various assistance packages on offer from the federal, state and territory governments
and from Tyro.
We are committed to doing all we possibly can to support our merchants and our team during this period of uncertainty
and change. We developed a range of responses to the crisis to ensure Tyro could continue to provide critical payments
and banking services to our over 32,000 merchants.
Response 1 – Formation of a crisis management team
In March 2020, with the onset of the height of the COVID-19 pandemic in Australia resulting in a nationwide lockdown,
we formed a crisis management team consisting of members of our Executive Leadership Team and team members
responsible for office logistics and communications This crisis management team had the central objective of protecting
our team and ensuring that we could continue to service our merchants in the manner they have come to expect from
Tyro. This crisis management team met on a daily basis, chaired by Robbie Cooke, our CEO and Managing Director and
weekly updates on initiatives, plans and strategies to combat the COVID-19 crisis were reported to the Board.
Some of the key areas that this crisis management team focussed on include:
•
Analysing and forecasting the impact of COVID-19 on Tyro, in particular our capital and liquidity requirements.
• Monitoring supply chains and providers for potential challenges for the delivery of key hardware, equipment and
supplies to keep our business operating.
•
Implementing a COVID-19 specific work from home policy and toolkit for team members, together with the
necessary technology and equipment support, and ensuring all functions within the business continued to operate
remotely and without significant disruption.
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SECTION 2 – OUR RESPONSE TO COVID-19 (cont’d)
Response 1 – Formation of a crisis management team (cont’d)
Response 3 – Fast-tracking access to the Tyro eCommerce payments portal
•
•
•
Supplying additional resources to team members where required, including mental health and wellbeing support.
Cutting all non-essential expenditure such as marketing expenditure, out-of-cycle salary increases and promotions,
staff training, physical travel and pausing the recruitment of any non-mission critical roles.
Placing increased focus on the wellbeing of our team members (physical, mental and emotional) and conducting
weekly employee pulse surveys in the first 8 weeks of the work from home arrangements to assess team sentiment
during this period of uncertainty.
Response 2 - Servicing our network of merchants
As a provider of critical payments technology and banking services, the ability of our payments and banking network to
remain functioning reliably at expected levels was our first priority.
The Tyro team did not miss a beat during the 10 weeks of lockdown, continuing to service all our merchants to our usual
high standard, and providing assistance to those of our merchants experiencing hardship during the crisis and being there
for them as businesses started re-opening post lockdown.
OUTCOME OF RESPONSE:
KEY FOCUS AREA OF RESPONSE
Reliability - Average payments service availability from 1
March 2020 to 30 June 2020.
OUTCOME
99.99%1
Speed of processing – Average time taken to authorise a
payment transaction from 1 March 2020 to 30 June 2020.
1.5 seconds
Minimising merchant churn - Merchant churn rate of
transaction value during the FY20 compared to FY19.
8.0% at 30 June 2020
9.3% at 30 June 2019
Response from our call centre – Ability to handle
increased call volumes to assist merchants.
Guidelines and information support provided to
merchants.
Increased staff in customer support teams on a 24/7 basis.
We provided merchants with general and industry specific
support and information for dealing with COVID-19 issues in
their respective businesses.
Examples included:
• sanitising of terminals;
• dealing with increased security and risk issues with
payments; and
• working with suppliers like lovelocalretail.org and
keepyourcafe.com.
1
Our availability is expressed as a percentage of total merchant transactions that are unaffected by a Tyro acquiring service issue. We measure
reliability on a transactional rather than a time (‘uptime’) basis as we believe this more accurately reflects the impact of service disruptions
during periods of high frequency transactions (for example, peak trading windows such as lunchtimes).
Lockdown laws enforced by state and territory governments in Australia in response to COVID-19 has driven a change in
consumer behaviour. In many households, online grocery, apparel, takeaway food orders and entertainment purchases
replaced retail and mall visits. As many of our hospitality merchants adapted to online takeaway orders, we were able to
provide telephone order payments processing and an eCommerce solution to our merchants to seamlessly transition
their business to eCommerce.
The Tyro eCommerce solution includes features such as e-Invoicing, virtual terminal, recurring payments and security and
fraud protection matched to a competitive pricing structure and our 24/7 Australian-based customer support. The Tyro
eCommerce solution connects with 11 popular and widely used shopping carts such as Shopify, OpenCart and Drupal.
OUTCOME OF RESPONSE:
KEY FOCUS AREA OF RESPONSE
Merchants with Tyro eCommerce solution at 30 June 2020.
Transaction value of eCommerce transactions in FY20.
OUTCOME
384
$10.6 million
Response 4 – Provision of a telehealth payments system
A further impact resulting from the lockdowns during COVID-19, was the ability for the public to visit medical practitioners.
Telehealth was introduced by the Australian Government as a new way to keep health practitioners and patients in touch
for consultations while keeping practitioners and the broader community safe.
Tyro introduced support for merchants in our health vertical by processing both Medicare Benefits Schedule (MBS) bulk-
billed telehealth claims through Tyro EFTPOS and gap fee payments through Tyro EFTPOS, mail order/telephone order
(MOTO) processing, direct invoicing and virtual terminals via the Tyro eCommerce platform.
OUTCOME OF RESPONSE:
KEY FOCUS AREA OF RESPONSE
Health merchants with telehealth solution as at 30 June 2020.
Transaction value of all telehealth transactions in FY20 (including MOTO).
OUTCOME
7,974
$222.3 million
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Response 5 – Financial assistance provided to our merchants
A number of financial assistance measures were put in place in response to COVID-19 to support our merchants, as well
as those merchants who had borrowed funds via a Tyro Business Loan.
Loan repayment holidays were provided for merchants affected by COVID-19 through reactive and proactive
engagement. Inbound merchant requests with the need to defer loan repayments were prioritised for immediate
assessment and action, whilst an outbound contact program provided merchants with awareness of the support available.
Our decisioning process was adjusted to provide more focus on performing loan assessments manually. We continue to
monitor the situation and make any necessary adjustments as the conditions change.
Tyro was also selected by the Commonwealth Government to participate in the Coronavirus SME Guarantee Scheme
(Scheme). The Scheme is designed to help provide businesses access to working capital and assist them through the
impact of COVID-19. From 12 May 2020, the Tyro Business Loan was solely issued under the Scheme and was available to
existing Tyro merchants. The unique features of the Tyro Business Loan that many of our merchants are familiar with were
retained (including repayments being calculated as a percentage of daily EFTPOS and eCommerce takings) and some
new features were added, as required under the Scheme, such as an initial six-month repayment holiday period.
We also provided terminal rental relief to merchants impacted by COVID-19 by waiving terminal rental charges for
affected merchants.
OUTCOME OF RESPONSE:
KEY FOCUS AREA OF RESPONSE
Number of Tyro Business Loan repayment holidays granted (1 March 2020 – 30 June 2020)
New Tyro Business Loans taken up by merchants under Coronavirus SME Guarantee Scheme
Total terminal rental fees waived (1 March 2020 to 30 June 2020)
OUTCOME
380
$0.7 million
$1.6 million
Response 6 – Safety of our Team
One of our key focus areas in our response to COVID-19 has been to prioritise the safety and wellbeing of our team. Under
the lockdown legislation put in place by the New South Wales Government in March 2020, we moved swiftly to make the
necessary arrangements for our team to effectively work from home from 23 March 2020. These arrangements covered
approximately 99% of all our team members with the only employees still required in office limited to certain merchant
support and infrastructure requirements that could not be undertaken remotely. Our work from home response has been
tremendously successful and our team maintained their high levels of productivity and motivation during the 10 weeks of
compulsory lockdown continuing to service all our merchants to our usual high standard. Our team continued to support
our merchants experiencing hardship throughout the crisis and as their businesses started re-opening post lockdown.
We have been fortunate that we did not need to make any reductions in our workforce due to the financial impact of
COVID-19. We were able to maintain full operational capacity in all of our teams, including our customer support team
and product support team. Furthermore, to ensure we are able to come out of COVID-19 as quickly as possible and return
to previous growth rates, it was critical for us to maintain the bench-strength in the team, to support newly acquired
merchants and maintain the roll-out of our new products pipeline. Any reductions in our workforce would have impacted
this ability.
In late March 2020, we launched a weekly employee pulse survey to understand how team members were adapting to
the new remote work environment, to assess whether any additional support was needed for team members and to gain
some insights into the effectiveness of our numerous employee support initiatives.
Given the impact of the lockdown on the general wellbeing of team members, we developed ‘mental wellness’ guides
for all employees, we held a Virtual Wellness Week which was specifically targeted at improving physical, mental and
emotional wellbeing whilst working in isolation, and we created virtual communities leveraging our various technology
platforms such as Slack and Zoom to encourage social connection during this unprecedented time.
On 1 June 2020, we re-opened our office to our team and advised that they were able to work from the office again, at
their election. We formed a Safe Work Committee that was primarily focussed on the safe return to the office for all of our
team members and ensuring that appropriate risk mitigation strategies were implemented.
Response 7 – Keeping Shareholders informed
Given the uncertainty surrounding the impact of COVID-19, and in particular its impact on transaction values for our
payments business, the Board decided to provide weekly updates to shareholders on transaction values from 25 March
2020. These transaction value updates continued until Tyro’s full-year results reporting date (18 August 2020). This
temporary measure, which is a first for an Australian listed company, was introduced to address the unusual operating
environment we faced and to provide transparency as to the impact on our operations.
The initiatives we have taken have been well-received by all our shareholders and the broader investment community.
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2.2 Our Team
2.1 Our Shareholders
Our shareholders include retail, self-managed superannuation funds and institutional investors. We maintain an active
dialogue with our shareholders through our newly created investor relations program and by promoting effective
communication with shareholders. We encourage their participation at general meetings and investor briefings and this
participation helps ensure that all shareholders have access to sufficient information, thereby maintaining an informed
market.
STAKEHOLDER MANAGEMENT:
ENGAGEMENT
KEY MATTERS RAISED BY STAKEHOLDER GROUP
PRINCIPAL RISKS TO/FROM STAKEHOLDER GROUP
Our people are at the core of who we are. We have a strong emphasis on recruiting and retaining top talent that enhances
our strong values-driven culture. The accumulation of our collective experience, shared values, and individual skills has
allowed Tyro to deliver industry-leading products and solutions.
i. Values:
We are proud of our open, inclusive, and collaborative culture which has as its foundation our guiding values. We foster a
high performance, values-driven culture and our most recent employee survey showed that 87% of our team members
are proud to work at Tyro and 89% would recommend it as a great place to work.
As a team, we are driven by making a real difference to Australian businesses – we support them and provide solutions to
their business challenges.
• Sustainable growth and capturing
• Deterioration in macroeconomic
TYRO’S GUIDING VALUES:
• Regular ASX releases.
• Half-year and full-year
published results.
Investor presentations.
•
• Media releases.
• Annual General Meeting.
• One-on-one meetings with
market share.
Impact of COVID-19.
•
• Future dividends and path to
profitability.
• Key Management Personnel
remuneration.
shareholders.
• Sustainability matters and response
• Participate in investor
conferences where
appropriate.
to ESG.
• Corporate Governance.
• Liquidity and future gearing.
• Strategy and innovation.
conditions.
• Disruption to payments market
by new operators entering the
space resulting in pricing pressure,
lower margins, and emergence of
alternative payment methods.
• Adverse regulatory measures
resulting in a change in the way we do
business.
• Disruption, failure, obsolescence
of technology or inability to scale
processes.
• Compliance with existing laws and
•
regulations.
Ineffective management of our capital
and liquidity.
ii. Diversity:
Tyro’s workforce is made up of many individuals with diverse skills, values, experiences, backgrounds and attributes
including those gained on account of their gender, gender identity, age, disability, ethnicity, marital or family status,
religious beliefs, cultural or socio-economic background, sexual orientation, perspective and experience. Advancing our
diversity, inclusion and belonging priorities is an ongoing focus for us.
We believe that such a commitment to diversity and inclusion creates a competitive advantage, enhances employee
participation and in this way is essential to Tyro’s continuing growth and success.
Our team members come from 43 countries, speak 56 languages, and have an average age of 34 years. 35% of our
managers and 42% of our Executive Leadership Team are female.
We also celebrate diversity of thinking. Our team consists of individuals who share common values, a common vision
for Tyro and common respect for their fellow team members. However, in certain circumstances they may not share the
same ideas, strategies, or way of doing things. We encourage this difference in thinking to enable us to challenge each
other, break down the boundaries that may be holding us back, and challenge our leadership team to shift historical
thinking to adopt a new way of fulfilling Tyro’s mission of being the best business bank.
For FY20, our first year as a listed ASX company, we focussed on the following key diversity objectives:
•
•
Achieving a gender diversity in the composition of the Board of not less than 30% of our Directors of each gender.
Rolling-out unconscious bias training to our team. In FY20 this training was focused on our hiring committees and is
due to be rolled-out to the entire Tyro team in FY21.
• Mentoring programs, with a focus on creating mentoring opportunities for members of the Women of Tyro group.
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iii. Engagement and collaboration:
ii. Diversity (cont’d):
•
Career development and targeted professional development programs including those aimed at helping employees
develop skills and experience in preparation for senior management and Board positions.
• Work/life balance policies including flexible work options, parental leave support, and return-to-work programs.
• Opportunities for employees on extended parental leave to maintain their connection with Tyro, for example, by
offering them the option (without any obligation) to receive all-staff communications and to attend work functions
and training programs through keep-in-touch days.
•
Networking opportunities for women at Tyro to expand their networks beyond their team and department, via the
Women of Tyro group.
As a relevant employer under the Workplace Gender Equality Act 2012, we participate in annual reporting against the
standardised gender equality indicators. For FY20, our gender mix profile was as follows:
GENDER DIVERSITY
AT 30 JUNE 2020
AT 30 JUNE 2019
Board of Directors (Non-executives)
2 of 6 Directors (33%)
1 of 6 Directors (17%)
CEO and Managing Director
0 of 1 employee (0%)
0 of 1 employee (0%)
Key Management Personnel1
1 of 2 employees (50%)
1 of 2 employees (50%)
Other executives / general managers1
4 of 9 employees (40%)
3 of 8 employees (38%)
Senior managers1
Other managers1
11 of 31 employees (36%)
11 of 29 employees (38%)
23 of 67 employees (34%)
25 of 69 employees (36%)
1
These management positions are defined in the Workplace Gender Equality Agency’s guide to reporting under the Workplace Gender Equality
Act 2012. Note that Key Management Personnel under these reporting guidelines does not include the CEO and Managing Director, as it does
elsewhere in this report.
Safety is one of the biggest social barriers to women fulfilling their potential in the workplace. For this reason, we actively
support and assist any of our female team members that may be experiencing domestic violence or abuse at home
through some of the following initiatives:
•
•
Team members are entitled to 5 days of unpaid family and domestic violence leave each year of their employment
and includes part time and casual employees. This leave entitlement refreshes each year.
Team members may also take leave if they need to do something to deal with the impact of family and domestic
violence and its impractical to do so outside their ordinary hours of work including making arrangements for their
safety, or safety of a close relative.
• We also provide an Employee Assistance Program for all employees, and their immediate families, which is provided
as either in-person or telephone counselling support.
In FY21, we will be introducing specific training to team members in relation to dealing with, and support offered, for
domestic violence and abuse.
An annual Tyro ‘Play Book’ sets out for Tyro’s team members our targets and deliverables for the year ahead. This
12-month plan, together with our regular hosted events, support our culture of collaboration and innovation. Some of
the events that we conduct include our quarterly innovation days known as Blitz, quarterly tribe days to encourage
effective teamwork across functions and monthly company all-hands, known as Mindshare, to enable the effective flow
of pertinent organisational information.
Other engagement activities include:
•
•
•
A weekly communications update from our CEO and Managing Director.
An update from our CEO and Managing Director whenever new material ASX announcements are released to the
market.
Use of the internal messaging platform, ‘Slack’, collaboration platform, ‘Confluence’ and employee engagement
platform, ‘Namely’.
We also hold annual all-company employee surveys and more frequent departmental pulse surveys, that not only
measures employee engagement but other workplace satisfaction factors such as collaboration, communication,
enablement and management, amongst others. Through COVID-19, we have also been conducting weekly employee
surveys to ensure the health and wellbeing of our team is constantly monitored and issues acted on immediately to the
benefit of the team.
iv.
Remuneration and employee share ownership:
Our approach to remuneration seeks to strike the right balance between:
•
•
•
Attracting, motivating, and retaining the best talent.
Reflecting the interests of our shareholders as the owners of our business.
Respecting and ‘Wow[ing] the customer’.
To enable our values-driven approach, our performance reviews include an assessment of how our team members live our
values when delivering against the expectations of their roles. This contributes to the overall performance rating which
impacts the team member’s remuneration outcome.
In relation to our FY20 incentive program, a new component relates to overall customer satisfaction levels which applies
to all team members irrespective of whether they hold a customer-facing role or not. In addition, all our sales incentive
programs involve a ‘balanced scorecard’ approach which is designed to ensure the appropriate balance is set between
financial outcomes and doing the right thing by our merchants.
We also recognise that we compete in a highly skilled, high demand talent market, and as such we offer remuneration
designed to attract, motivate and retain team members who will continue to contribute to our growth and success. Our
remuneration includes a mix of cash, short-term incentives in both cash and deferred equity, and a long-term incentive
for key team members in deferred equity only. Our remuneration approach focusses on both financial and operational
performance outcomes, together with an element of individual performance.
Tyro’s People Committee is responsible for our remuneration framework and all matters relating to our team members
including social sustainability of our workforce. For more information on our approach to remuneration, see our
Remuneration Report on pages 78 to 110.
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vii. Ethics and integrity
iv. Remuneration and employee share ownership (cont’d):
Share ownership:
Our goal is for all our team members to be shareholders in Tyro and share in the continued growth and success of Tyro.
The majority of our employees were either shareholders in Tyro or had options to acquire shares prior to our listing on the
ASX in December 2019. As a further incentive to encourage additional share ownership we offered team members the
opportunity to acquire shares through the IPO process as part of the listing. This opportunity included:
• The right to acquire $5,000 worth of shares in Tyro as a discount of 10% to the IPO listing price; and
• The right to acquire $10,000 worth of shares in Tyro at the IPO price.
Further opportunities to acquire shares continue through team members’ participation in our short-term incentive and
long-term incentive equity awards as part of their remuneration package.
v.
Training and development:
With a strong emphasis on our people and culture, we have a range of initiatives designed to support our team’s learning
and development and increase employee engagement and retention. These include bespoke leadership development
programs (through the Tyro Leader Program, in partnership with the Australian Institute of Management), career pathways
to provide promotion opportunities, and reward and recognition initiatives (through our peer recognition program that
encourages appreciation in the workplace and rewards those who exhibit our core values).
In FY20, we invested $0.73 million in the training and development of our team which was significantly less than budgeted
due to the COVID-19 pandemic when we had to pause all in-person training that had previously been scheduled.
vi.
Team Safety and wellbeing
As an employer, keeping our team safe is one of our most fundamental responsibilities and the events of the past 12
months (bushfires and COVID-19) highlight the need for us to continue our focus on this important area. Refer to section
2 on page 37 for details on how we responded to the significant safety issue posed by COVID-19 on our team.
Lost-time incidents (LTI) is the term we use when an employee is injured while carrying out a work-related task and is
consequently unable to perform his or her regular duties for a period of time after the incident. Total Recordable Injury
Frequency Rate (LTIFR) is a term we use to refer to the number of lost-time injuries within our financial accounting period
relative to the total number of hours worked in that period. There were no lost-time incidents recorded in FY20.
We also encourage all team members to focus on their own wellbeing. Through our People Team support program, we
make numerous services available to team members at discounted prices to focus on wellness initiatives including fitness
classes, nutritional advice, mental health support, health campaigns, financial coaching, and company-funded social
activities.
Everyone at Tyro is expected to live and breathe the standards set out in our Code of Conduct in carrying out their
everyday work. This code sets the framework under which all our people are expected to behave. We expect all our
Directors and team members to abide by the principles and spirit of this code.
Our Code of Conduct is a broad set of guidelines and is not intended to cover every situation that may arise. It
complements other policies, procedures, and guidelines we have and is intended to be consistent with them. It sets
out a practical set of principles giving direction and reflecting our approach to business conduct, rather than defining a
prescriptive set of rules.
• Acting honestly and with high standards of personal integrity.
• Complying with all laws, regulations and statutes that apply to Tyro and its operations.
• Observing at all times, Tyro’s policy on the use of the internet, e-mail, computer systems and
social media.
• Never engaging in dishonourable, unethical or unprofessional conduct likely to deceive,
defraud or harm Tyro or its customers.
• Never carrying out any action, verbal or written, which is likely to discriminate, abuse, torment,
harass or bully any person at any time as an employee or contractor of Tyro.
• Acting ethically and responsibly.
• Disclosing and dealing appropriately with any conflicts between your personal interests and
your duties as a Director, Exco, people leader, employee or contractor.
• Never taking advantage of Tyro’s property, information or customers for personal gain or to
cause detriment to Tyro and its customers.
• Dealing with customers and suppliers fairly.
• Maintaining the highest standard of business principles, conduct and service at all times.
• Never carrying out an act which may damage the reputation of, or bring into disrepute, Tyro or
our clients.
• Promoting Tyro in a professional and ethical manner.
Our Code of Conduct is supported by the following policies and procedures:
• Anti-bribery and corruption policy.
• Whistle-blower policy.
• Diversity policy.
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2.3 Our Merchants
Australian businesses, mainly small and medium-sized enterprises (SMEs), are at the heart of what we do. In particular, we
focus on three verticals – Health, Hospitality and Retail. This focus has enabled us to produce vertically specific products
and features, meeting the needs of our merchants and solving the friction points they experience.
Our merchant-focused solutions include:
•
•
•
•
allowing our merchants to accept multiple payment types;
an eCommerce solution that makes it easy for merchants launching online to take payments and provides unified
payments for merchants with an existing online and in-store presence;
being the first bank to offer a least-cost routing feature (Tap & Save), which allows merchants to save money by
processing eligible contactless multi-network debit card payments through the scheme that costs the merchant the
least; and
a fully integrated Alipay payments solution that provides our merchants with an opportunity to access the significant
number of Chinese tourists visiting Australia each year.
We interact with our merchants through our call centre, product team, sales team, and our banking team and through the
Tyro App and website. We also have an active social media engagement program and source feedback on our service
delivery though our Net Promoter Score (NPS) together with targeted merchant surveys.
As part of our listing on the ASX in December 2019, we provided all our merchants with an opportunity to acquire share
ownership in Tyro. This included offering each eligible merchant the right to acquire up to $15,000 worth of shares in
Tyro at the IPO price. Applications under the merchant offer were accepted in full and on listing, 1.72 million shares were
allocated to our merchants representing an increase in merchant ownership in Tyro of 0.5%.
STAKEHOLDER MANAGEMENT:
ENGAGEMENT
KEY MATTERS RAISED BY STAKEHOLDER
GROUP
PRINCIPAL RISKS TO/FROM STAKEHOLDER
GROUP
• 24/7 call centre.
• Tyro product and sales team.
• Tyro App, Tyro Merchant Portal and
• Business continuity from natural
disasters such as bushfires and
major flood events.
• Fraud and fraud prevention.
• Errors in processing and the
settlement process.
Tyro website.
• Social media engagement.
• Feedback from NPS surveys.
• Digital and above-the-line
marketing.
• Business continuity from
humanitarian issues such as
COVID-19.
• Access to funding assistance.
•
Information about new payment
types and banking products.
Information about responsible
lending practices.
•
• Access to eCommerce payments.
• System outages.
• Terminal issues that may lead to a
disruption in business.
• Point-of-sale system integration.
COVID-19 MERCHANT CASE
STUDIES
COVID-19 has had a huge impact on all sectors, with
the hospitality industry being one of the hardest hit.
Refer to our website at https://www.tyro.com/blog/
how-brisbanes-impressive-dumplings-changed-up-
their-business-in-a-challenging-environment/ for a
case study on how some of our merchants have opted
to reinvent their way of operating to remain trading.
COVID-19 also changed the way many medical
practices operated as they adapted to a situation they
hadn’t been confronted with before. This included
changes to their in-practice processes, as well as
embracing new technologies.
Refer to our website at https://www.tyro.com/blog/
how-wellers-hill-medical-centre-transitioned-
to-ensure-their-patients-safety-and-continued-
business/ for a case study on how medical practices
adapted to this changing environment.
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2.4 Our Community
The long-term success of Tyro is closely inter-related to the success of the communities in which we operate. Positive
relationships with the communities in which we operate allow us to build trust and long-term sustainability of our
operations.
There are categories through which Tyro looks to make a difference to our community:
i.
Tyro corporate contributions
Corporate contributions include sponsorships and events in partnership with various selected charity,
community, or industry bodies. Donations, or other non-financial benefits are also provided to causes where
appropriate.
In FY20, Tyro made total contributions of $11,214 to good causes in addition to employee led donations of goods
and services to the community.
Tyro also actively contributes to public policy debates and industry reviews to improve the payments system in
Australia and customer outcomes from those reviews. In FY20, Tyro provided a submission to the current review
by the Reserve Bank of Australia Payments System Board’s Review of Retail Payments. The key areas of Tyro’s
submission related to ensuring Least Cost Routing is enforced in Australia to the benefit of merchants and their
customers and improving the transparency of fees in the payments industry.
ii.
Employee volunteering and fundraising
Our team members proactively engage with their local communities through organising fundraising events,
assisting in community projects and donating their expertise where needed by communities. We offer our team
the support and resources they may need to assist in these proactive initiatives including the ability to take a
paid volunteer day annually.
2.5 Regulators
Compliance with our banking licence, and the legislation, regulations, rules and standards underpinning that licence,
is critical to our business sustainability, as is understanding, and being responsive to the broader economic, social and
community issues impacting government policy.
Our CEO and Managing Director, our Risk Team and our Legal Team manage our relations with regulators and participate
in regular meetings with government and regulatory agencies which assist us to foster constructive relationships and
participate in government and industry forums.
STAKEHOLDER MANAGEMENT:
ENGAGEMENT
KEY MATTERS RAISED BY STAKEHOLDER GROUP
PRINCIPAL RISKS TO/FROM STAKEHOLDER GROUP
• Participation in company
and industry meetings with
government and regulators.
• Participation in public forums.
• Attending industry meetings.
• Meetings with government
bodies, elected representatives,
policy officials and regulators.
• Accountability provisions under the
Banking Executive Accountability
Regime (BEAR).
Implementation of least cost routing.
•
• Compliance with AUSTRAC and
Anti-Money Laundering / Know Your
Customer regulations.
• Compliance with all Corporate
• Non-compliance with applicable laws and
regulations.
• Reputational damage to the payments
system due to unethical business
practices or non-compliance.
• Market disruption from new operators
in the payments system that are not
regulated.
• Participation in regulatory
Governance principals.
• Technology failures by a payments
review processes.
• Meeting minimum capital adequacy
operator.
targets and liquidity.
• Open banking and new payments
platform.
• Not managing cyber threats or protecting
consumer privacy through data breaches.
Impact of stress testing.
•
• Failure of third-party service providers.
2.6 Our Suppliers
Our ability to deliver our payments and banking offering is reliant on the performance and availability of our technology
and communication systems and that of our suppliers.
We are dependent on a number of key suppliers, including:
•
•
Card schemes.
Card issuers.
• Our Terminal hardware vendor - Worldline.
•
•
•
•
•
Telecommunication and network providers.
Point of Sale system partners who integrate with our terminals.
Data centre providers.
Cloud service providers.
Third party credit agencies – we rely on the availability and accuracy of their information to assist in making informed
credit assessments and in our Know Your Customer onboarding process to fulfil our anti-money laundering and
counter-terrorism financing obligations.
•
Third party software providers that are critical in delivering our services.
• Our eCommerce solution provider.
• Our logistics providers who deliver our terminals.
The absence of any one or more of the services above could impact our ability to provide some or all of our services for a
period of time, which may adversely affect our reputation, financial position, performance and ultimate sustainability of
our operations.
To protect our relationships with key suppliers, we regularly interact through meetings, tender processes and industry and
product conferences.
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SECTION 5 – GOVERNANCE
Information relating to corporate governance is covered in detail in the Investor section of our website and economic
sustainability is covered in more detail in the Directors’ Report on pages 67 to 77.
Our Corporate Governance Statement describes in full our approach to corporate governance and our compliance with
the Recommendations of the ASX Corporate Governance Council. Tyro has elected to early-adopt the fourth edition of
the ASX Corporate Governance Principles and Recommendations, which have formed the basis of Tyro’s decision making
and accountability since listing on the ASX. The Corporate Governance Statement in respect of FY20 has been lodged
with the ASX and is available from our website at: www.tyro.com/about-tyro/investors.
This Corporate Governance Statement has been approved by the Board and is current as at 18 August 2020.
2.6 Our Suppliers (cont’d)
STAKEHOLDER MANAGEMENT:
ENGAGEMENT
KEY MATTERS RAISED BY STAKEHOLDER
GROUP
PRINCIPAL RISKS TO/FROM STAKEHOLDER
GROUP
• Regular meetings with suppliers.
• Events and conferences.
• Tender processes.
• Supplier assessments and reviews.
• Timely payment for goods and
• Obsolescence of technology and
services delivered.
systems failures.
• Fair treatment.
• Meeting environmental standards
that we expect to be followed.
• Providers may choose to cease to
do business, or change the terms on
which they do business, with us.
• Reputational damage to Tyro due to
suppliers not complying with Tyro’s
supplier code of conduct (including
anti-slavery policies).
• Adherence to anti-bribery and
corruption policies.
SECTION 4 – ENVIRONMENTAL RESPONSIBILITY
Tyro acknowledges the increased community concern about climate change and the impact that businesses have on
the environment they operate in. We also acknowledge the importance of considering the impact of climate change on
the sustainability of our operations even though Tyro has a relatively low environmental footprint through our operations.
The bushfires that Australia experienced in January 2020 are a timely reminder of the potential impacts of climate
change with many of our merchants being directly affected by the fires while many more in the metropolitan areas were
impacted by the poor air quality as a direct result of the bushfires.
Our objectives around environmental reporting are to be transparent with our shareholders by disclosing our climate
change-related data, including the reporting of the risks and opportunities of climate change to our business and the
financial impacts and potential actions by Tyro to mitigate the climate-related risks. However, as Tyro only listed on
the ASX in December 2019, our approach to reporting on environmental issues is still under development. In FY21 we
will be enhancing our systems to report on environmental sustainability and impacts, including undertaking a formal
environmental risk assessment and developing an environmental management report for the Audit Committee and the
Risk Committee based on the recommendations of the Financial Stability Board’s Taskforce on Climate related Financial
Disclosures (TCFD) and with reference to the Global Reporting Initiative (GRI) standards on climate change.
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Profiles
Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
55
Board of Directors
David Thodey AO
CHAIR OF THE BOARD
Independent non-executive Director since November 2018 and Chairman since 15 October 2019.
OTHER TYRO RESPONSIBILITIES:
• Member of the People Committee.
CAREER:
David is a business leader focused on innovation,
technology and telecommunications, with more
than 30 years’ of experience in the technology and
telecommunications industries. He has a track record
of creating brand and shareholder value, and has been
successfully involved in innovation across a wide range
of sectors. David had a successful executive career as
CEO of Telstra, Australia’s leading telecommunications
and information services company from 2009 to 2015.
He began his career at IBM, where he spent more than
22 years and held several Asia Pacific senior executive
positions including Chief Executive Officer of IBM
Australia and New Zealand. In 2017, David was made
an Officer (AO) in the General Division of the Order of
Australia for his service to business and the promotion
of ethical leadership and workplace diversity.
RELEVANT OTHER DIRECTORSHIPS HELD IN
THE PAST THREE YEARS:
• Chair of Xero Limited, a leading New Zealand based
cloud-based accounting software platform for
small and medium-sized businesses.
• Chair of the Commonwealth Scientific and
Industrial Research Organisation (CSIRO).
• Non-executive director of Ramsay Health Care, a
global hospital group.
• Former Non-executive director of Vodafone plc, a
global telecommunications company (1 September
2019 to 28 July 2020).
QUALIFICATIONS:
David holds a Bachelor of Arts in Anthropology and
English from Victoria University, Wellington, New
Zealand, attended the Kellogg School of Management
postgraduate General Management Program at
Northwestern University in Chicago, USA, and was
awarded an Honorary Doctorate in Science and
Technology from Deakin University in 2016 and an
Honorary Doctorate of Business from University of
Technology Sydney in 2018.
Robbie Cooke
CEO AND MANAGING DIRECTOR
Robbie joined Tyro in 2018 as Chief Executive Officer
and was appointed as Managing Director on 18 October
2019.
CAREER:
Robbie has over 30 years’ experience in the oil and gas,
mining, lotteries, wagering and online travel industries.
Prior to Tyro, Robbie was the Managing Director and
CEO of Tatts Group Limited. This role concluded upon
Tatts merging via a scheme of arrangement with its
Australian peer, Tabcorp Holdings Limited.
Prior to Tatts, Robbie served initially as Chief Operating
Officer, and then as CEO and Managing Director of
one of Australia’s leading online travel groups, Wotif.
com Holdings Limited. During his seven years at Wotif,
Robbie oversaw the group’s significant scale up from
startup mode, achieving a circa fivefold increase in
profits and undertaking a successful IPO on the ASX in
2006.
QUALIFICATIONS:
Robbie is a member of the Australian Institute of
Company Directors, an associate of the Governance
Institute of Australia and a solicitor of the Supreme
Court of Queensland. Robbie also sits on the advisory
board of in-home care provider Five Good Friends.
Robbie holds a Bachelor of Laws (Honours) from The
University of Queensland Law School, a Bachelor of
Commerce from The University of Queensland and a
Graduate Diploma in Company Secretarial Practice from
the Governance Institute of Australia.
Hamish Corlett
NON-EXECUTIVE DIRECTOR
Non-executive Director since April 2019
(non-independent).
OTHER TYRO RESPONSIBILITIES:
• Member of the Audit Committee.
• Member of the People Committee.
CAREER:
Hamish is a founder and partner of TDM Growth
Partners, a private investment firm specialising in high
growth companies globally. Hamish has over 20 years’
experience in investing and investment banking. Prior
to TDM, Hamish worked as an Investment Manager at
Caledonia Investments, a global fund manager, and an
Analyst at Caliburn Partnership (now Greenhill).
RELEVANT OTHER DIRECTORSHIPS HELD IN
THE PAST THREE YEARS:
• Non-executive director of SomnoMed Limited, a
medical company providing treatment solutions for
sleep-related breathing disorders.
QUALIFICATIONS:
Hamish holds a Bachelor of Commerce with Honours
Class 1 (Accounting and Finance) from the University of
Sydney and a Graduate Diploma of Counselling from
the Australian College of Applied Psychologists.
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David Fite
NON-EXECUTIVE DIRECTOR
Non-executive Director
since July 2018 (non-independent).
OTHER TYRO RESPONSIBILITIES:
• Member of the Risk Committee.
Catherine Harris AO, PSM
NON-EXECUTIVE DIRECTOR
Independent non-executive Director
since December 2015.
OTHER TYRO RESPONSIBILITIES:
• Chair of the People Committee.
CAREER:
CAREER:
David has over 25 years’ experience in the financial
services industry. David has held various roles at
Westpac Banking Corporation, including Treasurer,
Assistant Chief Financial Officer and the Group
Executive responsible for all retail and business banking
products in Australia. David has also worked at Japan’s
Shinsei Bank (formerly known as The Long-Term Credit
Bank of Japan) as Senior Corporate Executive Officer,
Chief Financial Officer and a member of its Board. David
is also an active investor in various credit, financial
services and technology businesses.
RELEVANT OTHER DIRECTORSHIPS HELD IN
THE PAST THREE YEARS:
• Director of Judo Capital Holdings Ltd and Judo
Catherine has over 40 years’ experience in the retail
industry. She has held Director and Chair roles at
the Affirmative Action Agency, the University of
NSW, University of Notre Dame, the Sydney Cricket
Ground Trust, the National Gallery of Australia, the
Australian Defence Force Academy, The Museum
of Contemporary Art Australia, St Margaret’s Public
Hospital, The Australian Rugby League Commission, the
Australia Japan Foundation and the Sports Australia Hall
of Fame. Cathy is an Officer in the Order of Australia
and was awarded the Australian Public Service Medal in
2000 and The Centenary Medal in 2001.
RELEVANT OTHER DIRECTORSHIPS HELD IN
THE PAST THREE YEARS:
Bank Pty Ltd, a SME challenger bank.
• Chair of Harris Farm Markets Pty Ltd, Australia’s
• Director of Evari Insure Pty Ltd and associated
entities, a company that offers flexible online
insurance options to small businesses across
Australia.
• Director of Marsello Ltd, a company that makes
intelligent marketing accessible and easy for multi-
channel retailers.
• Director of MYOB Group Co Pty Ltd, a provider of
accounting, tax and business services.
QUALIFICATIONS:
David holds a Bachelor of Arts in Government (magna
cum laude) from Harvard College, and a Master of
Business Administration and Masters in Economics from
Stanford University.
largest independent produce retailer.
• Director of The Australian Ballet.
• Director of the University of New South Wales
School of Business.
• Director of Cox’s River Rest Pty Ltd.
QUALIFICATIONS:
Catherine holds a Bachelor of Commerce (with merit)
and an Honorary Doctorate in Business from the
University of New South Wales.
Fiona Pak-Poy
NON-EXECUTIVE DIRECTOR
Paul Rickard
NON-EXECUTIVE DIRECTOR
Independent non-executive Director
since September 2019.
Independent non-executive Director
since August 2009.
OTHER TYRO RESPONSIBILITIES:
OTHER TYRO RESPONSIBILITIES:
• Member of the Risk Committee.
• Member of the Audit Committee.
CAREER:
Fiona has over 25 years’ experience in a variety of
industries, for companies ranging from startups to large
public companies and not-for-profits. Fiona has served
on various boards, including MYOB, StatePlus, and the
commercialisation office of The University of Adelaide,
Adelaide Research and Innovation. She was a strategy
consultant for the Boston Consulting Group in the US
and Australia, and was also a partner in an Australian
venture capital fund focused on technology startups.
RELEVANT OTHER DIRECTORSHIPS HELD IN
THE PAST THREE YEARS:
• Non-executive Director of ASX-listed iSentia
Limited, a media intelligence and data technology
company.
• Non-executive Director of Novotech Aus
HoldCo, Asia-Pacific’s leading contract research
organisation (CRO) providing clinical research
solutions world-wide.
• Director of the Sydney School of Entrepreneurship.
• Former Non-executive Director of MYOB Group
Limited prior to their buyout by KKR in April 2019
(January 2017 to April 2019).
QUALIFICATIONS:
Fiona holds an Honours degree in Engineering from
The University of Adelaide and a Master of Business
Administration from the Harvard Business School.
• Chair of the Risk Committee.
• Chair of the Audit Committee.
CAREER:
Paul was the founding Managing Director of CommSec,
which he led from 1994 to 2002, and was Chairman
until 2009. After a 20 year career with Commonwealth
Bank finishing in the role of Executive General Manager
Payments & Business Technology, Paul left in 2009 to
team up with Peter Switzer and found the Switzer Super
Report, a subscription based newsletter for the trustees
of self-managed super funds. An expert in investment
and superannuation, Paul is a regular commentator
on TV, radio and online and also oversees editorial
development at Switzer Financial Group Pty Ltd. In
2005, Paul was named ‘Stockbroker of the Year’ and
admitted to the Industry Hall of Fame of the Australian
Stockbrokers Foundation.
RELEVANT OTHER DIRECTORSHIPS HELD IN
THE PAST THREE YEARS:
• Non-executive Director of ASX-listed WCM Global
Growth Ltd, an independent asset management
firm.
• Non-executive Director of Property Exchange
Australia Ltd, a company specialising in the digital
settlement of property.
• Director of OpenInvest Ltd and OpenInvest
Holdings Pty Ltd, a company that offers investors
access to professionally managed portfolios.
• Director of Switzer Financial Group Pty Ltd.
QUALIFICATIONS:
Paul holds Bachelor of Science degrees in Mathematics
and Computer Science from the University of Sydney.
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Leadership Team
Jairan Amigh
COMPANY SECRETARY AND SPECIAL COUNSEL
Dave Coombes
CHIEF TECHNOLOGY OFFICER
Jay was appointed as Co-Company Secretary on 20
February 2020 and become Company Secretary on
30 June 2020 with the resignation of Sami Wilson. Jay
holds Bachelors of Law and Commerce and has over 30
years in legal practice focusing on financial services and
corporate governance.
Dave joined us in 2017 in the role of Chief Technology
Officer. Dave has over 20 years’ 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. Prior to Tyro,
Dave held senior technology roles at BT Financial Group,
Tabcorp and Insurance Australia Group. Dave also
worked as a principal consultant at ThoughtWorks while
they were pioneering the use of agile development
methods for software delivery.
Dave holds a PhD in Theoretical Physics from the
University of Sheffield, UK and a first class honours
degree in Theoretical Physics from the University of
Birmingham, UK.
Angela Green
CHIEF RISK OFFICER
Angela joined us in 2019 in the role of Chief Risk
Officer. Angela has over 30 years’ experience in
banking and finance, management consulting and the
Royal Australian Air Force. Angela has held numerous
senior financial and non-financial risk management,
commercial and business lending product and
distribution roles at both Commonwealth Bank of
Australia and the National Australia Bank.
Angela holds a Master of Business Administration from
Victoria University.
Yvette Mandanas
CHIEF PEOPLE OFFICER
Yvette joined us in 2016 to establish the HR function
in the role of Chief People Officer. Yvette has over 15
years’ experience in HR in fast growth technology
organisations. Yvette specialises in the design and
delivery of HR operational, talent acquisition, leadership
development and culture development initiatives to
drive business strategy. Yvette has held HR leadership
roles during her time at Avanade, the Microsoft
technology consulting arm of Accenture, and at
Nearmap, an ASX-listed market leader in geospatial map
technology.
Yvette holds a Graduate Diploma in Human Resource
Management from the University of Technology
Sydney, has completed an Executive Program in People,
Performance and Culture from Stanford University,
and is a professional member of the Australian Human
Resources Institute (CAHRI).
Steven Chapman
HEAD OF AUDIT
Prav Pala
CHIEF FINANCIAL OFFICER
Steven joined us in 2019 and leads the internal audit function, providing an independent view on whether we have an
appropriate risk and control environment. Steven has over 17 years’ experience in project management, audit, and risk.
Steve began his career with a large UK utility firm before working for Woolworths Group, Insurance Australia Group and
QBE Insurance Group.
Steven is a Chartered Global Management Accountant (CGMA) and Certified Information Systems Auditor (CISA). He also
holds a Master of Arts in History (Honours) from the University of Glasgow.
Praveenesh (Prav) joined Tyro in 2014 in the role of Chief Financial Officer. Prav has over 20 years’ experience
gained in professional consulting, property funds management and financial services. Since starting his career at
PricewaterhouseCoopers, Prav has held several senior positions at QBE Insurance Group, Westfield Trust, Domaine Mirvac
Funds Management and ING Direct, and has managed large integration and strategic finance related projects.
Prav holds a Bachelor of Commerce from the University of New South Wales. He is a qualified CPA and member of the
CFA Institute.
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Leadership Team (cont’d)
James Revell
CHIEF STRATEGY OFFICER
Lisa Vitaris
CHIEF MARKETING OFFICER
James joined us in 2017 to establish the corporate
strategy function, and was appointed to the leadership
team as Chief Strategy Officer a year later. James
specialises in analysing and driving the delivery of
strategic growth opportunities in consideration of
structural trends and a deep understanding of the
current market. Prior to Tyro, James previously held roles
at Monitor Deloitte and Telstra Digital.
James holds a first class Honours degree from the
University of Cambridge and a Master of Commerce
from the University of Sydney Business School.
Lisa joined us in 2017 to drive both brand and
acquisition, and in 2018 was appointed as Chief
Marketing Officer. Lisa has over 16 years’ experience
in marketing, specialising in financial services. She
has extensive experience in branding and high growth
acquisition, and has held roles both client side at Aussie
Home Loans and CMC Markets, as well as at advertising
agencies working across Citibank, Bankwest, CommSec
and IMB.
Lisa holds a Master of Business in International
Marketing from the University of Technology, Sydney.
Josh Walther
CHIEF CUSTOMER OFFICER
Josh joined Tyro in 2017 in the role of Director of Sales, becoming Chief Customer Officer in 2018. Josh has more
than 20 years’ experience in financial services and management consulting with ING Direct, Aussie Home Loans,
KPMG Consulting and Arthur Andersen Business Consulting. He has extensive experience delivering sales growth and
customer experiences for financial services businesses across multiple distribution formats including direct, digital and
partnerships. In his eight years at ING Direct, Josh’s leadership in growing and developing consumer sales and service
channels culminated in him being awarded Australian Customer Experience Executive of the Year and his team awarded
Best Contact Centre in Australia.
Josh holds a Bachelor of Business (Honours – First Class) from the University of Technology, Sydney and completed the
Stanford University Executive Program for Growing Companies in 2019.
Sami Wilson
GENERAL COUNSEL
Sami is our General Counsel and joined us in 2018 to
establish the in-house legal function. Sami has over
10 years’ legal experience in a diverse range of areas,
including advising ASX-listed entities on corporate
law and M&A and working on private equity, venture
capital and banking and finance transactions. Before he
joined us, Sami was a Senior Associate at Herbert Smith
Freehills.
Sami holds a Bachelor of Laws (Honours) from the
University of Melbourne and a Bachelor of Commerce
from The University of Adelaide. Sami is admitted as a
solicitor of the Supreme Courts of New South Wales and
South Australia.
Bronwyn Yam
CHIEF PRODUCT OFFICER
Bronwyn joined us in 2017 and is our Chief Product
Officer. Bronwyn has over 20 years’ experience in
financial services and consulting. She has extensive
experience in challenging the status quo and delivering
on innovative processes and solutions. Bronwyn
has a passion for driving transformational change in
organisations and teams leveraging on technology
and disruptive thinking to deliver desired customer
outcomes. Prior to joining Tyro, Bronwyn held several
senior roles in strategy, lending and payments within
Commonwealth Bank of Australia since 2005. Bronwyn
also had a consulting career with Arthur Andersen
Business Consulting in the US and across Asia, working
with clients from multiple industries from manufacturing
to financial services.
Bronwyn holds a Bachelors of Arts, Business Economics
from the University of California, Los Angeles (UCLA)
and a Masters of Business Administration from the Hong
Kong University of Science and Technology (HKUST).
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Record
Transaction value
Total revenue
Direct expenses
Gross Profit
30 JUNE 2020
$’000
30 JUNE 2019
$’000
30 JUNE 2018
$’000
30 JUNE 2017
$’000
30 JUNE 2016
$’000
20,131,045
17,496,322
13,359,608
10,607,068
8,590,407
210,675
189,770
148,231
120,575
95,777
(117,200)
(106,510)
(79,163)
(64,538)
(49,584)
93,475
83,260
69,068
56,037
46,193
Operating expenses
(97,847)
(91,871)
(78,890)
(65,245)
(44,413)
EBITDA
(before share-based payments and IPO costs)
(4,372)
(8,611)
(9,822)
(9,208)
1,780
Share-based payments
(10,896)
(3,788)
(1,411)
(1,841)
(965)
IPO Costs
EBITDA
(9,730)
-
-
-
(24,998)
(12,399)
(11,233)
(11,049)
-
815
Depreciation & Amortisation
(12,524)
(7,864)
(7,064)
(5,984)
(4,025)
Net interest cost
(535)
-
-
-
-
Loss before income tax
(38,057)
(20,263)
(18,297)
(17,033)
(3,210)
Loss after income tax
(38,057)
(18,439)
(17,146)
(14,820)
$’000
$’000
$’000
$’000
(749)
$’000
Cash, cash equivalents and investments
188,324
68,758
84,251
96,755
110,027
Cash flows from operating activities
8,194
(13,931)
(12,799)
(15,571)
(3,269)
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Report
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
67
Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information Directors’
Report
For the year ended 30 June 2020
The Directors present their report together with the Financial Report of Tyro Payments Limited (Company or Tyro) for the
year ended 30 June 2020 and the Independent Auditor’s Report thereon.
MEETINGS OF DIRECTORS
DIRECTORS
The following persons held office as Directors of the Company during the financial year and up to the date of this Report
(unless otherwise stated):
David Thodey AO
Chair & Non-executive Director
Independent
Robbie Cooke
Hamish Corlett
David Fite
CEO and Managing Director
Executive
Non-executive Director
Non-independent
Non-executive Director
Non-independent
Catherine Harris AO, PSM
Non-executive Director
Fiona Pak-Poy
Paul Rickard
Non-executive Director
Non-executive Director
Independent
Independent
Independent
Kerry Roxburgh retired as Non-executive Director and Chairman of the Tyro Board, effective 15 October 2019. As part of
the Tyro Board’s ongoing renewal and succession process, David Thodey became Tyro’s Chairman on 15 October 2019.
Fiona Pak-Poy was appointed to the Tyro Board as a Non-executive Director on 4 September 2019.
Robbie Cooke was appointed as Managing Director on 18 October 2019.
Details, including term of office, qualifications, experience and information on other directorships held by Directors, can
be found on pages 56 to 59 of the Annual Report.
COMPANY SECRETARIES
Jairan Amigh
(appointed as Co-Company Secretary on
20 February 2020)
Sami Wilson
(resigned as Co-Company Secretary on
30 June 2020)
Jay was appointed as Co-Company Secretary on 20
February 2020 and became sole Company Secretary on
30 June 2020 with the resignation of Sami Wilson. Jay
holds Bachelors of Law and Commerce and has over 30
years in legal practice focusing on financial services and
corporate governance.
Sami joined Tyro in April 2018 as General Counsel to
establish the in-house legal function. He was appointed
Company Secretary on 7 May 2018 and resigned as Co-
Company Secretary effective 30 June 2020. Sami holds
Bachelors of Law and Commerce.
The number of meetings of the Company’s Directors (including meetings of Committees of Directors) and the number of
meetings attended by each Director during the financial year were:
BOARD OF
DIRECTORS MEETINGS
AUDIT COMMITTEE
RISK COMMITTEE
PEOPLE COMMITTEE
A
34
25
34
34
34
29
34
9
B
33
25
33
32
30
29
33
9
A
nm
nm
4
1
1
4
5
B
nm
nm
4
1
1
4
5
nm
nm
A
1
nm
nm
7
nm
7
8
2
B
1
nm
nm
7
nm
7
8
2
A
5
nm
5
nm
6
nm
1
1
B
5
nm
4
nm
6
nm
1
1
David Thodey
Robbie Cooke1
Hamish Corlett
David Fite
Catherine Harris
Fiona Pak-Poy
Paul Rickard
Kerry Roxburgh2
A
B
Number of meetings during the year while the Director was a member of the Board or Committee.
Number of meetings attended by the Director as a member during the year.
nm Not a member of the relevant Committee.
1
The CEO and Managing Director is not a Non-executive Director. Robbie was invited by the Board to attend the Risk Committee, Audit
Committee, and People Committee meetings (or part thereof).
2
Kerry Roxburgh retired as a Director and Chair on 15 October 2019.
In addition to the Board and Committee meeting attendances noted above, a number of Directors participated in other
Committees established for special purposes.
At the date of this report, the Company has an Audit Committee, Risk Committee and People Committee. The members
of each Committee are as follows:
AUDIT COMMITTEE
RISK COMMITTEE
PEOPLE COMMITTEE
Paul Rickard (Chair)
Paul Rickard (Chair)
Catherine Harris (Chair)
Hamish Corlett
Fiona Pak-Poy
David Fite
Fiona Pak-Poy
Hamish Corlett
David Thodey
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information DIRECTORS INTEREST IN SECURITIES
OPERATING AND FINANCIAL REVIEW
The relevant interest of each Director in securities of the Company at the date of this Directors’ Report is as follows:
1. Review of Operations and Financial
Grow merchant share in existing core verticals
DIRECTOR
David Thodey
Robbie Cooke
Hamish Corlett1
David Fite2
Catherine Harris
Fiona Pak-Poy
Paul Rickard
RELEVANT INTEREST IN ORDINARY
SHARES
OPTIONS OVER ORDINARY SHARES
RIGHTS OVER ORDINARY SHARES
859,091
491,936
68,199,357
18,547,995
627,826
32,728
2,319,660
82,286
5,504,530
68,000
2,919,318
164,626
83,000
253,940
131,905
1,200,000
89,658
89,658
106,262
73,692
61,432
1 Hamish Corlett’s holding reflects shares held beneficially through associated entities and directly held shares.
2 Includes options held by Euclid Capital Partners LLC, an entity controlled by David Fite.
2020 CORPORATE GOVERNANCE
STATEMENT
Tyro’s governance arrangements and practices as
compared to the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations
(4th Edition) are set out in our Corporate Governance
Statement. Tyro must also comply with its constitution,
the Corporations Act 2001 (Cth), the ASX Listing Rules,
the Banking Act 1959 (Cth), including the Banking
Executive Accountability Regime (contained in Part IIAA
of the Banking Act 1959) amongst other laws, and, as an
Authorised Deposit-taking Institution, with governance
requirements prescribed by the Australian Prudential
Regulation Authority (APRA) under Prudential Standard
CPS 510 Governance and other applicable published
APRA Prudential Standards.
Information about Tyro’s corporate governance policies
and practices can be found in the 2020 Corporate
Governance Statement available at:
www.tyro.com/about-tyro/investors.
PILLAR 3 INFORMATION
Tyro provides information required by APRA prudential
standard APS 330: Public Disclosure in the Regulatory
Disclosures section at:
www.tyro.com/about-tyro/investors.
PRINCIPAL ACTIVITIES
Tyro is a technology-focused and values-driven company
providing Australian businesses with payment solutions
and complementary business banking products.
As an Australian bank, Tyro operates under the supervision
of the Australian Prudential Regulation Authority. Tyro
provides credit, debit and EFTPOS card acquiring,
Medicare and private health fund claiming and rebating
services to Australian businesses. Tyro takes money on
deposit and offers unsecured cash-flow based lending
to Australian EFTPOS merchants. The Company has
implemented appropriate systems and controls to comply
with the stringent prudential and regulatory requirements
within the Australian banking system.
Position
Refer to the CEO and Managing Director’s Report
on pages 13 to 29 of the Annual Report, which
forms part of this Directors’ Report.
2. Significant Changes in the State of
Affairs
In the opinion of the Directors, there were no
significant changes in the state of affairs of the
Company during the financial period, except as
otherwise noted in this report.
3. Significant Events after the end of
the Financial Year
Refer to Note 24 of the Financial Report, which
forms part of this Directors’ Report.
4. Business Strategies and Future
Prospects
We have a clear strategy which underpins our
growth ambitions. This includes a number of key
initiatives as set out below:
A focus on merchants in the Health, Hospitality and Retail
verticals has been one of the pillars of our business model
and success. This approach has enabled us to better
understand each vertical and the needs of merchants
that operate within it, informing the development of
better solutions, and resulting in market share growth. We
believe that there is still significant opportunity in these
verticals.
We have over 32,000 Australian merchants, the significant
majority of which are SMEs in our three core verticals.
This compares to a total of 312,000 SMEs in the Health,
Hospitality and Retail verticals as at 30 June 2019.
Key drivers for continued market share growth include
increased marketing to drive brand awareness, more
Point of Sale system integrations, additional payments
methods and the development of more industry-specific
solutions.
Add new core verticals
We plan on developing Accommodation and Services
into core verticals (estimated to represent approximately
700,000 businesses in total as at 30 June 2019) as we
believe merchants in these verticals will benefit from
a merchant acquirer with the technical capability to
produce specialised solutions and the preparedness to
build domain expertise. We intend to use our technical
capability to produce specialised solutions, including in
eCommerce, to align with the identified needs in these
verticals and to expand our terminal offering to provide
more choice to merchants to enhance our attractiveness
in these verticals.
We intend to adopt a similar approach that has proven
successful in servicing Health, Hospitality and Retail
verticals and will leverage our existing platform and
payments domain knowledge.
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Directors’ Report (cont’d) Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
Drive expansion into eCommerce and other
payment types
We will continue to drive the take-up of our unified
payments solution by our merchants, particularly the
approximately one third of them that we estimate to
conduct online sales. Within our current merchant base,
we believe that there is a significant opportunity to drive
growth in eCommerce and that our merchants will benefit
from our unified payments solution, which provides
single-settlement and reporting across ‘card-present’ and
‘card-not-present’. We also believe that our merchants
will find this attractive as it will enable them to provide
their cardholders with a more seamless experience across
online and offline channels (for example, where customers
purchase online and seek a refund in-store).
As the first Australian bank to provide a fully integrated
Alipay solution, we intend to continue to innovate and
provide multiple new and emerging payment types. In the
near term, we plan to introduce payment methods like
WeChat Pay and Zip Pay. We believe that having these
features will position us ahead of the four major banks and
assist us in retaining and growing our merchant base.
Cross-sell and drive expansion in lending and
other value-adding services
We believe that there is significant cross-sell opportunity
within our current product suite. By promoting a greater
take-up of our ancillary value-adding offerings, including
loans in the form of merchant cash advances, we will seek
to enhance our unit economics through greater share of
merchant wallet and merchant retention. We also consider
that there are opportunities to offer certain value-adding
products decoupled from our payments solution, including
Tyro Connect as discussed below.
Tyro Connect Launched
In recent years, there has been growth in the number
of customer-facing apps participating in the payments
ecosystem. These include loyalty, booking and order-
ahead apps, designed to meet customer demands for
enhanced convenience and service. These apps typically
seek to integrate with multiple Point of Sale (POS) systems
to distribute their services into merchants’ operations
which can create duplication, costs and other inefficiencies
for POS suppliers, merchants and apps. In the current
configuration, some Hospitality app solutions require
additional hardware including printers and tablet devices
at the premises. The proliferation of apps has resulted in
friction for merchants, POS systems and app providers.
We are well placed to develop a solution, given our
technology expertise, integration experience and existing
network of POS system partners. This solution will aim to
solve these inefficiencies via an API-based integration
platform, distinct from merchant acquiring.
We are currently in the pilot phase of this solution, which
is known as Tyro Connect. Tyro Connect is designed to
be an integration hub for apps and POS systems – a ‘plug
and play’ platform software solution designed to address
merchant pain points around ‘counter clutter’ and manual
processes. It also aims to make it easier for POS system
partners and app providers to meet customer needs.
Tyro Connect seeks to reinforce our value proposition
to merchants, while embedding us more deeply into
the commerce ecosystem and enhancing our ability to
capture data and insights. We also intend for this to be a
standalone solution for businesses, irrespective of whether
they are currently using any other of our products. If a
business adopts Tyro Connect, it presents us with an
opportunity to cross-sell other products. We are currently
focused on use cases relevant to our core verticals, starting
with Hospitality.
Tyro’s key priorities and strategies for FY21 are also
discussed in the CEO and Managing Director’s Report
on pages 13 to 29. In the Directors’ opinion, any further
disclosure of information on Tyro’s business strategies and
future prospects would be likely to result in unreasonable
prejudice to the Company.
5. Material Risks to Business Strategies and Prospects for Future Financial Years
The potential material business risks that could adversely affect Tyro’s achievement of its business strategies and
financial prospects in future years are described below. This section does not purport to list every risk that may be
associated with Tyro’s business now or in the future. There is no guarantee or assurance that the importance of these risks
will not change or other risks emerge. While Tyro aims to manage risks in order to avoid adverse impacts on its financial
and reputational standing, some risks are outside the control of the Company.
The management and oversight of risk is ultimately overseen by our Board and Risk Committee. We have an integrated
Risk Management Framework in place to identify, assess, manage and report risks on a consistent basis. This framework
has been developed to accord with the tolerance levels set out in our Risk Appetite Statement.
TYRO’S RISK MANAGEMENT FRAMEWORK
OUR
PURPOSE
HOW MUCH
RISK WE TAKE
HOW WE
DEFINE RISK
WHAT RISK
WE TAKE
HOW WE
ASSURE
OURSELVES
HOW WE
GOVERN RISK
Our Strategy
Risk Appetite Statement
Risk Management Strategy
1. Strategic Risk Management
FINANCIAL RISK MANAGEMENT
NON-FINANCIAL RISK MANAGEMENT
2. Credit Risk
Framework
3. Liquidity Risk
Management
Framework
4. Market and
Investment Risk
Management
Framework
5. Operational
Risk
Management
Framework
6. Compliance
Risk
Management
Framework
7. Customer and
Conduct Risk
Management
Clear business procedures aligned to policies, risk and compliance self-assessment, control assurance program,
staff training, testing adherence to policy, analysing incidents, reporting, risks/issues and breach identification and
management, credit decisioning, hindsight review, profiling, stress testing, audits
I
R
S
K
C
U
L
T
U
R
E
BOARD, BOARD RISK COMMITTEE, BOARD AUDIT COMMITTEE
EXECUTIVE RISK COMMITTEE
BUSINESS UNIT RISK MANAGEMENT
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Directors’ Report (cont’d) Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
5. Material Risks to Business Strategies
and Prospects for Future Financial
Years (cont’d)
To help ensure we operate within the defined risk appetite
set by the Board, our approach to managing our risk is
underpinned by a ‘three lines’ of defence model:
•
•
•
First Line of Defence: risk owners – business
managers have primary responsibility for the
identification and management of risk in the
performance of their day-to-day responsibilities;
Second Line of Defence: risk appetite, oversight
and insight – dedicated risk management and
compliance functions are accountable for risk
oversight, insight and support, including the
development and regular review of the risk
management framework and appetite, advising the
business on risk management tools and strategies,
and monitoring and reporting on the risk profile; and
Third Line of Defence: independent assurance
– internal audit is accountable for independently
assuring that the risk management framework
is operating effectively. External audit provides
assurance that risk management is appropriate in the
context of their statutory and regulatory obligations.
This structured approach to risk management is key to the
development of our effective risk culture.
Material Risks:
Increased competitive pressures
Regulatory Risk
Deterioration in macroeconomic conditions
The Australian payments and business banking industries
in which we operate depend heavily upon the overall level
of consumer and business spending in Australia. A decline
in general economic conditions or changes in certain
macroeconomic factors (including rising unemployment,
lack of income growth, reduced consumer confidence,
inflation, volatility in local or global financial markets,
economic tensions, and government intervention,
including with respect to changes in interest rates) may
adversely affect our financial performance by reducing
transaction volumes and the average purchase amount of
transactions that our merchants process.
Two of our existing core verticals (Hospitality and Retail),
which accounted for 78.7% of our transaction value in
FY20, are particularly exposed to discretionary spending
in Australia. In addition, our growth plans into new
verticals (Accommodation and Services) could also be
impacted by adverse changes in consumer confidence
and spending. Accordingly, any reduction in discretionary
spending in these verticals could result in a decrease of
our revenue and profitability.
A sustained weakening of the Australian economy could
affect the financial performance of our merchants,
cause a reduction in transaction volumes, and in some
instances, lead to some merchants closing their business.
This could materially affect demand for our products
and services through reduced merchant numbers,
declines in transaction volumes and reduced earnings
on transactions. Further, higher interest rates or inflation,
or deterioration in Australian economic conditions,
may increase the likelihood that merchants and their
cardholders have insufficient income to pay their debts,
and could lead to increased lending losses in our banking
business or an increased level of chargebacks and
non-lending losses. Additionally, credit card issuers may
reduce credit limits and become more selective in their
card issuance practices, which could further constrain
our merchants’ transaction volumes and values. Any of
these developments could have an adverse impact on our
business, financial performance and operations.
We operate primarily in the payments and business
banking industries in Australia, which are highly
competitive and subject to significant change driven
by factors including advancements in technology,
changing consumer behaviours, new products and
services, evolving industry standards, regulation, and the
changing needs of our merchants. Some of our existing
and potential competitors possess significant market
share and resources and could increase their competitive
position through increased marketing activity, product
innovation, or price discounting.
Furthermore, large international competitors and/or global
technology leaders, could enter the Australian payments
and business banking industries or expand their existing
presence. These competitors may have greater financial
resources to apply to: R&D; sales and marketing; or
access to a large existing Australian merchant base, which
may enable them to expand or enter into the payments
and business banking industries. In addition, new or
existing competitors that are not subject to Australian
banking regulations (e.g. non-bank lenders) may be able
to develop and operate business models with lower
compliance costs.
We are subject to a range of laws and regulations across
our business and operate in an industry and alongside
competitors that have been subject to increasing
regulatory oversight and reform in recent years. Operating
in an evolving regulatory environment means that
regulatory developments may occur in the future that
impact our business or the products that we currently
offer, or may require us to make changes to products,
processes or systems that have an adverse impact on our
business or financial performance.
Merchant business performance may be affected by
factors beyond general economic conditions, including
changes to laws and regulations in the industries
in which they operate (for example, laws relating to
permitted trading hours). If such risks arise, they may
adversely impact our business, financial performance and
operations.
We manage regulatory risk through monitoring changes
to legislation, regulations and/or industry codes,
understanding and assessing the potential impacts to
our products, services, and operations and developing
strategies that support the implementation of any
necessary changes for our business and our merchants.
Compliance Risk
Credit Risk
Compliance risk entails the risk of a failure to act in
accordance with laws, regulations, industry standards and
codes, internal policies and procedures and principles
of good governance as applicable to the Company’s
business. This risk includes overseeing the establishment
and maintenance of risk-based controls to mitigate the
risks associated with money laundering and terrorism
financing.
We have a dedicated compliance team who operate
within, and oversight, set compliance policies and
supporting documentation which are subject to regular
review to ensure they remain current. We have a
compliance monitoring program in place to monitor
adherence to policies. Our risk and controls self-
assessment process is also used to identify, evaluate and
manage compliance risks and for developing associated
controls.
We face lending credit risk in granting unsecured loans in
the form of merchant cash advances to our merchants. If
our merchants do not repay the principal and fees owing
under their loan contract, we may experience a decrease
in revenue, increase in expenses (including an increase in
impairment expenses and an increase in funding costs),
and/or decrease in operating cash flows received. As
our loan book grows over time, this may have a material
adverse impact on our business, financial condition and
operating and financial performance.
There is a risk that our credit risk framework may not
appropriately define credit assessment processes,
eligibility criteria, risk grades or settings or effectively
monitor portfolio risk. If our framework and policies fail
to mitigate credit risk and losses from credit exceed
expectations, we may experience losses that may
adversely impact our financial performance, position and
prospects.
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Directors’ Report (cont’d) Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information Credit Risk (cont’d)
Market and Investment Risk
Strategic Risk
8. Sustainability
We are also exposed to credit risk from our merchant
acquiring activities such as being liable for chargebacks,
which may lead to losses. If schemes fail to honour the
settlement funds for acquired transactions, we may be
unable to honour our merchants’ settlement positions. This
may lead to merchant dissatisfaction, loss of merchants,
reputational damage, and adverse impacts on our
business, financial performance and operations.
We manage credit risk through our Risk team and credit
risk policies within the limits set by the Board and Risk
Committee. We also obtain guarantees from the directors
or principals of merchants.
Liquidity and Funding Risk and Capital Adequacy
Risk
Liquidity and funding risk and capital adequacy risk is the
risk of loss arising from the Company failing to maintain
the level of capital required by prudential regulators
and other key stakeholders such as shareholders and
merchants to support Tyro’s operations, future strategies
and risk appetite.
As a licensed Authorised Deposit-taking Institution, the
Australian Prudential Regulation Authority requires us to
hold a certain level of equity. Our business is currently
loss-making and there is no certainty our organic capital
generation will meet the future requirements of our
business. We may not be able raise additional capital
when required or at cost effective rates or on competitive
terms. An inability to raise debt or equity in the future
may impact our ability to operate or grow our business.
This may result in regulatory scrutiny from the Australian
Prudential Regulation Authority or adverse impacts on our
business position, financial performance and results of
operations.
We forecast future capital requirements and available
capital resources to manage the business to our required
levels of regulatory capital, target adequacy levels and
internal capital triggers, over a forecast period. This is an
annual exercise with the Executive Leadership Team and
the Board, performed in conjunction with the business
planning and budgeting process.
Market and investment risk is the risk of loss arising from
adverse changes in interest rates, foreign exchange
rates, equity prices, commodity prices and other relevant
parameters, such as market volatility. Tyro’s Asset and
Liability Committee oversees management of this risk
within the Board set risk appetite limits.
Operational Risk
Operational risk relates to the risk of loss resulting
from inadequate or failed internal processes, people
and systems, or from external events which affect our
business. Our business is exposed to operational risks
such as external and internal fraud, processing errors,
system or hardware failure and failure of information
security systems.
Loss from operational risk events could divert investment
from new products into remediation of existing systems
and processes, damage merchant relations or our
reputation, adversely affect our financial results or
position, as well as divert staff away from their core roles
to remediation activity. In addition, losses could include
legal or remediation costs and loss of property and/or
information.
We have a dedicated Operational Risk team who
provide oversight over the operational risk management
framework which includes the following sub-categories:
internal fraud, external fraud, employment practices and
workplace safety, customers, products and business
practice, damage to physical assets, business disruption
and systems failures, and execution, delivery and process
management.
Reputation Risk
The risk of loss that directly or indirectly impacts our
earnings, liquidity and capital adequacy, that is caused
by adverse perceptions of the Company held by any of
our merchants, the community, shareholders, investors, or
regulators. There is also a risk to our reputation through
the conduct of our employees or contractors (or both) or
the social and/or environmental impacts of our business
practices. Our brand reputation and awareness are critical
to maintaining and growing our merchant base and Point
of Sale system partner network.
We manage reputation risk by maintaining a values-driven
culture that ensures we act with integrity and enables us
to build trusted relationships with merchants and wider
community.
Tyro acknowledges the importance of considering the
impact of environmental, social and governance factors
on the sustainability of our businesses. We further
acknowledge that there is a requirement by institutional
shareholders and investors to report on our sustainability
framework, initiatives and performance.
Although our operations are not subject to any particular
and significant environmental regulation under any law
of the Commonwealth of Australia or any of its states or
territories, we still acknowledge that it is important that by
fulfilling our mission to set businesses free to get on with
business by simplifying payments and banking, we do so
in such a manner that we create a sustainable future for
all our stakeholders. Refer to pages 31 to 53 of the Annual
Report for further details on Sustainability
Strategic risk is the risk that Tyro’s business strategy and
strategic objectives may lead to an increase in other
key risks such as credit risk, capital adequacy risk or
operational risk.
Technology Risk
Technology risk concerns our ability to deliver fast and
easy payments solutions and access to finance for our
merchants (and to successfully assess credit risk) and
depends on the efficient and uninterrupted operation
of our technology platform, technology used by others
and the internet generally. There is a risk that these
technologies and systems may experience downtime
or interruption from a range of issues such as system
failures, service outages or cyber-attacks which could
cause significant damage to our reputation (particularly if
the failure relates to our platform), our ability to facilitate
payments transactions, our ability to make informed
credit decisions and assess the credit performance of
our loan book, our ability to service merchants in a timely
manner, and our ability to retain existing merchants and
generate new merchants, any of which could have an
adverse impact on our business, financial performance
and operations.
Sustainability and Climate Change Risk
Climate change is becoming increasingly relevant to all
businesses in Australian. The ongoing effects of climate
change risks may impact the long-term prosperity of
Australia’s economy, environment and society which may
lead to adverse impacts upon our business.
We manage sustainability and climate change risk
through our Sustainability Framework. Refer to pages 31
to 53 of the Annual Report for further details.
6.
Dividends
No dividends were paid to shareholders or otherwise
recommended or declared for payment during the year.
7. Share-Based Payments
Details of share-based payments are disclosed in our
Remuneration Report on pages 78 to 110 and in Note 12 of
the Financial Statements.
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Directors’ Report (cont’d) Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information Audited
Remuneration
Report
LETTER FROM CHAIR OF THE PEOPLE COMMITTEE
Dear Shareholder,
On behalf of your Board, I am pleased to present
Tyro’s first Remuneration Report as an ASX
listed company in a year which has proved to
be extremely challenging for our community,
our merchants and our team. This Report covers
remuneration arrangements and outcomes for the
2020 financial year, and an outline of proposed
changes to our remuneration framework for FY21.
FY20 was a momentous year for Tyro with our
listing on the ASX on 6 December 2019. As part of
the listing process, we undertook a comprehensive
review of our remuneration structure to best
ensure our remuneration framework and policies
align with the targets and objectives of a growing
business in the highly regulated Australian
banking sector.
Over the past six months, we have also
actively engaged with our shareholders on our
approach to remuneration and governance. The
support received from shareholders during this
engagement is encouraging and provides us with
confidence that our remuneration framework
meets stakeholder expectations across all levels.
From a performance perspective, the team at Tyro
has done an exceptional job in FY20. In the first
half of FY20 we delivered record transaction value,
revenue, and gross profit, all whilst undertaking
the complex, and potentially distracting, process
of listing Tyro on the ASX. This growth was then
unfortunately disrupted by COVID-19 which
resulted in the team having to quickly shift their
focus on navigating the significant challenges
that COVID-19 presented for our merchants and
our business. The resilience and strength that
our team displayed through this period, and the
support they continue to provide to our merchants
in this unprecedented humanitarian and economic
crisis clearly demonstrates why your Board has
great confidence in Tyro’s future success.
Many of our merchants continue to find the
impact of COVID-19 extremely challenging
despite all their efforts to innovate and adapt, and
notwithstanding the various assistance packages
on offer from the federal, state and territory
governments, and from Tyro. When faced with
such a challenging business environment, it is
encouraging to see merchants who have opted
to reinvent their way of operating to remain
trading, with many receiving positive feedback
from customers and increased business through
their innovation. The Tyro team also did not miss
a beat during lockdown continuing to service all
our merchants to our usual high standard, and
providing all such assistance we possibly could
to support our merchants experiencing hardship
during the depths of the crisis, and being there for
them as their businesses started to re-open as the
lockdown restrictions were lifted. The team’s high
performance and values-driven culture is what will
best ensure our return to the pace of growth we
are accustomed to delivering in order to meet our
strategic goals.
The exceptional performance of our team also
contributed to Tyro’s share price outperforming
the broader ASX200 and the ASX300 (to which
we were recently added), notwithstanding the
challenges of the COVID-19 crisis from early March
of this year. As at 30 June 2020, Tyro is up 27.3%
from our listing price of $2.75 compared to the
ASX300 which is down 12.1% for the same period.
Tyro’s share price performance compared to the S&P/ASX300 (XKO)
SHARE PRICE @ 30 JUNE 2020
27.3% (since listing)
MARKET CAP
27.9% (since listing)
80
60
40
20
0
-20
-40
-60
-80
9
1
0
2
/
6
/
2
1
9
1
0
2
/
3
1
/
2
1
9
1
0
2
/
0
2
/
2
1
9
1
0
2
/
7
2
/
2
1
9
1
0
2
/
3
/
1
9
1
0
2
/
0
1
/
1
9
1
0
2
/
7
1
/
1
9
1
0
2
/
4
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6
TYR.ASX
ASX300 (XKO)
The resilience and strength that our team
displayed through this period, and the support
they continue to provide to our merchants in
this unprecedented humanitarian and economic
crisis clearly demonstrates why your Board has
great confidence in Tyro’s future success...
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Review CEO’s Operational & Financial Review Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information strategy and objectives. We continue to engage
with team members, shareholders, regulators
and proxy advisors and remain open to exploring
alternatives and considering potential changes to
remuneration in the future, including considering
the ongoing debate and potential regulatory
changes within the financial services sector
relating to remuneration. We are committed as a
Board to continuously reviewing the effectiveness
of our remuneration policies.
I look forward to presenting our remuneration
report to you at the Tyro Annual General Meeting
to be held on 27 October 2020.
Yours sincerely,
_____________________________
Catherine Harris AO, PSM
Chair
People Committee
Our approach to Remuneration
We recognise that an effective remuneration
framework is essential to attracting and retaining
top talent and the success of our business. We
have committed to a policy of a market-related
and a role- specific remuneration structure for
all employees including our Key Management
Personnel (KMP).
Our employee remuneration is comprised of
fixed annual remuneration (being base salary,
superannuation, and any fringe benefits),
together with a short-term incentive (STI) plan
for all team members and a long-term incentive
(LTI) plan for certain nominated personnel. The
fixed annual remuneration together with the
STI and LTI comprise the Total Remuneration
Opportunity (TRO) available to team members. As
mentioned, prior to listing on 6 December 2019,
we conducted an evaluation of our executive
remuneration against a peer benchmark group
based on market capitalisation and a spectrum
of relevant companies in the financial services
sector of the ASX index. I am pleased to report
that our remuneration outcomes for FY20 are well
within the benchmarks of these peer groups.
Furthermore, key determinants in all remuneration
decisions are based on our overall financial
performance, customer satisfaction outcomes
and individual performance (against individual
key performance indicators (KPIs). To help inform
this process, we conduct regular performance
reviews. These reviews promote open and honest
communication and are designed to provide the
information we need to allocate incentives fairly,
and to identify goals, areas for development, and
training requirements for our team.
The Board is confident that our approach to
remuneration drives a culture and behaviour
amongst team members that supports our
growing business and creates alignment with our
TYRO’S APPROACH TO
REMUNERATION
As a high-growth company with proprietary
technology at our core we compete for world-
class talent in the technology sector. It is therefore
essential to have a remuneration approach that can
lead to the recruitment and retention of the best
people in order to achieve our strategic objectives.
As such, we continue to invest in our people with
competitive reward and remuneration structures and
a culture of ownership, collaboration and teamwork.
The objective of remuneration at Tyro is to:
• align reward with strategic objectives;
• attract, motivate and retain a highly skilled team;
•
incentivise and reward high performance that
delivers sustainable long-term value creation and
reflects the interests of our shareholders as the
owners of our business to drive high growth; and
• be transparent, easy to understand and delivers
remuneration outcomes that meet team member
expectations and make sense to Tyro’s team
members and external stakeholders.
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INTRODUCTION
2.2 Remuneration Outcomes
This Report forms part of the Directors’ Report and sets out the remuneration arrangements of the Company for the year
ended 30 June 2020 and is prepared in accordance with Section 300A of the Corporations Act. The information has been
audited as required by Section 308(3C) of the Corporations Act.
The Remuneration Report details the remuneration arrangements for Tyro’s KMP. KMP are those persons having authority
and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including all
Directors. References in this Remuneration Report to Executives refers only to those Executives who are KMP, as outlined
in section 3 below for FY20.
2. FINANCIAL PERFORMANCE AND REMUNERATION OUTCOMES
2.1 Financial Performance Outcomes
Transaction value up 15.1%
to $20.1 billion
For H1 FY20, transaction value growth was up 30%, exceeding the prospectus full-year
forecast growth of 28.6%. However, the impact of the bush fires in January 2020 and
COVID-19 from March 2020 on merchant trading contributed to overall full-year growth
moderating back to 15.1%.
Revenue up 11.0% to $210.7
million
Our Payments business lifted revenue by 10.4% to $202.8 million (FY19: $183.7 million).
The increase in revenue reflected the 15.1% increase in transaction value and a 10.8%
increase in the number of merchants.
Operating expenses as
a percentage of both
Gross Profit and Total
Revenue decreased in FY20
compared to FY19 reflecting
the increased operating
leverage of Tyro from higher
revenue
EBITDA loss down 49.2% to
$4.4 million
Our Banking business revenue declined 38.1% to $1.8 million. The decline was due
to a fair value adjustment of negative $2.4 million recognised on our business loans,
reflecting potential adjustments for changes in risk of our portfolio given the struggles
our merchants are going through over the COVID-19 period.
The operating expense margin is used as a factor to adjust the base financial
performance pool, either up or down to ensure that transaction value growth and
revenue growth does not materially impact the cost base of Tyro.
Tyro generated a positive EBITDA result of $1.5 million for the first half of FY20, however
the impact of COVID-19 in the second half of FY20 resulted in lower revenues putting us
back in an EBITDA loss position. To protect our business during COVID-19, we curtailed
discretionary spending on marketing, travel, and certain other costs, however these
savings were not sufficient to offset the lower revenue achieved.
Tyro was eligible to receive payments as part of the Federal Government’s ‘JobKeeper’
initiative and supported by this we were able to keep our team intact.
Group remuneration
CEO and Managing
Director
STI
LTI
Liquidity Event
Performance Rights
(LEPR)
Initial Public Offer
(IPO) Bonus
Non-executive
Director fees
No fixed annual remuneration increase will be provided to employees for FY21 until such time
as Tyro and our merchants are operating in a more stable environment once the impacts of
COVID-19 reduce. There was an average increase of 2.8% across the company in FY20. Our
objective with fixed remuneration is to maintain a market-related remuneration position in our
benchmark group and maintaining remuneration in the range of the 50th to 75th percentile of
our peer benchmark groups.
Total statutory remuneration for the CEO and Managing Director was $2,247,965 (FY19:
$2,090,357). Included in statutory remuneration are the following elements of the CEO and
Managing Director’s TRO together with the accounting cost of long-term benefits and share-
based payments:
•
•
•
Fixed annual remuneration of $862,176 (FY19: $850,531).
An annual travel allowance of up to $50,000 (FY19: Nil).
A Short-Term Incentive (STI) of $209,077 of which 100% is payable as Service Rights (FY19:
$356,900 of which 100% was payable in cash and salary sacrificed to rights under the
Remuneration Sacrifice Rights Plan).
A Long-Term Incentive (LTI) of $556,104 (FY19: $415,000) issued as options to acquire
shares based on the FY20 Employee Share Option Plan.
•
All team members participated in Tyro’s STI Plan. Excluding the CEO and Managing Director, the
Board allocated $153,994 as a STI in the form of Service Rights to KMP (FY19: $151,413 of which
100% was payable in cash and $123,123 was salary sacrificed to rights under the Remuneration
Sacrifice Rights Plan). The total STI allocated across the Company to all team members in
the form of Service Rights (excluding the CEO and Managing Director) was $2,378,125 (FY19:
$2,553,280) of which the Executive Leadership Team was allocated $580,225 (24% of the total).
38 team members participated in Tyro’s LTI Plan. Excluding the CEO and Managing Director,
the Board allocated $475,982 in options under the current Option Plan to KMP. The total LTI
allocated across the Company (excluding the CEO and Managing Director) was $2,819,693
(FY19: $4,462,961) of which the Executive Leadership Team was allocated $1,973,197 (70% of the
total).
A limited number of Executives and senior leadership team members of Tyro were granted
performance rights under the LEPR Plan between FY19 and FY20. A liquidity event was
triggered under the Plan with the IPO that took place on 6 December 2019. The first tranche of
the Liquidity Event Performance Rights vested and became exercisable on 6 December 2019.
4,100,000 LEPRs were allocated under the Plan of which 1,366,668 have vested and 266,667
have been exercised.
A bonus of $490,500 was paid to the general team of which KMP received $112,000 and the
Executive Leadership Team received $187,000 (38% of the total) in recognition of the efforts of
the team to prepare Tyro for the IPO and listing on ASX that took place on 6 December 2019.
Non-executive Directors received $867,711 in fees of which $786,681 was salary sacrificed
to rights under the Remuneration Sacrifice Rights Plan. Base Director fees were set at
$108,000 (FY19: $90,000), an increase of 20% over FY19. The Chairman received $180,000
(FY19: $150,000) in fees while fees for Committee Chairs were $20,000 per Committee (FY19:
$20,000). Non-executive Director fees were benchmarked to our peer group during the year
and adjusted accordingly.
Salary Sacrifice Rights
Plan
A total of $786,6811 was salary sacrificed by Directors, Executives and other senior leadership
team members in FY20 under the Remuneration Sacrifice Rights Plan (FY19: $1,423,317).
1
As noted below in Section 6.1, in respect of FY20, any STI payable to Executives and other senior leadership team members was paid in Service
Rights and not cash, so is excluded from this figure.
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3. KEY MANAGEMENT PERSONNEL
Tyro Remuneration Governance Framework
The KMP covered in this report are Tyro’s Non-executive Directors, Chief Executive Officer and Managing Director (CEO),
Chief Financial Officer (CFO) and Chief Risk Officer (CRO).
Details of KMP, including changes made during the reporting period are provided in the table below:
NON-EXECUTIVE DIRECTORS
David Thodey AO
Chairman (from 15 October 2019), Non-executive Director
Hamish Corlett
David Fite
Non-executive Director
Non-executive Director
Catherine Harris AO, PSM
Non-executive Director
Fiona Pak-Poy
Paul Rickard
Non-executive Director (from 4 September 2019)
Non-executive Director
FORMER NON-EXECUTIVE DIRECTORS
Kerry Roxburgh
EXECUTIVE KMP
Robbie Cooke
Chairman, Non-executive Director (until 15 October 2019)
CEO and Managing Director (appointed Managing Director from 18 October
2019)
Praveenesh (Prav) Pala
Chief Financial Officer
Angela Green
Chief Risk Officer
There have been no changes in KMP since the end of the reporting period.
4. REMUNERATION GOVERNANCE
The People Committee consists of three Non-executive Directors, with one performing the role of Chair. This Committee
provides Tyro with a robust governance framework to ensure remuneration policies, practices and outcomes are
reasonable and consistent with shareholder expectations. The diagram below provides an overview of this framework.
Board - Chaired by David Thodey
REVIEW AND APPROVE TYRO’S REMUNERATION POLICIES AND FRAMEWORK TO ENSURE
THAT THEY ARE ALIGNED WITH TYRO’S PURPOSE, VALUES, STRATEGIC OBJECTIVES AND RISK
APPETITE. REVIEW AND APPROVE REMUNERATION OUTCOMES FOR SENIOR EXECUTIVES,
OTHERS AS REQUIRED BY THE LAW AND NON-EXECUTIVE DIRECTORS.
Board People Committee – Chaired by Catherine Harris
The Committee assists the Board with remuneration matters by providing objective oversight and making recommendations to
the Board in relation to:
•
•
•
Tyro’s remuneration policy and frameworks;
the remuneration of the CEO and Managing Director, other senior executives and others as required by the law; and
the process for allocating any pool of Directors fees approved by shareholders.
Composition
The people Committee is independent of management. Accordingly, the Committee consists entirely of Non-executive
Directors, the majority of whom are independent. Where appropriate, the CEO and Managing Director and Chief People Officer
attend Committee meetings. However, they do not participate in formal decision-making or in discussions relating to their own
remuneration.
DELEGATED BOARD COMMITTEE
CEO and Managing Director
Present proposals on remuneration,
implementing remuneration polices and other
matters within the authority of the Committee
Remuneration Consultants
External and independent remuneration
advice and information to assist the
Committee in decision making
For further details regarding the People Committee Charter, refer to our Investor Relations website at:
www.tyro.com/about-tyro/investors/
The People Committee is responsible for advising the Board on:
• annual allocation of the pool of fees approved by
shareholders to Directors;
•
the BEAR requirements around remuneration of
accountable persons;
• annual remuneration of the CEO and Managing Director,
• executive recruitment, termination policies and
the CEO and Managing Director’s direct reports
and any other persons under the Banking Executive
Accountability Regime (BEAR), amongst others;
• performance review of the CEO and Managing
Director, senior executives and other BEAR
accountable persons;
• employee equity plans;
succession planning;
•
recruitment, reappointment and removal of Directors;
• performance and development of Directors including
ongoing skills assessment, professional development
and annual evaluation of the performance of the
Board; and
• strategic people initiatives, including diversity and
•
the monitoring of culture, including risk culture;
related disclosures, including sustainability reporting.
Remuneration is set by the Board with the advice of People Committee and is reviewed on an annual basis. During this
process, consideration is given to individual team member performance and the overall performance of Tyro, as well as
prevailing market conditions.
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4.1 Remuneration Consultants
The People Committee engages independent remuneration advisors on an as-needs basis to provide information
regarding market dynamics, trends and regulatory developments, specifically those impacting financial services
companies. The People Committee and the Board consider this information along with other market insights to determine
what would be the most appropriate recommendations to make for Tyro regarding remuneration.
In FY20, PwC was engaged to provide benchmarking data for Non-executive Directors and senior leadership team
members including the CEO and Managing Director for the purposes of informing the People Committee of the
current market positioning of KMP and senior leadership team members against Tyro’s benchmarking peers. PwC was
paid $85,272 for the benchmarking review and the review of the existing remuneration framework’s compliance with
BEAR. Godfrey Remuneration Group was also engaged in FY20 relating to services for providing remuneration data
for Executives. Godfrey Remuneration Group was paid $11,000 for these services. E&Y was engaged in FY20 to provide
remuneration advice to the Board and was paid $6,050 for the services provided.
The Board is satisfied that no remuneration recommendations (as defined in the Corporations Act 2001) were provided by
PwC or any other external remuneration advisors during FY20.
5.
APPROACH TO SETTING REMUNERATION LEVELS
Incentivise and reward high
performance that delivers
sustainable long-term value
creation and reflects the interests
of our shareholders as the owners
of our business
Be transparent, easy to understand
and delivers remuneration
outcomes that meet team member
expectations and make sense to
Tyro’s team members and external
stakeholders
We aim to generate strong alignment between employee and Executive reward
and shareholder outcomes through the structure of our short-term incentive plan
and long-term incentive plan.
It is critical that our employees and Executives have an ownership mindset that
enhances Tyro’s long-term value and compliance regulations, rather than focusing
on short-term gains.
It is important for our Board to have a clear and transparent remuneration
framework that encourages shareholder confidence and allows comparisons with
our peer companies.
It is also important that the hurdles required to be achieved under our framework
are easy to understand. It is also critical that our team members understand, at any
given point in time, the likelihood of vesting of options and rights and the potential
value of remuneration attached to those awards.
Tyro’s remuneration strategy is aligned with the Company’s purpose of setting businesses free to get on with business by
simplifying payments and banking.
5.1 Benchmarking analysis
The objective of remuneration at Tyro is to:
Align reward with strategic
objectives
Our remuneration framework aligns both the-short term and long-term rewards of
employees and Executives with Tyro’s strategic goals and core values.
Attract, motivate and retain a
highly skilled team
Our most important competitive advantage is our people and our values driven
approach to ‘wow’ing’ the customer. To attract and retain our talented team,
we target remuneration at levels that ensure we can access the limited and
competitive talent pool to drive our business forward.
Our approach to remuneration also motivates team members to drive overall
customer satisfaction and perform well in all market conditions and economic
cycles.
240
170
24
42
Technologists
Customer
Risk & Compliance
Corporate
In order to meet our commitment of ensuring remuneration is market-related together with attracting world-class talent,
we adopted a benchmarking approach to setting remuneration levels for our Executives and senior leadership team.
As a technology company with a banking licence we do not have any direct ASX-listed peers of a similar size. As such, we
used two comparator groups. The first comparator group was based on the market capitalisation of ASX listed companies
with ASX rankings within a range of 20 above and below (40 companies in total) of a median of $1.5 billion (excluding REITs
and secondary ASX listings).
MARKET CAPITALISATION PEER GROUP
Market Capitalisation range:
$1.47 BILLION TO $1.19 BILLION
Market Capitalisation range:
$1.92 BILLION TO $1.51 BILLION
-1: ARB Corporation Ltd
-2: Blackmores Ltd
-3: Clinuvel Pharmaceuticals Ltd
-4: Austal Ltd
-5: Resolute Mining Ltd
-6: Inghams Group Ltd
-7: Virgin Australia Holdings Ltd
-8: Ausdrill Ltd (Perenti)
-9: Nearmap Ltd
-10: Freedom Foods Group Ltd
-11: Smartgroup Corporation Ltd
-12: Jumbo Interactive Ltd
-13: Genworth Mortgage Insurance
-14: Lovisa Holdings Ltd
-15: G8 Education Ltd
-16: PolyNovo Ltd
-17: Costa Group Holdings Ltd
-18: Aveo Group
-19: Gold Road Resources Ltd
-20: McMillan Shakespeare Ltd
Tyro
Payments
Limited
+20: IOOF Holdings Ltd
+19: Healius Ltd
+18: Netwealth Group Ltd
+17: GrainCorp Limited
+16: Super Retail Group Ltd
+15: Bapcor Ltd
+14: Domain Holdings Australia Ltd
+13: Lynas Corporation Ltd
+12: Nufarm Ltd
+11: Perpetual Ltd
+10: IPH Ltd
+9: InvoCare Ltd
+8: Webjet Ltd
+7: Nanosonics Ltd
+6: MFF Capital Investments Ltd
+5: Monadelphous Group Ltd
+4: Hutchison Tel (Australia) Ltd
+3: WAM Capital Ltd
+2: Bingo Industries Ltd
+1: Credit Corp Group Ltd
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5.1 Benchmarking analysis (cont’d)
The second comparator group, used to validate the primary market capitalisation peer group, was based on financial
services companies in the ASX300, and companies in the ASX 300 Diversified Financials index, excluding those that are
above a market capitalisation of $5.0 billion and below that of $0.5 billion (excluding REITs, insurance companies, income
trusts and secondary ASX listings). This group consists of 31 companies against which our remuneration is benchmarked.
FINANCIAL SERVICES PEER GROUP
20 COMPANIES BELOW TYRO
Tyro
Payments
Limited
11 COMPANIES ABOVE TYRO
$50 million – $1.291 billion
$1.507 billion – $4,187 billion
5.2 Setting target remuneration
Our policy is to target a total remuneration opportunity of our Executives between the 50th and 75th percentiles of both
comparator groups acknowledging that certain roles require specialist banking and payment skills and as such may need
to be adjusted to recognise these unique skills.
An individual Executive’s remuneration is determined by the Board after considering:
•
•
•
the benchmarking data provided by our independent remuneration advisors for each Executive role compared to
both the market capitalisation comparator group and financial services comparator group;
individual performance, BEAR accountabilities, role complexity, and regulatory requirements specific to the role; and
industry experience and the availability of comparable talent in the domestic market.
6. EXECUTIVE REMUNERATION FRAMEWORK
Tyro’s Executive remuneration framework is made up of three components that when combined create a Total
Remuneration Opportunity (TRO) for Executives and senior leadership team members.
COMPONENT
DESCRIPTION
MEASURES
FIXED ANNUAL
REMUNERATION (FAR)
Represents between
47.0% to 71.5% of TRO
depending on position.
• Fixed cash remuneration comprises base
salary, superannuation and any fringe
benefits.
• FAR is reviewed annually by the People
Set at a level that results in Executives’ Total
Remuneration Opportunity being positioned
between the 50th and 75th percentiles of
companies in our comparator groups.
Committee and adjustments approved by
the Board.
• FAR is payable in cash and there are no
restrictions on timeframe before the
remuneration is released.
Based on:
• Benchmarking data.
• Role, responsibilities and accountability.
• Capability, competencies and
•
contribution.
Industry experience and the availability
of comparable talent in the domestic
market.
SHORT-TERM
INCENTIVE PLAN (STI)
Represents between
14.5% to 23.0% of TRO
depending on position.
•
•
•
•
•
Annual grant of either cash or rights or
a combination of both that is variable in
value as the share price fluctuates.
For Tyro Executives in FY20, 100% of the
STI is issued as Service Rights.
The objective is to reward Executives
for achievement of revenue growth and
customer satisfaction as well as achieving
their individual KPIs approved by the People
Committee.
Service rights have no performance
hurdles and will vest in equal monthly
tranches over a 24-month period.
No holding lock is applied post vesting.
Claw-back provisions apply.
Additionally, variable remuneration for the
Executives that are ‘Accountable Persons’
under the Banking Executive Accountability
Regime (BEAR) is subject to deferral
requirements under the regime.
• 30% of the STI is based on individual KPIs.
• 10% of the STI is based on achieving a
specified customer satisfaction measure.
• 60% of the STI is based on achieving a
minimum hurdle of revenue growth over
the prior financial year.
LONG-TERM
INCENTIVE PLAN (LTI)
Represents between
14.5% to 30.0% of TRO
depending on position.
Market value options granted annually to
reward Executives for the achievement
of long-term strategic objectives that
contribute to shareholder wealth creation,
and encourages long-term decision making.
The Options are subject to performance
hurdles.
For FY20 Options, to qualify for exercise
both of the following hurdles must be
satisfied:
Features:
• The number of Options to be issued are
determined by reference to a fair value
calculation of Options conducted by an
independent external consultant.
• The Options vest annually in equal
tranches of 25% commencing 24 months
after the grant date, subject to meeting
the performance hurdles.
• The Options expire seven years from
grant date.
• The resultant shares remain subject to
a holding lock for 24 months post the
actual exercise date.
• Subject to claw-back in accordance with
BEAR deferral requirements.
•
•
A 20% compounded Gross Revenue
growth rate per annum.
A positive Net Profit result (before tax
and share-based expenses).
If a tranche does not satisfy both
performance hurdles on the relevant
testing date, the tranche will rollover to
the next testing date and must satisfy the
performance criteria for that tranche.
If the performance hurdles are not satisfied
by the fourth testing date the options
cannot be retested and are forfeited on their
expiry date or earlier cessation date of the
employee, under the plan rules.
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SUMMARY OF TOTAL REMUNERATION OPPORTUNITY FOR CEO/MD AND EXECUTIVES
100%
80%
60%
40%
Long-term
Incentive (LTI)
– Subject to
Performance
Conditions
25% Vesting
– resultant shares
subject to 24
month holding lock
25% Vesting
– resultant shares
subject to 24
month holding lock
25% Vesting
– resultant shares
subject to 24
month holding lock
25% Vesting
– resultant shares
subject to 24
month holding lock
Short-term
Incentive (STI)
Vests equally monthly over a
24-month period
20%
Fixed
Remuneration
(including super)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
14.5% - 30.0%
of TRO in a
LTI payable
as an equity
instrument
14.5% - 23.0%
of TRO in a STI
of 100% payable
in eauity
47.0% - 71.5%
of TRO in
Fixed Annual
Remuneration
Remuneration Sacrifice Rights Plan
Employees and Directors may also participate in the
Remuneration Sacrifice Rights Plan, following invitation by
the Board. Historically only Directors and members of the
senior leadership team have been invited to participate in
the Remuneration Sacrifice Rights Plan. Under the plan,
the Board invites participants to apply for Remuneration
Sacrifice Rights by sacrificing a percentage of their
pre-tax short-term incentive (or pre-tax fees in the case
of Directors) in exchange for rights that automatically
convert into shares. The participation in the Remuneration
Sacrifice Rights Plan does not change the Total
Remuneration Opportunity of any individual employee.
No payment is required to be made on conversion
of these rights and issued rights are not subject
to performance or employment related hurdles or
conditions. The shares issued on conversion of the
Remuneration Sacrifice Rights will be restricted for a
period following the date of the grant of the rights.
Shares resulting from conversion of Remuneration
Sacrifice Rights may be subject to trading restrictions
(as nominated by the relevant Director or employee)
but otherwise rank equally with other shares, and
Shareholders are entitled to the same dividend and voting
rights as ordinary shares, as specified in our Constitution.
An invitation to participate in the Remuneration Sacrifice
Rights Plan may specify a trading restriction, which is a
period during which the shares issued on conversion of
Remuneration Sacrifice Rights cannot be transferred,
sold, encumbered or otherwise dealt with. The minimum
trading restriction period is one year from the date of
grant of the rights, with a maximum trading restriction
period being 15 years for the date of the grant of the
rights. Subject to these minimum and maximum trading
restrictions, the trading restriction applicable to individual
Remuneration Sacrifice Rights is nominated by the
relevant Director or employee. The trading restriction
period will be lifted on the earlier of the date in the
invitation letter, or the date the participant ceases to be
an employee, or the Director ceases to hold that role.
Below follows a detailed description of each component
of at-risk remuneration for FY20 and planned changes for
FY21.
6.1 Short-term incentive plan applicable to FY20
The STI Plan for FY20 is designed to reward for the achievement of annual goals set in line with the Tyro’s strategy and
reflecting key growth drivers of the business to deliver returns for shareholders. The Plan provides the STI framework for
the CEO and Managing Director, Executives and other senior leadership team members and employees of the Company.
The CEO and Managing Director has a maximum STI potential of 50% of FAR. Excluding the CEO and Managing Director,
a maximum STI potential of between 15% and 40% of the Executives FAR is available as an STI. All other employees are
allocated a potential target incentive amount of between 5% and 10% of FAR.
Grant of an STI is at the discretion of the Board and is assessed following the conclusion of the relevant financial year.
Whether an STI is granted will depend on satisfaction of various criteria, including individual performance against key
performance indicators, customer satisfaction outcomes and Company financial performance outcomes (see below), as
determined by the Board.
Gross Profit Measure
x
Cost Control Measure
=
Financial Performance Pool
H
T
W
O
R
G
T
I
F
O
R
P
S
S
O
R
G
40% to 45% and above growth
- Pool formed 6.7% contribution
35% to 40% growth
- Pool formed 5.6% contribution
30% to 35% agrowth
- Pool formed 4.5% contribution
25% to 30% growth
- Pool formed 3.4% contribution
20% to 25% growth
- Pool formed 2.2% contribution
15% to 20% growth
- Pool formed 1.1% contribution
0% to 14.99% growth
- No Financial Incentive
pool formed
FYI Gross Profit
$83.3 million
Margin
Adjustment Factor
(either upwards or
downwards) - Operating
Expense control
Financial
Performance
Incentive Pool
created
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6.1 Short-term incentive plan applicable to FY20 (cont’d)
Analysis of qualifying criteria for FY20:
COMPONENT
DESCRIPTION
OUTCOME FOR FY20
• Gross Profit growth for FY20
amounted to 12.3%.
• No STI bonus pool was created as
gross profit growth fell under the
minimum hurdle of 15%.
Financial performance
60% of the STI target
maximum potential is
allocated to Financial
performance.
• An STI bonus pool is created if Gross Profit
for FY20 exceeds the Gross Profit for FY19
by 15% or more.
• The bonus pool is calculated as a
percentage of Gross Profit with bands in
operation from 1.1% of Gross Profit to a
maximum of 6.7% of Gross Profit stepped
per 5% incremental growth over the
minimum growth of 15%.
• The STI bonus pool is adjusted (either up
or down) by a Margin Adjustment Factor
calculated by expressing the prior year
Expense Margin over the current year
Expense Margin.
Customer Satisfaction
• The Customer Satisfaction bonus pool
• NPS score of 43 achieved at 30
10% of the STI target
potential is allocated to
achieving a set Customer
Satisfaction rating.
•
is based on achieving a pre-defined Net
Promotor Score (NPS) of 37 set by the
People Committee at the start of the
financial year.
Incremental step-up of the bonus pool takes
place as the NPS score increases above the
minimum score set up to a maximum of 43
and above.
Individual KPI
achievement
30% of the STI target
maximum potential is
allocated to individuals
achieving their
respective KPIs.
• A STI bonus pool based on individual KPIs
is calculated as 30% of the STI target
maximum potential
• KPIs are set at the start of the financial year.
• KPI bonus pool adjusted down for the actual
KPI outcomes achieved in performance
reviews undertaken at the end of the
financial year.
June 2020.
• Customer Satisfaction bonus pool
of $1.2 million created.
• Based on the actual team member
KPI scores.
• A KPI bonus pool of $1.4 million was
created.
For FY20, all STIs were paid as Service Rights. Service Rights, once granted, will have no performance hurdles and will
vest in equal monthly tranches over 24-months with no holding lock. In FY19, all STIs were paid as cash with Executives
and other senior leadership team members given the option to salary sacrifice the STI into rights under the Remuneration
Sacrifice Rights Plan (see above).
The key terms of the Service Rights relating to the FY20 STI are set out below.
TERM
DESCRIPTION
Administration
The plan is administered by the Board (or the Board’s delegate).
Eligibility
Full-time and part-time employees of the Company are eligible to receive awards under
the STI Plan. The Board will select eligible employees to whom awards are to be granted
from time to time.
Effective date
2 September 2020
Grant date
Price
Expiry
The date specified as the grant date in each participant’s offer document.
The volume weighted average price (VWAP) of Tyro shares traded in the 10 trading days
commencing on the day following the day of announcement of Tyro’s FY20 full year
result.
Service rights issued under the plan will lapse 10 years after the date on which the
relevant right vests.
Vesting dates
Vesting takes place in equal monthly tranches over a 24-months.
Vesting condition
The holder of the rights must be employed by us or provide services to us as a contractor
or consultant on the date of vesting.
Exercise
Rights
Following satisfaction of the vesting condition on each vesting date, the relevant number
of Service Rights may be exercised at nil consideration
Each service right granted entitles the holder to one Share on exercise. Shares resulting
from an exercise of Service Rights rank equally with other Shares, and Shareholders are
entitled to the same dividend and voting rights specified in our Constitution.
Holding lock period
None.
Amendments
Other terms
The Board may amend the terms of the plan without consent of the participants if the
amendment does not reduce the rights of the participants.
The rules of the plan include other terms relating to the administration, transfer,
termination and variation of the plan.
6.2 Long-term incentive plan applicable to FY20
Historically, share-based compensation benefits have been granted under the Employee Share Option Plan, adopted by
the Company in October 2016. The Employee Share Option Plan was established to grant options over Shares to Directors
and all eligible employees of the Company.
The LTI Plan for FY20 is designed to reward for the achievement of long-term targets that generate strong alignment
between Executives and shareholders, and encourage decision making for long-term shareholder wealth creation.
The Plan provides the LTI framework for the CEO and Managing Director, Executives and other senior leadership team
members and nominated employees of the Company. The CEO and Managing Director has a maximum LTI potential
of 64.5% of FAR. Excluding the CEO and Managing Director, a maximum LTI potential of between 15% and 40% of the
Executives FAR is available as an LTI. All other nominated employees are allocated a potential target incentive amount
generally between 10% and 20% of FAR.
Following listing on the ASX on 6 December 2019, no further Options will be granted under this Employee Share Option
Plan with the grant of options in FY20 being the last grant under this Plan.
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Analysis of qualifying criteria for FY20:
COMPONENT
DESCRIPTION
OUTCOME FOR TESTING OF HURDLES
Financial performance
100% of the LTI incentive
is allocated to financial
performance.
Market value options granted annually to
reward Executives for the achievement
of long-term strategic objectives that
contribute to shareholder wealth creation,
and encourages long-term decision
making.
The options are subject to performance
hurdles. To qualify for exercise both of the
following hurdles must be satisfied:
•
•
A 20% compounded Gross Revenue
growth rate per annum (FY19 plan:
25% per annum).
A positive net profit result (before tax
and share-based expenses).
If a tranche does not satisfy both
performance hurdles on the relevant
testing date, the tranche will be retested at
the next testing date (if any).
If the performance hurdle(s) are not
satisfied at the testing date for the fourth
tranche, any unvested options are forfeited
on the expiry date or earlier cessation date
of the employee, under the plan rules.
FY20 Plan:
•
•
•
Compounded Gross Revenue growth
rate of 11% achieved (1 July 2019 to 30
June 2020).
Net Loss before tax, share-based
payments and IPO costs of $17.4
million achieved.
The first tranche of the FY20 LTI Plan
is not due to vest until 1 October 2021,
with performance hurdles to be tested
as at 30 June 2021 in respect of the
period from 1 July 2019 to 30 June
2021.
FY19 Plan:
• Compounded Gross Revenue growth
rate of 19% achieved (1 July 2018 – 30
June 2020).
• Net Loss before tax, share-based
payments and IPO costs of $17.4 million
achieved in FY20 and $16.5 million in
FY19.
• The first tranche of the FY19 LTI Plan
is not due to be tested against the
performance hurdles until 1 May 2021
(with performance hurdles to be tested
as at 30 June 2020 in respect of the
period from 1 July 2018 to 30 June 2020.
A similar option plan was in place for FY19, with the only difference being a Compounded Gross Revenue hurdle of 25%
and the performance testing dates and periods being one year earlier. All other terms and conditions are consistent with
the FY20 Employee Share Option Plan.
The key terms of the Employee Share Option Plan are set out in the table below.
TERM
DESCRIPTION
Administration
The plan is administered by the Board.
Eligibility
Conditions
Eligible participants are Directors, Executives, Senior Leadership Team members as well
as other nominated employees of the Company.
Options granted in respect of FY20 must satisfy two performance hurdles to qualify for
exercise:
•
•
20% compound Gross Revenue growth per annum (FY19 plan – 25%); and
a positive Net Profit result (before tax and share-based expenses).
If a tranche does not satisfy both performance criteria on the relevant testing date, the
tranche will be retested at the next testing date (if any).
Effective date of the
Employee Share Option
Plan Rules
14 October 2016
Grant date
1 October 2019
Exercise price
$1.79 per Option (FY19 plan - $1.50)
Vesting
Expiry
Forfeiture
Rights
FY20 Options vest in equal tranches of 25%, commencing 24 months after the grant date.
30 September 2026.
FY20 Options are subject to forfeiture prior to vesting and thereafter – any Shares issued
will be subject to forfeiture for a nominated period sufficient to satisfy the BEAR deferral
requirements.
Each FY20 Option entitles the Option holder to one Share. Shares issued on exercise of
FY20 Options rank equally with other Shares, and Shareholders are entitled to the same
dividend and voting rights specified in our Constitution.
Minimum holding period
and holding lock
FY20 Options must be held for a minimum period of three years from the date of the
grant or until the holder ceases employment with us in accordance with the rules of the
Employee Share Option Plan.
Shares issued on exercise are additionally subject to a holding lock for 24 months from
the date the FY20 Option is exercised.
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Tyro intends implementing a new LTI Plan for FY21. No grants under the new LTI Plan have been made up to the date of
this report.
The new LTI Plan will be open to the CEO and Managing Director, the Executive Leadership Team (XLT) and other
nominated employees of Tyro and will be fulfilled via an issuance of performance rights rather than options. This approach
removes the inherent subjectivity arising in relation to options both with respect to fixing an appropriate exercise price
and in relation to the valuation methodology applied in determining the number of instruments to be issued.
The number of performance rights to be issued for each participant will be determined by reference to:
•
•
the volume weighted average price (VWAP) of Tyro shares traded in the 10 trading days commencing on the day
following the day nominated by the Board; and
each participant’s prescribed LTI entitlement that falls within the participant’s TRO as approved under the
Remuneration Framework. For FY21, the maximum LTI potential will be 64.5% of the CEO and Managing Director’s
FAR, and for the Executive Leadership Team a maximum LTI potential of between 15% to 40% of the XLTs FAR. All
other nominated employees will be allocated a maximum LTI potential of between 7.5% to 20% of FAR.
The performance rights will vest subject to passing a ‘Gateway’ and then satisfying a prescribed ‘Performance Hurdle’,
and will vest in one tranche 3 years following the effective date of the Plan (Vesting Date).
The ‘Gateway’ that must be passed prior to testing the performance hurdle is defined as Tyro reporting a positive EBITDA1
(before share-based payments) result for the financial year immediately preceding the Vesting Date. If the ‘Gateway’ is
passed, the number of Performance Rights that qualify for exercise will depend on the vesting percentage determined by
reference Tyro’s compound gross profit growth rate during the vesting period.
The compound gross profit growth rates for the vesting period are yet to be determined.
Performance rights will be subject to forfeiture prior to vesting (malus) and any shares issued after the vesting date
will be subject to forfeiture for a 2 year period following expiry of the holding lock sufficient to satisfy BEAR clawback
requirements (clawback).
The remaining key terms of the new LTI Plan are set out in the table below.
TERM
DESCRIPTION
Administration
The plan is administered by the Board.
Eligibility
Conditions
Eligible participants are Directors, Executive Leadership Team members as well as other
nominated employees of the Company.
Performance rights granted in respect of the new FY21 LTI Plan must satisfy passing
a Gateway and then the Performance Hurdle to qualify for exercise. Refer to the
explanation of the Gateway and Performance Hurdle provided on the previous page.
Effective date
The date specified as the effective date in each participant’s offer document.
Grant date
The date of the instrument of grant.
Exercise price
Nil
Vesting
Forfeiture
Rights
Subject to passing the ‘Gateway’ and satisfying the Performance Hurdle, the
Performance Rights vest in one tranche 3 years following the Effective Date.
The new FY21 LTI performance rights are subject to forfeiture prior to vesting and
thereafter any shares issued will be subject to clawback for up to a further 2 year period
following the expiry of the ‘Holding Lock’ (ie. awards can be forfeited up to 6 years from
the grant date.
Each FY21 LTI performance right entitles the rights holder to one Share. Shares issued on
exercise of FY21 LTI performance rights rank equally with other Shares, and Shareholders
are entitled to the same dividend and voting rights specified in our Constitution.
Minimum holding period
and holding lock
Shares issued on exercise are subject to a holding lock for 12 months post the actual
exercise date.
1
Tyro uses EBITDA as a non-IFRS measure of business performance, which excludes the non-cash impact of share-based payments expense
and expenses associated with the IPO
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6.4 Liquidity Event Performance Rights
A limited number of Executives and senior leadership team members of Tyro were granted performance rights under the
Liquidity Event Performance Rights (LEPR) Plan between FY19 and FY20. A liquidity event was triggered under the Plan
with the IPO that took place on 6 December 2019. The first tranche of the Liquidity Event Performance Rights vested and
became exercisable on 6 December 2019. 4,100,000 LEPRs were allocated under the Plan of which 1,366,668 have vested
and 266,667 have been exercised at the date of this report.
Key terms of the LEPR Plan are set out in the table below.
TERM
DESCRIPTION
Administration
The plan is administered by the Board.
Eligibility
Board determined.
Effective date of LEPR
Plan Rules
Grant date
Price
Vesting dates
9 May 2019 to 6 August 2019 (LEPR Plan Rules attached to individual grant letters)
9 May 2019 to 6 August 2019
Liquidity Event Performance Rights granted under the plan are issued for nil
consideration.
Vesting will occur in three equal tranches, as follows:
• one third on the date of the liquidity event (Initial Vesting Date);
• one third on the date that is 12 months after the Initial Vesting Date; and
• one third on the date that is 24 months after the Initial Vesting Date.
The Board may resolve that any unvested Liquidity Event Performance Rights cease to
vest for the duration of any unpaid leave of absence.
A liquidity event includes the IPO that took place on 6 December 2019. The first
tranche of the Liquidity Event Performance Rights vested and became exercisable on 6
December 2019.
Vesting condition
The holder of the rights must be employed by us or provide services to us as a contractor
or consultant on the date of vesting.
Expiry
Exercise
Rights
Liquidity Event Performance Rights issued under the plan will lapse 10 years after the
date on which the relevant Liquidity Event Performance Right vests.
Following satisfaction of the vesting condition on each vesting date, the relevant number
of Liquidity Event Performance Rights may be exercised at nil consideration.
Each Liquidity Event Performance Right granted entitles the holder to one Share on
exercise.
Shares resulting from an exercise of Liquidity Event Performance Rights rank equally
with other Shares, and Shareholders are entitled to the same dividend and voting rights
specified in our Constitution.
Minimum holding period
and holding lock
A holder must not dispose of any Share issued, allotted or transferred on exercise of a
Liquidity Event Performance Right from the date that is 12 months from the date of issue,
allotment or transfer.
The Board may amend the terms of the Plan without consent of the participants if the amendment does not reduce the
rights of the participants.
7. SECURITIES TRADING POLICY AND HEDGING
Tyro has a Securities Trading Policy which aims to ensure that all employees understand their obligations in relation to
insider trading, describes restrictions on buying and selling Tyro securities by Directors, Executives, the senior leadership
team, employees and each of their closely connected persons and when approvals need to be sought. Under the
Securities Trading Policy, Tyro prohibits all KMP and certain other employees from entering into arrangements which have
the effect of limiting the economic risk related to an unvested share, option or other security granted or awarded under a
Tyro employee incentive scheme, including those still subject to disposal restrictions.
All KMP and certain other employees are also restricted from entering into margin loans in respect to Tyro’s securities,
unless they have received prior written approval in accordance with the Securities Trading Policy. No hedging or margin
loans were entered into by KMP during FY20 and to the date of this report.
The Securities Trading Policy can be found on the Corporate Governance page in the Investors section of the Company’s
website at: https://www.tyro.com/about-tyro/investors.
8.
EXECUTIVE REMUNERATION FOR FY20
8.1 Contracts of employment
The employment conditions of the KMP (excluding Non-executive Directors) are provided in the table below. All KMP are
employed under contracts of no fixed duration.
NAME
CONTRACT TERM
NOTICE PERIOD
TERMINATION PAYMENT
Robbie Cooke
No fixed duration
6 months
Prav Pala
No fixed duration
6 months
Angela Green
No fixed duration
6 months
Combination of notice and payment in lieu, totalling no
less than 6 months
Combination of notice and payment in lieu, totalling no
less than 6 months
Combination of notice and payment in lieu, totalling no
less than 6 months
In the event of serious misconduct, Tyro may terminate employment at any time without notice or a termination payment
being made. Any options or rights not vested before the date of termination will lapse.
Robbie Cooke is subject to a post-employment restraint period of 12 months, and Prav Pala and Angela Green are subject
to a post-employment restraint period of 6 months, subject to all usual legal requirements.
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8.2 CEO and Managing Director Remuneration
Robbie Cooke entered into an employment agreement with the Company to govern his employment as CEO and
Managing Director of Tyro. The CEO’s FY20 remuneration is comprised of the following elements (before the accounting
cost of long-term benefits and share-based payments):
•
•
•
•
a base salary and superannuation of $862,176 per annum;
an allowance claimable up to $50,000 annually for reimbursement of personal travel expenses between Brisbane and
Sydney;
a discretionary annual STI bonus of up to 50% of his base salary based on the performance of the Company and his
achievement of key performance indicators. The award and payment of the STI is at the discretion of the Board. In
respect of FY20, the target maximum STI is $431,088; and
participation in our LTI Plan to a value equal to 64.5% of his base salary. In respect of FY20, the value of the LTI
granted to Robbie is $556,104.
In addition to the LTI Option Plan, Robbie may participate in the Remuneration Sacrifice Rights Plan in respect of any
annual STI granted in cash. Details of options and rights held by Robbie are set out in section 10 of this report.
8.2.1 Key Performance Indicators
The Board sets the Key Performance Indicators for Robbie’s FY20 STI incentive in 2019 in line with Tyro’s five-year
strategy and Prospectus targets. The KPIs comprise the financial incentive and the operational incentive as outlined in the
performance review below.
8.2.2 Performance review
Robbie’s performance was assessed according to the KPIs within the context of the overall performance of Tyro and
the senior leadership team in FY20. In summary, Robbie’s short-term incentive structure comprises the following
components:
•
•
•
Financial Performance Incentive
Target 30% of FAR
Individual KPI Incentive
Maximum 15% of FAR
Customer Satisfaction Incentive
Target 5% of FAR
The first and largest consideration was the financial performance of Tyro for FY20 which leads to the financial incentive
outcome. This carried a 60% weighting of maximum STI and was determined from year-on-year Gross Profit growth (refer
to section 6.1 for more details on how this is calculated). No Financial Performance Incentive was paid in relation to FY20.
The second consideration is the incentive based on the achievement of specified individual KPIs. This carried a 30%
weighting of maximum STI.
The third consideration is the Customer Satisfaction Incentive, which carried a 10% weighting of maximum STI. The
Customer Satisfaction bonus pool was based on achieving a pre-defined Net Promotor Score (NPS) of 37 (as set by the
People Committee at the start of the financial year). This bonus pool is subject to an incremental step-up as the NPS
score increases above the minimum score, up to a maximum of 43 and above.
Assessment of Robbie’s individual KPIs for FY20 are were determined by the People Committee according to the
following table:
KPIS
Liquidity Event:
•
• Coordinate and run the process
Initiate investigation of liquidity event
Execute in a way to minimise management distraction and retain focus on business
performance.
Future Growth Opportunities
Executive Team Depth:
• Review capabilities
• Build team strengths
Strategy:
• Deliver new strategic plan
• Drive performance to plan
Living the Tyro Values:
• WOW the Customer
• Be GOOD
• Commit to GREATNESS
• Stay HUNGRY
8.2.3 STI incentive
WEIGHTING %
40.0%
15.0%
7.5%
25.0%
12.5%
In accordance with the outcome of the Financial Performance Incentive, the Customer Satisfaction incentive and
assessment of the Executive KMPs annual KPIs set by the Board at the start of the year, the Board determined the
Executive KMP FY20 STI incentive to be as follows.
ROBBIE COOKE
PRAV PALA
ANGELA GREEN
WEIGHTING
%
TARGET
$
RESULT
$
RESULT
%
TARGET
$
RESULT
$
RESULT
%
TARGET
$
RESULT
$
RESULT
%
60.0% 258,653
-
0.0% 103,305
-
0.0% 84,007
-
0.0%
10.0%
43,109
86,217
20.0%
17,218
34,435
20.0%
14,001
28,002
20.0%
30.0%
129,326
122,860
28.5%
51,653
51,653
30.0% 42,004
39,904
28.5%
ITEM
Financial
performance
Customer
Satisfaction
performance
Individual KPI
performance
Total
100.0% 431,088 209,077
48.5%
172,176
86,088 50.0% 140,012
67,906 48.5%
In relation to FY20, the Board determined to pay 100% of the Executive KMPs STI in the form of Service Rights rather than
the typical cash (80%) and Service Rights (20%) allocation. These Service Rights have no performance hurdles and will
vest in equal monthly tranches over a 24-month period. The rights will be awarded in September 2020 and in the case of
the CEO and Managing Director, are subject to approval by shareholders at the Annual General Meeting in October 2020.
8.2.4 Annual remuneration increase for FY21
No fixed annual remuneration increase will be provided to Robbie for FY21 until such time as Tyro and our merchants are
operating in a more stable environment once the impacts of COVID-19 reduce. The People Committee will continue to
evaluate this position through FY21 and determine an increase at an appropriate time.
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8. EXECUTIVE REMUNERATION FOR FY20 (cont’d)
8.3 Executive statutory remuneration for FY20
The following table provides the statutory remuneration outcomes for Executive KMP for FY20 and FY19 and is prepared
in accordance with Australian Accounting Standards. The statutory remuneration outcomes disclosed in this table differs
from the Executive KMPs’ FY20 Total Remuneration Opportunity and the elements of the remuneration framework
outlined in section 6. Differences arise mainly due to the accounting treatment of long-term benefits (which include
annual leave and long service leave) and share-based payments (Performance Rights, LEPRs, Remuneration Sacrifice
Rights and Option Plans). Disclosures include an accounting value for current year Rights and all unvested Option Plan
awards.
The Accounting Standards require remuneration in the form of equity awards to be expensed (and therefore included as
remuneration) over the performance period of the Option Plan even though an Executive may not realise any benefit from
that award.
Statutory Executive KMP Remuneration table
EXECUTIVE
KMP
CASH
SALARY
SUPER-
ANNUATION
SHORT-TERM
NON-
MONETARY
BENEFITS
CASH STI
INCENTIVE
IPO
BONUS
LONG-
SERVICE
LEAVE
$
$
$
Robbie Cooke
844,023
21,003
50,0001
830,000
25,271
FY20
FY19
Prav Pala
$
-
-
$
-
-
$
-
-
LONG-TERM
OPTIONS
RIGHTS2
TOTAL
PERFORMANCE
BASED EQUITY
COMPONENT
$
$
$
%
641,056
691,8833
2,247,965
392,525
842,261
2,090,057
-
-
-
-
-
28,290
-
10,000
-
-
-
-
-
102,000
24,384
186,071
383,8964
1,129,919
-
-
-
80,964
241,310
766,960
55,295
266,5095
732,220
1,718
53,908
88,170
59.3%
59.1%
50.4%
42.0%
43.9%
63.1%
FY20
409,436
24,132
FY19
383,562
32,834
Angela Green
379,413
21,003
30,833
1,711
FY20
FY19
Total
FY20
1,632,872
66,138
50,000
112,000
24,384
882,422 1,342,288
4,110,104
FY19
1,244,395
59,816
-
28,290
-
-
475,207
1,137,479
2,945,187
1
2
3
4
5
Non-monetary benefits for Robbie Cooke relate to an allowance claimable up to $50,000 annually for reimbursement of personal travel
expenses between Brisbane and Sydney
Rights relate to the Remuneration Sacrifice Rights Plan, the LEPR Plan and the Service Rights awarded in FY20 under the STI Plan. These
rights are classified as long-term due to the terms of each respective Plan.
Included in the accounting cost of Rights awarded to Robbie Cooke, is an amount of $156,809 relating to the FY20 STI Incentive of $209,077
awarded to Robbie Cooke in FY20. This accounting cost represents 75% of the total Incentive with the remaining 25% to be expensed in FY21.
Included in the accounting cost of Rights awarded to Prav Pala, is an amount of $64,566 relating to the FY20 STI Incentive of $86,088
awarded to Prav Pala in FY20. This accounting cost represents 75% of the total Incentive with the remaining 25% to be expensed in FY21.
Included in the accounting cost of Rights awarded to Angela Green, is an amount of $50,929 relating to the FY20 STI Incentive of $67,906
awarded to Angela Green in FY20. This accounting cost represents 75% of the total Incentive with the remaining 25% to be expensed in FY21.
9. NON-EXECUTIVE DIRECTOR REMUNERATION
Non-executive Directors receive a base fee, and where applicable, an additional fee in recognition of the higher workload
and extra responsibilities resulting from Board Committee participation. Fees are based on peer market benchmarks and
reviewed annually.
Non-executive Directors do not receive incentive payments, and following Tyro’s listing on the ASX on 6 December 2019,
they are no longer entitled to participate in any Tyro employee or Executive equity plans other than the Remuneration
Sacrifice Rights Plan. They receive no non-monetary benefits and do not participate in any retirement benefit scheme,
other than statutory superannuation contributions.
Under the ASX Listing Rules, the total amount or value of remuneration paid to Non-executive Directors in any year may
not exceed the amount approved by Shareholders at the Company’s general meeting. This amount has been fixed at
$1,400,000 per annum, as approved by Shareholders at Tyro’s 2019 Annual General Meeting.
As at the date of this report, the Non-executive Director base fee agreed to be paid by us is $108,000 per annum before
superannuation contributions. Non-executive Directors are also paid additional base fees for the following roles:
•
•
Chair of the Board: $72,000 per annum (for total remuneration of $180,000 per annum); and
Chair of a Board Committee: $20,000 per Committee Chair (for total remuneration of $128,000 per annum), not
payable if the Committee Chair is also the Board Chair.
Other than the Chair of a Board Committee, Non-executive Directors are not paid an additional fee for being a member
of a Board Committee. In addition to the remuneration above, the Company will contribute statutory superannuation to a
complying superannuation fund.
Remuneration is reviewed annually and any increase to it will be at the discretion of the Board but will not exceed the
aggregate amount approved by Shareholders.
The table below outlines the statutory remuneration paid to Non-executive Directors in FY20 in accordance with
Australian Accounting Standards.
NON-EXECUTIVE
DIRECTOR
FINANCIAL
YEAR
CASH FEES
SUPER-
ANNUATION
David Thodey
Kerry Roxburgh
Hamish Corlett
David Fite
Catherine Harris
Fiona Pak-Poy
Paul Rickard
Total
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
$
-
$
-
OPTIONS
RIGHTS
$
$
TOTAL
$
14,272
197,525
211,797
45,000
4,275
8,026
-
57,301
-
-
-
-
-
-
27,067
65,611
92,678
20,353
164,250
184,603
9,048
134,261
143,309
18,398
1,748
2,950
-
23,096
-
-
18,414
134,261
152,675
90,000
8,550
15,846
-
114,396
-
-
18,977
159,125
178,102
22,000
2,090
13,550
96,360
134,000
-
-
-
-
9,137
110,352
119,489
-
-
-
71,333
6,777
21,065
91,993
191,168
-
-
14,554
142,349
156,903
71,333
6,777
117,980
893,128
1,089,218
175,398
16,663
75,279
402,959
670,299
PERFORMANCE
BASED EQUITY
COMPONENT
%
6.7%
14.0%
29.2%
11.0%
6.3%
12.8%
12.1%
13.9%
10.7%
10.1%
7.6%
-
11.0%
9.3%
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Rights held by Executive and Non-executive KMP
10.1 Rights
Unissued ordinary shares in Tyro held under the Liquidity Event Performance Rights Plan and the Remuneration Sacrifice
Rights Plan at the date of this report are shown in the table below:
NAME
Non-Executive KMP:
David Thodey
AWARD TYPE
GRANT DATE
EXPIRY DATE
Remuneration sacrifice rights in respect
of FY18 Executive STI
18 Apr 2019
Remuneration sacrifice rights in respect
of FY19 Director Fees
5 Sep 2018
Remuneration sacrifice rights in respect
of FY19 Executive STI
16 Oct 2019
Remuneration sacrifice rights in respect
of FY20 Director Fees
16 Oct 2019
Liquidity Event Performance Rights
9 May to 6
Aug 2019
1
10 years after relevant vesting date
n/a
n/a
n/a
n/a
1
EXERCISE
PRICE
% VESTED % EXERCISED
n/a
100.0%
100.0%
n/a
100.0%
100.0%
n/a
100.0%
100.0%
NUMBER
HELD AS
RIGHTS
Nil
Nil
Nil
n/a
100.0%
6.2%
552,607
n/a
33.3%
6.5% 3,833,333
BALANCE AT
START OF YEAR
GRANTED AS
COMPENSATION EXERCISED FORFEITED
BALANCE AT
END OF YEAR
VESTED AND
EXERCISABLE
UNVESTED
FY20
FY19
-
-
131,905
-
-
-
-
-
Kerry Roxburgh
FY20
159,776
149,431 (203,590)
(105,617)1
FY19
Hamish Corlett
FY20
David Fite
FY19
FY20
FY19
-
-
-
-
-
159,776
89,658
-
89,658
-
-
-
-
-
-
Catherine Harris
FY20
93,735
106,262
(93,735)
Fiona Pak-Poy
FY19
FY20
FY19
-
-
-
93,735
73,692
-
-
-
-
Paul Rickard
FY20
138,472
61,432 (138,472)
FY19
-
138,472
-
Executive KMP:
Robbie Cooke
FY20
1,306,604
270,583
(377,187)
FY19
-
1,306,604
-
Prav Pala
FY20
500,000
85,792 (252,459)
FY19
-
500,000
-
Angela Green
FY20
300,000
7,553 (107,553)
FY19
-
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
131,905
131,905
-
-
-
-
159,776
159,776
89,658
89,658
-
-
89,658
89,658
-
-
106,262
106,262
93,735
93,735
73,692
73,692
-
-
61,432
61,432
138,472
138,472
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
400,000
800,000
1,306,604
106,604
1,200,000
333,333
500,000
200,000
300,000
-
-
-
-
333,333
500,000
200,000
300,000
1
Remuneration Sacrifice Rights in respect of FY20 Director Fees lapsed per the terms of the Remuneration Sacrifice Rights Plan, in respect of the
period from 16 October 2019 to 30 June 2020, following the retirement of Kerry Roxburgh as Chairman of the Board on 15 October 2019.
105
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Remuneration Report (cont’d) Review CEO’s Operational & Financial Review Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 10. SUMMARY OF OPTIONS AND RIGHTS UNDER ISSUE (cont’d)
Options held by Executive and Non-executive KMP
NAME
Non-Executive KMP:
BALANCE AT
START OF YEAR
GRANTED AS
COMPENSATION EXERCISED FORFEITED
BALANCE AT
END OF YEAR
VESTED AND
EXERCISABLE
UNVESTED
Details of Rights vested, exercised and forfeited in the year are included in the table below.
AWARD TYPE
GRANT DATE
VESTING DATE
VESTED %
EXERCISED
(NUMBER)
FORFEITED
(NUMBER)
Remuneration sacrifice rights in
respect of FY18 Executive STI
Remuneration sacrifice rights in
respect of FY19 Director Fees
Remuneration sacrifice rights in
respect of FY19 Executive STI
Remuneration sacrifice rights in
respect of FY20 Director Fees
18 Apr 2019
1 Jul 2019
100.0%
106,604
5 Sep 2018
1 Jul 2019
100.0%
391,983
16 Oct 2019
7 Apr 2020
100.0%
773,579
Nil
Nil
Nil
16 Oct 2019
1 Jul 2020
100.0%
43,814
105,617
Liquidity Event Performance Rights
9 May to 6 Aug
2019
1
33.3%
266,667
Nil
1
Vesting will occur in three equal tranches, as follows: one third on the date of the liquidity event (Initial Vesting Date); one third on the date
that is 12 months after the Initial Vesting Date; and one third on the date that is 24 months after the Initial Vesting Date.
10.2 Options
AWARD TYPE
GRANT DATE
EXPIRY DATE
EXERCISE PRICE
NUMBER HELD AS
OPTIONS
Options exercisable between $0.375
to $1.76 expiring between 17 October
2020 and 22 July 2024
Options exercisable at Nil expiring
between 30 December 2024 and 25
June 2025
Options exercisable at Nil expiring on
31 August 2025
Between
18 Oct 2013
to 19 Dec 2018
31 Dec 2018
to 26 Jun 2019
Between
17 Oct 2020
to 22 Jul 2024
Between
30 Dec 2024
and 25 Jun 2025
$0.375 to $1.76
19,513,517
Nil
2,161,090
Options exercisable at $1.50 expiring
on 30 April 2026
1 May and 6 Aug
2019
30 Apr 2026
$1.50
6,154,423
Options exercisable at $1.79 expiring
on 30 September 2026
Options exercisable at $0.08 expiring
on 17 December 2020
1 Oct 2019
30 Sep 2026
$1.79
7,740,124
17 Dec 2010
17 Dec 2020
$0.08
2,625,000
1 Sep 2019
31 Aug 2025
Nil
1,409,282
Angela Green
Unissued ordinary shares in Tyro held under Option plans at the date of this report are shown in the table below:
Paul Rickard
FY20
253,940
David Thodey
FY20
FY19
82,286
-
-
82,286
-
-
Kerry Roxburgh
FY20
346,861
- (133,268)
FY19
212,032
134,829
Hamish Corlett
FY20
68,000
-
FY19
-
68,000
David Fite
FY20
2,919,318
-
FY19
2,837,032
82,286
Catherine Harris
FY20
164,626
-
FY19
67,140
97,486
Fiona Pak-Poy
FY20
FY19
-
-
83,000
-
-
FY19
141,354
112,586
Executive KMP:
Robbie Cooke
FY20
3,766,945
1,737,585
FY19
-
3,766,945
Prav Pala
FY20
1,474,909
558,830
FY19
768,800
706,109
FY20
FY19
-
-
454,437
39,607
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82,286
82,286
2,857
79,429
-
82,286
213,593
39,151
174,442
346,861
141,546
205,315
68,000
68,000
-
-
68,000
68,000
2,919,318
2,795,991
123,327
2,919,318
2,766,546
152,772
164,626
40,722
123,904
164,626
24,451
140,175
83,000
-
-
-
83,000
-
253,940
114,936
139,004
253,940
94,364
159,576
5,504,530
864,068
4,640,462
3,766,945
454,545
3,312,400
2,033,739
625,624
1,408,115
1,474,909
499,846
975,063
494,044
39,607
-
-
494,044
39,607
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Details of all current Options vested, exercised and forfeited are included in the table below.
AWARD TYPE
GRANT DATE
VESTING DATE
VESTED % EXERCISED FORFEITED
Options exercisable between
$0.375 to $1.76 expiring between
17 October 2020 and 22 July 2024
Options exercisable at Nil expiring
between 30 December 2024 and
25 June 2025
Options exercisable at Nil expiring on
31 August 2025
Between 18 Oct
2013 to 19 Dec
2018
31 Dec 2018 to 1
Apr 2019
Monthly linear
74%
11%
3%
Annual linear
20%
4%
2%
1 Sep 2019
Annual linear
0%
0%
7%
Options exercisable at $1.50 expiring
on 30 April 2026
1 May 2019
Options exercisable at $1.79 expiring
on 30 September 2026
1 Oct 2019
Annually over 4 tranches
based on performance
conditions
Annually over 4 tranches
based on performance
conditions
0%
0%
0%
0%
0%
1%
Options exercisable at $0.08 expiring
on 17 December 2020
17 Dec 2010
Fully vested on grant
100%
0%
0%
This section sets out the required statutory disclosures of equity grants for Tyro’s KMP.
NUMBER OF
OPTIONS/
RIGHTS
GRANTED
VESTING DATE
EXERCISE
PRICE
VALUE OF
OPTIONS/
RIGHTS AT
GRANT DATE
VESTED %
VESTED
(NUMBER)
FORFEITED/
LAPSED %
EXECU-
TIVE KMP GRANT DATE
Robbie Cooke
VALUE OF
OPTIONS/
RIGHTS
EXERCISED
DURING THE
REPORTING
PERIOD
19 Dec 2018
1,818,180
1
$1.76
$475,159
43.3%
787,878
Nil
-
18 Apr 2019
106,604 18 Apr 2019
Nil
$109,589
100.0%
106,604
Nil
$109,589
1 May 2019
1,567,813
26 Jun 2019
1,200,000
26 Jun 2019
380,952
1 Oct 2019
1,737,585
2
3
4
5
$1.50
$488,235
-
-
Nil $1,320,000
33.3%
400,000
Nil
$419,047
20.0%
76,190
$1.79
$816,231
-
-
Nil
Nil
Nil
Nil
-
-
-
-
16 Oct 2019
270,583 16 Oct 2019
Nil
$356,900
100.0%
270,583
Nil $356,900
Prav Pala
10 Oct 2014
211,268
6 Oct 2015
166,129
2 Nov 2016
141,403
1 Feb 2018
250,000
31 Dec 2018
71,428
1 May 2019
634,681
9 May 2019
500,000
1 Oct 2019
558,830
1
1
1
1
4
2
3
5
$0.45
$31,211
100.0%
211,268
$0.60
$26,479
100.0%
166,129
$1.49
$39,580
80.0%
113,119
$1.76
$59,492
48.3%
120,823
Nil
$74,999
20.0%
14,285
$1.50
$197,647
-
-
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
-
-
-
Nil
$550,000
33.3%
166,667
Nil
$183,333
$1.79
$262,510
-
-
Nil
Nil
-
$113,160
16 Oct 2019
85,792 16 Oct 2019
Nil
$113,160
100.0%
85,792
Angela Green
6 Aug 2019
300,000
6 Aug 2019
39,607
1 Oct 2019
454,437
3
2
5
16 Oct 2019
7,553 16 Oct 2019
Nil
$9,963
100.0%
7,553
Nil
$330,000
33.3%
100,000
Nil
$110,000
$1.50
$12,334
$1.79
$213,472
-
-
-
-
Nil
Nil
Nil
-
-
$9,963
1
2
3
4
5
Options granted vest monthly in equal tranches over a period of 5 years and are not subject to any performance conditions.
Options granted vest annually in equal 25% tranches over a period of four years, commencing 24 months after the grant date and subject to
the following performance conditions: (i) 25% compound gross revenue growth per annum; and (ii) a positive net profit result (before tax and
share-based expenses). If a tranche does not satisfy both performance criteria on the relevant testing date, the tranche will be retested at the
next testing date (if any).
Vesting will occur in three equal tranches, as follows: one third on the date of the liquidity event (Initial Vesting Date); one third on the date
that is 12 months after the Initial Vesting Date; and one third on the date that is 24 months after the Initial Vesting Date.
Options granted vest annually in equal 20% tranches over a period of five years, commencing 12 months after the grant date and are not
subject to any performance conditions.
Options granted vest annually in equal 25% tranches over a period of four years, commencing 24 months after the grant date and subject to
the following performance conditions: (i) 20% compound gross revenue growth per annum; and (ii) a positive net profit result (before tax and
share-based expenses). If a tranche does not satisfy both performance criteria on the relevant testing date, the tranche will be retested at the
next testing date (if any).
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11. SUMMARY OF SHARES HELD BY EXECUTIVE AND NON-EXECUTIVE KMP
The number of ordinary shares held in Tyro for FY20 by each KMP, including their personally related parties, is set out below.
NAME
BALANCE AT START OF
YEAR
RECEIVED DURING THE
YEAR ON EXERCISE OF
OPTIONS/RIGHTS
OTHER CHANGES DURING
THE YEAR
BALANCE AT END OF YEAR
Non-Executive KMP:
David Thodey
FY20
FY19
Hamish Corlett1
FY20
David Fite
FY19
FY20
FY19
Catherine Harris
FY20
Fiona Pak-Poy
Paul Rickard
Executive KMP:
Robbie Cooke
Prav Pala
Angela Green
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
750,000
-
932,444
932,444
20,547,995
20,547,995
425,000
425,000
-
-
2,144,824
2,144,824
-
-
-
-
-
-
-
-
-
-
-
-
93,735
-
-
-
138,472
-
377,187
-
252,459
-
107,553
-
109,091
750,000
181,819
-
859,091
750,000
1,114,263
932,444
(2,000,000)
18,547,995
-
20,547,995
109,091
-
32,728
-
36,364
-
114,749
-
20,203
-
3,637
-
627,826
425,000
32,728
-
2,319,660
2,144,824
491,936
-
272,662
-
111,190
-
1 Shares indicated in the table are beneficially held by Hamish Corlett. Hamish Corlett also has a relevant interest in TDM Growth
Partners Pty Ltd who have a total interest in Tyro of 68,017,538 ordinary shares.
12. LOANS AND OTHER TRANSACTIONS
No loans have been granted to any KMP. There were no transactions during the reporting period involving an equity
instrument to KMP or related parties, other than those disclosed in the Remuneration Report.
Directors’
Report (cont’d)
OPERATING AND FINANCIAL REVIEW (cont’d)
9. Additional Information
Indemnities and Insurance
Clause 54 of the Company’s Constitution provides that
every person who is or has been a Director or Secretary of
the Company must be indemnified by the Company, to
the extent permitted by law, against:
•
•
liabilities incurred by the person as an officer of the
Company; and
for legal costs incurred by the person in defending
any proceedings which relate to a liability incurred by
that person as an officer of the Company.
The Company has executed Deeds of Indemnity,
Insurance and Access, consistent with this Clause, in
favour of all current Directors of the Company, the
current and former Secretaries of the Company who are
each named in this Directors’ Report and the Company’s
current Chief Financial Officer. The Company has also
entered into equivalent Deeds of Indemnity with former
Directors and Secretaries of the Company, in accordance
with the Company’s previous Constitution. Each Deed
indemnifies those persons for the full amount of all such
liabilities including costs and expenses, subject to their
terms.
The Company indemnified Tyro SaleCo Limited (a special
purpose vehicle incorporated to facilitate the sale of
existing shares in the Company held by shareholders
wishing to sell shares into Tyro’s initial public offering)
and the directors (who are Directors of the Company) and
company secretary (who is an employee of the Company)
of Tyro SaleCo Limited, to the maximum extent permitted
by law, for any loss that they may incur as a consequence
of Tyro’s initial public offering, subject to the terms of that
Deed of Indemnity.
For the year ended 30 June 2020, no amounts have been
paid pursuant to indemnities (FY19: Nil).
The Company’s Constitution also allows the Company to
pay insurance premiums for contracts insuring the current
and former Directors and Secretaries of the Company in
relation to any such liabilities and legal costs.
During or since the end of the financial year, the Company
has paid the premium in respect of contracts insuring
each of the Directors and the Secretary named in this
Directors’ Report, the former Directors, and the officers of
the Company as permitted by the Corporations Act. The
class of officers insured by the policy includes all officers
of the Company. The terms of the contracts of insurance
prohibit the disclosure of the nature of the liabilities
insured against and the amount of the premium. As at the
date of this report, no amounts have been claimed or paid
in respect of these insurance contracts other than the
premium referred to above.
To the extent permitted by law, the Company has agreed
to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against
claims by third parties and resulting liabilities, losses,
damages, costs and expenses arising from the audit (for
an unspecified amount). This indemnity does not extend
to matters finally determined to have arisen from Ernst &
Young’s negligent, wrongful or willful acts or omissions.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any
proceedings to which the Company is a party, for the
purpose of taking responsibility on behalf of the Company
for all or part of those proceedings.
No proceedings have been brought or intervened in on
behalf of the Company with leave of the Court under
section 237 of the Corporations Act.
Non-audit Services
Tyro may decide to employ its auditor on assignments
additional to their statutory audit duties where the
auditor’s expertise and experience with the Company is
important.
The Board has considered the position and, in accordance
with the advice received from the Audit Committee, is
satisfied that the provision of the non-audit services is
compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001.
111
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Remuneration Report (cont’d) Review CEO’s Operational & Financial Review Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information Directors’
Report (cont’d)
9. Additional Information (cont’d)
Rounding of Amounts
The Directors are satisfied that the provision of non-
audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the
Audit Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
none of the services undermine the general principles
relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants,
including reviewing or auditing the auditor’s own
work, acting in a management or a decision making
capacity for the Company, acting as advocate for
the Company or jointly sharing economic risk and
rewards.
The non-audit services paid to the auditors (Ernst &
Young) was for tax compliance services amounting
to $55,000 and services relating to the IPO process
amounting to $223,000. Details of the audit and non-
audit fees paid or payable for services provided by the
auditors (Ernst & Young) are detailed in Note 22 of the
Financial Report.
Auditor’s Independence
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act is set
out on page 113 and forms part of the Directors’ Report for
the financial year ended 30 June 2020.
The Company is of a kind referred to in Legislative
Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to the ‘rounding
off’ of amounts in the Directors’ Report. Amounts in the
Directors’ Report have been rounded off in accordance
with that Legislative Instrument to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
DIRECTORS’ RESOLUTION
This Directors’ Report is made in accordance with a
resolution of the Directors.
__________________________________
David Thodey AO
Chair
__________________________________
Robbie Cooke
CEO | Managing Director
Sydney, 18 August 2020
Auditor’s Independence
Declaration
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 the financial report of Tyro Payments Limited for the financial year
ended 30 June 2020, 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
Michael Byrne
Partner
18 August 2020
Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
113
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Financial
Report
Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
115
CONTENTS
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CASH FLOWS
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF ACCOUNTING POLICIES
2. REVENUE AND EXPENSES
3. SEGMENT REPORTING
4. INCOME TAX
5. CASH AND CASH EQUIVALENTS
6. DUE FROM OTHER FINANCIAL INSTITUTIONS
7. TRADE AND OTHER RECEIVABLES
8. LOANS
9. FINANCIAL INVESTMENTS
10. PROPERTY, PLANT AND EQUIPMENT
11. INTANGIBLE ASSETS
12. SHARE-BASED PAYMENTS
13. DEPOSITS
14. TRADE PAYABLES AND OTHER LIABILITIES
15. CURRENT PROVISIONS
16. NON-CURRENT PROVISIONS
17. CONTRIBUTED EQUITY AND RESERVES
18. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES
19. COMMITMENTS
20. LEASES
21. EARNINGS PER SHARE
22. AUDITOR’S REMUNERATION
23. RELATED PARTY DISCLOSURES
24. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
118
118
119
120
121
122
122
131
132
133
135
135
136
136
136
137
138
139
142
142
143
143
144
145
152
153
154
155
155
157
158
159
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Financial Statements
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Fees and terminal rental income
Interest income on loans
Fair value (loss)/gain on loans
Interest income on cash and deposits
Interest income on assets at FVOCI
Sale of terminal accessories
Other revenue and income
Revenue
Interchange, integration and support fees
Interest expense on deposits
Terminal accessories
Total direct expenses
Gross profit
Employee benefits expense (excl. share-based payments)
Share-based payments expense
Administrative expenses
Contractor and consulting expenses
Marketing expenses
Depreciation and amortisation
Lending and non-lending losses
Net lease interest expense
Initial Public Offering (IPO) expenses (2)
Total operating expenses
Loss before tax expense
Income tax benefit
Loss for the year
Other comprehensive (loss) / income
FVOCI reserve – net revaluation (loss)/gain, net of tax
Total comprehensive loss for the year
NOTE
2
2
2
2
2
10, 11, 20
2
4
20201
$000
201,770
4,179
(2,361)
991
791
1,056
4,249
210,675
(115,722)
(516)
(962)
(117,200)
93,475
(67,662)
(10,896)
(16,598)
(5,913)
(5,716)
(12,524)
(1,958)
(535)
(9,730)
(131,532)
(38,057)
-
(38,057)
(96)
(38,153)
2019
$000
182,787
2,912
26
1,298
1,035
898
814
189,770
(105,489)
(276)
(745)
(106,510)
83,260
(60,813)
(3,788)
(17,775)
(7,715)
(4,771)
(7,864)
(797)
-
-
(103,523)
(20,263)
1,824
(18,439)
42
(18,397)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
(1)
(2)
The current year results reflect the adoption of AASB 16 Leases (AASB 16). The Company has not restated prior periods as permitted by AASB 16. Refer to Note
1 for details on the impact of the initial adoption.
IPO costs were $15,990,000 of which $9,730,000 have been expensed in the Statement of Comprehensive Income and $5,006,000 (after recognised tax) have
been netted off against equity as disclosed in Note 17.
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2020
NOTE
2020
$000
2019
$000
ASSETS
Current assets
Cash and cash equivalents
Due from other financial institutions
Trade and other receivables
Loans
Prepayments
Net investment in sublease
Inventories
Total current assets
Non-current assets
Loans
Financial investments
Property, plant and equipment
Right of use assets
Intangible assets
Net investment in sublease
Deferred tax assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Deposits
Trade payables and other liabilities
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
5
6
7
8
20
8
9
10
20
11
20
4
13
14
20
15
20
16
17
17
17
103,761
18,429
15,172
9,840
2,223
823
60
150,308
2,081
69,761
17,266
4,528
5,367
544
13,984
113,531
263,839
50,542
10,332
4,672
4,347
69,893
2,811
1,416
4,227
74,120
189,719
265,763
28,477
(104,521)
189,719
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
23,900
7,910
27,762
14,924
1,943
-
60
76,499
741
37,159
18,734
-
2,503
-
13,028
72,165
148,664
26,918
23,518
-
4,113
54,549
-
1,046
1,046
55,595
93,069
141,856
17,492
(66,279)
93,069
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information Financial Statements
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Fees and terminal rental income received
Interchange, integration and support fees paid
Interest received
Interest paid
Other income received
Payments to employees and suppliers and IPO costs:
Personnel expenses paid
Terminals purchased
Other operating expenses and IPO costs paid
Movement in net schemes and other receivables
Movement in customer loans
Movement in deposits
Net cash flows from operating activities
Cash flows from investing activities
Movement in term deposit investments
Purchases
Proceeds on maturity
Movement in financial investments
Purchases
Proceeds
Movement in equity investments
Purchases
Proceeds
Purchase of property, plant and equipment (exc. terminals)
Payments for recognised intangible assets
Payments received from sublease
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from issues of shares (net of transaction costs)
Proceeds from exercise of share options
Payments for lease liabilities
Net cash flows from financing activities
Net movement in cash and cash equivalents
Effect of foreign exchange rates on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
NOTE
2020
$000
2019
$000
202,499
(115,986)
6,035
(487)
4,264
(70,263)
(7,176)
183,137
(105,743)
5,386
(258)
1,572
(59,899)
(8,103)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020 – ATTRIBUTABLE TO EQUITY HOLDERS OF TYRO PAYMENTS LIMITED
CONTRIBUT-
ED EQUITY
$000
FVOCI RE-
SERVE
$000
NOTE
SHARE-
BASED
PAYMENTS
RESERVE
$000
ACCU-
MULATED
LOSSES
$000
OPTION
PREMIUM
RESERVE
$000
GENERAL
RESERVE
FOR CREDIT
LOSSES
$000
TOTAL
$000
At 1 July 2018
Adjustment from initial adoption of AASB 9
141,258
-
855
(798)
11,687
(48,514)
-
1,328
Adjusted balance at 1 July 2018
141,258
57
11,687
(47,186)
167
-
167
1,264
106,717
-
530
1,264
107,247
Loss for the year
-
-
-
(18,439)
-
-
(18,439)
Other comprehensive income
Total comprehensive income
Option premium reserve
-
-
42
-
-
-
-
42
42
-
(18,439)
-
-
(18,397)
-
-
-
-
(167)
-
598
-
-
-
-
-
(167)
598
(43,477)
(29,901)
Issue of share capital – from options and
rights exercised
Share-based payments
-
-
3,788
-
-
-
3,788
Transfer to general reserve for credit losses
-
-
-
(654)
-
654
-
At 30 June 2019
Loss for the year
Other comprehensive income
Total comprehensive income
Issue of share capital – from IPO(1)
Issue of share capital – from options and
rights exercised
Share-based payments
Transfer to general reserve for credit losses
141,856
99
15,475
(66,279)
-
1,918
93,069
-
-
-
119,994
3,913
-
-
-
(96)
(96)
-
-
-
-
3
-
-
-
-
-
10,896
(38,057)
-
(38,057)
-
-
-
-
(185)
26,371
(104,521)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(38,057)
(96)
(38,153)
119,994
3,913
10,896
185
-
2,103
189,719
At 30 June 2020
17
265,763
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 $5,006,000.
8,867
294
23,624
8,194
(10,033)
-
(42,211)
12,967
(3,498)
-
(1,663)
(3,082)
405
(47,115)
119,994
3,913
(4,815)
119,092
80,171
(310)
23,900
103,761
(7,416)
(8,061)
15,355
(13,931)
-
10,037
(3,500)
5,691
-
-
(1,045)
(2,518)
-
8,665
-
598
-
598
(4,668)
4
28,564
23,900
5
17
5
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
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Notes to the Financial Statements
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 18 August 2020.
The Company is listed on the Australian Securities Exchange (ASX), registered 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 and International Financial Reporting Standards (IFRS) and Interpretations as issued by the International Accounting
Standards Board (IASB). The financial report has also been prepared on a historical cost basis, except for loans and financial 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, 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) Going concern
The Company had net current assets of $80.4 million as at 30 June 2020 (2019: $22.0 million).
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.
(c) New accounting standards and interpretations
(i) Changes in accounting policies
The accounting policies are consistent with those applied in the previous financial year except for:
AASB 16 Leases
On 1 July 2019, the Company adopted AASB 16 Leases. The primary change from the adoption of the new standard is the application
of lessee’s accounting principles. Under AASB 16, the lessee is required to recognise a lease on the balance sheet. This involves
recognising a right-of-use (ROU) asset and related lease liability, being the present value of future (minimum) lease payments.
The Company elected to use the exemptions proposed by the standard on lease contracts where the lease terms ends within 12
months as of the date of initial application, and lease contracts for which the underlying asset is of low value.
Right-of-use assets
The Company recognises ROU assets at the commencement date of the lease (i.e. the date the underlying asset is available for use).
ROU assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably
certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the lease term.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of minimum lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid
under residual value guarantees. The variable lease payments that do not depend on an index or a rate are recognised as expense in
the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the
Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Lease liabilities (cont’d)
Following a detailed assessment of the requirements of the standard, the Company recognised the impact of AASB 16 adoption at
transition date using the modified retrospective approach and did not restate comparative information as permitted by the standard.
In summary, the impact of AASB 16 adoption is as follows:
Impact on the balance sheet (increase/(decrease)) as at 1 July 2019:
Assets
Right-of-use assets (1)
Liabilities
Lease liabilities
Deferred rent incentive
Net impact on equity
AMOUNT IN $’000
9,091
11,533
(2,442)
-
(1)
From 1 July 2019, a portion of the ROU assets relating to the head lease has been subleased by the Company. The Company derecognised the related
carrying amount of the ROU asset that it transfers to the sublessee and recognised net investment in the sublease. Any difference is recognised in the
Statement of Comprehensive Income.
After the adoption of AASB 16, the Company’s statement of comprehensive income will change with interest expense recognised on
the lease liability, depreciation recognised on the ROU asset and removal of administration expenses relating to the previous operating
lease expense.
Several other amendments and interpretations apply for the first time in 2020, but do not have an impact on the financial statements
of the Company. The Company has not early adopted any standards, interpretations, or amendments that have been issued but are not
yet effective.
(ii) Accounting standards and interpretations issued but not yet effective
Interpretations and amendments to existing standards that are not yet effective are not expected to result in significant changes to the
Company’s accounting policies.
(d) 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 (including
Key Management Personnel) and other stakeholders 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
12. The options are expensed using a linear probability of vesting approach.
Classification and valuation of investments - The Company classifies its investments in equity securities and floating rate notes
as Financial Investments – at FVOCI, with movements in fair value 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 Company prioritises the use of observable market inputs
in valuation of level 3 fair valued investments and considers all reasonable sources of alternative information when incorporating
unobservable inputs. Further details are as disclosed in the footnotes.
Valuation of loans - The Company classifies and measures its loans at fair value, with movements in fair value recognised directly
in the Statement of Comprehensive Income. The fair value of loans has been estimated using a valuation technique that converts
forecasted cash flows to a present value amount (discounted cash flow method). The forecasted cash flows are actuarially
determined using predictive models based partly on evidenced historical performance and expected repayment profiles including
an adjustment for loans to customers impacted by COVID-19. Inputs into the valuation model are detailed in the footnotes.
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(d) Significant accounting judgements, estimates and assumptions (cont’d)
Capitalisation of internally generated software - An intangible asset arising from development expenditure on an internal project is
recognised by the Company only when the following can be demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
•
•
its intention to complete and its ability to use or sell the asset;
• how the asset will generate probable future economic benefits;
• availability of resources to complete the development; and
•
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The Company commences amortising internally generated software projects from the point the asset is ready for use.
Estimation of useful lives of assets - The estimation of the useful lives of assets has been primarily 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 for property, plant and equipment are
included in the footnotes for amortisation of intangible assets with finite useful lives. In assessing whether the useful life of an
intangible asset is finite or indefinite, Management use judgement in determining the period over which expected future benefits
will be generated, also factoring in the market that the Company operates in and the longer term strategy for the Company. 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.
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 after taking into account the implications of COVID-19 on the current
financial year’s results and the uncertainty it brings to certain variables in the Company’s forecasts. Deferred tax assets are
recognised for deductible temporary differences and carried forward tax losses 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 expected 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. An assessment of the continuity of
ownership test (and where applicable, the same business test) is also performed to support the recognition of any carried forward tax
losses and R&D credits.
Initial Public Offering (IPO) Costs - During the year ended 30 June 2020, the Company undertook an IPO to list on the ASX. Costs
incurred that are directly attributable and incremental to the issuance of new equity (net of tax) have been recognised in equity as
an offset to the value of capital raised. The Company exercised judgement in determining an allocation methodology (between
equity and expense) for costs which relate to both the issuance of new equity and other activities. The Company’s methodology was
determined with reference to the number of new shares issued in raising capital, and the nature and purpose of services rendered in
incurring costs. All other costs were taken directly to Statement of Comprehensive Income during the period.
The Company’s fee income from contracts with customers is derived primarily 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 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 processing Medicare Easyclaim generated from merchants is based on a fixed fee per transaction and is
recognised when transactions are processed; and
• Revenue from Dynamic Currency Conversion transactions generated from merchants is calculated based on the individual value
of the transactions and is recognised once the transaction has been processed.
Terminal rental income generated from operating leases with merchants is recognised progressively based on a fixed monthly rental on
terminal. There is no minimum rental period for merchants.
Interest income is recognised in the Statement of Comprehensive Income in accordance with AASB 9 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.
(f) Jobkeeper
The Government announced a temporary wage subsidy program of $1,500 before tax per eligible employee in March 2020 to support
businesses affected by COVID-19. This subsidy is initially offered over a six month period from 30 March 2020 until 27 September 2020.
The employer entity is eligible for the subsidy over the period if its GST turnover for a test period of at least one month falls short of
the entity’s GST turnover for the corresponding period in 2019, in line with thresholds specified by the Government. Tyro was an eligible
recipient of Jobkeeper during the reporting period.
This is recognised as “Other revenue and income” in the Statement of Comprehensive Income in accordance with AASB120 Accounting
for Government Grants and Disclosure of Government Assistance.
(g) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
(i) Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-
value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the
underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term.
(e) Revenue recognition
(ii) Lease liabilities
Revenue from contracts with customers is recognised in accordance with AASB 15 which introduced a single, principle-based five step
recognition and measurement model. The five steps are:
1. Identify the contract with a customer;
2. Identify separate performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to each performance obligations identified in Step 2; and
5. Recognise revenue when a performance obligation is satisfied.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to
terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date
because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future
payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
125
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments
on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified
as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the
statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent
rents are recognised as revenue in the period in which they are earned.
(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 expected credit losses (ECL). Collectability of trade receivables is reviewed on
an ongoing basis. Debts that are known to be uncollectible are written off when identified.
AASB 9 impairment requirements are based on the ECL model. This replaces the “incurred loss” approach under AASB 139. The
Company has applied the simplified approach to calculate ECL for trade receivables where a loss allowance is based on lifetime ECL at
each reporting date. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit
losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e. by
customer type). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable
information that is available at the reporting date about past events, current conditions and forecasts of future economic condition.
(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 at least on an
annual basis. Inventories are derecognised when the rights to benefits are transferred to a third party.
(ii) Impairment
Management makes assessments of the net realisable value of inventory at least 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
Inventories, where the cost of inventory exceeds the net realisable value, inventory is written down to their net realisable value.
Net realisable value is an estimate, based on the most reliable evidence at the time, of the amount the inventories are expected to realise.
(m) Loans
Loans to merchants are classified and measured at fair value with changes in the fair value being recognised in the Statement of
Comprehensive Income. 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 recognises the
unearned fee in the Statement of Comprehensive Income as interest income and is disclosed together with the fair value movement
on loans. When the loan is uncollectible, it is written-off. Such write-offs of loans occur after all the necessary assessment for write-off
procedures have been completed and the amount of the loss has been determined. Loan write-offs are disclosed as lending losses in
the Statement of Comprehensive Income. Subsequent recoveries are recognised against these write-offs.
Over the reporting period, specific requests for the loans to be put on a “repayment holiday” due to hardship were assessed on a case-
by-case basis. Where appropriate, these loans may have qualified for, and were provided, a repayment holiday for an initial period of up
to three months. Further extension requests will be assessed on a case-by-case basis.
(n) Financial investments
Financial 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 through other comprehensive income (FVOCI). Gains
or losses on financial investments are recognised in a separate reserve 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. The recycling to the Statement of Comprehensive Income
upon de-recognition does not apply to equity investments that the Company has irrevocably elected to measure at FVOCI. For these
investments the cumulative gain or loss remains in equity, though the Company may reclass between equity accounts. For financial
investments which are debt instruments, all counterparties are of high credit quality (in line with the Company’s investment policy) and
the ECL is assessed as immaterial.
Purchase and sale of investments are recognised on trade date - the date on which the Company becomes party to the contractual
provisions of the investment.
(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 reporting date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of comprehensive
income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.
(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 4).
(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
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. Cash flows are
disclosed net of the amount of GST (unless stated otherwise) in the Statement of Cash Flows and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of
operating cash flows.
127
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
(t) Deposits from customers
(r) Property, plant and equipment
(i) Cost
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:
Plant and equipment:
EFTPOS terminals
Furniture and office equipment
Computer equipment
Leasehold improvements
2020
2019
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 identify 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) Derecognition and disposal
An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected to arise from
continued use of the asset. Gains and losses on disposals are calculated as the difference between the net disposal proceeds and the
asset’s carrying amount and are included in the Statement of Comprehensive Income in the year the asset is derecognised.
(s) Intangible assets
The Company continues to make significant investments in various projects to develop new products and enhance existing products’
capabilities. For certain projects, it is more probable that future economic benefits from the assets arising from the projects will flow
to the entity and their expenditure can be measured reliably with enhancements in the Company’s data governance, system and
reporting. Therefore, software development costs for those projects are recognised as intangible assets in the Statement of Financial
Position in accordance with AASB 138 Intangible Assets.
Following initial recognition of the development expenditure as an asset, the intangible asset is carried at its cost less any accumulated
amortisation and any accumulated impairment losses. Each development project will then be reviewed annually for any indicator of
impairments in accordance with AASB 136 Impairment of Assets.
The useful life of finite intangible assets is judgmental and reviewed annually by management with adjustments made where deemed
necessary. The following method is used in the calculation of amortisation:
INTANGIBLE ASSET
AMORTISATION METHOD
USEFUL LIFE
Internally generated software
Customer relationships
Straight line
Straight line
Finite (3 - 5 years)
Finite (5 years)
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) 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 from chargebacks based primarily on historical
experience and other relevant factors. A provision is recognised in the general reserve for credit losses 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.
(w) General reserve for credit losses
The Company appropriates for estimated future credit losses from chargebacks, with a general reserve for credit losses. The Company
estimates the reserve by using a multiple of historical losses over a rolling 120 day period of transaction values. The general reserve for
credit losses is then allocated as a separate reserve within equity.
The Company also appropriates 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.
129
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 1. STATEMENT OF ACCOUNTING POLICIES (cont’d)
2. REVENUE AND EXPENSES
(x) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These
benefits include wages and salaries, annual leave and long service leave.
Entitlements arising in respect of salaries and wages, annual leave and other employee benefits that are expected to be settled within
one year have been measured at their nominal amounts. Employees are entitled to 20 days annual leave each year.
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. Expected future payments are
discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that match
as closely as possible to the estimated future cash outflows.
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 the reporting date is estimated to be less than the annual entitlement for sick leave.
(y) Share-based payment transactions
Share-based compensation benefits are provided to employees (including Key Management Personnel) via the Employee Share
Option Plan, whereby employees render services in exchange for rights over the Company’s shares, as well as other stakeholders
under contractual arrangements. The cost of these equity-settled transactions 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 using the Black-Scholes option valuation model.
The loss before tax expense has been arrived at after accounting for the following items:
Fees and terminal rental income
Merchant service fee
Terminal rental income
Other fee income
Other revenue and income
Jobkeeper receipts
Fair value gains on equity instruments
Fair value gain/ (loss) on debt instruments
Other income
Interchange, integration and support fees
Interchange and scheme fees
Integration, support and other fees
The cost of equity-settled transactions is recognised, together with any corresponding increase in equity, over the period in which the
employees/stakeholders become fully entitled to the award (the vesting period).
Employee benefits expense (excluding share-based payments)
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 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. Details of the types of share-based payments and their respective
terms and vesting conditions are disclosed in the footnotes.
The Company also has share-based compensation benefits in the form of rights which are tied to performance conditions, as well as
remuneration sacrifice rights. The policy treatment is consistent with that for share options via the Employee Share Option Plan.
(z) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are accounted in
contributed equity as a deduction, net of tax, from the proceeds of issue.
(aa) Foreign currency translation
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the spot rate of exchange ruling at
the reporting date.
Non-monetary assets and liabilities are translated at their historic rates of exchange at their respective transaction dates.
(ab) De-recognition of assets and liabilities
Assets and liabilities are de-recognised 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.
Wages, salaries and incentives
Superannuation
Other employee benefits expense
Administrative expenses
Communications, hosting and licencing costs
Terminal management and logistics
Travel and entertainment
Professional services
Training and conferences
Rent(1)
Other administrative expenses
Lending and non-lending losses
Lending losses
Non-lending losses
2020
$000
180,236
17,660
3,874
201,770
3,867
-
19
363
4,249
(108,005)
(7,717)
(115,722)
(57,667)
(5,236)
(4,759)
(67,662)
(7,694)
(2,371)
(1,208)
(1,433)
(644)
-
(3,248)
(16,598)
(1,088)
(870)
(1,958)
2019
$000
162,174
15,452
5,161
182,787
-
159
(2)
657
814
(97,259)
(8,230)
(105,489)
(52,395)
(4,690)
(3,728)
(60,813)
(5,532)
(2,162)
(1,153)
(1,536)
(820)
(4,100)
(2,472)
(17,775)
(542)
(255)
(797)
(1)
The current year results reflect the adoption of AASB 16 Leases (AASB 16). The Company has not restated prior periods as permitted by AASB 16. Refer to Note
1 for details on the impact of the initial adoption.
131
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information (c) Assets and liabilities by segment
PAYMENTS
$000
BANKING
$000
CORPORATE AND OTHER
$000
TOTAL
$000
3. SEGMENT REPORTING
(a) Description of segments and principal activities
For management purposes, the Company is organised into three operating segments comprising Payments, Banking and Corporate
and other. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker, which is the CEO and Managing Director. The Company operates in one geographical segment being Australia.
The Company’s reportable segments under AASB 8 Operating Segments are as follows:
REPORTABLE SEGMENT
PRINCIPAL ACTIVITIES
Payments
Acquires electronic payment transactions from merchants. Revenue is primarily earned from fees charged for
processing acquired transactions. Revenue is also earned from other fee income, terminal rental income and
sales of terminal accessories. Direct expenses include scheme and interchange fees, integration, support and
other fees and cost of terminal accessories sold.
Banking
Complementary banking services to merchants. Revenue is earned from fees charged on loans to merchants.
Interest expense is incurred on merchant deposits.
Corporate and other
Corporate and other includes investment income earned from financial investments and other revenue and
income. Corporate includes the Company’s head office and includes all employee benefits expenses and
other operating expenses.
(b) Revenue and gross profit by segment
PAYMENTS (1)
$000
BANKING (2)
$000
CORPORATE
AND OTHER (3)
$000
2020
Revenue
Gross Profit
2019
Revenue
Gross Profit
202,826
86,142
183,685
77,451
1,818
1,302
2,938
2,662
Reconciliation of gross profit to loss before tax:
Gross profit
Operating expenses excl. depreciation, amortisation and net lease interest expense
Depreciation and amortisation
Net lease interest expense
IPO expenses
Loss before tax
6,031
6,031
3,147
3,147
2020
$000
93,475
(108,743)
(12,524)
(535)
(9,730)
(38,057)
TOTAL
$000
210,675
93,475
189,770
83,260
2019
$000
83,260
(95,659)
(7,864)
-
-
(20,263)
2020
Segment assets
Segment liabilities
2019
Segment assets
Segment liabilities
4. INCOME TAX
a) Income tax benefit
48,759
2,441
51,986
6,504
37,790
50,543
36,137
26,918
Major components of income tax benefit for the period ended 30 June 2020:
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 and equity
Deferred tax related to items recognised in equity during the year
Deferred tax on capital raising costs
Deferred tax on unrealised gain on financial investment – FVOCI
Income tax benefit 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
(1)
Gross profit of the payments segment is payments revenue and income less direct expenses.
Tax effect of current year losses for which no deferred tax asset is recognised
(2)
Gross profit of the banking segment is income from merchant lending less fair value loss on loans and interest expense on deposits.
(3)
Gross profit of corporate and other includes income from investments and other revenue and income.
Sale of VISA shares
Total income tax benefit
177,290
21,136
60,541
22,173
2020
$000
-
-
-
-
927
29
956
2020
$000
(38,057)
11,417
70
(3,269)
(149)
(332)
(7,737)
-
-
263,839
74,120
148,664
55,595
2019
$000
-
1,824
1,824
(183)
-
36
(147)
2019
$000
(20,263)
6,079
198
(1,137)
(147)
(17)
(3,010)
(142)
1,824
133
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
4. INCOME TAX (cont’d)
c) Deferred income tax assets and liabilities
5. CASH AND CASH EQUIVALENTS
STATEMENT OF
FINANCIAL
POSITION
$000
STATEMENT OF
COMPREHENSIVE
INCOME
$000
OTHER COMPRE-
HENSIVE INCOME
AND EQUITY
$000
STATEMENT OF FI-
NANCIAL POSITION
$000
STATEMENT OF
COMPREHENSIVE
INCOME
$000
OTHER COMPRE-
HENSIVE INCOME
AND EQUITY
$000
2020
2019
Deposits at call
Short term deposits
Deferred tax assets (DTA)
Fixed assets
Provisions & accruals
Other
Lease break fee
R&D credits
Tax losses
Right-of-use assets
Prepayments
Financial investments
Total
5,558
2,093
3,848
-
274
1,910
13,683
(284)
(104)
689
301
13,984
4,850
(1,974)
2,888
-
(6,126)
-
(362)
(284)
(99)
745
362
-
-
-
927
-
-
-
927
-
-
29
29
956
708
4,067
33
-
6,400
1,910
13,118
-
(5)
(85)
(90)
13,028
(389)
1,045
41
(21)
898
(183)
1,391
-
4
429
433
1,824
-
-
-
-
-
-
-
-
-
(147)
(147)
(147)
Deferred tax assets relate to deductible temporary differences, unused tax losses and credits up to $13,984,000 recognised as assets
as at 30 June 2020. In addition, approximately $15,206,000 of deductible temporary differences, unused tax losses and credits have
not been recognised as assets at balance date.
Reconciliation of loss after tax to net cash flows used in operations
Loss for the year
Adjustments for:
Depreciation and amortisation
Share-based payments expense
Fair value loss/(gain)
Loans written off
Net lease interest expense
Foreign currency loss/(gain)
Gain on disposal of property plant and equipment
Deferred tax benefits
Other
Changes in assets and liabilities:
Decrease/(increase) in customer loans
Decrease/(increase) in interest and other receivables
(Increase) in prepayments
Increase in deposits
(Decrease) in interest and other payables
Increase/(decrease) in provisions
Net cash flow from operating activities
6. DUE FROM OTHER FINANCIAL INSTITUTIONS
Term deposits
Deposits pledged as collateral
2020
$000
88,761
15,000
103,761
2019
$000
23,900
-
23,900
2020
$000
2019
$000
(38,057)
(18,439)
12,524
10,896
2,342
1,088
535
310
(190)
-
65
294
8,463
(400)
23,624
(14,854)
1,554
8,194
2020
$000
10,000
8,429
18,429
7,864
3,788
(183)
542
-
(4)
(94)
(1,824)
(102)
(8,061)
(6,871)
(18)
15,355
(5,402)
(482)
(13,931)
2019
$000
-
7,910
7,910
Includes term deposits with maturities greater than three months from the date of acquisition and deposits pledged to counterparties
as collateral. Refer to Note 19 for details of deposits pledged as collateral.
135
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 7. TRADE AND OTHER RECEIVABLES
10. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of net carrying amounts at the beginning and end of the year.
Scheme and other receivables
Merchant acquiring fees
Interest receivable
Expected credit loss provision
2020
$000
10,625
4,532
53
(38)
15,172
2019
$000
23,003
4,729
30
-
27,762
Scheme receivables are presented net of merchant payables in line with the accounting policy disclosed in Note 1.
The Company’s ageing of trade and other receivables are as follows:
TOTAL
$000
15,172
27,762
CURRENT
$000
1-30 DAYS
$000
31-60 DAYS
$000
61-90 DAYS
$000
>90 DAYS
$000
IMPAIRMENT
$000
15,004
27,223
100
494
-
-
90
10
16
35
(38)
-
2020
$000
2019
$000
Carrying value 2020
Carrying value 2019
8. LOANS
Current
Loans (net of unearned fees)
Non-current
Loans (net of unearned fees)
2,081
11,921
741
15,665
Income from loans comprises interest income of $4,179,000 (2019: $2,912,000), fair value (loss)/gain of ($2,361,000) (2019: $26,000)
and lending loss of ($1,088,000) (2019: ($542,000)).
9. FINANCIAL INVESTMENTS
Floating rate notes
Equity investment – meandu Australia Holdings Pty Ltd
Equity investments – YBF Holdings Pty Ltd and Teamsquare Pty Ltd
2020
$000
66,134
3,499
128
69,761
2019
$000
36,948
-
211
37,159
The Company elected to measure the equity investments in meandu Australia Holdings Pty Ltd (me&u), YBF Holdings Pty Ltd and
Teamsquare Pty Ltd (YBF) at FVOCI, resulting in no recycling of fair value changes to the Statement of Comprehensive Income upon a
de-recognition event.
9,840
14,924
Accumulated depreciation and impairment
(29,680)
(1,909)
(6,698)
(3,273)
(41,560)
Net carrying amount
12,863
799
2,060
1,544
17,266
Year ended 30 June 2020
At 30 June 2019 net of accumulated depreciation
and impairment
Additions
Disposals
Depreciation for the year
At 30 June 2020 net of accumulated
depreciation and impairment
At 30 June 2019
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2020
Cost
EFTPOS
TERMINALS
$000
FURNITURE
AND OFFICE
EQUIPMENT
$000
COMPUTER
EQUIPMENT
$000
LEASEHOLD
IMPROVEMENTS
$000
TOTAL
$000
13,258
649
2,756
2,071
18,734
6,488
(35)
(6,848)
12,863
36,668
(23,410)
13,258
506
-
(356)
799
2,202
(1,553)
649
640
-
(1,336)
2,060
387
-
8,021
(35)
(914)
(9,454)
1,544
17,266
8,152
4,430
51,452
(5,396)
(2,359)
(32,718)
2,756
2,071
18,734
42,543
2,708
8,758
4,817
58,826
Year ended 30 June 2019
At 30 June 2018 net of accumulated
depreciation and impairment
Additions
Disposals
Depreciation for the year
At 30 June 2019 net of accumulated depreciation
and impairment
At 30 June 2018
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2019
Cost
Accumulated depreciation and impairment
Net carrying amount
EFTPOS
TERMINALS
$000
FURNITURE
AND OFFICE
EQUIPMENT
$000
COMPUTER
EQUIPMENT
$000
LEASEHOLD
IMPROVEMENTS
$000
TOTAL
$000
10,412
952
3,234
2,625
17,223
8,182
(22)
(5,314)
13,258
28,646
(18,234)
10,412
36,668
(23,410)
13,258
87
-
(390)
649
2,115
(1,163)
952
2,202
(1,553)
649
929
-
(1,407)
2,756
7,222
(3,988)
3,234
8,152
(5,396)
2,756
184
-
(738)
2,071
4,246
(1,621)
2,625
4,430
(2,359)
2,071
9,382
(22)
(7,849)
18,734
42,229
(25,006)
17,223
51,452
(32,718)
18,734
137
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
11. INTANGIBLE ASSETS
Reconciliation of net carrying amounts at the beginning and end of the year
INTERNALLY GENERATED
SOFTWARE
CUSTOMER
RELATIONSHIPS
Year ended 30 June 2020
At 30 June 2019 net of accumulated amortisation and impairment
Additions
Amortisation for the year
At 30 June 2020 net of accumulated amortisation and impairment
At 30 June 2019
Cost
Accumulated amortisation and impairment
Net carrying amount
At 30 June 2020
Cost
Accumulated amortisation and impairment
Net carrying amount
2,503
2,832
(165)
5,170
2,518
(15)
2,503
5,350
(180)
5,170
-
250
(53)
197
-
-
-
250
(53)
197
Reconciliation of net carrying amounts at the beginning and end of the year
INTERNALLY GENERATED
SOFTWARE
CUSTOMER
RELATIONSHIPS
Year ended 30 June 2019
At 30 June 2018 net of accumulated amortisation and impairment
Additions
Amortisation for the year
At 30 June 2019 net of accumulated amortisation and impairment
At 30 June 2018
Cost
Accumulated amortisation and impairment
Net carrying amount
At 30 June 2019
Cost
Accumulated amortisation and impairment
Net carrying amount
-
2,518
(15)
2,503
-
-
-
2,518
(15)
2,503
-
-
-
-
-
-
-
-
-
-
TOTAL
$000
2,503
3,082
(218)
5,367
2,518
(15)
2,503
5,600
(233)
5,367
TOTAL
$000
-
2,518
(15)
2,503
-
-
-
2,518
(15)
2,503
12. SHARE-BASED PAYMENTS
The Company provides benefits to employees (including Key Management Personnel (KMP)) from time to time including share-based
payments as remuneration for service. Additionally, the Company provides share-based payments to other stakeholders as part of
contractual agreements.
(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
Monthly 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 Director with the
Company during the vesting period. The options generally vest in equal amounts each month
over the vesting period.
Annual linear vesting schedule
Options vest similarly to the monthly linear vesting schedule, except they vest in equal amounts
annually over the vesting period.
Performance linear vesting
schedule
Options vest in equal amounts annually over the vesting period, and are also subject to
performance criteria.
All option grants and any shares issued on the exercise of those options must be held for a minimum period commencing on the date
on which the options are granted and continuing until the earlier of:
•
•
the date which is 3 years after the date on which options are granted; or
the date on which the participant ceases employment with the Company.
Other relevant terms and conditions applicable to options granted under the ESOP include:
• The term of each option grant ranges primarily between 6 – 7 years from the date of grant or such shorter term as provided in the
ESOP or grant letter;
• Each option entitles the holder to one ordinary fully paid share;
• All awards granted under the ESOP are equity-settled;
• A 2 year holding lock applies to those options with annual linear or performance linear vesting schedules. For annual linear options,
the lock period applies following the relevant vesting date, and for performance linear options the lock period applies from exercise
date. During this period the shares issued cannot be transferred, sold, encumbered or otherwise dealt with; and
• Under the ESOP rules and subject to any requirements under law or the ASX listing rules, the Board, at its discretion, may determine
that options held by an employee or Director do not lapse on cessation of employment or Directorship and that the relevant holder
of options has additional time to exercise their options.
139
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 12. SHARE-BASED PAYMENTS (cont’d)
(b) Fair value of options under the ESOP
The following table illustrates the number and weighted average exercise prices (WAEP) in cents and movements of share options
during the year:
JUN 2020
Number
JUN 2020
WAEP (cents)
JUN 2019
Number
JUN 2019
WAEP (cents)
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 period ended 30 June 2020:
Monthly linear and annual linear vesting
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price ($)1
SEP 2019
OCT 2019
0%
N/A
N/A
0%
40%
0.73% - 0.79%
$1.15 - $1.50
$1.15 - $2.00
Opening
Granted
Exercised
Forfeited or expired
Closing
1
The Company considers the volume weighted average share price near grant date, when determining fair value.
Of which: Exercisable at the end of the period
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.
Performance based vesting
Expected volatility used is the historical volatility of the Company’s estimated 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.
There were 8,248,341 options exercised during the period ended 30 June 2020 (2019: 1,939,496).
The weighted average remaining contractual life for share options outstanding as at 30 June 2020 was 5 years (2019: 4 years).
The following table summarises further details of the share options outstanding at 30 June 2020:
RANGE OF EXERCISE PRICES
CONTRACTUAL LIFE
VESTING CONDITIONS
NO. OF OUTSTANDING OPTIONS
179 cents
176 cents
7 years
4 year annual vesting, plus performance criteria
6 years or less
5 year monthly linear vesting
162 cents to 176 cents
7 years or less
No vesting in first 6 months of 5 year monthly
linear vesting period
162 cents
150 cents
7 years or less
5 year monthly linear vesting
7 years
4 year annual vesting, plus performance criteria
37.5 cents to 149 cents
7 years or less
5 year monthly linear vesting
8 cents to 14 cents
7 years
5 year monthly linear vesting
0 cents
Total
6 years
5 year annual linear vesting
JUN 2020
7,740,124
7,589,967
750,000
90,000
6,154,423
11,081,212
-
3,570,372
JUN 2019
-
8,466,637
790,000
90,000
6,154,423
17,828,817
829,167
2,611,147
36,976,098
36,770,191
30,615,768
1,554,294
(6,623,341)
(2,465,170)
23,081,551
14,664,292
6,154,423
7,822,597
-
(82,473)
13,894,547
-
36,976,098
14,664,292
102
-
59
109
107
108
150
179
-
179
166
-
32,126,443
3,134,471
(896,018)
(3,749,128)
30,615,768
8,023,259
-
6,154,423
-
-
6,154,423
-
36,770,191
8,023,259
91
22
45
143
102
39
-
150
-
-
150
-
Opening
Granted
Exercised
Forfeited or expired
Closing
Of which: Exercisable at the end of the period
Total outstanding at the end of the year
Total exercisable at the end of the year
Refer to Note 17, for outstanding share options at the end of the period that are not part of ESOP.
(c) Performance rights, remuneration sacrifice rights and rights to shares under other contractual
arrangements
During the period, the Company granted 1,475,617 remuneration sacrifice rights as part of an equity incentive arrangement. The
following model inputs were used in the Black-Scholes valuation model to determine the fair value:
GRANT DATE
Vesting period
Expiry date
Share price at grant date ($)1
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Target conversion date – post the end of the relevant financial year or post publication of half-year
results
OCT-19
Employment conditions apply
$1.15 - $2.00
0%
N/A
N/A
1
The Company considers the volume weighted average share price near grant date, when determining fair value.
141
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 12. SHARE-BASED PAYMENTS (cont’d)
15. CURRENT PROVISIONS
JUN 2020
Number
JUN 2020
WAEP (cents)
JUN 2019
Number
JUN 2019
WAEP (cents)
Performance, remuneration sacrifice rights
and rights to shares under other contractual
arrangements
Opening
Granted
Exercised
Forfeited or expired
Closing
Exercisable at the end of the period
13. DEPOSITS
Deposits1
Term deposits
6,998,587
1,475,617
(1,882,647)
(105,617)
6,485,940
1,652,608
-
-
-
-
-
-
1,200,000
5,798,587
-
-
6,998,587
-
2020
$000
49,691
851
50,542
-
-
-
-
-
-
2019
$000
26,918
-
26,918
1
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.
14. TRADE PAYABLES AND OTHER LIABILITIES
Accounts payable
Deferred rent incentive
Accruals – scheme fees, commissions, bonuses and others
Payroll Liabilities
Other liabilities – clearing suspense and other payables
2020
$000
665
-
5,576
826
3,265
10,332
2019
$000
3,320
2,654
6,738
3,744
7,062
23,518
Leave provision
Annual leave provision
Long service leave provision
Total leave provisions
Other provisions
Balance at the beginning of the year
Provided for during the year
Released during the year
Balance at the end of the year
Total current provisions
16. NON-CURRENT PROVISIONS
Long service leave provision
Make good provision
Balance at the beginning of the year
Provided for during the year
Balance at the end of the year
Total non-current provisions
2020
$000
3,721
341
4,062
951
285
(951)
285
4,347
2020
$000
712
556
148
704
1,416
2019
$000
2,882
280
3,162
2,095
-
(1,144)
951
4,113
2019
$000
490
409
147
556
1,046
143
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 17. CONTRIBUTED EQUITY AND RESERVES
(i) Movement in ordinary shares on issue
At 1 July 2018
Share options exercised
At 30 June 2019
Shares issued as part of IPO
Share options and rights exercised
Capital raising costs (net of tax)
At 30 June 2020
Terms and conditions of contributed equity
NUMBER OF SHARES
$000
440,307,255
3,564,496
443,871,751
45,493,432
10,130,988
-
499,496,171
141,258
598
141,856
125,000
3,913
(5,006)
265,763
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
2020
$000
15,475
10,896
26,371
The share-based payments reserve is used to record the value of share-based payments or benefits provided to any Directors,
employees as part of their remuneration or compensation, and share-based payments provided to other stakeholders as part of
contractual agreements.
(iii) General reserve for credit losses
Balance at the beginning of the year
Transfer from accumulated losses:
Appropriation for chargeback losses
Appropriation for lending losses
Balance at the end of the year
2020
$000
1,918
253
(68)
2,103
2019
$000
11,687
3,788
15,475
2019
$000
1,264
223
431
1,918
The general reserve for credit losses has been created to satisfy APRA’s prudential standards for ADIs as described in Note 1(w). 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) FVOCI reserve
Balance at the beginning of the year
Adjustment from initial adoption of AASB 9
Total revaluations for the year
Balance at the end of the year
2020
$000
99
-
(96)
3
2019
$000
855
(798)
42
99
Total reserves at the end of the year
28,477
17,492
(v) Accumulated losses
Movements in accumulated losses were as follows:
Accumulated losses at the beginning of the financial year
Adjustment from initial adoption of AASB 9
Loss attributable to shareholders of the Company
Transfer to general reserve for credit losses
Accumulated losses at the end of the financial year
2020
$000
2019
$000
(66,279)
-
(38,057)
(185)
(104,521)
(48,514)
1,328
(18,439)
(654)
(66,279)
18. 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, net investment in sublease, loans, financial investments, deposits, lease liabilities, trade payables and other
liabilities.
(i) Risk management
The Board has responsibility for setting Tyro’s strategy and the Risk Management Framework (RMF). The RMF includes the Risk
Management Strategy (RMS), the Risk Appetite Statement (RAS) and the Internal Capital Adequacy Assessment Process (ICAAP). The
RMS supports Tyro in achieving its strategic priorities by clearly articulating the approach to managing risks aligned with the material
risk types that are consistent with the RAS. The CEO and Management team are responsible for implementing the RMS, and for
developing policies, controls, processes and procedures for identifying and managing risk.
Various management committees, including the Executive Risk Committee (ERC), the Price Committee (PriceCo) and the Asset and
Liability Management Committee (ALCO), ensure appropriate execution of the RMS is applied to the day-to-day operations and
regularly report to the Board Risk Committee (BRC).
(ii) Risk controls
Risks are identified, managed and controlled through the Risk and Control Self-Assessment (RCSA) process. The RCSA is an
assessment of key risks and controls which enable the business to understand its operational risk environment and facilitate decision-
making, prioritisation, allocation of resources and effective governance. Business risks are controlled within tolerance levels approved by
the Board through the RAS.
(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 lending and
investing activities, including deposits with banks and financial institutions, foreign exchange transactions and financial investments in
floating rate notes.
The maximum exposure to credit risk is represented by the carrying amounts of the financial assets at the reporting date. The
Company’s credit risk management framework outlines the core values which govern its credit risk-taking activities and reflect the
priorities established by the Board.
The framework is used to develop 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 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, past behaviour and an overview of trading history.
145
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
18. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
(v) Operational risk
As part of equity, a General Reserve for Credit Losses (GRCL) is maintained 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(w). The
Company does not hold any credit derivatives or collateral to offset its credit exposure. The Company’s exposure to bad debts from
chargebacks is not significant at the reporting date.
Operational risk is the risk that arises from inadequate or failed internal processes and systems, human error or misconduct, or from
external events. It includes, amongst other things, fraud, technology risk, model risk and outsourcing risk.
The BRC is responsible for monitoring the operational risk profile, the performance of operational risk controls, and the development
and ongoing review of operational risk policies.
Credit losses from loans
(vi) Market risk
The Company is also subject to the risk of credit losses from its unsecured loan product and loan product operating under the
Government SME guarantee scheme. 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 Chief Risk Officer (CRO). The CRO is also
responsible for ensuring the Lending Credit Risk Policy is reviewed regularly and submitted to the BRC for endorsement and approval
by the Board.
To manage the risk of credit losses, various underwriting criteria is in place before a loan can be offered. A merchant must also have a
minimum acquiring transaction history to be eligible for a loan offer, as well as providing a personal guarantee. Loans issued under the
Government SME guarantee scheme are guaranteed up to 50% of the loan balance, by the Australian Government.
The Company maintains a GRCL to also cover credit losses estimated but not certain to arise over the full life of the loans as described
in Note 1(w).
Market risk is the potential loss of value or potential reduction in expected earnings resulting from movements in interest rates
and currency exchanges rates. Tyro’s balance sheet activities exposes the profit and loss to earnings volatility. Ultimately, the aim
of managing market risks is to stabilise earnings. 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 at this stage.
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:
This table summarises the Company’s credit risk exposures as at reporting date:
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, term deposits, floating rate notes, loans and variable deposits (bank account for businesses).
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 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 and increase equity by $748,512 (2019: $287,526). 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.
-
-
30 JUNE 2020
STANDARD & POORS
CREDIT RATING*
AAA
AA
A+
A
A-
BBB+
unrated
30 JUNE 2019
STANDARD & POORS
CREDIT RATING*
AAA
AA
A+
A
A-
BBB+
unrated
CASH AND BALANCES
WITH FINANCIAL
INSTITUTIONS
DUE FROM OTHER
FINANCIAL INSTITUTIONS
TRADE RECEIVABLES
LOANS AND ADVANCES^
NET INVESTMENT IN
SUBLEASE
($000)
31,218
($000)
-
72,543
18,356
-
73
-
-
-
-
-
-
-
-
($000)
1,638
8,249
4,415
-
-
168
702
($000)
($000)
-
-
-
-
-
-
-
-
103,761
18,429
15,172
11,921
11,921
1,367
1,367
CASH AND BALANCES
WITH FINANCIAL
INSTITUTIONS
DUE FROM OTHER
FINANCIAL INSTITUTIONS
TRADE RECEIVABLES
LOANS AND ADVANCES^
NET INVESTMENT IN
SUBLEASE
($000)
21,725
($000)
-
2,175
7,839
-
71
-
-
-
-
-
-
-
-
($000)
1,033
17,102
8,596
-
222
-
809
($000)
($000)
-
-
-
-
-
-
-
-
-
-
-
-
15,665
23,900
7,910
27,762
15,665
*Long-term credit rating
^Includes loans issued under the Government SME guarantee scheme of $676,000.
-
-
147
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
18. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
3) Other price risk
VARIABLE INTEREST RATE
FIXED INTEREST RATE
TOTAL
< 3 MONTHS
3 TO 12 MONTHS
> 1 YEAR
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
conditions (other than those arising from interest rate risk or currency risk), for example from changes in equity prices. Further
information on sensitivity to other price risk is discussed below.
Cash and cash equivalents
88,761
15,000
-
-
103,761
(vii) Capital Management
The Company’s capital management objectives are to:
1,924
1,547
12,991
-
16,462
• Maintain a sufficient level of capital above the regulatory minimum to provide a buffer against loss arising from unanticipated
73
-
1,894
-
1,967
events, and allow the Company to continue as a going concern; and
-
3,182
6,658
2,081
11,921
• Ensure that capital management is closely aligned with the Company’s business and strategic objectives.
66,134
-
-
-
66,134
The Company manages capital adequacy according to the framework set out by APRA Prudential Standards.
(49,691)
(851)
-
-
(50,542)
VARIABLE INTEREST RATE
FIXED INTEREST RATE
TOTAL
< 3 MONTHS
3 TO 12 MONTHS
> 1 YEAR
APRA determines minimum prudential capital ratios that must be held by all ADIs. Accordingly, the Company is required to maintain a
minimum prudential capital ratio 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
ICAAP. The Company operates under the specific capital requirements set by APRA. The Company has satisfied its minimum capital
requirements throughout the 2020 financial year in the form of Tier 1 capital which is the highest quality component of capital.
30 JUNE 2020
($’000)
Financial assets
Other term deposits
USD term deposit
Loans
Floating rate notes
Financial liabilities
Deposits
30 JUNE 2019
($’000)
Financial assets
Cash and cash equivalents
23,900
-
-
-
23,900
Other term deposits
USD term deposit
Loans
Floating rate notes
Financial liabilities
Deposits
2) Foreign currency risk
1,460
1,547
1,547
1,431
5,985
71
-
1,854
-
1,925
-
3,750
11,174
741
15,665
36,948
-
-
-
36,948
(26,918)
-
-
-
(26,918)
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 terminals from foreign suppliers are
transacted in foreign currencies at the exchange rate prevailing at the transaction date. At the reporting date the Company has some
US dollar and Euro exposure.
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 and increase equity by $311,776 (2019: $183,055). A depreciation of 15% of the US dollar and Euro
compared to the Australian dollar will reduce the Company’s profit and reduce equity by $230,443 (2019: $135,302).
The following table shows the financial assets and liabilities on which the foreign currency sensitivity analysis has been performed.
USD term deposit
UnionPay deposit
Trade payables
USD
USD
EUR
AUD
2020
($000)
1,894
73
200
AUD
2019
($000)
1,854
71
888
Capital Adequacy
Tier 1 Capital
Common Equity Tier 1 Capital
Contributed capital
Accumulated losses & reserves
Regulatory adjustments to Common Equity Tier 1 Capital
Net deferred tax assets
Capitalised expenses
Other adjustments
Common Equity Tier 1 Capital
Additional Tier 1 Capital
Total Tier 1 Capital
Tier 2 Capital
General reserve for credit losses(1)
Total Tier 2 Capital
Total Capital
Total risk weighted assets
Risk weighted capital ratios
Common Equity Tier 1
Tier 1
Total Capital ratio
(1) Standardised approach (to a maximum of 1.25% of total credit risk weighted assets).
2020
($000)
265,763
(78,147)
187,616
(13,984)
(5,169)
(3,825)
(22,978)
164,638
-
164,638
1,147
1,147
165,785
102,200
%
161
161
162
2019
($000)
141,856
(50,704)
91,152
(13,028)
(2,503)
(211)
(15,742)
75,410
-
75,410
977
977
76,387
85,827
%
88
88
89
149
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 18. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
(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 Board approved liquidity framework. Responsibility for liquidity management is delegated to the
CFO and CEO. The CFO manages liquidity on a daily basis and submits regular reports to ALCO, and to the BRC at the seating of the
BRC. The CFO is also responsible for monitoring and managing capital planning. The capital plan outlines triggers for additional funding
should liquidity be required. The CRO provides oversight of the business’ adherence with the Liquidity Risk framework and reports to
the BRC.
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 the reporting date, the Board of Directors determined that there was sufficient cash available to meet its financial liabilities and
anticipated expenditure.
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 TO 6 MONTHS >6 TO 12 MONTHS
>1 TO 5 YEARS
>5 YEARS
TOTAL
As at 30 June 2020
Financial liabilities
Variable rate deposits
Term deposits
Lease liabilities
Trade payables and other liabilities
(49,691)
(851)
(1,237)
(10,332)
(62,111)
-
-
-
-
-
-
(1,237)
(2,561)
(2,872)
-
-
-
(1,237)
(2,561)
(2,872)
-
-
-
-
-
(49,691)
(851)
(7,907)
(10,332)
(68,781)
(AMOUNTS IN $’000S)
<3 MONTHS
3 TO 6 MONTHS >6 TO 12 MONTHS
>1 TO 5 YEARS
>5 YEARS
TOTAL
As at 30 June 2019
Financial liabilities
Variable rate deposits
Trade payables and other liabilities
(ix) Fair values
(26,918)
(23,518)
(50,436)
-
-
-
-
-
-
-
-
-
-
-
-
(26,918)
(23,518)
(50,436)
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.
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.
The table below shows the Company’s financial assets that are measured at fair value, or where not measured at fair value, their fair
value equivalent. Management has assessed that for other financial assets and liabilities not disclosed in the table below, that due to
their short-term maturity or repricing profile, the carrying amount is an approximation of fair value.
Financial Asset
Floating rate notes
Loans
Equity investment
Net investment in sublease
Financial Asset
Floating rate notes
Loans
Equity investment
Floating rate notes
Level 1
66,134
-
-
-
66,134
Level 1
36,948
-
-
36,948
Level 2
-
-
-
-
-
Level 3
-
11,921
3,627
1,367
16,915
Level 2
Level 3
-
-
-
-
-
15,665
211
15,876
30 JUNE 2020 ($000)
Total
66,134
11,921
3,627
1,367
83,049
30 JUNE 2019 ($000)
Total
36,948
15,665
211
52,824
The floating rate notes invested in by the Company have a short-term repricing profile and are of high credit quality. The fair value of
these floating rate notes is obtained from an independent third party pricing service that uses tradable prices and quotes from active
markets.
Loans
Loans are included in Level 3 due to one or more of the significant inputs used in determining the fair value being based on
unobservable inputs. To determine the fair value, an income valuation approach is used. This technique converts forecasted cash
flows to a present value amount (also known as a discounted cash flow method). Forecast cash flows are actuarially determined using
predictive models based partly on evidenced historical performance and expected repayment profiles.
The fair value model will be periodically reviewed, tested and refined as needed.
The fair value of loans requires estimation of:
• The expected future cash flows;
• The expected timing of receipt of those cash flows; and
• Discount rates derived from similar observed rates for comparable assets that are traded in the market.
The main inputs used in measuring the fair value of loans are as follows:
• Loan balance - accepted principal and fee, outstanding principal and fee, and date of acceptance;
• Annual settlement amount - forecasted total annual settlements for loan customers;
• Current repayment percentage - percentage of daily settlements through the loan customers’ terminals that go towards loan
repayments;
• Historical default and recovery information; and
• Discount rates - market benchmarked discount rate and allows for a market level of default risk.
The unobservable pricing inputs which determine fair value are based on:
• Tyro pricing of loans including adjustments for credit risk – ranging between 32% and 36%;
• Historical data with respect to behavioural repayment patterns – generally ranging between 3 to 12 months; and
• Default experience for loans deemed uncollectable and which are valued at $0.
• An estimate for the deterioration in credit risk of merchants as a result of COVID-19.
These inputs directly affect the fair value of the loans. A sensitivity of a change of 10% in the value ascribed to credit risk for loans to
merchants that are either not trading completely, or are on repayment holidays, will have an impact of between negative $506,000 and
positive $545,000 to profit and loss.
151
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 18. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
20. LEASES
Equity investments
At the reporting date, the Company held unlisted equity instruments in me&u and YBF. The valuations of me&u and YBF are level 3
financial instruments with several unobservable inputs.
The valuation of me&u was based on the transacted price which, being recent and within the last eight months, is considered to
reasonably represent fair value as at 30 June 2020. Management also considered other recent evidence of the enterprise value of the
investee when assessing the fair value. me&u continues to invest in development of its operations and technology, and Management
will consider an updated valuation at the next reporting date.
Transfer between categories
There were no transfers between Level 1, Level 2 or Level 3 during the financial year.
19. COMMITMENTS
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
Premium Custody Services, the lessor of 1.15/14-16 Lexington Drive, Bella Vista
2020
$000
3,294
524
73
4,525
13
8,429
2019
$000
3,254
60
71
4,525
-
7,910
The Company has provided irrevocable standby letters of credit of $3,891,000 (2019: $3,385,000) 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 a yearly basis.
Mastercard International and Visa International, at their discretion, may increase the required amounts of the standby letters of
credit upon written request to the Company. The required amounts of the standby letters of credit are dependent on Mastercard
International’s and Visa International’s view of their risk exposure to the Company.
A bank guarantee in favour of UIR is held with the Westpac Banking Corporation in relation to the lease arrangement for the office
premises. The amount represents up to 9 month’s rent and includes all annual increases of 4% since 2016 until lease maturity and is
refundable on expiry of the lease agreement, subject to satisfactory vacation of the leased premises.
(a) Company as lessor - sublease arrangement
The arrangement relates to the sublease of Level 5 of the Company’s registered office. It is a non-cancellable lease with a term of up
to 2 years, 6 months and 20 days ending 21 January 2022, aligned to the Company’s head-lease. The sublease agreement does not
provide the lessee with the option to extend the lease. Lease payments are subject to annual increases of 4%.
Lease income recognised in the Statement of Comprehensive Income are as follows:
Gain on recognition of net investment in sublease
Interest income on net investment in sublease
Total amount recognised in profit and loss
JUN 2020
$000
147
113
260
Set out below is a maturity analysis of lease receivables, showing undiscounted lease payments to be received after the reporting date:
Within one year
After one year but not more than five years
Total undiscounted lease payments receivable
Unearned interest income
Net investment in sublease
b) Company as lessee – property lease
JUN 2020
$000
892
556
1,448
(81)
1,367
The property lease predominantly relates 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 21 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%.
Set out below, are the carrying amounts of the Company’s right-of use assets and lease liabilities in the Statement of Financial Position
and the movements during the period:
RIGHT-OF-USE ASSETS
LEASE LIABILITIES
As at 30 June 2019
Transition adjustments
As at 1 July 2019
De-recognition due to sublease
Additional leases (1)
Depreciation expense
Interest expense
Payments
As at 30 June 2020
$000
-
9,091
9,091
(1,827)
116
(2,852)
-
-
4,528
$000
-
11,534
11,534
-
116
-
648
(4,815)
7,483
(1)
This includes a new 12 month property lease with an option to renew for 12 months that Tyro entered into on 26 March 2020. Tyro has elected not to treat this
lease as a short term lease as it is reasonably certain that the option to renew will be exercised.
153
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information 20. LEASES (cont’d)
Lease liabilities - Maturity analysis
CONTRACTUAL UNDISCOUNTED CASH FLOWS
Within one year
After one year but not more than five years
Total undiscounted lease liabilities at 30 June 2020
The amounts recognised in the Statement of Comprehensive Income are as follows:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Interest income from sub-leasing right-of-use assets
Total amount recognised in Statement of Comprehensive Income
21. EARNINGS PER SHARE
JUN 2020
$000
5,035
2,872
7,907
JUN 2020
$000
(2,852)
(648)
113
(3,387)
22. AUDITOR’S REMUNERATION
Fees in respect of the role of the appointed auditor
Audit and review of the financial reports of the Company
Audit-related services (regulatory compliance)
Fees for assurance services required by legislation to be performed by the auditor
Discretionary fees for other assurance related services
IPO related services
Other assurance and agreed-upon-procedures services
Fees for other non-assurance services
Tax compliance
Other assistance and services
2020
$000
388*
-
223
17
55
29
712
2019
$000
372
55
-
-
64
35
526
* This includes fees in the capacity as the appointed auditor under APRA’s APS 310 Audit and Audit Related Matters.
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.
Basic loss per share shows the loss attributable to each ordinary share. It is calculated as the net loss attributable to ordinary
shareholders divided by the weighted average number of ordinary shares in each year.
The Directors are of the opinion that the services as disclosed in Note 22 do not compromise the external auditor’s independence for
the following reasons:
Diluted loss per share shows the loss attributable to each ordinary share if all the dilutive potential ordinary shares had been ordinary
shares. There are no discontinued operations of the Company.
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
EARNINGS
Net loss attributable to ordinary shareholders used to calculate
basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating
basic earnings per share
JUN 2020
$000
(38,057)
NUMBER
476,033,272
JUN 2019
$000
(18,439)
NUMBER
442,718,333
Weighted average number of potentially dilutive ordinary shares
504,695,120
458,797,525
EARNINGS PER SHARE
Basic
JUN 2020
CENTS
(7.99)
JUN 2019
CENTS
(4.16)
Diluted EPS is consistent with basic EPS due to the Company currently generating negative earnings.
• none of the services undermine the general principles relating to auditor independence as set out in 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 or
jointly sharing economic risks and rewards.
23. 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
David Thodey1
Kerry Roxburgh
Robbie Cooke2
Hamish Corlett
David Fite
Catherine Harris
Fiona Pak-Poy
Paul Rickard
1 Appointed Chairman 15 October 2019.
2 Appointed Managing Director 18 October 2019
Non-executive Director, Chair
16 November 2018
TITLE
APPOINTED
Non-executive Director, Chairman (retired 15 October 2019)
18 April 2008
Chief Executive Officer and Managing Director
18 October 2019
Non-executive Director
Non-executive Director
18 April 2019
03 July 2018
Non-executive Director
17 December 2015
Non-executive Director
4 September 2019
Non-executive Director
28 August 2009
155
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
23. RELATED PARTY DISCLOSURES (cont’d)
EXECUTIVES1
Robbie Cooke
Angela Green
Praveenesh Pala
Chief Executive Officer and Managing Director
TITLE
Chief Risk Officer
APPOINTED
23 March 2018
03 June 2019
Chief Financial Officer
20 October 2014
1. Key Management Personnel have been updated in 2020 financial year.
Compensation of Key Management Personnel
Short-term benefits
Long-term benefits (long service leave)
Post-employment benefits (superannuation)
Share-based payments
Total
Interests held by Key Management Personnel
2020
$000
1,708
24
73
3,781
5,586
2019
$000
4,444
22
286
2,413
7,165
Share options and rights held by Key Management Personnel to purchase ordinary shares have the following expiry dates and exercise
prices.
ISSUE YEAR
EXPIRY YEAR
PRICE($)
2020
NUMBER OUTSTANDING
2019
NUMBER OUTSTANDING
EXERCISE
FY13/14
FY13/14
FY14/15
FY14/15
FY15/16
FY15/16
FY16/17
FY16/17
FY16/17
FY17/18
FY17/18
FY17/18
FY18/19
FY18/19
FY18/19
FY18/19
FY18/19
FY18/19
FY19/20
FY19/20
FY19/20
FY20/21
FY19/20
FY21/22
FY19/20
FY22/23
FY19/20
FY23/24
FY23/24
FY19/20
FY23/24
FY24/25
FY24/25
FY24/25
FY25/26
FY28/29
FY29/30
No expiry date
FY26/27
No expiry date
$0.375
$0.375
$0.450
$0.450
$0.600
$0.600
$1.490
$1.490
$1.620
$1.760
$1.760
$1.620
$0.000
$1.760
$1.500
$0.000
$0.000
$0.000
-
61,350
-
281,691
-
221,506
-
207,828
-
-
500,000
-
526,668
1,818,180
2,741,001
1,533,333
200,000
442,397
98,160
234,038
323,945
171,173
252,150
149,959
227,103
200,000
94,166
1,250,000
400,000
745,237
1,818,180
4,599,709
3,200,000
300,000
-
498,587
$1.790
2,833,852
-
$0.000
552,607
-
During the year, 2,833,852 options and 1,065,966 rights were granted to Key Management Personnel.
(b) Transactions with related parties
SaleCo
During the year, Tyro SaleCo Limited (SaleCo), an entity in which Robbie Cooke – CEO and Managing Director of Tyro Payments holds
100% of the shares, was incorporated to acquire shares that were sold by Tyro’s existing shareholders that elected to sell shares as part
of the IPO process. SaleCo held those shares for a short period of time, prior to the shares being transferred to certain individuals that
applied to acquire shares in the IPO.
In total, SaleCo held 58,962,897 shares at a value of $162,147,967, representing 11.9% of the shares on issue as at completion of the IPO.
As at 30 June 2020, SaleCo no longer held any Tyro shares.
(c) Share options with related parties (not under ESOP)
In December 2010, the Company granted 7.5 million share options to related parties for providing a (now expired) loan facility to the
Company for liquidity purposes, which was drawn down and subsequently repaid. These options are not under ESOP.
As at 30 June 2020, 2.6 million options were outstanding with a WAEP of 8 cents.
Euclid Capital Partners, related party of David Fite (Shareholder)1
Total
1. Appointed Director on 3 July 2018.
OUTSTANDING OPTIONS AT THE END OF THE YEAR
2,625,000
2,625,000
24. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
In the opinion of the Directors, there have been no matters or circumstances which have arisen between 30 June 2020 and the date of
this report that have significantly affected or may significantly affect the operations of the Company, the result of those operations or
the state of affairs of the Company in subsequent financial years.
157
Notes to the Financial StatementsTYRO PAYMENTS LIMITED - ANNUAL REPORT 2020Highlights Chair’s Letter CEO’s Report Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information Directors’ Declaration
Independent Auditor’s Report
In the Directors’ opinion:
a. the financial statements and notes set out on pages 116 to 157 are in accordance with the Corporations Act 2001,
including:
i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
ii) giving a true and fair view of the Company’s financial position as at 30 June 2020 and of its performance for the
financial year ended on that date; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
c. the remuneration disclosures set out in the Directors’ Report comply with Accounting Standards AASB 124 Related
Party Disclosures and the Corporations Regulations 2001; and
d. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in the
financial statements.
The Directors have been given the declarations by the Chief Executive Officer and Managing Director and Chief
Financial Officer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
__________________________________
__________________________________
David Thodey AO
Chair
Sydney, 18 August 2020
Robbie Cooke
CEO | Managing Director
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
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Tyro Payments Limited (the Company), which comprises the
statement of financial position as at 30 June 2020, 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)
b)
giving a true and fair view of the Company's financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Review CEO’s Operational & Financial Review Sustainability Report Profiles 5-Year Track Record Directors’ Report Financial Report Additional Information
TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
159
Independent Auditor’s Report
Independent Auditor’s Report
Page 2
Page 3
Recoverability of deferred tax assets
Revenue recognition – merchant service fees
Why significant
How our audit addressed the key audit matter
Why significant
How our audit addressed the key audit matter
The financial statements include $14.0 million in
deferred tax assets. Assessing their
recoverability was subject to significant
judgements made by the Company in forecasting
future taxable profits and determining the
availability and expected timing of utilising the
deferred tax assets against future taxable
income in accordance with tax legislation.
The judgements involve expected business
growth which is dependent upon market and
economic conditions. They include judgements
concerning COVID-19 and the impact the
pandemic may have on the Company’s ability to
earn sufficient future taxable profits.
Accordingly, this was considered to be a key
audit matter.
Disclosures relating to deferred tax assets are
set out in in Note 1: Statement of Accounting
Policies under the section Taxation and also in
Note 4: Income Tax.
Our audit procedures included the following:
• Assessed the mathematical accuracy of the
Company’s deferred tax asset utilisation
model.
• Agreed the amount of unused tax benefits
carried forward as deferred tax assets to
prior period lodged income tax returns.
• Evaluated the Company’s assumptions and
estimates in relation to the likelihood of
generating sufficient future taxable income
based on most recent Board approved
forecasts, prepared by the Company,
principally by performing sensitivity analyses
and evaluating and testing the key
assumptions used to determine the amounts
recognised.
• Evaluated the Company’s consideration of
the impact of COVID-19 in the forecasted
cash flows.
• We considered the consistency of
judgements and assumptions made with
respect to other accounting estimates and
models.
• Assessed the historical accuracy of the
Company’s previous future taxable profit
forecasts by comparing to actual
performance.
•
Involved our tax specialists in reviewing the
Company’s assessment of their ability to
utilise carry forward tax losses in accordance
with income tax legislation.
The Company generated $201.8 million in
revenue from merchant service fees for the year
ended 30 June 2020.
Given the importance of revenue to the users of
the financial statements, specifically as a key
performance indicator for the Company and a
key metric for senior management of the
Company, this was considered to be a key audit
matter.
Our audit procedures included the following:
• Evaluated the Company’s revenue
accounting and assessed whether the
Company’s accounting policies comply with
the requirements of Australian Accounting
Standards.
• Assessed the operating effectiveness of key
controls over revenue recognition.
• For a sample of merchant service fee
revenue transactions, we obtained
supporting evidence such as customer
contracts and transaction records to support
the timing and value of revenue recognised.
• Analysed accounting entries impacting
revenue that did not arise from the system-
generated reporting of underlying
transactions.
IT systems and controls over financial reporting
Why significant
How our audit addressed the key audit matter
The Company’s operations and financial
reporting systems are heavily dependent on IT
systems, including automated accounting
procedures and IT dependent manual controls.
The Company’s controls over IT systems include:
• The framework of governance over IT
systems;
• Controls over program development and
changes;
• Controls over access to programs, data
and IT operations; and
• Governance over generic and privileged
user accounts.
Given the reliance on the IT systems in the
financial reporting process, we considered this to
be a key audit matter.
Our procedures included evaluating and testing the
design and operating effectiveness of certain
controls over the continued integrity of the IT
systems that are relevant to financial reporting.
We also carried out direct tests, on a sample basis, of
system functionality that was key to our audit testing
in order to assess the accuracy of certain system
calculations, the generation of certain reports and
the operation of certain system enforced access
controls.
Where we noted design or operating effectiveness
matters relating to IT system controls relevant to our
audit, we performed alternative audit procedures.
We also considered mitigating controls in order to
respond to the impact on our overall audit approach.
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Independent Auditor’s Report
Page 4
Page 5
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 Company’s 2020 Annual Report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
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.
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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
•
•
•
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 78 to 110 of the directors' report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Tyro Payments Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
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Independent Auditor’s Report
Page 6
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Michael Byrne
Partner
Sydney
18 August 2020
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Additional
Information
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TYRO PAYMENTS LIMITED - ANNUAL REPORT 2020
167
Shareholder
Information
The shareholder information set out below is based on the information recorded in the Tyro Payments Limited share
register as at 31 July 2020.
TOP 20 LARGEST SHAREHOLDERS
ORDINARY SHARES
Tyro has on issue 499,646,563 fully paid ordinary shares.
VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
a. Ordinary shares – On a show of hands every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
b. Options and rights – No voting rights.
SUBSTANTIAL SHAREHOLDERS
The following is a summary of the current substantial shareholders pursuant to notices lodged with the ASX in accordance
with section 671B of the Corporations Act:
NAME
DATE OF INTEREST
NUMBER OF ORDINARY SHARES1
% OF ISSUED CAPITAL2
TDM Growth Partners and its Associates
Gockco Pty Ltd
Danita R. Lowes
Tiger Global Group Entities
FIL Limited and its related entities
6 Dec 2019
6 Dec 2019
6 Dec 2019
11 Dec 2019
10 Jun 2020
68,199,357
69,119,528
27,028,582
39,638,943
31,190,798
13.73%
13.72%
5.44%
7.98%
6.25%
1.
2.
As disclosed in the last notice lodged with the ASX by the substantial shareholder.
The percentage set out in the notice lodged with the ASX is based on the total issued share capital of Tyro at the date of interest.
ON MARKET BUY-BACK
There is no current on-market buy-back in respect of Tyro’s ordinary shares.
DISTRIBUTION OF SECURITIES HELD
Analysis of number of ordinary shareholders by size of holding:
RANGE
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
ORDINARY SHARES1
NUMBER OF HOLDERS
NUMBER OF SECURITIES
189
1,012
1,320
4,201
4,641
449,915,557
27,293,389
9,544,459
10,572,771
2,320,387
11,363
499,646,563
1.
Ordinary shares include shares offered to employees under the Company’s incentive arrangements.
There were no holders of less than a marketable parcel of ordinary shares and there are 242,931,900 ordinary shares
subject to voluntary escrow arrangements.
The names of the 20 largest quoted equity security holders as they appear on the Tyro share register are listed below:
NAME
NUMBER OF SHARES
% OF TOTAL OF SHARES
ORDINARY SHARES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Grokco Pty Ltd as Trustee for Groktrust
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Internet Fund III Pte.Ltd.
Danita Lowes
Invia Custodian Pty Limited
David Fite
Hans-Josef Jost Stollmann
FNL Investments Pty Limited (FNL Inv Pl Staff S Plan)
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Limited
National Nominees Limited
Howarth Commercial Pty Ltd
Jasgo Nominees Pty Ltd ATF Jasgo Family Trust
Abyla Pty Ltd
JH 7 Properties Pty Ltd
Sophia-Konstantina Fiona Stollmann
Drop Knee Investments Pty Ltd
Gorann Pty Ltd Anne Gordon Holdings Super Fund Ac
20
HSBC Custody Nominees (Australia) Limited - A/C 2
63,296,843
52,785,757
47,186,926
39,638,943
27,028,582
20,359,993
18,547,995
16,659,442
13,217,473
9,898,149
7,400,937
6,557,530
6,138,405
4,860,726
3,625,000
3,272,728
3,261,237
3,208,174
3,089,528
2,743,461
12.67
10.56
9.44
7.93
5.41
4.07
3.71
3.33
2.65
1.98
1.48
1.31
1.23
0.97
0.73
0.66
0.65
0.64
0.62
0.55
TOTAL
352,777,829
70.61
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Information (cont’d)
DOMICILE OF ORDINARY SHAREHOLDERS
DOMICILE
NUMBER OF HOLDERS
% HOLDERS
NUMBER OF SHARES
% OF SHARES
Australian Capital Territory
New South Wales
Northern Territory
Queensland
South Australia
Tasmania
Victoria
Western Australia
Overseas
Total
158
5,636
37
1,477
530
108
2,639
674
104
1.39
49.60
0.33
13.00
4.66
0.95
23.22
5.93
0.92
520,314
345,593,626
36,908
7,816,788
2,510,360
297,224
93,492,139
6,362,561
43,016,643
0.10
69.17
0.01
1.56
0.50
0.06
18.71
1.27
8.61
11,363
100.00
499,646,563
100.00
UNQUOTED EQUITY SECURITIES
Performance rights in respect of ordinary shares issued under the Tyro STI
Rights Plan, the Tyro Remuneration Sacrifice Rights Plan and the Liquidity
Event Performance Rights Plan
4,385,940
Options in respect of ordinary shares issued under the Tyro Options Plans
39,414,130
12
356
NUMBER ON ISSUE
NUMBER OF HOLDERS
GO ONLINE TO MANAGE YOUR SHAREHOLDING
Online share registry facility
Tyro offers shareholders the use of an online share registry facility through www.linkmarketservices.com.au or https://
investorcentre.linkmarketservices.com.au/ to conduct standard shareholding enquiries and transactions, including:
• update registered address;
•
lodge or update banking details;
• notify Tax File Number / Australian Business Number;
• check current and previous shareholding balances; and
• appoint a proxy to vote at the Annual General Meeting.
Corporate
Directory
DIRECTORS
David Thodey AO - Chair of the Board
Robbie Cooke – CEO and Managing Director
Hamish Corlett – Non-executive Director
David Fite – Non-executive Director
Catherine Harris AO PSM – Non-executive Director & Chair
of People Committee
Fiona Pak-Poy – Non-executive Director
Paul Rickard – Non-executive Director & Chair of Audit
Committee and Risk Committee
REGISTERED AND PRINCIPAL
ADMINISTRATIVE OFFICE IN
AUSTRALIA
Tyro Payments Limited
1/155 Clarence Street, Sydney, NSW, 2000, Australia
Telephone: 1300 966 639
ABN: 49 103 575 042
WEBSITE ADDRESS
www.tyro.com
AUSTRALIAN SECURITIES
EXCHANGE (ASX) LISTING
Tyro Payments Limited shares are listed on the ASX under
the code TYR.
DIRECTOR PROFILES
Refer to profiles on pages 56 to 59.
EXECUTIVE LEADERSHIP TEAM
Refer to profiles on pages 60 to 63.
SPECIAL COUNSEL AND COMPANY
SECRETARY
Jairan Amigh
email: jamigh@tyro.com
INVESTOR RELATIONS
Giovanni Rizzo
email: grizzo@tyro.com
MEDIA
Matt Johnston
email: mjohnston@tyro.com
AUDITOR
E&Y Australia
200 George Street
Sydney, NSW, 2000, Australia
SHARE REGISTRY
Link Market Services Pty Limited
Level 12, 680 George Street
Sydney, NSW, 2000, Australia
email: registrars@linkmarketservices.com.au
Telephone within Australia 1300 554 474
Telephone outside Australia +61 1300 554 474
Fax +61 2 9287 0303
To maintain or update your details online and enjoy full
access to all your holdings and other valuable information,
simply visit https://investorcentre.linkmarketservices.
com.au.
TYRO ASX ANNOUNCEMENTS
Details of all announcements released by Tyro Payments
Limited can be found on our Investors page at www.tyro/
about-tyro/investors.com.
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