Tyro Payments Limited
ABN 49 103 575 042
Annual Report to Shareholders
Year ended 30 June 2012
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
1
The CEO Report
Building a specialised banking institution (SCCI) for merchants
Tyro Payments Limited (or “Tyro”) is an Australian banking institution accepting electronic payments on behalf of
merchants. Tyro does not take money on deposit.
Tyro holds an authority under the Banking Act to carry on a banking business as a Specialist Credit Card Institution
(SCCI) and operates under the supervision of the Australian Prudential Regulation Authority (APRA). Tyro is a
Principal Member of Visa and MasterCard and a Tier 1 Member of the payment clearing streams BECS and
CECS.
Tyro is an accredited provider for Medicare Australia Easyclaim. Patients can use the Tyro Medicare Easyclaim
solution to claim their Medicare rebate once they have paid their account—the rebate is then paid into their bank
account almost immediately.
Tyro provides an in-house developed, end-to-end solution, authorising, clearing and settling electronic card
payments. Tyro accepts Visa, MasterCard, American Express/JCB, Diners, PIN based EFTPOS as well as
Medicare Easyclaim, gift and loyalty card transactions.
The Tyro solution is IP based and all transactions are processed in real time.
At the end of June 2012, Tyro completed its fifth full fiscal year trading, since the commercial launch of its EFTPOS
facility on 26 April 2007.
Our vision and guiding principles
Tyro Payments provides the Merchant’s EFTPOS and it just works. Tyro listens, understands, develops, integrates
and supports flawless solutions that plug in and just work for the merchant’s business.
Tyro People dare to challenge the EFTPOS Industry and they succeed. Tyros learn, think, respect, debate, decide,
act and grow for a new world where innovation, fairness and transparency prevail.
Tyro shares the wealth and recognition fairly among its many stakeholders. Tyro aspires to build wealth for its staff
and shareholders and to contribute innovation and competition to the Australian banking industry.
Our governance
Whilst senior management has responsibility for day-to-day management, in line with prudential and regulatory
requirements, the Board of Directors (the board) has ultimate responsibility for Tyro’s sound and prudent
management.
In line with best practice and in particular the requirements of APRA Prudential Standard CPS510: Governance,
the board establishes frameworks, policy and direction, supported by operational management. The board also
establishes advisory committees in respect of key aspects of the business which assist it in carrying out its
functions, as well as providing it with expert advice on key issues.
The primary role of the board is to provide effective governance over company affairs, including its strategic
direction, establishing goals for management and monitoring the achievement of those goals, to ensure that the
interests of stakeholders are protected and the confidence of the merchant acquiring market is maintained, whilst
having regard for the interests of all stakeholders including customers, employees and suppliers.
The board currently consists of five directors, with a majority of three directors including the Chairman meeting
APRA’s independence requirements.
The directors of the board have set standards applicable at all levels of Tyro to ensure compliance with the Tyro
Code of Conduct, the Corporations Act 2001, the National Privacy Principles 2001 and the Banking Act 1959 and
all other applicable regulation. The board has established a policy of board renewal that ensures it has the
necessary expertise and general reinvigoration while also maintaining ongoing understanding of Tyro’s business.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
2
The year’s highlight for Tyro was passing the break-even point
In the month of December 2011 and then every month from March 2012 onwards, Tyro delivered a net profit.
Since February 2003, Tyro has been working on developing its technology, gaining access to the banking system
and building its merchant portfolio. After nine years, Tyro has now crossed the monthly break-even point.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
3
Historical financial year summary
Tyro launched its first EFTPOS facility in April 2007. In the following five fiscal years the transaction volume grew
by 125 per cent year on year and the operating income by 92 per cent. The operations, support services and sales
marketing capacity was successively put into place. This led to a 16 per cent annual increase of the total
expenses.
Unaudited information
FY0708
FY0809
FY0910
FY1011
FY1112
Transaction Volume in AUD
115,453,972
510,888,137 1,310,465,042 1,983,290,792 2,950,695,145
Operating Income
870,575
2,580,520
6,578,940
7,694,629
11,873,327
Employment Expenses
3,717,161
3,921,667
4,683,300
5,520,530
7,856,206
Other Expenses
1,994,879
2,800,133
2,938,174
3,646,196
4,227,746
Share based payments
1,013,245
971,875
781,423
133,774
84,503
Total Expenses
Expense Ratio
Interest Expense
EBIT
6,725,285
7,693,675
8,402,897
9,300,500
12,168,455
773%
298%
128%
121%
102%
-
-
-
209,645
233,106
(5,854,710)
(5,113,155)
(1,823,957)
(1,605,871)
(295,128)
EBIT % Change
18%
13%
64%
12%
82%
Building the merchant portfolio
Tyro has grown its merchant portfolio in the health and general retailing space.
Month of
June 2011
Month of
June 2012
Growth
No of merchants or merchant outlets (MID)
4,520
6,351
No of credit and debit card transactions
2,553,213
3,855,041
No of Medicare Easyclaim transactions
804,514
882,169
Value of credit and debit card transactions
$183.1 million
$271.7 million
40.51%
50.99%
9.65%
48.39%
Tyro Health: Medical Practices and Pharmacies
Since launching, Tyro has focused on opportunities within primary care and related health markets. Specifically
Tyro has targeted the installed base of Health Communication Network (HCN). HCN is the leading Australian
provider of e-health and practice automation solutions and addresses both the General Practitioner and Specialist
Practitioner market place.
During the year, Tyro has certified further Point of Sale (POS) software vendors that target specifically the
pharmacy space. We expect to build our presence in that segment further.
Medicare Easyclaim
Tyro has deployed Australia’s first integrated Easyclaim platform. Easyclaim is a real-time Medicare claiming and
reimbursement service for patient-paid and bulk bill claims using an EFTPOS terminal and the EFTPOS network
from the medical practice immediately after the consultation has occurred.
HCN has integrated the Easyclaim platform into its PracSoft practice management system (PMS). The seamless
electronic payment, claiming, reimbursement and reconciliation solution was launched in April 2009. The claim and
Medicare card data is automatically transferred from the PMS, where it resides, through the Tyro EFTPOS terminal
to Medicare and from Medicare back to the PMS for reconciliation.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
4
During the year the integrated Medicare Easyclaim solution was also launched with Blue Chip, HCN’s equivalent
PMS for the specialist medical practices space. Since report date, Tyro has launched Easyclaim with a second
PMS provider Medilink.
Medicare statistics show that in June 2012 there were 8,685,740 million claims for GP Professional Attendances.
During the same month, Tyro processed 881,496 Easyclaim transactions. Thus at this juncture, Tyro is assumed to
process in excess of 10.15% of GP professional attendances in Australia. By end of June 2012, a total of 1,327
HCN practices used integrated Easyclaim.
Tyro Retail
Tyro is continuing to execute its overall strategy of accessing merchants via Point of Sale (POS) vendors. The Tyro
Terminal Adaptor (TTA) enables the POS vendors to implement the EFTPOS integration protocol directly with
Tyro. This means that integration with Tyro TTA no longer requires weeks of effort but merely days and
integrations are far more robust.
As at 30 June 2011, Tyro had 37 certified POS integrations. During the year, Tyro completed integration and
certification with a 12 further POS vendors. Currently, Tyro has 69 certified POS and PMS solutions, 8 POS
solutions in certification and 26 at some stage of development.
The Product Management Team has been working closely with POS providers to deliver integrated reporting,
reconciliation and settlement solutions that automate the end of day processing used by our merchants. There is a
“headless” version of the TTA that allows the POS vendor to provide integrated EFTPOS with his own skin i.e. the
look and feel of his own user interface.
Tyro Hospitality
During the 2011 financial year Tyro launched its integrated Pay at Table solution. This solution permits the
payment terminal to communicate with a restaurants POS over a wireless network, thus permitting pay at table
transactions to be conducted on an integrated basis. There is now a comprehensive suite of features including
tipping at table, tip completion at the POS, splitting amounts and opening bar tabs.
At this stage, Tyro is not aware of any other acquirer that offers similar functionality. As at June 30th 2012 Tyro has
signed up to 664 hospitality merchants.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
5
Leveraging the Internet
The Tyro architecture has brought EFTPOS into the internet age. Tyro removes constraints and enables
businesses, no longer tied to legacy technology, to radically improve the efficiency of their processes.
Merchants can increase transaction speed and lower communication expense by using the public internet or for
larger retail organisations their corporate network.
Software vendors can integrate directly with Tyro eliminating an expensive software and hardware middleware
layer and thus point of failure used by incumbents for aggregation and integration purposes.
Tyro provides the capability of secure integrated credit and debit card processing in a “thin client” (web-based)
infrastructure. At this stage, Tyro is not aware of any other acquirer that offers similar functionality.
Availability
Tyro has maintained 100% uptime with its live-live infrastructure. Even during maintenance downtime merchants
are able to continue to transact as our terminals will automatically connect to any available application switch
within either of our two data centres. When integrated the merchant’s POS also uses either data centre.
During the year, Tyro regularly tested recovery of our infrastructure components and transient network failures.
Security
Since April 2012, all EFTPOS terminals in Australia must support EMV acceptance (Chip cards). 100% of Tyro's
active terminal fleet are accepting chip cards.
While competitors claim exemption from PCI PA DSS, Tyro has retained its accreditation for this certification.
Because of the architecture it uses, Tyro has remained without any merchant or terminal compromises. Its
competitors have not fared so well with their exempted solutions, with a number of reports in the press around card
data compromises.
Tyro did have some minor incidences during the year which it quickly got on top of, upgrading the software to
better protect its merchants. In addition to get on the front foot, Tyro has tightened security in the terminal
application to prevent unreported stolen terminals from being used to commit fraud. This upgrade is being rolled
out now.
Tyro continues to look for ways to enhance the security of its applications. Tyro has commenced implementing
additional fraud controls around refunds, which will be rolled out during the next 6 months.
Environmental Sustainability
Climate change is not simply an environmental issue. It is a key business and social issue which impacts us all.
By the very nature of its innovative internet-based technology, Tyro is contributing to a more sustainable future with
paperless statements, integrated receipt, online reporting and web based documentation. With the development of
integrated receipt Tyro continues to further expand its environmental awareness beyond corporate headquarters to
a growing proportion of its customer base.
Tyro has implemented a company wide recycling program and continues to search for new and efficient ways to
minimise its environmental footprint.
Employees
Tyro employed 68 employees as at 30 June 2012 (compared to 54 employees at 30 June 2011). They are critical
to its continued success. By utilising comprehensive recruitment and pre-screening practices for all employees,
along with at least annual performance management reviews, Tyro endeavours to recruit, retain and suitably
reward the best people in the industry. All employees are offered to participate in the Employee Share Option Plan.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
6
The highlights in the industry
Hype around new mobile payment technologies mainly capitalising on the propagation of smartphones is
invigorating innovation and investment into front-end payment solutions. With NFC, iPhone 5, Apple Passbook,
Google Wallet, Square, PayPal and others, consumers and merchants are daily overwhelmed with news on new
developments in mobile payments and mobile-pass technology.
As these new solutions get adopted, this will result in dramatically increased transaction volumes putting further
stress on the failing back-end legacy core payment systems. Tyro has been very vocal and critical in that regard.
Regulatory environment
The Reserve Bank of Australia (RBA) has concluded its Strategic Review of Innovation in the payment space with
increased engagement and oversight. There are significant efforts under way to reinforce the governance
framework, so as to drive the overdue investments into an open, real-time retail payment infrastructure addressing:
real-time interbank settlement and account posting
•
• network choice in contactless environments
•
• access to the payment system infrastructure
retail payment system reliability
Tyro continues to suffer from constraints due to the challenging eftpos access regime and expansion barriers and
imbalanced and discriminatory structures and behaviours in the payment space. The score card for the industry’s
ability of allowing a new entrant to compete within fair rules and on a level playing field continues to fall short.
If that remains the case, parallel payment worlds will develop without regulatory oversight and thus with all the
risks and failures that this engenders for the community. It is in the public interest to have an open but regulated
payment system where innovation can happen inside the system with trust and security maintained.
The RBA is currently reviewing the domestic debit card system. It has decided to maintain the designation
although narrowing the definition to debit card transactions under the eftpos Payment Australia Limited scheme.
Currently the RBA is reviewing the eftpos access regime and the eftpos interchange fee. The outcome of this
review may have a significant impact on Tyro and the sole acquirer business model in general.
Positioning in the new world
The new world of mobile internet connected POS and EFTPOS devices and of cloud based applications should
play well to Tyro’s strengths of an end-to-end internet acquiring platform and its secure internet integration
architecture. Tyro owning its technology should be able to compete well with bringing innovative solutions fast to
market and with custom tailored features and functions to the requirement of specific vertical market segments.
Currently, Tyro is extending its software partnerships to those vendors that provide selling and payment solutions
in this new cloud world. Tyro proposes the easiest, safest and most reliable direct integration model for new POS
software entrants or incumbents extending their offerings to the new platforms.
Tyro is launching its new desktop colour contactless terminal in October followed by a mobile version mid next
year. While there is a lot of enthusiasm, Tyro has to be recognisant that the real ubiquitous infrastructure for
smartphones and tablets to be capable of handling payments, passes and membership cards is possibly a decade
away. And even then, merchants will have to accept all the older payment instruments, be it cash, check, magnetic
and EMV card, mobile wallet, coupons…
Tyro sees itself as the trusted partner of the software industry and the merchant community navigating through the
proliferation of payment instruments and offering seamless and efficiently integrated solutions.
Strategic choice – further investment
Against the background of all the opportunities arising from new technologies, Tyro intends to invest significantly
into the further build-up of its engineering team. Tyro is currently in the market seeking top notch Java Developers.
This is challenging, since Tyro needs only top talent to work on its mission critical payment and banking
applications. On the other hand Tyro is very unique and attractive marrying agile development methods, with deep
banking knowledge and an opportunity to make a major difference for the Australian community.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
7
Tyro Payments Limited
ABN 49 103 575 042
Directors Report
Year ended 30 June 2012
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
8
CONTENTS
PAGE
Directors’ Report
Independent Auditor Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flow
Statement of Changes in Equity
Notes to the Financial Statements for the year ended 30 June 2012
Note 1 – Statement of Accounting Policies
Note 2 – Revenue and Expense
Note 3 – Income Tax
Note 4 – Cash and Cash Equivalents
Note 5 – Trade and Other Receivables
Note 6 – Inventories
Note 7 – Available for Sale Investments
Note 8 – Property, Plant and Equipment
Note 9 – Share Based Payments
Note 10 – Trade Payables and Other Liabilities
Note 11 – Interest Bearing Loans and Borrowing
Note 12 – Provisions
Note 13 – Long Service Leave Liability
Note 14 – Contributed Equity and Reserves
Note 15 – Financial Risk Management Objectives, Policies and Processes
Note 16 – Commitments and Contingencies
Note 17 – Leases
Note 18 – Segment Reporting
Note 19 – Auditor’s Remuneration
Note 20 – Related Party Disclosures
Note 21 – Matters subsequent to the end of financial year
Directors’ Declaration
Independent Auditor Report
10
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17
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Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
9
Directors Report
The Board of Directors of Tyro Payments Limited has pleasure in submitting its report for the financial year ended
30 June 2012. The names and details of the company’s directors in office during the financial year and until the date
of this report are as follows. All directors were in office for the entire year.
Names, qualifications, experience and special responsibilities:
Kerry Roxburgh, Chairman
Non-executive Director since 18 April 2008
Kerry is currently the Lead Independent non-executive Director of Ramsay Health Care Ltd, and a non-executive
director of the Medical Indemnity Protection Society and of MIPS Insurance Ltd. He is Chairman of the Charter Hall
Group, Tasman Cargo Airlines Ltd and of TEKTUM Ltd. He is Deputy Chairman of Marshall Investments Pty. Ltd.
He is also a member of the Advisory Boards of AON Insurance and of Built Pty. Ltd.
In 2000 he completed a 3 year term as CEO of E*TRADE Australia (a business that he co-founded in 1997),
becoming its non-executive Chairman until June 2007, when it was acquired by the ANZ Bank. Prior to this
appointment he was an Executive Director of Hong Kong Bank of Australia Group where for 10 years from 1986, he
held various positions including Head of Corporate Finance and Executive Chairman of the group’s stockbroker,
James Capel Australia. Until 1986 Mr Roxburgh was in practice for more than 20 years as a Chartered Accountant.
Kerry is a member of the Audit Committee, Remuneration Committee and Risk Committee.
Directorships held over the last three years:
• LawCover Insurance Group – Deputy Chairman (Resigned July 2011)
• Eircom Holdings Limited – Chairman (Resigned January 2010)
• Professional Insurance Australia Limited (Resigned June 2010)
Michael Cannon-Brookes
Non-executive Director since 10 December 2009
Michael is Co-Founder, CEO and director of Atlassian, an innovative, award-winning enterprise software company
based in Australia and established in 2002. Michael was named Australian IT Professional of the Year in 2004,
awarded 'Australian Entrepreneur of the Year' by Ernst & Young in 2006 and honoured by the World Economic
Forum in 2009 as a Young Global Leader. Michael is an active investor and advisor to technology-focused ventures.
Michael is Chairman of the Remuneration Committee and member of the Audit and Risk Committees.
Directorships held during the past three years:
• Atlassian Corporation Pty Limited & Subsidiaries
• Tyro Payments Limited
Rob Ferguson
Non-executive Director since 14 November 2005
Rob began his career as a research analyst for a Sydney stockbroker. He joined Bankers Trust Australia in 1972
and became managing director in 1985. Through his ongoing delivery of higher investment performance, he and
his team built BT Funds Management into the leader in the retail mutual funds business. By mid 1990s, BT had
$50 billion under management. Rob became chairman of BT Funds Management in 1999 until he resigned the
position in 2002. Rob is Chairman of the Risk Committee and a member of the Audit and Remuneration
Committees.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
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Directorships held during the past three years:
• Chairman of GPT Management Holdings Limited
• Deputy Chair of the Sydney Institute
• Director of the Lowy Institute.
• Tyro Payments Limited
• Non-executive Chairman of IMF (Australia) Ltd
• Non-executive Chairman of Primary Health Care Limited
• Chairman of SmartWard Holdings Pty Ltd (appointed Feb-12)
Other previous directorships of listed or unlisted companies held by Rob Ferguson:
• Director of Westfield Holdings Ltd (1994 – 2004)
• Chairman of Vodafone Australia (2000 – 2002)
• Chairman of Nextgen Limited (2000 – 2004)
• Director of Racing NSW (2004 – 2009)
Paul Rickard
Non-executive Director since 28 August 2009.
Paul is the Principal of a financial services consultancy firm, which he established following a 20 year career with
the Commonwealth Bank of Australia. He was previously the Executive General Manager, Payments & Business
Technology and the Chief Information Officer for the Business and Institutional Banks. During his career at the
CBA, Paul was the founding Managing Director of CommSec, which he led from 1994 through to 2002. In 2005,
Paul was named ‘Stockbroker of the Year’ and admitted to the Industry Hall of Fame. Paul is Chairman of the Audit
Committee and member of the Risk Committee.
Directorships held during the past three years:
• Tyro Payments Limited
• National E-Conveyancing Development Limited
• Halidon Asset Management Ltd
• Religare Securities Australia Pty Ltd (ceased)
• Switzer Financial Group Pty Ltd
• Lumus Financial Services Pty Ltd
Jost Stollmann
Director and CEO since 5 April 2005
Jost founded and grew the German system and network integrator CompuNet Computer AG into a US$1B
company, sold it to GE Capital and led the integration and expansion of GE Capital IT Solutions across the
continent as president of Europe. As Federal Shadow Minister of Economy and Technology, he ran and managed
his own election campaign contributing significantly to the landslide victory of the first German government of
Chancellor Gerhard Schröder.
Directorships held during the past three years:
• Tyro Payments Limited
Justin Mitchell
Company Secretary since 12 April 2007
Justin is Company Secretary and Head of Compliance & Risk at Tyro Payments Limited. Justin’s wide risk,
compliance and audit experience includes the design and set up of internal audit functions, design and
implementation of risk frameworks and internal compliance plans and controls. Justin has not held any
directorships during the past three years.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
11
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Tyro Payments Limited were:
Director
Shares
Options
Kerry Roxburgh1
Michael Cannon-Brookes2
Rob Ferguson3
Paul Rickard
Jost Stollmann4
940,182
2,966,667
30,352,950
248,204
1,787,967
2,736,110
4,587,477
1,333,334
53,467,309
17,710,127
1 Includes ordinary shares and options jointly held with Alex Roxburgh as trustees for the Kerry & Alex Roxburgh
Superannuation Fund being associate of Kerry Roxburgh
2 Includes shares and options held by Abyla Pty Ltd and Grokco Pty Ltd being associates of Michael Cannon-Brookes
3 Includes ordinary shares and options held by Torryburn Superannuation Fund and Ordinary Shares and options jointly
held by Simon Peter Price and Rachel Emma Ferguson being associates of Rob Ferguson
4 Includes ordinary shares and options held by Fiona Stollmann being an associate of Jost Stollmann
DIVIDENDS
No dividends have been declared or paid since the date of incorporation.
CORPORATE INFORMATION
Corporate Structure
Tyro Payments Limited (“Tyro”) is an unlisted public company. It is incorporated and domiciled in Australia. The
registered office of Tyro is Level 2, 125 York Street, Sydney, New South Wales, 2000.
Nature of operations and principal activities
Tyro’s principal activities are:
• Credit and Debit Acquiring Services: Tyro is a financial institution providing credit and debit acquiring
services. As such, it has implemented the necessary frameworks, policies, procedures and systems to
comply with the stringent prudential and regulatory requirements to perform electronic transaction
processing, clearing and settlement activities within the Australian banking sector.
• Software development: Tyro’s focus is on using proven modern technology to provide extremely reliable,
secure, low cost and flexible acquiring services to merchants in partnership with the software industry.
As such, Tyro owns its own switching and payment software and has continued to develop this for further
competitive advantage over the course of the year.
There have been no significant changes in the nature of those activities during the year.
OPERATING AND FINANCIAL REVIEW
Overview
Tyro was founded on 3 February 2003 by Peter Haig, Andrew Rothwell and Paul Wood. Two founders Peter Haig
and Andrew Rothwell have maintained their active association with Tyro. In November 2004, Jost Stollmann
became a major investor, then Director and CEO. Kerry Roxburgh joined as non-executive Director on 18 April
2008. He was appointed Chairman of the Board on 19 February 2010.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
12
Tyro positions itself as a specialised institution focused on merchant acquiring acting as a developer of its own
acquiring technology, as a processor of its own transactions and as acquirer of record with its own banking
authority.
Performance Indicators
Reviewing and approving all Tyro business strategies and significant policies, the board ensures that it is satisfied
that all aspects of management and operations conform to its strategy, direction and policies. Additionally, the
board monitors management practice and ensures that senior management adhere to set KPI’s in all spheres of
the business. It practices a rigorous program of board meetings, board committee meetings and the stringent
review of a range of regular management reports encompassing all aspects of the business, including finance,
operations, sales and strategy.
In particular, the board ensures that an effective system of risk management and internal control is established and
maintained, and that senior management proactively monitors the effectiveness of the risk management
framework.
Operating Results for the Year
Tyro reported an operating loss after providing for income tax of $528,234 (2011: $1,815,517 loss).
2012
2011
2010
Revenues
Operating Loss
Revenues
Operating Loss
Revenues
Operating Loss
$28,433,480
$528,234
$19,912,640
$1,815,517
$14,298,130
$1,823,959
One of Tyro’s business partners agreed with Tyro to forego commission payments for the period extending from
the 1 January 2009 to 30 June 2010 in return for a heightened commission payment for the period from the 1 July
2010 to 31 December 2011.
The impact of this agreement decreased losses for FY 0809 by $0.1 million and FY 0910 by $0.9 million. Losses
increased by $0.7 million for FY 1011 and by $0.4 million for FY 1112.
Investments for Future Performance
Tyro has invested significantly in human resources to develop testing of our availability and speed of the switching
and payments system architecture. It has also invested in the purchase of computer servers and networking to
ensure sufficient scalability of the production IT infrastructure to meet the expected demand for acquiring services.
In parallel, the Company has been building the non-engineering capability of the business to support the sales and
operational capability necessary as it scales up its acquiring services.
Currently, Tyro is in the market to hire Java Developers to increase the engineering capacity further.
Capital Structure
During the period, Tyro issued 54,618,733 ordinary shares on 12 December 2011 raising $2,730,936.65 of
additional capital. The capital was raised to ensure Tyro is fully compliant with prudential capital requirements
imposed by APRA and to fund on-going operations.
A further 1,036,232 ordinary shares were issued upon exercise of options on 25 June 2012 raising $65,507.26.
As at 30 June 2012 Tyro had accounts payable of $393,799.
Cash from Operations
Tyro continued to operate at a loss for the 2011/12 financial year, in line with the fact that it still operated under the
heightened commission agreement for the first half of the period, accrued officer bonuses for the prior year,
migrated Officer bonuses and Director compensation from share based payments to cash. Also, Tyro is still in the
phase scaling up the operational business. Tyro had interest income of $794,152, for the period.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
13
Funding
Tyro had cash and cash equivalents of $18,183,122 at the end of the period.
Under its banking authority as a Specialist Credit Card Institution (SCCI), Tyro is subject to a Prudential Capital
Ratio (PCR) set by APRA. The regulatory minima are set in three ways, by a PCR, minimum Tier 1 Ratio and a
minimum Net Tier 1 Capital requirement. The PCR is confidential and cannot be disclosed. APRA requires Tyro to
always maintain a prudent buffer above the regulatory minima.
Internal limits are always above the capital minima and these internal limits currently are:
Level 1
PCR
22%
Tier 1 Ratio
Net Tier 1 Capital
22%
$5.5 million
Total Tier 1 capital held as at 30 June 2012 was $11.5M. Tyro has always held sufficient capital to meet APRA’s
prudential capital requirements.
Risk Management
Tyro is prudentially supervised by APRA and is required to comply with prudential standards and provide quarterly
capital adequacy reporting. Tyro has undertaken improvements to its risk management frameworks, policies,
procedures and systems required to ensure on-going compliance with regulatory requirements and to satisfy both
business needs and external stakeholders.
Statement of Compliance
This report is based on the guidelines in The Group of 100 Incorporated Publication Guide to the Review of
Operations and Financial Condition.
Liquidity
Although Tyro has made operating losses in prior years, this is in line with expectations given that Tyro remains in
the development and scaling up phase of its business. Tyro has maintained its operating loss for the fiscal year
ended 30 June 2012 in line with forecast and holds sufficient cash to pay its debts as and when they become due
and payable. It is also able to manage and control its expenses.
For these reasons the directors believe Tyro is a viable going concern as the next phase of the business plan
approaches; one of a fully operational business.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs.
Significant events after balance date
There are no significant events after balance date.
Likely developments and expected results
The directors expect that in the 2012/13 financial year Tyro will continue to grow the acquiring business and
continue to expand the functionality of electronic transaction acquiring services.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 77,384,544 un-issued ordinary shares under options under the Employee
Share Option Plan.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
14
There are a further 7,500,000 un-issued shares attached to the 17 December 2010 loan facility for $2.5M, these
options expire on 17 December 2020.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the company.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, Tyro has not in respect of any person who is, or has been, an officer or auditor
of the company or of a related body corporate:
Indemnified or made any relevant agreement for indemnifying against a liability, including costs and
expenses in successfully defending legal proceedings with the exception of the general indemnity
provisions contained in the Company's Constitution.
During or since the financial year, Tyro has paid premiums in relation to a contract insuring all of its directors and
officers against legal costs incurred in defending proceedings for conduct involving:
(a) a willful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of
the Corporations Act 2001.
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each director is as follows:
Number of meetings held during the year
Director
Kerry Roxburgh
Michael Cannon-Brookes*
Rob Ferguson
Paul Rickard
Jost Stollmann*
Board
Meetings
Audit
Committee
Risk
Committee
Remuneration
Committee
7
6
4
6
6
6
4
2
4
4
4
4
6
6
4
6
5
6
2
2
2
2
1
2
* Both Michael Cannon-Brookes and Jost Stollmann did not attend one Board Meeting due to declared conflict of interest at that meeting.
Committee Membership
As at the date of this report, Tyro had an Audit Committee, a Risk Committee and a Remuneration Committee of
the Board of Directors. Members acting on the Committees of the Board during the year were:
Audit Committee
P. Rickard (Chairman)
M. Cannon-Brookes
R Ferguson
K Roxburgh
Remuneration Committee
Risk Committee
M. Cannon-Brookes (Chairman)
R. Ferguson
K Roxburgh
R Ferguson (Chairman)
M. Cannon-Brookes
P. Rickard
K Roxburgh
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
15
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
17
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
18
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
19
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
20
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of this financial report are set out below:
The financial report of Tyro Payments Limited (the Company) was authorised for issue in accordance with a resolution of the
directors on 20 September 2012.
Tyro Payments Limited is an unlisted public company, incorporated and domiciled in Australia.
(a) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the Corporations Act
2001and Australian Accounting Standards.
Unless otherwise indicated, all amounts are expressed in Australian Dollars ($).
The financial report has been prepared on the basis of historical cost, with the exception of available for sale financial
instrucments which have been measured at fair value.
The principal accounting policies applied in the preparation of the financial report are set out below. These policies have been
consistently applied to the current year and the comparative period, unless otherwise stated in the relevant note disclosures.
Where necessary, comparative information has been reclassified to be consistent with current period disclosures.
(b) Going concern
The Company is in its sixth year of operation and has made an operating loss of $528,234 (2011: $1,815,517) . It commenced
operations in April 2007 with the launch of stand-alone EFTPOS facilities to the general public and has been incurring losses
since.
The Company has a history of raising sufficient capital to meet the Company's expenditure and prudential capital needs. Tyro
Payments Limited is able to control its expenses. Should current cash levels not be sufficient to meet the Company's
prudential capital requirements, the Company may seek to raise additional funding internally from existing shareholders and/or
externally from additional strategic investors or implement cost reduction measures. Liabilities recognised relate to trade
payables from the course of ordinary operations. No other lending has been sought from financial or other entities.
It is for the above reasons that 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) Statement of compliance
The financial report complies with Australian Accounting standards issued by the Australian Accounting Standards Board and
complies with International Financial Reporting Standards issued by the International Financial Reporting Standards Board.
(d) Accounting standards and interpretations issued but not effective
Australian Accounting Standards and Interpretations, which have recently been issued or amended but are not yet effective
have not been adopted by the Company for the annual reporting period ended 30 June 2012, as outlined in the table below.
These new standards, when applied in future periods, are not expected to have a material impact on the Statement of
Financial Position and Statement of Comprehensive Income of the Company.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
21
Application
date of
standard
Application
date for
Company
1-Jan-13
1-Jul-13
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(d) Accounting standards and interpretations issued but not effective (cont'd)
Reference
Title
Summary
AASB 9
Financial
Instruments
AASB 9 includes requirements for the classification and
measurement of financial assets. It was further amended
by AASB 2010-7 to reflect amendments to the accounting
for financial liabilities.
These requirements improve and simplify the approach for
classification and measurement of financial assets
compared with the requirements of AASB 139. The main
changes are described below.
(a) Financial assets that are debt instruments will be
classified based on (1) the objective of the entity’s business
model for managing the financial assets; (2) the
characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to
present gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income. Dividends in respect of these
investments that are a return on investment can be
recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at
fair value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on
them, on different bases.
(d) Where the fair value option is used for financial
liabilities the change in fair value is to be accounted for
as follows:
► The change attributable to changes in credit risk are
presented in other comprehensive income (OCI)
► The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes in
credit risk are also presented in profit or loss.
Consequential amendments were also made to other
standards as a result of AASB 9, introduced by AASB
2009-11 and superseded by AASB 2010-7 and 2010-10.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
22
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(d) Accounting standards and interpretations issued but not effective (cont'd)
Reference
Title
Summary
AASB 13
Fair Value
Measurement
AASB 13 establishes a single source of guidance for
determining the fair value of assets and liabilities. AASB 13
does not change when an entity is required to use fair value,
but rather, provides guidance on how to determine fair value
when fair value is required or permitted. Application of this
definition may result in different fair values being determined
for the relevant assets.
Application
date of
standard
Application
date for
Company
1-Jan-13
1-Jul-13
AASB 13 also expands the disclosure requirements for all
assets or liabilities carried at fair value. This includes
information about the assumptions made and the qualitative
impact of those assumptions on the fair value determined.
Consequential amendments were also made to other
standards via AASB 2011-8.
AASB 1053 Application of
Tiers of
Australian
Accounting
Standards
This Standard establishes a differential financial reporting
framework consisting of two Tiers of reporting requirements
for preparing general purpose financial statements:
1-Jul-13
1-Jul-13
(a) Tier 1: Australian Accounting Standards; and
(b) Tier 2: Australian Accounting Standards – Reduced
Disclosure Requirements.
Tier 2 comprises the recognition, measurement and
presentation requirements of Tier 1 and substantially reduced
disclosures corresponding to those requirements.
The following entities apply Tier 1 requirements in preparing
general purpose financial statements:
(a) for-profit entities in the private sector that have public
accountability (as defined in this Standard); and
(b) the Australian Government and State, Territory and
Local Government.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
23
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
AASB
2010-2
AASB
2011-9
Amendments to
Australian Accounting
Standards arising from
reduced disclosure
requirements
This Standard gives effect to Australian Accounting
Standards – Reduced Disclosure Requirements.
AASB 1053 provides further information regarding
the differential reporting framework and the two
tiers of reporting requirements for preparing general
purpose
30-Jun-14
1-Jul-14
This Standard requires entities to group items
presented in other comprehensive income on the
basis of whether they might be reclassified
subsequently to profit or loss and those that will not.
1-Jul-12
1-Jul-12
Amendments to
Australian Accounting
Standards –
Presentation of Other
Comprehensive Income
[AASB 1, 5, 7, 101,
112, 120, 121, 132,
133, 134, 1039 & 1049]
(e) Significant accounting judgements, estimates and assumptions
In applying the Company's accounting policies management continually evaluates judgements, estimates and assumptions
based on experience and other factors, including expectations of future events that may have an impact on the Company. All
judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances
available to management. Actual results may differ from judgements, estimates and assumptions. Significant judgements,
estimates and assumptions made by management in the preparation of these financial statements are outlined as follows:
Share-based payments transactions - The Company recognises the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date on which they are granted. The fair value is determined using
the Black-Scholes option valuation model, with the assumptions detailed in Note 9.
Classification of and valuation of investments - The Company classifies its investments in listed securities as 'available -for-
sale' investments and movements in fair values are recognised directly in equity. The fair value of listed shares has been
determined by reference to published price quotations in an active market.
Estimation of useful lives of assets - The estimation of the useful lives of assets has been based on historical experience. In
addition, the condition of the assets is assessed at least once per year and considered against their remaining useful lives.
Adjustments to useful lives are made when considered necessary. Depreciation charges are included in Note 8.
(f) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
24
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(i) Fee income
The Company derives fee income from the following sources:
- Merchant service fee income is generated from merchant customers for credit and debit card acquiring services. Fees are
charged to merchants depending on the type of transaction being performed based on a percentage of transaction value or
on a fixed amount per transaction. Fees related to the payment transactions are recognised at the time transactions are
processed. Interchange fee is recognised as an expense instead of netting-off against merchant service fee income in the
Statement of Comprehensive Income.
- Revenue from terminal rental income generated from merchants is based on a fixed rental from terminals.
- Revenue from DC Interchange generated from banks is based on a fixed fee per transaction and is recognised when
transactions are processed.
- Revenue from gift-card transaction fees generated from merchants is based on a fixed fee per transaction and is recognised
when transactions are processed.
- Revenue from processing Medicare Easyclaim generated from merchants is based on a fixed fee per transaction and is
recognised when transactions are processed.
-Revenue from DCC transactions generated from merchants is based on a fixed fee per transaction and is recognised when
transactions are processed.
(ii) Interest income
- Interest income is recognised in the Statement of Comprehensive Income on an accruals basis, using the effective Interest
method. This 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.
(g) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and whether the arrangement conveys a right to use the asset.
Leases in which the Company retains substantially all the risks and benefits of ownership of the leased asset are classified as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased
asset and recognised as an expense over the lease term on the same basis as lease rental income. Operating lease
payments are recognised as an income or expense in the Statement of Comprehensive Income on a straight-line basis over
the lease term.
Deferred income is recognised as a liability on the Statement of Financial Position on inception of the lease. The deferred
lease incentive is then recognised in the Statement of Comprehensive Income on a straight line basis over the term of the
lease, through lease expense.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. For the
purposes of the Statement of Cash Flows, cash and cash equivalents are reported net of outstanding bank overdrafts.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
25
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(i) Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less an allowance for any uncollectible amounts. Term Deposits are
included in Trade and other receivable.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off
when identified. An allowance for doubtful debts is raised when there is objective evidence that the Company will not be able
to collect the debt.
(j) 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.
(k) Available-for-sale Investments
Available-for-sale investments are initially recognised at fair value plus transaction costs that are directly attributable to the
acquisition of the investment. After initial recognition these investments are measured at fair value. Gains or losses on
available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or
otherwise disposed of or until the investment is determined to be impaired, at which time the cumulative gain or loss
previously reported in equity is transferred to the Statement of Comprehensive Income.
The Company currently does not have any investments categorised as held-for-trading.
Purchase and sale of investments are recognised on settlement date - the date on which the Company receives or delivers
the asset.
(l) Inventories
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 recoverable
amounts. Impairment is assessed on an annual basis (refer to Note 1(p)). Inventories are derecognised upon transfer to
property, plant and equipment when leased out to merchants or rights to benefits are transferred to a third party.
(m) Income Taxes
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or
paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
26
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(n) 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.
Cash flows used in or from operating activities are included in the Statement of Cash Flows on a gross basis and the GST
component of cash flows arising from investing and financing activities, which is recoverable from or payable to the taxation
authority are classified as part of the Company's operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST.
(o) Acquisition of assets
All assets acquired including property, plant and equipment are initially recorded at their cost of acquisition at the date of
acquisition, being the fair value of the consideration provided plus any incidental costs directly attributable to the acquisition.
Expenditure is only recognised as an asset only when it is probable that future economic benefits associated with the asset will
flow to the Company and the cost of the item can be measured reliably. All other expenditure is expensed as incurred.
(p) Recoverable amount of inventory and property, plant and equipment
The carrying amounts of inventory and property, plant and equipment valued on the cost basis are reviewed to determine
whether they are in excess of their recoverable amounts at Statement of Financial Position. If the carrying amount of such an
asset exceeds its recoverable amount, the asset is written down to its recoverable amount.
The write-down is expensed in the reporting period in which it occurs.
The recoverable amount of an asset is the greater of its fair-value-less-costs-to-sell and its value-in-use. In assessing value-in-
use, the estimated future cash flows are discounted to their present values using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
Where a group of assets working together supports the generation of cash inflows, their recoverable amounts are determined
as part of the cash-generating unit to which the group of asset belongs, unless the value-in-use of this group of assets can be
estimated to be close to its fair value.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
27
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(p) Recoverable amount of inventory and property, plant and equipment
The carrying amounts of inventory and property, plant and equipment valued on the cost basis are reviewed to determine whether
they are in excess of their recoverable amounts at Statement of Financial Position. If the carrying amount of such an asset
exceeds its recoverable amount, the asset is written down to its recoverable amount.
The write-down is expensed in the reporting period in which it occurs.
The recoverable amount of an asset is the greater of its fair-value-less-costs-to-sell and its value-in-use. In assessing value-in-use,
the estimated future cash flows are discounted to their present values using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Where a group of assets working together supports the generation of cash inflows, their recoverable amounts are determined as
part of the cash-generating unit to which the group of asset belongs, unless the value-in-use of this group of assets can be
estimated to be close to its fair value.
(q) Property, plant and equipment
(i) Cost and Valuation
Property, plant and equipment are measured at cost less accumulated depreciation and any impairment in value (Note 1 (l)). 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
2012
3 years
5 years
4 years
2011
3 years
5 years
4 years
The assets' residual values, remaining useful lives and depreciation methods are reassessed and adjusted, if appropriate at each
reporting date.
(iii) Impairment
The impairment testing for property, plant and equipment is conducted in accordance with the Accounting Policy in Note 1(o).
(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.
Any expenditure so capitalised is amortised over the period of expected benefit from the related project.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
28
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(r) Trade and other payables
Merchant payables arise when the Company has received monies from the relevant schemes and financial institutions.
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 Tyro.
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.
(s) Interest-bearing loan and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs. After initial recognition, interest-bearing loans and liabilities are subsequently measured at amortised cost
using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part
of the cost of the loans and liabilities. The fair value of the options attached to the loan is also included in the cost of the loan.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for 12 months after the reporting date. Borrowing costs consists of interest and other costs incurred in the borrowing of funds.
(t) Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the impact of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the
risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised
as a finance cost.
Contingent liabilities are not recognised in the Statement of Financial Position, but are disclosed in the relevant notes to the
financial statements. They may arise from uncertainty as to the existence of a liability or represent an existing liability in
respect of which settlement is not probable or the amount cannot be reliably measured. Only when settlement becomes
probable will a liability be recognised.
The Company is contingently liable for processed credit card sales transactions in the event of a dispute between the
cardholder and a merchant. If a dispute is resolved in the cardholder’s favour, the Company will credit or refund the amount to
the cardholder and charge back the transaction to the merchant. If the Company is unable to collect the amount from the
merchant, the Company will bear the loss for the amount credited or refunded to the cardholder.
Management evaluates the risk of such transactions and estimates its potential loss for chargebacks based primarily on
historical experience and other relevant factors. A provision is maintained 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.
(u) General reserve for chargebacks
The Company provisions against credit risk by a general reserve for chargebacks. The Company estimates the reserve by
using a multiple of historical losses over a rolling 120 day period of transaction values. The general reserve for chargebacks is
then allocated as a separate reserve within equity. The methodology and assumptions used for estimating chargeback
provisions are reviewed regularly to reduce any possibilities that uncollectible chargebacks may not have been specifically
identified.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
29
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(v) 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 leaves and other employee benefits that are expected to be
settled within one year have been measured at their nominal amounts.
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.
No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave to be taken in the future
by all employees at reporting date is estimated to be less than the annual entitlement for sick leave.
(w) Share-based payment transactions
Share-based compensation benefits are provided to employees (including Key Management Personnel) via the Employee
Share Option Plan, whereby employees render services in exchange for rights over the Company's shares.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined internally using the Black-Scholes Option
Valuation Model.
The cost of equity-settled transactions is recognised, together with any corresponding increase in equity, over the period in
which the employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent
to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Company, will
ultimately vest. This opinion is based on the best available information at the reporting date. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair
value at grant date.
No expense is recognised for awards that do not ultimately vest. There were no modifications to the terms of the outstanding
options during the financial year. Details of the types of share-based payments and their respective terms and vesting
conditions are disclosed in Note 9.
(x) 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.
(y) 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.
(z) Derecognition of assets and liabilities
Assets and liabilities are derecognised from the Statement of Financial Position upon sale, maturity or settlement. Gains and
losses arising from derecognition of these assets and liabilities are accounted in the Statement of Comprehensive Income.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
30
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
2. REVENUE AND EXPENSES
Fees and commission income
Easyclaim income
DCC commission
Merchant service fee
Debit card interchange fee
Terminal rental income
Development fee
Other fee income
Fees and commission expense
Interchange fees
Switching and settlement fees
Gift card processing expense
Scheme fees
Commissions expense
Other expense
Interest income
Interest on cash at bank and term deposit
Other Income
Gain on disposal of PPE
Net gain on available-for-sale investments
Miscellaneous share income
Engineering expenses
Employee benefits expense
Executive bonuses
Recruitment
Depreciation
Other expenses
Operations expenses
Communication and hosting
Employee benefits expense
Depreciation
Software and hardware maintenance
Terminal management & logistics
Data centre and infrastructure
Other expenses
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
31
2012
$
2,152,863
371,684
2011
$
1,785,018
364,948
20,768,595
13,775,930
1,423,441
2,149,956
147,485
61,401
957,849
1,613,444
26,146
56,443
27,075,425
18,579,778
10,165,037
573,783
22,536
2,406,837
2,782,908
196,666
6,629,829
420,517
18,867
1,999,486
2,500,640
95,732
16,147,767
11,665,071
794,152
794,152
5,689
5,689
920
2,686,510
261,600
84,118
12,986
34,598
615,194
615,194
12,946
12,946
666
2,282,259
-
51,632
22,179
52,357
3,079,812
2,408,427
155,339
1,729,638
918,627
156,087
490,658
171,131
151,043
3,772,523
175,055
1,429,388
791,497
123,991
378,684
155,256
107,980
3,161,851
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
2. REVENUE AND EXPENSES (cont'd)
Sales and marketing expenses
Marketing and branding
Employee benefits expense
Executive Bonuses
Other expenses
Administrative expenses
Employee benefits expense
Directors' remuneration
Executive bonuses
Professional fees
Interconnect and membership
Legal
Telephone and internet
Depreciation
Travel
Office supplies
Insurance
Provision for employee leave (adjustment)/entitlement
Public relations
Recruitment
Utilities
Occupancy expenses
Share based payments expense
Other expenses
Extracted from the above are the following:
Employee benefits expense
Wages, salaries and commissions
Termination payment
Superannuation
Depreciation of non-current assets
Property, plant and equipment
Other expenses
Other Write offs
Bad debt and chargeback loss expense
2012
$
33,872
1,348,031
261,600
115,247
1,758,750
1,129,557
256,202
439,270
356,588
179,259
130,811
73,277
37,961
19,840
61,829
55,827
189,641
40,000
22,474
20,015
434,170
84,503
48,966
2011
$
79,665
903,875
-
20,532
1,004,072
905,009
-
-
317,384
157,759
119,065
42,226
42,101
35,616
52,666
51,967
127,319
-
15,803
15,911
285,097
133,774
51,456
3,580,190
2,353,153
5,785,829
35,206
686,160
6,507,195
969,574
12,461
34,517
46,978
4,804,858
27,270
432,356
5,264,484
855,777
50,616
4,660
55,276
Other Write offs refer to a once of expense taken as a result of the implementation of a system reconciliation of all receivable
and settlement accounts that had been previously unreconciled. This has been initiated in the previous year but was finalised in
the current year.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
32
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
3. INCOME TAX
(a) Income tax expense
The major components of income tax expenses are
Statement of Comprehensive Income
Current income tax
Current income tax charge
Derecognition of deferred tax asset from tax losses*
Deferred income tax
Deferred income tax relating to origination and reversal of temporary differences
Derecognition of deferred income tax from temporary differences*
Income tax expense reported in the statement of comprehensive income
(b) Amount charged or credited directly to equity
Deferred tax on unrealised gain/(loss) on available-for-sale investment
Derecognition of deferred income tax*
Income tax expense reported in equity
(c) Reconciliation between tax expense recognised in statement of comprehensive
income and tax expense calculated per the statutory income tax rate
Accounting profit before income tax
At the statutory income tax rate of 30%
Non deductible expenditure
Other
Derecognition of deferred income tax*
Total
(d) Recognised deferred tax assets and liabilities
(i) Deferred tax assets
Property plant and equipment
Provisions and accruals
Available-for-sale investments
Other
(ii) Deferred tax liabilities
Property plant and equipment
Prepayments
Available-for-sale investments
Other
2012
$
2011
$
(60,078)
60,078
(313,734)
313,734
(228,746)
228,746
-
(343,685)
343,685
-
19,727
(19,727)
-
(2,094)
2,094
-
(528,234)
(158,470)
30,455
(160,808)
288,823
-
(1,815,517)
(544,655)
42,266
(155,030)
657,419
-
133,716
70,352
-
25,575
229,643
-
897
19,727
2,052
22,676
201,734
24,176
2,094
119,249
347,253
-
1,474
-
1,474
Net deferred tax asset/(liability) prior to derecognition
Derecognition of deferred income tax from temporary differences*
Net deferred tax asset recognised in the Statement of Financial Position
206,967
(206,967)
-
345,779
(345,779)
-
* The Company has not recognised any deferred tax on the basis that it does not meet the requirements under AASB 112
Income Taxes. The Company has carry forward tax losses of approximately $21,697,720 (2011: $21,498,261) which are
available for offset against future taxable income subject to meeting relevant statutory tests.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
4. CASH AND CASH EQUIVALENTS
Comparatives for prior period have been restated due to the reclassification of term deposits from "Cash and cash
equivalents" to "Receivables" (Note 5)
Call deposits
Exchange settlement balance
Cash in hand
2012
$
2,264,640
15,917,982
500
2011
$
2,285,245
12,012,732
824
18,183,122
14,298,801
Call deposits earn interest at floating rates based on daily bank deposit rates. The Reserve Bank of Australia (RBA) pays
interest on balances held in exchange settlement accounts at a rate of 25 basis points below the cash rate. Refer to note 16
for details of cash and cash equivalents pledged as security. Term deposits earn interest based on an agreed rate and term.
Reconciliation of operating loss after tax to net cash flows used
in operations
Operating loss for the year
Adjustments for:
Depreciation of non-current assets
Share-based payments and share issuance expense
Gain / Loss on disposal of property plant and
equipment
Changes in assets and liabilities
(Increase) / Decrease in trade and other receivables
(Increase) / Decrease in prepayments
(Increase) / Decrease in inventory
Increase /(Decrease) in trade and other payables
2012
$
2011
$
(528,234)
(1,815,517)
969,574
84,503
(5,689)
(261,561)
(38,972)
(27,444)
4,345,182
855,777
133,774
12,946
229,747
(13,948)
172,731
3,192,655
Net cash used in operating activities
4,537,358
2,768,165
5. TRADE AND OTHER RECEIVABLES
Comparatives for prior period have been restated due to the reclassification of term deposits from "Cash and cash
equivalents" to "Receivables" (Note 4)
Trade debtors
Term deposits
Interest receivable
Other receivables
436,085
1,729,748
21,525
69,992
454,478
1,501,849
21,384
18,078
2,257,350
1,995,789
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
34
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
5. TRADE AND OTHER RECEIVABLES (cont’d)
The Company's ageing of trade and other receivables is as follows:
Current
$
1-30
days*
$
31-60
days*
$
61-90
days*
$
>90
days*
$
401,962
99,323
20,831
2,680
2,806
Trade and other receivables before
impairment
Carrying value 2012 (Total $527,602)
2011 (Total $493,940)
274,602
218,313
1,023
2
-
* These balances are past due net of impairment at reporting date.
6. INVENTORIES
2012
$
2011
$
Terminals and accessories
135,595
108,151
7. AVAILABLE-FOR-SALE INVESTMENTS
Investment in VISA shares
206,839
120,399
These investments were acquired following the demutualisation of VISA International, as a result of which listed VISA shares
were issued to members of the VISA network. All VISA shares were listed on the New York Stock Exchange (NYSE) on 26th
March 2008 with VISA’s certificate of incorporation providing for the mandatory buyback of up to 80% of the common stock
allocated to VISA members out of IPO proceeds as soon as possible after listing.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
35
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
8. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of net carrying amounts at the beginning and end of the year:
Year ended 30 June 2012
At 1 July 2011 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers
Depreciation for the year
At 30 June 2012 net of accumulated
depreciation and impairment
At 1 July 2011
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2012
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 June 2011
At 1 July 2010 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers
Depreciation for the year
At 30 June 2011 net of accumulated
depreciation and impairment
At 1 July 2010
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2011
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
Eftpos
Terminals
$
Furniture
and Office
Equipment
$
Computer
Equipment
$
Total
$
1,063,297
1,129,350
(1,699)
(814,352)
48,051
9,527
-
(21,076)
277,117
94,539
-
(134,146)
1,388,465
1,233,416
(1,699)
(969,574)
1,376,596
36,503
237,510
1,650,608
2,954,383
(1,891,087)
1,063,297
160,059
(112,007)
48,051
1,585,192
(1,308,075)
277,117
4,699,634
(3,311,169)
1,388,465
4,075,953
(2,699,357)
1,376,596
167,276
(130,773)
36,503
1,679,730
(1,442,221)
237,509
5,922,959
(4,272,351)
1,650,608
Eftpos
Terminals
$
Furniture
and Office
Equipment
$
Computer
Equipment
$
Total
$
1,009,498
69,294
261,556
1,340,348
720,721
(8,197)
(658,726)
6,247
-
(27,490)
185,710
(587)
(169,561)
912,678
(8,784)
(855,777)
1,063,296
48,051
277,118
1,388,465
2,254,817
(1,245,319)
1,009,498
159,121
(89,827)
69,294
1,403,179
(1,141,624)
261,556
3,817,118
(2,476,770)
1,340,348
2,954,383
(1,891,087)
1,063,297
160,059
(112,007)
48,051
1,585,192
(1,308,075)
277,117
4,699,634
(3,311,169)
1,388,465
Fully depreciated assets as at 30th June 2012 $1,913,275 (2011: $1,240,429)
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
36
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
9. SHARE-BASED PAYMENTS
The Company will provide benefits to employees and Directors from time to time including share-based payments as
remuneration for service.
(a) Employee Share Option Plan
The Employee Share Option Plan was established to grant options over ordinary shares in the Company to employees or
Directors who provide services to the Company.
Options granted pursuant to the Employee Share Option Plan may be exercised, in whole or part, subject to vesting terms and
conditions as indicated below:
Type of Option
Vesting Terms and Conditions
Linear vesting schedule
Options granted will vest in proportion to the time that passes linearly during the
vesting schedule, subject to maintaining continuous status as an employee or
consultant with the Company during the vesting schedule.
Service vesting schedule
The options vest according to a period of service may be exercised as to a set
number of shares per agreed day of service, as defined in the specific option grant.
Fully vested at time of grant
Options may be exercised as to all shares from the vesting commencement date.
Other relevant terms and conditions applicable to options granted under the Employee Share Option Plan include:
- the term of each option grant shall be 7 years from the date of grant or such shorter term as provided in the Employee Share
Option Plan agreement.
- Each option entitles the holder to one ordinary share.
- All awards granted under the Employee Share Option Plan are equity-settled.
(b) Fair value of options
"The fair vaue of each option is estimated on the date of grant using the Black-Scholes Option Valuation Model. No options
were issued for the year ended 30 June 2012. The table below lists the assumptions used in determining the fair value of the
options granted during the year ended 30 June 2011:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price ($)
2011
0%
74%
4.70% - 5.28%
$0.04
A zero dividend policy assumption is used for valuing all option grants. This is in line with the Company's capital management
policy and growth strategy.
Expected volatility used is the historical volatility of the peer group. The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may not necessarily be the actual outcome.
The average expected life for 7 year options is assumed to be 5 - 6 years from the grant date. The expected life for 10 year
option is assumed to be 5 - 8 years. For all other options with a contractual life of 5 year or less, the expected life is assumed
to be the total contractual life from the date of grant to the expiry date.
There were 1,036,232 options exercised during the year ended 30 June 2012 (2011: 0).
The weighted average remaining contractual life for the share options outstanding as at 30 June 2012 was 4.65 years (2011:
5.65 years).
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
37
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
9. SHARE-BASED PAYMENTS (Cont’d)
The following table summarises further details of the stock options outstanding at 30 June 2012:
Range of Exercise Prices Contractual life
Vesting conditions
No of Outstanding Options
2012
2011
6 cents to 55 cents
10 years or less
5 year linear vesting
19,496,689
20,650,800
6 cents to 45 cents
5 years and 10 years
12 months service
1,565,217
2,434,782
6 cents to 55 cents
3, 5 and 10 years
12 months linear vesting
14,936,349
15,679,793
6 cents to 55 cents
10 years or less
Fully vested at time of grant
29,399,137
31,210,566
Total
65,397,392
69,975,941
The following table illustrates the number and weighted average exercise prices (WAEP) in Cents and movements of share
options during the year:
2012
No
2012
WAEP (Cents)
2011
No
2011
WAEP (Cents)
Linear vesting schedule
Outstanding at the beginning of the year
36,330,593
12
29,762,147
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Fully vested at time of grant
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Service vesting schedule
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
-
(166,667)
(1,730,888)
34,433,038
33,881,821
9,301,317
-
(2,732,871)
36,330,593
31,935,352
8
26
12
12
31,210,566
10
21,782,169
-
-
(1,811,429)
29,399,137
29,399,137
2,434,782
-
(869,565)
-
1,565,217
1,565,217
9,905,804
-
19
(477,407)
7
7
6
6
6
6
31,210,566
31,210,566
2,634,782
-
-
(200,000)
2,434,782
2,434,782
69,975,941
58,333,493
Total outstanding at the end of the year
Total exercisable at the end of the year
65,397,392
57,333,296
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments is disclosed in
Note 2.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
38
22
8
20
12
13
10
6
39
10
10
6
10
6
6
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
10. TRADE PAYABLES AND OTHER LIABILITIES
Merchant payables
Accounts payable
Rent payable
Interest payable
Accruals
Other liabilities
11. INTEREST-BEARING LOANS AND BORROWINGS
Loans from related parties
2012
$
2011
$
8,070,479
4,762,856
393,799
66,894
-
1,176,930
400,259
456,922
-
106,849
475,840
306,720
10,108,361
6,109,187
-
-
2,413,052
2,413,052
On 17 December 2010, Tyro received a loan for liquidity funding purposes. The loan was for $2.5M until 15 January
2012 at a contractual interest rate of 8%.
12. PROVISIONS
Annual leave provision
Balance at the beginning of the year
Provision during the year
Leave taken during the year
Balance at the end of the year
13. LONG SERVICE LEAVE LIABILITY
Balance at the beginning of the year
Provision during the year
Balance at the end of the year
2012
$
295,839
130,630
(44,660)
381,809
2012
$
93,917
103,669
197,585
2011
$
262,438
99,376
(65,975)
295,839
2011
$
-
93,917
93,917
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
39
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
14. CONTRIBUTED EQUITY AND RESERVES
(i) Ordinary Shares
Issued and fully paid
Ordinary shares paid at 5 cents each
Ordinary shares paid at 6 cents each
Ordinary shares paid at 8 cents each
Ordinary shares paid at 10 cents each
Ordinary shares paid at 15 cents each
Ordinary shares paid at 30 cents each
Ordinary shares paid at 45 cents each
Ordinary shares paid at 55 cents each
54,618,733
148,608,005
166,667
3,540,688
10,475,433
32,520,837
8,111,112
11,282,322
2012
$
2011
$
2,730,937
8,916,480
13,333
354,069
-
8,864,306
-
354,069
1,571,315
1,571,315
9,756,251
9,756,251
3,650,001
3,650,001
6,205,277
6,205,277
33,197,663
30,401,219
Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends when declared and, in the event of winding up of the Company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on ordinary
shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Movement in ordinary shares on issue
At 1 July 2010
No shares issued during the year
At 1 July 2011
Shares issued during the year:
- 11 Dec 2011 shares exercised at 5c each
- 19 June 2012 shares exercised at 6c each
- 19 June 2012 shares exercised at 8c each
At 30 June 2012
(ii) Share-based payments reserve
Balance at the beginning of the year
Share-based payments expensed during the year
Balance at the end of the year
Nature and purpose of reserve
No:
Shares
$
213,668,832
30,401,219
-
-
213,668,832
30,401,219
54,618,733
2,730,937
869,565
166,667
52,174
13,333
269,323,797
33,197,663
2012
$
2011
$
6,177,746
6,043,972
84,503
133,774
6,262,249
6,177,746
The share-based payments reserve is used to record the value of share-based payments / benefits provided to any Directors,
employees and consultants as part of their remuneration or compensation.
Refer to Note 9 for further details of these plans.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
40
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
14. CONTRIBUTED EQUITY AND RESERVES (Cont’d)
(iii) General reserve for credit losses:
Balance at the beginning of the year
Transfer to retained earnings
Balance at the end of the year
2012
$
2011
$
142,995
68,403
211,398
95,489
47,506
142,995
The general reserve for credit losses has been created to satisfy Australian Prudential and Regulation Authority (APRA)
prudential standards for Authorised Deposit-Taking Institutions (ADI) to maintain a general reserve for credit losses. The
Company applies an internal methodology to estimate the credit risk of its merchant customers and the maximum expected
losses based upon a number of assumptions concerning the performance of merchants in relation to the Company's credit risk
grading system and actual experience.
(iv) Available-for-sale investment revaluation reserve
Balance at the beginning of the year
Total revaluations for the year
Balance at the end of the year
(v) Option Premium Reserve
Balance at the beginning of the year
Total premium received
Total revaluations for the year
Balance at the end of the year
2012
$
2011
$
38,536
86,439
124,975
166,720
313,600
-
480,320
45,516
(6,980)
38,536
-
-
166,720
166,720
In 2012 consideration of $313,600 was received by the Company to extend the life of some options. In prior year, the option
premium reserve revaluation corresponds to the fair value of the equity instruments issued in consideration for the $2.5 million
loan taken out by Tyro. The fair value of these options has been determined using the Black-Scholes Option Valuation Model.
7,078,942
6,519,016
Total reserves at the end of the year
(vi) Retained losses
Movements in retained losses were as follows:
Retained losses at the beginning of the financial year
(27,769,841)
(25,906,818)
Net loss attributable to shareholders of the Company
Transfer to general reserve for credit losses
(528,234)
(1,815,517)
(68,403)
(47,506)
Retained losses at the end of the financial year
(28,366,478)
(27,769,841)
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
41
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
15. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES
The Company's principal financial instruments include cash and cash equivalents, trade and other receivables, held-to-
maturity investments, available-for-sale financial assets and trade and other payables.
(i) Risk management
The Board is responsible for approving and reviewing the risk management strategy and framework and all risk management
policies. The Board also ensures senior management has identified all risks and that those risks are managed and controlled
appropriately. Senior management is responsible for implementing the Board's approved risk management strategy and for
developing policies, controls, processes and procedures to identify and manage risks in all of the Company’s activities. The
Board has installed a Board Risk Committee to assist the Board in fulfilling its responsibilities in the management of risk. The
Risk Committee overseas matters relating to credit, capital, liquidity, operational and other aspects of risk management.
(ii) Risk controls
Risks are controlled through a system that identifies key risks, establishes controls to manage those risks (with an emphasis
on preventive control), and maintains a regular review process to monitor the effectiveness of controls. Business risks are
controlled within tolerance levels approved by the Risk Committee and Board.
(iii) Internal audit
The Company has an internal audit function which provides independent assurance to the Board on the adequacy and
effectiveness of the control environment and risk framework. Internal Audit also reviews the controls implemented by
management to ensure compliance with APRA's prudential requirements. This program of internal control and audit is
reviewed and approved on a regular basis by the Audit Committee.
(iv) Credit risk
Credit risk represents the loss if counterparties fail to perform as contracted. Credit risk arises from trade receivables, cash
and cash equivalent balances, exposures to merchants and held to maturity investments. The maximum exposure to credit
risk is represented by the carrying amounts of the financial assets at reporting date. The Company's credit risk management
principles define the framework and core values which govern its credit risk taking activities and reflect the priorities
established by the Board.
From these principles flow the development of target market strategies, underwriting standards and credit procedures which
define the operating processes. The operation of a credit risk grading system coupled with ongoing monitoring, reporting and
review allows the Company to identify changes in credit quality at client and portfolio levels and to take corrective actions in a
timely manner.
In addition, the Company is subject to the risk of credit card chargebacks. The maximum period the Company is potentially
liable for such chargebacks is 120 days after the date of the transaction. The Company prudently manages credit risk
associated with its merchant portfolio both at an individual and a portfolio level, by monitoring the concentration of risk by
industry and type of counterparty.
It is the Company's policy that all merchants are subject to credit verification procedures including an assessment of their
independent credit rating, financial position, past experience and industry reputation.
As part of equity, a general provision reserve for credit losses is raised to cover losses due to uncollectible chargebacks that
have not been specifically identified. The reserve is calculated based on estimation of potential credit risk in the merchant
portfolio. The Company does not hold any credit derivatives or collateral to offset its credit exposure. The Company trades
only with recognised, creditworthy third parties and as such no collaterals are requested. Credit exposures are monitored on
an ongoing basis with the result that the Company's exposure to bad debts is not significant at reporting date.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
42
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(iv) Credit risk (Cont’d)
30 June 2012
Standard & Poors Credit Rating*
AAA
AA-
A
unrated
30 June 2011
Standard & Poors Credit Rating*
AAA
AA
A+
unrated
*Long-term credit rating
(v) Operational risk
Cash and balances with
financial institutions
Trade
receivables
15,917,982
2,264,451
190
1,729,748
527,602
Cash and balances with
financial institutions
Trade
receivables
12,012,732
2,285,064
181
1,501,849
493,940
Operational risk is the risk that arises from inadequate or failed internal processes, people and systems, or from external
events. The definition is aligned to the regulatory (Basel II) definition, including legal and regulatory risk but excluding strategic
and reputation risk.
(vi) Market risk
Market risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices or conditions, and comprises interest rate risk, foreign currency risk and other price risk. The Company does not
engage in financial market trading activities nor assume any foreign exchange, interest rate or other derivative positions and
does not have a trading book. The Company does not undertake any hedging around the values of its financial instruments as
any risk of loss is considered insignificant to the operations of the Company.
Any government securities, bank bills or other marketable instruments that the Company holds are for investment or liquidity
purposes and held in the normal course of business in line with investment and liquidity guidelines. Each component of market
risk is detailed below as follows:
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
43
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(a) Interest rate risk
The Company's financial assets and liabilities are subject to interest rate risk as their fair values will fluctuate in accordance with
movements in the market interest rates. The Company has exposure to interest rate risk on its variable interest-bearing cash and
cash equivalent balances. Held-to-maturity investments in treasury bonds are at fixed interest rate rates and as such are not
exposed to any interest rate risk fluctuations. All other financial assets and financial liabilities at reporting date are non-interest
bearing.
The following net exposure to interest rate risk is to be reported at reporting date:
Cash and cash equivalents
18,183,122
14,298,801
Sensitivity analysis:
An increase of 100 basis points in the general cash rate (assuming every other factors being constant) will reduce the Company's
loss after tax and increase equity by $181,831 (2011:$142,988). A decrease of 100 basis points in the general cash rate will have an
equal and opposite effect.
2012
2011
(b) Foreign Currency risk
Tyro is not exposed to foreign currency risk in the settlement of merchant transactions as all monies received and paid are in
Australian Dollars. The Company's settlement of fees with card schemes and the purchases of inventory from foreign suppliers are
transacted in foreign currencies and any balances at reporting date are translated at the exchange rate prevailing the balance sheet
date. At reporting date the Company has some US Dollar and Euro exposure.
The following USD and EUR net exposure is to be reported at reporting date:
Available-for-sale investments-VISA shares
Trade Payables
USD Term Deposit
Sensitivity analysis:
AUD
2012
AUD
2011
USD
EUR
USD
206,839
68,854
120,399
207,153
1,275,635
1,210,541
An appreciation of 15% of the US Dollar and EUR compared to the Australian Dollar (assuming every other factors being constant)
will reduce the Company's loss after tax and increase equity by $212,961.45 (2011: $177,879). A depreciation of 15% of the US
Dollar and EUR compared to the Australian Dollar will increase the company's loss after tax and reduce equity by $370,367.73
(2011:$309,354).
(c ) Other Price Risk
The Company's investment in available-for-sale financial assets is valued by way of reference to an underlying listed equity on the
New York Stock Exchange (NYSE) and as such its fair value will fluctuate in direct proportion with the quoted market price indicated.
However, this investment is not linked to any NYSE Market Index and any form of Price risk as a result of movements caused by any
specific index is considered minimal. No sensitivity analysis has been performed.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
44
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(c ) Other Price Risk
(vii) Liquidity risk
Liquidity risk is the risk that the Company will have insufficient liquidity to meet its obligations as they fall due. This risk is
managed by liquidity forecasting, maintaining adequate cash resources for future expenditure and other financial
commitments. The Company's liquidity risk management policy aims to ensure that enough high quality liquid assets are
always available for the Company's cash flow and liquidity requirements. The company forecasts cash flow and liquidity
needs on a monthly basis with detailed period analysis for critical funding periods such as Christmas. The company also has a
capital plan in place which outlines triggers for required funding should liquidity be required.
At balance sheet date, the board of directors determined that there was sufficient cash resources available to meet its
anticipated expenditure and other financial liabilities.
Year ended 30 June 2012
Liquid financial assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables and other liabilities
Interest-bearing loans and borrowings
Net inflow/(outflow)
Year ended 30 June 2011
Liquid financial assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables and other liabilities
Interest-bearing loans and borrowings
Net inflow/(outflow)
< 6 months
$000
6-12 months
$000
Total
$000
18,183,122
981,715
19,164,837
(10,108,361)
-
(10,108,361)
9,056,476
-
1,275,635
1,275,635
-
-
-
1,275,635
< 6 months
$000
6-12
months
$000
14,298,801
1,995,789
16,294,590
(6,002,337)
-
(6,002,337)
10,292,253
-
-
-
(106,849)
(2,413,052)
(2,519,902)
(2,519,902)
18,183,122
2,257,350
20,440,472
(10,108,361)
-
(10,108,361)
10,332,111
Total
$000
14,298,801
1,995,789
16,294,590
(6,109,187)
(2,413,052)
(8,522,239)
7,772,351
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
45
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(viii) Fair values
The Company uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the
table below.
Year ended 30 June 2012
Quoted
market
price
(Level 1)
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non market
observable
inputs
(Level 3)
Total
Financial Asset
Available for sale
206,839
-
206,839
Year ended 30 June 2011
Quoted
market
price
(Level 1)
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non market
observable
inputs
(Level 3)
Total
Financial Asset
Available for sale
120,399
-
120,399
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date
without any deduction for transaction costs.
For financial instruments not quoted in active markets, the Company uses valuation techniques such as present value
techniques, comparison to similar instruments for which market observable prices exist and other relevant models used by
market participants. These valuation techniques use both observable and unobservable market inputs.
Transfer between categories
There were transfers between Level 1 and Level 2 during the current year. But no transfers between Level 1 and Level 2
during the previous year.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
46
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
(ix) Capital Management
'The Capital Plan is reviewed within the strategic process and is included within the strategic plan and 3 year business plan
(financials) including key performance targets and contingency plans if key performance measures are not met. The Company
maintains capital to cover risks inherent in the business and as aligns its objectives and processes in respect of risk
management around the prudential standards. The adequacy of the Company's capital is regularly monitored and measured
consistent with the rules and requirements of APRA. The Company has an internal policy target ratio above the prudential limit
requirement and includes elements for risk exposures such as market, operations and credit risk.
During the past year, the Company complied in full with APRA's capital minima. In all planning, the Company maintains a
buffer above regulatory capital adequacy requirements to ensure that the level of capital held is appropriate for the level and
type of risks associated with the acquiring business.
Regulatory capital
Tier 1 capital
Tier 2 capital
Total capital
Risk weighted assets
Tier 1 capital ratio
Total capital ratio
Actual
2012
11,479,104
26,878
11,505,981
Actual
2011
8,835,427
14,819
8,850,246
5,275,543
5,462,961
218%
218%
162%
162%
Below defines what APRA considers as Capital:
Tier 1 Capital consists of ordinary shares, general reserves, retained earnings, non-cumulative irredeemable preference
shares (approved by the Board and APRA) and other APRA approved Tier 1 Capital instruments.
Upper Tier 2 Capital consists of general provision for Doubtful Debts and other APRA approved Upper Tier 2 Capital
instruments. Lower Tier 2 Capital (not to exceed 50% of net Tier 1 Capital) consists of APRA approved Term Subordinated
Debt.
The Company does not have any lower Tier 2 Capital (2011: nil).
16. COMMITMENTS AND CONTINGENCIES
Commitments relating to BECS
Contingent liabilities -secured
(I) Irrecoverable standby letters of credit in favour of:
- MasterCard International
- Visa International
(ii) Bank Guarantee in favour of:
- Dukeville Pty Ltd, the lessor of 125 York Street, Sydney
2012
$
2011
$
2,675,635
140,000
2,610,541
140,000
454,113
3,269,748
291,308
3,041,849
The Company has provided an irrevocable standby letter of credit of $2,815,635 secure through fixed charges over term
deposits with the Commonwealth Bank of Australia and Westpac Banking Corporation, to MasterCard International and Visa
International. These are one-year arrangements that are subject to automatic renewal on a yearly basis. MasterCard
International and Visa International, at their discretion, may increase the required amounts of the standby letters of credit upon
written request to the Company. The required amounts of the standby letters of credit are dependent on MasterCard
International's and Visa International's view of their risk exposure to the Company.
A bank guarantee is held with the Westpac Banking Corporation in relation to the lease arrangement for the office premises.
The amount represents 9 month’s rent and is refundable on expiry of the lease agreement, subject to satisfactory vacation of
the leased premises.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
47
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
17. LEASES
(a) Operating lease commitments - Company as lessor
Prior to April 2010, Tyro operated a "rent to own" model whereby ownership of the terminal would transfer to the merchant
once they had made 36 consecutive rental payments. However Tyro bears the risk of repairing or replacing the terminal over
the 3 year period. The merchant would then continue to pay a service and maintenance fee after this period. There is no
minimum rental period for merchants and they are able to terminate with Tyro at any time with no penalty or buy out fees.
From April 2010, the company has moved to a perpetual rental model whereby there will be no transfer of ownership of the
asset and the merchant will pay terminal rental for the duration that they are with Tyro.
Type of Terminals
Cost
Depreciation
Expense
Net
Carrying
Value
814,915
2,362,487
1,547,572
1,713,467
1,151,785
561,682
4,075,954
2,699,357
1,376,597
Xenta
Xentissimo
(b) Operating lease commitments - Company as lessee
Future minimum rentals payable under the non-cancellable
operating leases as at 30 June 2012 are as follows:
- Within one year
- After one year but not more than five years
2012
$
2011
$
544,324
1,548,460
2,092,784
353,100
912,175
1,265,275
The operating lease commitments relates to the lease of the Company's registered office located at 125 York Street, Sydney
NSW. It is a non-cancellable lease with a term of 4 years ending 31 January 2016. The lease agreement provides the
Company with a right of renewal on expiry at which time all terms will be renegotiated. Lease payments are subject to
discretionary annual increases of 4%.
18. SEGMENT REPORTING
The Company operates in one geographical segment being Australia and within one business segment being the provision of
credit and debit card acquiring services to merchants.
19. AUDITOR'S REMUNERATION
Amounts received or due and receivable by Ernst & Young:
- an audit of the financial report of the Company
- other services in relation to the Company
2012
$
2011
$
196,875
190,000
46,255
45,474
243,130
235,474
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
48
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
20. RELATED PARTY DISCLOSURES
(a) Key Management Personnel
The total cash remuneration paid to the Directors and Executives of the Company amounted to $1,669,930 (2011: $944,613).
Details of compensation paid to key management personnel including all monetary and non-monetary components are shown
in the various tables in this note.
Details of Key Management Personnel
Appointed
Resigned
Directors
Kerry Roxburgh
Michael Cannon-Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Non-executive Chairman
Non-executive
Non-executive
Non-executive
Chief Executive Officer
Title
VP Sales and Marketing
Chief Information Officer
Company Secretary
Compensation of Key Management Personnel
Short-term Benefits
Post Employment benefits (superannuation)
Share-based Payments
Total
18-Apr-08
10-Dec-09
14-Nov-05
28-Aug-09
05-Apr-05
01-Jan-07
03-Feb-03
19-Mar-07
2012
$
1,954,130
159,800
13,701
2011
$
817,667
126,947
237,871
2,127,631
1,182,485
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
49
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
20. RELATED PARTY DISCLOSURES (cont’d)
30 June 2012
Directors
Kerry Roxburgh
Michael Cannon-Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
30 June 2011
Directors
Kerry Roxburgh
Michael Cannon-Brookes
Rob Ferguson
Thomas Girgensohn
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Short-term
Benefits
Salary &
Fees
($)
60,000
40,000
40,000
40,000
466,946
491,596
479,815
335,773
1,954,130
Short-term
Benefits
Salary &
Fees
($)
-
-
-
-
-
206,468
244,199
221,331
145,669
817,667
Termination
Benefits
($)
Post
Employment
Superannuation
($)
Share-based
Payments
Options
($)
Total
($)
-
-
-
-
-
-
-
-
-
5,400
3,600
3,600
3,600
43,225
24,942
44,383
31,050
-
-
-
-
65,400
43,600
43,600
43,600
3,101
513,272
2,324
5,647
2,629
518,862
529,845
369,452
159,800
13,701
2,127,631
Termination
Benefits
($)
Post
Employment
Superannuation
($)
Share-based
Payments
Options
($)
Total
($)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,742
21,905
46,080
14,220
18,373
11,066
11,066
5,116
11,066
48,561
18,373
11,066
11,066
5,116
11,066
299,771
43,096
56,651
32,876
309,200
324,062
192,765
126,947
237,871
1,182,485
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
50
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
20. RELATED PARTY DISCLOSURES (cont'd)
Shareholdings of Key Management Personnel and their Related Entities Transactions
Michael Cannon-Brookes
-
2,000,000
Outstanding
at start
of year
Shares
issued/
transferred
during the
year
On exercise
of
options
Outstanding
at end
of year
690,182
-
22,072,348
124,102
41,585,685
2,155,379
5,405,977
-
-
-
-
-
-
-
250,000
966,667
940,182
2,966,667
8,280,602
30,352,950
124,102
248,204
11,881,624
53,467,309
957,946
3,113,325
-
5,405,977
700,000
700,000
72,033,673
2,000,000
23,160,941
97,194,614
Outstanding
at start
of year
Shares
Issued
during the
year
On exercise
Outstanding
of
options
at end
of year
690,182
-
22,072,348
8,533,052
124,102
41,585,685
2,155,379
5,405,977
-
80,566,725
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
690,182
-
22,072,348
8,533,052
124,102
41,585,685
2,155,379
5,405,977
-
80,566,725
30 June 2012
Directors
Kerry Roxburgh
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
30 June 2011
Directors
Kerry Roxburgh
Michael Cannon-Brookes
Rob Ferguson
Thomas Girgensohn
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
51
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
20. RELATED PARTY DISCLOSURES (cont'd)
Option Holdings of Key Management Personnel
Outstanding
at start
of period
1-Jul-11
Options
granted
as
remuneration
Other
movement*
Options
exercised/
expired/forfeited
during the year
Outstanding
at end
of period
2012
Exercisable
at end
of period
2012
30 June 2012
Linear/Service vesting schedule
Directors
Kerry Roxburgh
1,787,967
Michael Cannon-Brookes
1,111,110
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
2,962,477
1,333,334
4,640,464
545,046
2,812,244
595,927
15,788,569
Fully vested at time of grant
Directors
Kerry Roxburgh
250,000
Michael Cannon-Brookes
2,591,667
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
9,905,862
124,102
25,496,742
6,495,820
10,254,809
3,105,538
58,224,540
74,013,109
* Other options transfer or issuance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
966,667
-
-
-
-
-
-
-
-
-
-
1,787,967
1,787,967
1,111,110
2,077,777
2,962,477
2,962,477
1,333,334
1,333,334
436,364
4,204,100
3,790,056
-
-
-
545,046
217,837
2,812,244
2,396,997
595,927
366,069
966,667
436,364
15,352,205
14,932,514
-
250,000
-
-
966,667
966,667
2,591,667
2,591,667
-
-
-
-
8,280,602
1,625,260
1,625,260
124,102
-
-
11,990,715
13,506,027
13,506,027
957,946
5,537,874
5,537,874
(1,666,667)
8,588,142
8,588,142
700,000
700,000
3,105,538
3,105,538
-
-
23,270,032
34,954,508
34,954,508
23,706,396
50,306,713
48,920,355
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
52
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
20. RELATED PARTY DISCLOSURES (cont'd)
Option Holdings of Key Management Personnel
Outstandin
g
at start
of period
1-Jul-10
Options
granted
as
remuneratio
n
Other
movement*
Options
exercised/
expired/forfeite
d
during the year
Outstanding
at end
of period
2011
Exercisable
at end
of period
2011
30 June 2011
Linear/Service vesting schedule
Directors
Kerry Roxburgh
Michael Cannon-
Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
666,667
1,121,300
444,443
666,667
2,328,631
1,349,817
666,667
666,667
666,667
666,667
545,046
2,812,244
595,927
-
-
-
14,183,239
3,787,968
Fully vested at time of grant
Directors
Kerry Roxburgh
Michael Cannon-
Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
250,000
-
-
-
2,591,667
8,280,862
124,102
-
-
1,625,000
-
19,980,438
3,891,304
1,625,000
4,321,907
2,173,913
Peter Haig
7,863,505
2,391,304
Justin Mitchell
1,656,255
1,449,283
42,477,069
9,905,804
5,841,667
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,787,967
1,787,967
1,111,110
1,111,110
32,821
2,962,477
2,962,477
333,333
1,683,151
1,683,151
-
1,333,334
1,333,334
-
-
-
545,046
108,868
2,812,244
2,213,014
595,927
289,520
499,487
17,471,720
15,550,358
-
-
-
-
-
-
-
-
-
250,000
250,000
2,591,667
2,591,667
9,905,862
9,905,862
124,102
124,102
25,496,742
25,496,742
6,495,820
6,495,820
10,254,809
3,105,538
10,254,809
3,105,538
58,224,540
58,224,540
Total
56,660,308
13,693,772
5,841,667
499,487
75,696,260
73,774,898
* Other options transfer or issuance
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
53
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
20. RELATED PARTY DISCLOSURES (cont'd)
Option Terms and Conditions
Stock option grants may be exercised, in whole or in part, subject to vesting terms and conditions indicated below:
Type
Terms and Conditions
Type of Option
Linear vesting
schedule
Vesting Terms and Conditions
Options granted will vest in proportion to the time that passes linearly during the vesting schedule,
subject to maintaining continuous status as an employee or consultant with the Company during the
vesting schedule.
Service vesting
schedule
Options granted will vest in proportion to the time that passes during the vesting schedule, subject to
maintaining continuous status as providing service to the Company during the vesting schedule.
Fully vested at
time of grant
Options may be exercised as to all shares from the grant date.
(b) Transactions with related parties
The following table provides the total amount of transactions that were entered into with related parties for the relevant
financial year. These transactions were on commercial terms & conditions.
2012
2011
Related Party
Health Communications
Network
Rob Ferguson, a director of Tyro Payments is also the Non-Executive Chairman of Primary Health Care Ltd. Health
Communications Network is a subsidiary of Primary Health Care Ltd.
Commissions Paid
2,038,749
2,268,273
$
$
c) Loans from related parties
On 17 December 2010 the company entered into a loan facility of $2,500,000 with four lenders, all of whom being Directors,
major shareholders or related parties for the purpose of funding operational liquidity requirements. The Loan Facility
commenced on 17 December 2010 and ended on 16 January, 2012. Consideration for the facility is 8% p.a. interest rate and
7,500,000 options granted at time of drawdown. The facility was documented and approved by the Board. The interest
expense attributable to the options attached to the loan as at 30 June 2012 was $86,947. No additional rights are attached to
the options. The options do represent an equity instrument and thus have a corresponding reserve against equity in the
Statement of Equity. The term of the options is 10 years and the exercise price is $0.08 per option. The average effective
interest rate including options for the $2,500,000 facility is 15.3%.
Loan Amount
Number of
Options
Interest
paid
Abyla Pty Ltd ABN 92 119 827 593 related party Michael Cannon-
Brookes (Director)
$625,000.00
1,625,000
$27,397.26
Fiona Stollmann related party Jost Stollmann (Director)
$625,000.00
1,625,000
$27,397.26
Euclid Capital Partners ABN 79 937 786 536 related party David Fite
(Shareholder)
$625,000.00
2,625,000
$27,397.26
Robert Alexander Ferguson (Director)
$625,000.00
1,625,000
$27,397.26
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
54
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
20. RELATED PARTY DISCLOSURES (cont’d)
On 17 November 2011 the company entered into a twenty eight day loan facility of $999,999 with three lenders, all of whom
being Directors or related parties for the purpose of funding operational liquidity requirements. Consideration paid consisted of
an Establishment Fee equal to 1% of loan amount, a Line Fee of 1.5% of maximum loan amount and interest equal to 12%
per annum payable on the total outstanding. The facility was documented and approved by the Board.
Abyla Pty Ltd ABN 92 119 827 593 related party Michael Cannon-Brookes (Director)
$333,333.00
$3,068.49
Robert Alexander Ferguson (Director)
$333,333.00
$3,068.49
Fiona Stollmann related party Jost Stollmann (Director)
$333,333.00
$3,068.49
Loan Amount
Interest Paid
On 30 January 2012 the company entered into a seven day loan facility of $999,666 with three lenders, all of whom being
Directors or related parties to Directors for the purpose of funding operational liquidity requirements. Consideration paid was
interest equal to 12% per annum payable on the total outstanding. The facility was documented and approved by the Board.
Abyla Pty Ltd ABN 92 119 827 593 related party Michael Cannon-Brookes (Director)
$333,000.00
$766.36
Euclid Capital Partners ABN 79 937 786 536 related party David Fite (Shareholder)
$333,333.00
$767.12
Fiona Stollmann related party Jost Stollmann (Director)
$333,333.00
$767.12
Loan Amount
Interest Paid
21. MATTERS SUBSEQUENT TO END OF THE FINANCIAL YEAR
No matter or circumstance has arisen subsequent to 30 June 2012 that has affected or may significantly affect:
(a) the Company's operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the Company's state of affairs in future financial years.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
55
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Corporate Information
Directors
Kerry Roxburgh (Chairman)
Mike Cannon-Crookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Company Secretary
Justin Mitchell
Registered Office
Level 2
125 York Street
Sydney NSW 2000
(02) 8907 1700
Solicitors
Cowell Clarke
Level 5, 63 Pirie Street
Adelaide SA 5000
(08) 8228 1111
Auditors
Ernst & Young
680 George Street
Sydney NSW 2000
(02) 9248 5555
Internet Address
www.tyro.com
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2012
59