Tyro Payments Limited
ABN 49 103 575 042
Annual Report
to Shareholders
Year ended 30 June 2013
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
1
The CEO Report
Building a specialised banking institution (SCCI) for merchants
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 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 via the EFTPOS network at the practice. 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, 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. Tyro focusses on the small and
medium business community and their brick and mortar points of business. Tyro embeds its payment solutions into
business software and markets through the respective software partner. At the end of June 2013, Tyro completed
its sixth full fiscal year trading, since the commercial launch of its first 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 merchants.
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 payments industry.
Corporate Governance
This statement outlines our corporate governance framework, policies and practices.
Framework and approach
At all times demonstrate behaviour that is consistent with being a good corporate citizen by acting honestly, fairly,
diligently and in accordance with the law.
All directors, managers, employees and contractors are expected to act with the utmost integrity and objectivity,
striving at all times to enhance the reputation and performance of Tyro. Processes are in place to promote and
communicate these policies. The Board has set a requisite Code of Conduct at all levels. This approach includes a
commitment to governance standards which Tyro sees as intrinsic to the success of our business and our
performance.
Australia
Tyro complies with the Corporations Act and as an ADI must comply with governance requirements prescribed by
APRA under Prudential Standard CPS 510 Governance. The following three key principles apply to the Board and
all employees of Tyro. Directors and employees will act with honesty and integrity; act lawfully and within the spirit
of the law; and act within the spirit of justice and equity.
Over time, Tyro will adopt and report against the ASX Corporate Governance Principles and Recommendations
(ASXCGC Recommendations) published by the ASX Corporate Governance Council (ASXCGC).
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
2
Board
The primary role of the Board is to provide effective governance over company affairs whilst having regard for the
interests of all stakeholders and best corporate governance practices.
• Approve the strategic direction and objectives for Tyro.
• Evaluate the performance of the Board and Board committees
• Manage the succession, remuneration and performance of Board members, the CEO and direct reports of
the CEO.
• Consider and approve Tyro’s annual budget including revenue, profit, capital expenditure and cash flows,
as proposed by management, ensuring appropriate resources are available to achieve the business
objectives.
• Evaluate executive management’s performance in the implementation and achievement of business
objectives and strategies.
• Review and approve capital management policies and plans having regard for the various liquidity and
capital adequacy regulatory requirements applying to Tyro.
• Ensure business risks are identified and approve systems of risk management, regulatory compliance and
control and associated group policies to manage those risks.
• Monitor management’s implementation of, and compliance with, these systems and controls.
• Determine and approve the level of authority to be granted to the CEO in respect of operating and capital
expenditures and credit facilities and authorise the further delegation of those authorities to management
In carrying out its responsibilities and powers as set out in this Charter, the Board will at all times recognise its
overriding responsibility to act honestly, fairly, diligently and in accordance with the law.
Board Audit Committee
The Board Audit Committee assists the Board by providing a non-executive review of the effectiveness of Tyro’s
accounting and financial reporting framework and regulatory compliance.
As detailed in its charter, key responsibilities include oversight of: the integrity of the financial statements and
financial reporting systems; reviewing the external auditor’s qualifications, performance, independence and fees;
reviewing performance of the internal audit function and regulatory compliance.
Board Risk Committee
The primary objective of the Board Risk Committee is to assist the Board in fulfilling its responsibilities in the
management of risk in Tyro.
As set out in its charter, the Board Risk Management Committee provides non-executive oversight of the
implementation and on-going operation of Tyro’s risk management framework. The Board Risk Committee
provides recommendations to the Board on risk appetite; reviews and approves the frameworks for managing risk;
monitors the risk profile, exposures against limits and the management and control of our risks.
Board Remuneration Committee
The primary objective of the Remuneration Committee is to assist the Board in fulfilling its responsibilities in the
management of pay and reward policies and practices and linking these to the overall risk management practices
and risk outcomes.
As set out in its charter, the Board Remuneration Committee conducts regular reviews and makes
recommendations to the Board on the remuneration of the CEO, direct reports of the CEO, and other persons
whose activities may affect the financial soundness of Tyro and any other person specified by APRA.
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 range of financial and other skills, experience and knowledge necessary for
Tyro’s business.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
3
Our market position
The main revenue source for credit and debit card payment acceptance is the $2 billion merchant service fee
(MSF) charged to Australian merchants in FY1213. Tyro’s MSF income increased during the year to $30.7 million.
Balancing continued investment with earnings growth
Since February 2003, Tyro has been working on developing its technology, gaining access to the banking system
and building its merchant portfolio. Tyro launched its first EFTPOS facility in April 2007.
In the month of December 2011 and then every month from March 2012 onwards, Tyro delivered a net profit. With
this year’s result, Tyro has delivered its first profitable fiscal year. The results reflect the balancing of continued
investment and earnings growth
Continuing Operations
Fees and commission income
Fees and commissions expense
Net fees and commissions Income
Jan 13 - June 13 July 12 - Dec 12
$
$
FY 12/13
$
19,319,864
(10,532,755)
8,787,109
18,264,524
(10,651,447)
7,613,078
37,584,389
(21,184,202)
16,400,187
Terminal and accessories sale
Terminal and accessories COGS
Net Terminal and Accessories Sale Income
358,950
(218,993)
139,957
347,608
(214,005)
133,604
706,558
(432,998)
273,560
Interest Income
Other Income
394,470
380,926
775,396
27,808
(3,562)
24,246
Total Operating income
9,349,344
8,124,046
17,473,389
Less: Expenses
Engineering expenses
Operations expenses
Sales and marketing expenses
Administrative expenses
Other expenses
Interest Expense
Total operating expenses
2,131,563
2,232,613
1,113,785
1,764,287
57,131
66,405
7,365,786
1,776,698
2,142,783
951,339
1,887,569
31,039
99,711
6,889,140
3,908,261
4,375,396
2,065,125
3,651,857
88,171
166,116
14,254,926
Foreign currency gain/(loss)
134,040
(59,788)
74,251
Operating profit/(loss) before tax expense
2,117,597
1,175,117
3,292,714
Income tax (expense)/benefit
Income tax (expense)/benefit
6,572,887
-
6,572,887
Net profit/loss for the period
8,690,485
1,175,117
9,865,602
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
4
Historical financial year summary
Over the financial year ended 30 June 2013, the transaction volume grew by 38 per cent for the year and the
operating income by 47 per cent. Over the year there was further significant investment into the engineering and
sales marketing capacity. This led to a 15 per cent annual increase of the total expenses.
Unaudited information
FY0708
FY0809
FY0910
FY1011
FY1112
FY1213
Transaction Volume AUD
115,453,972
510,888,137 1,310,465,042 1,983,290,792 2,950,695,145 4,074,382,050
Operating Income
870,575
2,580,520
6,578,940
7,694,629
11,873,327
17,473,389
Employment Expenses
3,717,161
3,921,667
4,683,300
5,520,530
7,856,206
9,171,707
Other Expenses
1,994,879
2,800,133
2,938,174
3,646,196
4,227,746
4,793,851
Share based payments
1,013,245
971,875
781,423
133,774
84,503
49,001
Total Expenses
Expense Ratio
Interest Expense
6,725,285
7,693,675
8,402,897
9,300,500
12,168,455
14,014,559
773%
298%
128%
121%
102%
80%
-
-
-
209,645
233,106
166,116
EBIT
(5,854,710)
(5,113,155)
(1,823,957)
(1,605,871)
(295,128)
3,458,830
Building the merchant portfolio
Tyro has grown its merchant portfolio in the health and general retailing space.
No of merchants or merchant outlets (MID)
Month of
June 2011
4,520
Month of
June 2012
6,351
Month of
June 2013
8,024
No of credit and debit card transactions
2,553,213
3,855,041
5,268,401
No of Medicare Easyclaim transactions
804,514
882,169
890,000
Value of credit and debit card transactions
$183.1m
$271.7m
$356.1 m
Growth
26%
37%
1%
31%
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.
Last year the integrated Medicare Easyclaim solution was also launched with Blue Chip, HCN’s equivalent PMS for
the specialist medical practices space. In the current year, other practice management software providers like
Abaki Practice 2000 and Medilink have integrated with Tyro. Best Practices is in the development and certification
process. They market and deliver integrated EFTPOS and Medicare Easyclaim to their practices franchise.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
5
Medicare statistics show that in June 2013 there were 8,389,058 million claims for GP Professional Attendances.
During the same month, Tyro processed 890,111 Easyclaim transactions. Thus at this juncture, Tyro is assumed to
process in excess of 10.61% of GP professional attendances in Australia.
By end of June 2013, 2,418 General and Specialist practices had signed up to use Tyro’s Integrated Easyclaim
solution.
Tyro Retail
Tyro is continuing to execute its overall strategy of accessing merchants via Point of Sale (POS) vendors. The Tyro
Terminal Adaptor (TTA) and new iClient enable the POS vendors to implement the EFTPOS integration protocol
directly with Tyro. This means that integration no longer requires weeks of effort but merely days and integrations
are far more robust.
As at 30 June 2013, Tyro has 92 certified POS and PMS solutions, 7 POS solutions in certification and 49 at some
stage of development.
The Product Management Team has been working closely with POS and PMS 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. For 1 April 2013, Visa had
originally announced that PIN would become mandatory and signature was not going to be accepted anymore for
face-to-face transactions. Since the other banks were not ready for the PIN mandate the deadline was extended by
what we estimate to be a year.
With Tyro the patron will not be forced to leave his seat and pay at the cashier using the four digit PIN code, or the
restaurateur will not be forced back into an unintegrated, error prone and inefficient payment process.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
6
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.
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 a company-wide recycling program and continues to search for new and efficient ways to minimise its
environmental footprint.
Employees
Tyro employed 93 employees as at 30 June 2013 (compared to 68 employees at 30 June 2012). Our people are
critical to our 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.
Investments for Future Performance
Tyro has invested significantly in human resources to bed down the 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 continued growth of our 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 software engineers to increase the development capacity further.
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.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
7
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.
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 has launched its new desktop colour contactless terminals which will be followed by a mobile version in the
new 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, cheque,
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 growth
Against the background of all the opportunities arising from new technologies, Tyro intends to invest significantly
into the further build-up of its sales and engineering teams. 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 a very unique and attractive to prospective employees, 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 2013
8
Information for shareholders
We report to shareholders each year, in late August or September, with the Annual Report and then the Annual
General Meeting. We also report half-yearly to shareholders via an email newsletter in January, following the end
of the half-year. A hard copy of the Annual Report can be obtained by contacting the Company Secretary.
Annual General Meeting
The Tyro Annual General Meeting (AGM) will be held at the Hilton Sydney, 488 George Street Sydney NSW 2000
on Thursday, 19 September 2013 commencing at 3pm.
Shareholder Information
For information about your shareholding or to notify a change of address etc., you should contact the company via
the Company Secretary
Phone: (02) 8907 1714
Email: jmitchell@tyro.com
Tyro Payments Limited
Attn: Company Secretary
Level 2
125 York Street
Sydney NSW 2000
Electronic Communications
Shareholders can elect to receive the Annual Report and shareholder newsletters by email. Shareholders who wish to register
or notify a change of their email address should contact the company via the Company Secretary
Tyro Payments Limited
Attn: Company Secretary
Level 2
125 York Street
Sydney NSW 2000
Phone: (02) 8907 1714
Email: jmitchell@tyro.com
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
9
Tyro Payments Limited
ABN 49 103 575 042
Directors Report
Year ended 30 June 2013
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
10
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 2013
Note 1 – Statement of Accounting Policies
Note 2 – Revenue and Expense
Note 3 – Income Tax
Note 4 – Cash and Cash Equivalents
Note 5 – Trade and Other Receivables
Note 6 – Inventories
Note 7 – Available for Sale Investments
Note 8 – Property, Plant and Equipment
Note 9 – Share Based Payments
Note 10 – Trade Payables and Other Liabilities
Note 11 – Provisions
Note 12 – Long Service Leave Liability
Note 13 – Contributed Equity and Reserves
Note 14 – Financial Risk Management Objectives, Policies and Processes
Note 15 – Commitments and Contingencies
Note 16 – Leases
Note 17 – Segment Reporting
Note 18 – Auditor’s Remuneration
Note 19 – Related Party Disclosures
Note 20 – Matters subsequent to the end of financial year
Directors’ Declaration
Independent Auditor Report
10
17
18
19
20
21
22
31
33
34
35
36
36
36
38
40
40
40
41
43
49
50
50
51
51
57
58
59
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
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Directors Report
The Board of Directors of Tyro Payments Limited present their report together with the financial statements for the
financial year ended 30 June 2013.
Directors
The names and details of the company’s directors in office during the financial year and until the date of this report
are Kerry Chisholm Dart Roxburgh, Michael Alexander Cannon-Brookes, Robert Alexander Ferguson, Paul Gordon
Rickard and Hans-Josef Jost Stollmann. All directors were in office for the entire year.
Skills, qualifications, experience and special responsibilities for each director are set out below:
Kerry Roxburgh, Chairman
Non-executive Director since 18 April 2008
Kerry is currently the Lead Independent non-executive Director of Ramsay Health Care Ltd, and a non-executive
director of the Medical Indemnity Protection Society and of MIPS Insurance Ltd. He is Chairman of the Charter Hall
Group and of Tasman Cargo Airlines Ltd. Kerry 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 in the last three years:
• LawCover Insurance Group – Deputy Chairman (Resigned July 2011)
• TEKTUM Limited – Chairman (Resigned January 2013)
Mike Cannon-Brookes
Non-executive Director since 10 December 2009
Michael is Co-Founder, CEO and director of Atlassian, an innovative, award-winning enterprise software company
based in Australia and established in 2002. Michael was named Australian IT Professional of the Year in 2004,
awarded 'Australian Entrepreneur of the Year' by 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. By mid 1990s, BT had $50 billion under management. Rob became
chairman of BT Funds Management in 1999 until he resigned the position in 2002. Rob is Chairman of the Risk
Committee and a member of the Audit and Remuneration Committees.
Directorships held during the past three years:
• Chairman of GPT Management Holdings Limited
• 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)
• Non-executive Watermark Market Neutral Fund Limited (appointed 28-May-13)
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
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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)
• Deputy Chair of the Sydney Institute (1993 – 2013)
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
• Substancia Capital Limited
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
Company Secretary
Our Company Secretary as at 30 June 2013 is Justin Mitchell.
Justin was appointed on 19 March 2007 to build and manage the compliance and risk management frameworks
and oversee Tyro’s regulatory obligations. Justin was appointed Company Secretary on 12 April 2007. Justin’s
wide compliance and risk management experience includes the setup of internal audit functions, design and
implementation of risk frameworks and internal compliance plans and controls.
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.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
13
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
16,496,491
1 Includes ordinary shares and options jointly held with Alex Roxburgh as trustees for the Kerry & Alex
Roxburgh
Superannuation Fund being an associate of Kerry Roxburgh
2 Includes ordinary shares by Abyla Pty Ltd and Grokco Pty Ltd being associates of Michael Cannon-Brookes
3 Includes ordinary shares held by Torryburn Superannuation Fund and Simon Peter Price and Rachel Emma
Ferguson being associates of Rob Ferguson
4 Includes options held by Fiona Stollmann being an associate of Jost Stollmann
Nature of operations and principal activities
Tyro’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
Operating Results for the Year
Tyro reported an operating result before tax of $3,292,714 (2012: $528,234 loss).
2013
2012
2011
Revenues
Operating Profit
Revenues
Operating Loss
Revenues
Operating Loss
$39,066,343
$3,292,714
$28,433,480
$528,234
$19,912,640
$1,815,517
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 Increased losses increased by $0.7 million for FY 1011 and by $0.4 million for FY
1112.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
14
Capital Structure
Tyro is fully compliant with prudential capital requirements prescribed by APRA and has sufficient capital to fund
on-going operations.
During the period, 50,000 ordinary shares were issued upon exercise of options on 25 September 2012 and a
further 80,707 ordinary shares were issued upon exercise of options on 21 January 2013 raising a total of $7,842
additional capital.
As at 30 June 2013 Tyro had accounts payable of $410,094.
Cash from Operations
Tyro has achieved a profit for the 2012/13 financial year. The result is in line with budget after having reached the
milestone of sustained profitability since March 2012. Tyro is still in a phase of high growth and scaling up of the
business. Tyro had interest income of $775,396 for the period.
Funding
Tyro had cash and cash equivalents of $22,945,049 at the end of the period.
Under its banking authority as a Specialist Credit Card Institution, Tyro is subject to a prudential capital
requirements set by the Australian Prudential Regulation Authority (APRA). The prudential capital requirements
set by APRA is confidential and cannot be disclosed. APRA requires Tyro to always maintain a prudent buffer
above the regulatory minima.
Total Tier 1 capital held as at 30 June 2013 was $14.8M. Tyro has always held sufficient capital to meet its internal
targets above APRA’s prudential capital requirements.
Risk Management
The Board is responsible for reviewing and approving the risk management strategy, including determining our
appetite for risk. The Board has delegated to the Board Risk Committee responsibility for providing
recommendations to the Board, setting risk appetite, approving frameworks, policies and processes for managing
risk, and determining whether to accept risks beyond management’s delegated authorities.
The Board Risk Committee monitors the alignment of our risk profile with our risk appetite, and with our current
and future capital planning. The Board Risk Committee receives regular reports from management on the
effectiveness of our management of business risks.
The CEO and management team are responsible for implementing our risk management strategy and frameworks,
and for developing policies, controls, processes and procedures for identifying and managing risk.
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
Tyro has achieved an operating profit for the fiscal year ended 30 June 2013 in line with forecast and holds
sufficient cash to pay its debts as and when they become due and payable. Tyro is also able to manage and
control its expenses.
For these reasons the directors believe Tyro is a viable going concern over the next phase of the business plan;
one of continuing the growth of the company.
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.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
15
Likely developments and expected results
The directors expect that in the 2013/14 financial year Tyro will continue to grow the acquiring business and
continue to expand the functionality of its merchant acquiring services.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 77,842,176 un-issued ordinary shares under options under the Employee
Share Option Plan.
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 the financial year, the company paid a premium in respect of a contract insuring the directors of the
company (named above) and the company secretary against a liability incurred as an officer of the company to the
extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
The company has entered into deeds of access and indemnity with its directors and company secretary which will
indemnify them against liability incurred as an officer of the company to a third party only to the extent permitted by
the Corporations Act.
The company has agreed to indemnify its auditor, Ernst & Young, against a liability incurred as auditor only to the
extent permitted by law.
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each director is as follows:
Board Meetings
Audit
Committee
Risk
Committee
Remuneration
Committee
Meetings held during the year
Director
Kerry Roxburgh
Michael Cannon-Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
6
5
6
5
6
6
Committee Membership
4
3
4
3
4
4
6
5
6
5
6
6
2
2
2
1
2
2
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 2013
16
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
Continuing Operations
Fees and commission income
Fees and commission expense
Net fees and commission Income
Terminal and accessories sale
Terminal and accessories COGS
Net terminal and accessories sale income
Interest Income
Other Income
Total Operating income
Less : Expenses
Engineering expenses
Operations expenses
Sales and marketing expenses
Administrative expenses
Other expenses
Interest Expense
Total operating expenses
Foreign currency gain/(loss)
Operating profit/(loss) before tax expense
Income tax (expense)/benefit
Net income/(loss) for the year
Other Comprehensive Income
Net fair value gain/(loss) on available for sale financial instrument
Total comprehensive income/(loss) for the period
Note
2013
$
2012
$
2
2
2
2
2
2
2
2
2
3
37,584,389
(21,184,202)
16,400,187
706,558
(432,998)
273,560
27,075,425
(16,147,767)
10,927,658
563,903
(418,995)
144,908
775,396
794,152
24,246
6,609
17,473,389
11,873,327
3,908,261
4,375,396
2,065,125
3,651,857
88,171
166,116
14,254,926
3,079,812
3,772,523
1,758,750
3,580,190
46,978
233,106
12,471,359
74,251
69,798
3,292,714
(528,234)
6,572,888
-
9,865,602
(528,234)
52,883
86,439
9,918,485
(441,795)
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 2013
18
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Total Current Assets
Non-current Assets
Available-for-sale investment
Property, plant and equipment
Deferred Tax Assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade payables and other liabilities
Provisions
Total Current Liabilities
Non - current Liabilities
Long service leave liability
Total Non - current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Note
2013
$
2012
$
4
5
6
7
8
3
10
11
12
13
13
13
22,945,051
2,645,742
185,343
374,652
26,150,788
335,945
1,736,810
6,496,664
8,569,419
18,183,122
2,257,350
164,368
135,595
20,740,435
206,839
1,650,608
-
1,857,447
34,720,207
22,597,882
12,025,019
520,969
12,545,988
10,108,361
381,809
10,490,170
288,764
288,764
197,585
197,585
12,834,752
10,687,755
21,885,455
11,910,127
33,205,505
7,255,048
(18,575,098)
33,197,663
7,078,942
(28,366,478)
21,885,455
11,910,127
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
19
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Cash flows from operating activities
Payments to suppliers and employees
Interest and fee income received
Dividend income received
Receipts from Terminals & accessories sale
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from loan
Loan repayment
Interest paid on Loans
Proceeds from exercise of share options
Proceeds from equity fund raising
Net cash flows from financing activities
Net increase in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at beginning of year
Note
2013
$
2012
$
2
4
(33,739,901)
39,039,399
1,381
706,558
6,007,437
(23,708,570)
27,681,105
920
563,903
4,537,358
(1,211,954)
50,469
(1,161,485)
(1,233,416)
7,386
(1,226,030)
5,500,000
(5,500,000)
(166,116)
7,842
-
(158,274)
4,687,678
74,251
18,183,122
1,999,665
(4,499,665)
(106,849)
-
3,110,044
503,195
3,814,523
69,798
14,298,801
Cash and cash equivalents at end of year
4
22,945,051
18,183,122
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
20
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
21
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
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 22 August 2013.
Tyro Payments Limited is an unlisted public company, incorporated and domiciled in Australia.
The nature of the operations and principal activities of the Group are described in the directors’ report.
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report has also been prepared on a historical cost basis, except for available-for-sale
investments, which have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest dollars unless otherwise stated.
(b) Compliance with IFRS
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
(c) Going concern
The Company is in its seventh year of operation and has made an operating profit of $3,292,714 (2012: loss $528,234). 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.
(d) Statement of compliance
The financial report complies with Australian Accounting standards issued by the Australian Accounting Standards Board and
complies with International Financial Reporting Standards issued by the International Financial Reporting Standards Board.
(e) New Accounting standards and interpretations
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 2013, 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.
(i) Changes in account policies
The accounting policies are consistent with those applied in the previous financial year and corresponding interim period.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
22
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
The Company has adopted the following new and amended Australian Accounting Standards and AASB
Interpretations
- AASB 2010-8: Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets
- AASB 2011-9: Amendments to Australian Accounting Standards - Presentation of Other Comprehensive Income [AASB 101]
(ii) Accounting standards and interpretations issued but not effective
Application
date of
standard
Impact on
Company
financial
report
Application
date for
Company
1-Jan-13
None
1-Jul-13
1-Jan-13
None
1-Jul-13
Title (summarised)
Australian
Accounting
Standard
Reference
Fair Value Measurement
AASB 13
AASB 2011-8
Amendments to Australian
Accounting Standards arising
from AASB 13 (September
2011)
[AASB 1,2, 3, 4, 5, 7, 9, 2009-
11, 2010-7, 101, 102, 108, 110,
116, 117, 118,119, 120, 121,
128, 131, 132, 133, 134, 136,
138, 139, 140, 141, 1004, 1023
& 1038 and Interpretations 2, 4,
12 13, 14, 17, 19, 131 & 132]
Employee Benefits
AASB 119
AASB 2011-10
Amendments to Australian
Accounting Standards arising
from AASB 119 (September
2011)
[AASB 1, AASB 8, AASB 101,
AASB 124, AASB 134, AASB
1049 & AASB 2011-8 and
Interpretation 14]
Summary
The main change introduced by this
standard is to revise the accounting for
defined benefit plans. The amendment
removes the options for accounting for the
liability, and requires that the liabilities
arising from such plans is recognized in
full with actuarial gains and losses being
recognized in other comprehensive
income. It also revised the method of
calculating the return on plan assets.
Consequential amendments were also
made to other standards via AASB 2011-
10. This Standard applies to annual
reporting periods beginning on or after 1
January 2013.
The main change introduced by this
standard is to revise the accounting for
defined benefit plans. The amendment
removes the options for accounting for the
liability, and requires that the liabilities
arising from such plans is recognized in
full with actuarial gains and losses being
recognized in other comprehensive
income. It also revised the method of
calculating the return on plan assets.
Consequential amendments were also
made to other standards via AASB 2011-
10. This Standard applies to annual
reporting periods beginning on or after 1
January 2013.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
23
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(ii) Accounting standards and interpretations issued but not effective (cont'd)
Australian
Accounting
Standard
Reference
AASB 2011-4
Title (summarised)
Amendments to Australian
Accounting Standards to
Remove Individual Key
Management Personnel
Disclosure Requirements
Amendments to Australian
Accounting Standards –
Offsetting Financial Assets and
Financial Liabilities
AASB 2012-3
IFRIC Interpretation 21: Levies*
IFRIC 21
IAS 37
Amendments to IAS 36 - Recoverable
Amount Disclosures for Non-Financial
Assets*
IAS 36
Application
date for
Company
1-Jul-13
1-Jul-14
1-Jul-14
Application
date of
standard
1-Jul-13
1-Jan-14
1-Jan-14
Impact on
Company
financial
report
The company
has not yet
determined
the extent of
the impact of
the
amendments,
if any
The company
has not yet
determined
the extent of
the impact of
the
amendments,
if any
The company
has not yet
determined
the extent of
the impact of
the
amendments,
if any
1-Jan-14
1-Jul-14
The company
has not yet
determined
the extent of
the impact of
the
amendments,
if any
Summary
This Standard makes amendments to
remove individual key management
personnel disclosure requirements from
AASB 124. This Standard applies to
annual reporting periods beginning on or
after 1 July 2013. Early adoption of this
Standard is not permitted.
AASB 2012-3 adds application guidance
to AASB 132 Financial Instruments:
Presentation to address inconsistencies
identified in applying some of the offsetting
criteria of AASB 132, including clarifying
the meaning of “currently has a legally
enforceable right of set-off” and that some
gross settlement systems may be
considered equivalent to net settlement.
Applicable for annual reporting periods
beginning on or after 1 January 2014.
Early adoption is permitted.
IFRIC 21 is an interpretation of IAS
37 Provisions, Contingent Liabilities and
Contingent Assets. IAS 37 sets out criteria
for the recognition of a liability, one of
which is the requirement for the entity to
have a present obligation as a result of a
past event (known as an obligating event).
The Interpretation clarifies that the
obligating event that gives rise to a liability
to pay a levy is the activity described in
the relevant legislation that triggers the
payment of the levy.
IFRIC 21 is effective for annual periods
beginning on or after 1 January 2014.
The amendments to IAS 36 Impairment of
Assets address the disclosure of
information about the recoverable amount
of impaired assets if that amount is based
on fair value less costs of disposal. The
amendments clarify the IASB’s original
intention: that the scope of those
disclosures is limited to the recoverable
amount of impaired assets that is based
on fair value less costs of disposal.
The amendments are to be applied
retrospectively for annual periods
beginning on or after 1 January 2014.
Earlier application is permitted for periods
when the entity has already applied IFRS
13.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
24
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(ii) Accounting standards and interpretations issued but not effective (cont'd)
Title (summarised)
Australian
Accounting
Standard
Reference
Financial Instruments
AASB 9
AASB 2010-7
Amendments to Australian
Accounting Standards arising
from AASB 9 (December 2010)
[AASB 1, 3, 4, 5, 7, 101, 102,
108, 112, 118, 120, 121, 127,
128, 131, 132, 136, 137, 139,
1023 & 1038 and Interpretations
2, 5, 10, 12, 19 & 127]
[supersedes AASB 2009-11
which was issued in December
2009]
Summary
Simplifies the classifications of financial
assets into those to be carried at
amortised cost and those to be carried at
fair value. The new standard also:
- simplifies requirements for embedded
derivatives.
- removes the tainting rules associated
with held-to-maturity assets.
- provides an opportunity to fair value
investments in equity instruments to other
comprehensive income, with no separate
impairment test, whilst taking dividends to
income.
- requires entities to reclassify their
financial assets when there is a change in
the entity's business model.
The new standard is available for early
adoption for periods ending on or after 31
December 2009 and is applicable to
annual reporting periods beginning on or
after 1 January 2015, with early
application permitted.
Application
date for
Company
1-Jul-14
Application
date of
standard
1-Jan-15
Impact on
Company
financial
report
The company
has not yet
determined
the extent of
the impact of
the
amendments,
if any
(iii) The adoption of the above Standards and Interpretations is deemed not to have an impact on the financial statements or performance of the
Company.
(f) Significant accounting judgements, estimates and assumptions
In applying the Company's accounting policies management continually evaluates judgements, estimates and assumptions
based on experience and other factors, including expectations of future events that may have an impact on the Company. All
judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances
available to management. Actual results may differ from judgements, estimates and assumptions. Significant judgements,
estimates and assumptions made by management in the preparation of these financial statements are outlined as follows:
Share-based payments transactions - The Company recognises the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date on which they are granted. The fair value is determined using
the Black-Scholes option valuation model, with the assumptions detailed in Note 9.
Classification of and valuation of investments - The Company classifies its investments in listed securities as 'available -for-sale'
investments and movements in fair values are recognised directly in equity. The fair value of listed shares has been determined
by reference to published price quotations in an active market.
Estimation of useful lives of assets - The estimation of the useful lives of assets has been based on historical experience. In
addition, the condition of the assets is assessed at least once per year and considered against their remaining useful lives.
Adjustments to useful lives are made when considered necessary. Depreciation charges are included in Note 8.
Long Service Leave - Entitlements that arise in respect of long service leave which are expected to be settled more than 12
months after the reporting date have been measured at their present values of expected future payments. Long service leave is
calculated based on assumptions and estimates of when employees will take leave and the prevailing wage rates at the time
the leave will be taken. Long service leave liability also requires a prediction of the number of employees that will achieve
entitlement to long service leave.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
25
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(g) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
(i) Fee income
The Company derives fee income from the following sources:
- Merchant service fee income is generated from merchant customers for credit and debit card acquiring services. Fees are
charged to merchants depending on the type of transaction being performed based on a percentage of transaction value or on
a fixed amount per transaction. Fees related to the payment transactions are recognised at the time transactions are
processed. Related interchange fee, which is collected from mercharts and paid to credit institutions is recognised as an
expense instead of netting-off against merchant service fee income in the Statement of Comprehensive Income.
- Revenue from terminal rental income generated from merchants is based on a fixed rental from terminals.
- Revenue from Debit Card Interchange generated from banks is based on a fixed fee per transaction and is
recognised when transactions are processed.
- Revenue from processing Medicare Easyclaim generated from merchants is based on a fixed fee per transaction and is
recognised when transactions are processed.
- Revenue from Dynamic Currency Conversion (DCC) transactions generated from merchants is 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.
(h) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires
an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether
the arrangement conveys a right to use the asset.
Leases in which the Company retains substantially all the risks and benefits of ownership of the leased asset are classified as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased
asset and recognised as an expense over the lease term on the same basis as lease rental income. Operating lease payments
are recognised as an income or expense in the Statement of Comprehensive Income on a straight-line basis over the lease
term.
Deferred income is recognised as a liability on the Statement of Financial Position on inception of the lease. The deferred lease
incentive is then recognised in the Statement of Comprehensive Income on a straight line basis over the term of the lease,
through lease expense.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. For the
purposes of the Statement of Cash Flows, cash and
cash equivalents are reported net of outstanding bank overdrafts.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
26
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(j) Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less an allowance for any uncollectible amounts. Term Deposits are included
in Trade and other receivable.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified. An allowance for doubtful debts is raised when there is objective evidence that the Company will not be able to
collect the debt.
(k) Prepayments
Prepayments are recognised for amounts paid whereby goods have not transferred ownership to the Company or where
services have not yet been provided. Upon receipt of goods or the service the corresponding asset is recognised in the
Statement of Financial Position or the expense is recognised in the Statement of Comprehensive Income.
(l) Available-for-sale Investments
Available-for-sale investments are initially recognised at fair value plus transaction costs that are directly attributable to the
acquisition of the investment. After initial recognition these investments are measured at fair value. Gains or losses on
available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or
otherwise disposed of or until the investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is transferred to the Statement of Comprehensive Income.
Purchase and sale of investments are recognised on settlement date - the date on which the Company receives or delivers the
asset.
(m) Inventories
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(r). 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.
(n) Income Taxes
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or
paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the by the reporting date.
(o) Deferred tax asset
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the reporting date (Note 3).
(p) Other Taxes
Goods and Services Tax (GST)
Revenues, expenses, assets and liabilities are recognised net of the amount of GST except for the following:
- when the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
- trade receivables and trade payables are stated with the amount of GST included.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
27
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(p) Other Taxes (cont’d)
The net amount of GST recoverable from or payable to the taxation authority is included as part of other receivables or other
payables in the Statement of Financial Position.
Commitments and contingencies are disclosed net of the amount of GST.
(q) Acquisition of assets
All assets acquired including property, plant and equipment are initially recorded at their cost of acquisition at the date of
acquisition, being the fair value of the consideration provided plus any incidental costs directly attributable to the acquisition.
Expenditure is 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.
(r) Property, plant and equipment
(i) Cost and Valuation
Property, plant and equipment are measured at cost less accumulated depreciation and any impairment in value. The Company
recognises in the carrying amount of an item of property, plant and equipment the cost of replacing parts when the cost is
incurred and the recognition criteria are met. When each major inspection is performed, its cost is recognised in the carrying
amount of the item of property, plant or equipment, as a replacement, provided that the recognition criteria are satisfied.
(ii) Depreciation
Depreciation is provided on a straight-line basis over the estimated useful life of each specific item of property, plant and
equipment.
Estimated useful lives are as follows:
2013
2012
Plant and equipment:
- EFTPOS terminals
- Furniture and office equipment
- Computer equipment
3 years
5 years
4 years
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
Management has identified cash generating units and applicable impairment indicators in accordance with AASB 136
Impairment of Assets. The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets are written down to their recoverable amount. The recoverable amount of
plant and equipment is the greater of fair value less costs to sell.
(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.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
28
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(s) Trade and other payables
Merchant payables arise when the Company has received monies from the relevant schemes and financial
institutions.
Payables to merchants are only recognised to the extent that a liability arises. This liability arises when the proceeds have been
paid by the schemes and financial institutions and received by the Company.
Liabilities for trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for
goods and services received, whether or not billed to the Company.
(t) Interest-bearing loan and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs. After initial recognition, interest-bearing loans and liabilities are subsequently measured at amortised cost
using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of
the cost of the loans and liabilities. The fair value of the options attached to the loan is also included in the cost of the loan.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for 12 months after the reporting date. Borrowing costs consists of interest and other costs incurred in the borrowing of funds.
(u) Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the impact of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
Contingent liabilities are not recognised in the Statement of Financial Position, but are disclosed in the relevant notes to the
financial statements. They may arise from uncertainty as to the existence of a liability or represent an existing liability in respect
of which settlement is not probable or the amount cannot be reliably measured. Only when settlement becomes probable will a
liability be recognised.
The Company is contingently liable for processed credit card sales transactions in the event of a dispute between the
cardholder and a merchant. If a dispute is resolved in the cardholder’s favour, the Company will credit or refund the amount to
the cardholder and charge back the transaction to the merchant. If the Company is unable to collect the amount from the
merchant, the Company will bear the loss for the amount credited or refunded to the cardholder.
Management evaluates the risk of such transactions and estimates its potential loss for chargebacks based primarily on
historical experience and other relevant factors. A provision is recognised for merchant losses necessary to absorb
chargebacks and other losses for merchant transactions that have been previously processed and on which revenues have
been recorded.
(v) General reserve for chargebacks
The Company provides for estimated future credit losses with a general reserve for chargebacks. The Company estimates the
reserve by using a multiple of historical losses over a rolling 120 day period of transaction values. The general reserve for
chargebacks is then allocated as a separate reserve within equity.
The methodology and assumptions used for estimating general reserve for chargeback required are reviewed regularly.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
29
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1. STATEMENT OF ACCOUNTING POLICIES (cont'd)
(w) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave and long service leave.
Entitlements arising in respect of salaries and wages, annual 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.Long service leave is calculated based on
assumptions and estimates of when employees will take leave and the prevailing wage rates at the time the leave will be taken.
Long service leave liability also requires a prediction of the number of employees that will achieve entitlement to long service
leave.
No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave to be taken in the future
by all employees at reporting date is estimated to be less than the annual entitlement for sick leave.
(x) Share-based payment transactions
Share-based compensation benefits are provided to employees (including Key Management Personnel) via the Employee
Share Option Plan, whereby employees render services in exchange for rights over the Company's shares.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined internally using the Black-Scholes Option
Valuation Model.
The cost of equity-settled transactions is recognised, together with any corresponding increase in equity, over the period in
which the employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent to
which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Company, will
ultimately vest. This opinion is based on the best available information at the reporting date. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair
value at grant date.
No expense is recognised for awards that do not ultimately vest. There were no modifications to the terms of the outstanding
options during the financial year. Details of the types of share-based payments and their respective terms and vesting
conditions are disclosed in Note 9.
(y) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
accounted in contributed equity as a deduction, net of tax, from the proceeds of issue.
(z) 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.
(aa) 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 2013
30
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
2. REVENUE AND EXPENSES
2013
$
2012
$
The Operating loss before tax expense has been arrived at after accounting for the following items:
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
Dividend income on financial instruments
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 2013
31
2,345,418
388,573
30,676,853
1,430,978
2,635,928
58,160
48,479
37,584,389
13,933,485
770,940
18,261
3,172,166
3,076,891
212,459
21,184,202
2,152,863
371,684
20,768,595
1,423,441
2,149,956
147,485
61,401
27,075,425
10,165,037
573,783
22,536
2,406,837
2,782,908
196,666
16,147,767
775,396
775,396
794,152
794,152
22,865
1,381
5,689
920
24,246
6,609
3,536,181
163,500
156,947
20,931
30,702
3,908,261
203,114
2,179,565
1,034,519
168,717
368,880
187,086
233,515
4,375,396
2,686,510
261,600
84,118
12,986
34,598
3,079,812
155,339
1,729,638
918,627
156,087
490,658
171,131
151,043
3,772,523
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
2013
$
2012
$
16,599
1,762,587
163,500
122,439
2,065,125
33,872
1,348,031
261,600
115,247
1,758,750
1,101,504
256,200
264,870
425,365
187,809
84,919
23,952
42,696
20,481
99,774
43,090
230,337
45,000
20,184
28,463
677,218
49,001
50,994
3,651,857
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
3,580,190
7,264,284
106,236
764,408
8,134,928
5,785,829
35,206
686,160
6,507,195
1,098,146
969,574
(1,175)
89,346
88,171
12,461
34,517
46,978
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
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
32
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
3. INCOME TAX
a) Income tax expense
Major components of income tax recognised in statement of comprehensive income for the period ended 30 June 2013
2013
2012
Current Income Tax
Current income tax charge
Unrecognition of deferred tax asset from tax losses *
Prior year under/(over)
Deferred Income Tax
Relating to origination and reversal of temporary differences and tax
losses
Derecognition of deferred income tax from temporary differences*
Income Tax benefit in income
statement:
Amount reported directly in other comprehensive
income
Deferred tax on unrealised gain/(loss) on available-
for-sale investment
Derecognition of deferred income tax from temporary
differences
Income tax expense reported in
equity
b) Reconciliation of income tax expense and prima facie tax:
Operating Profit/(Loss) Before Tax
At the statutory income tax rate of
30%
Research and development
incentive
Share based payment
remuneration
Entertainment
Recognition of previously unrecognised deferred tax
balances
Other
Derecognition of deferred income
tax*
-
-
(60,078)
60,078
-
(6,572,888)
-
(228,746)
228,746
(6,572,888)
-
76,224
19,727
(76,224)
(19,727)
-
-
3,292,714
987,814
(283,327)
14,700
5,709
(7,297,784)
-
(528,234)
(158,470)
(160,808)
25,351
4,837
267
288,823
Total income tax benefit
(6,572,888)
-
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
3. INCOME TAX (cont’d)
c) Deferred income tax
Liability and Assets
2013
2012
Balance Sheet
Income
Statement
other
comprehensive
Income
Balance Sheet
Income
Statement
other
comprehensive
Income
$
$
$
$
$
$
Deferred income tax
assets
Fixed Assets
Provisions & Accruals
Other (Section 40-880)
542,275
501,693
1,248
(542,275)
(501,693)
(1,248)
Tax Losses
5,560,158
(5,560,158)
6,605,374
(6,605,374)
-
-
-
-
-
-
-
-
133,716
70,352
25,575
-
229,643
(133,716)
-
(70,352)
(25,575)
-
-
-
-
(229,643)
-
(897)
897
-
(76,224)
(32,486)
(108,710)
-
32,486
32,486
76,224
-
76,224
(19,727)
-
19,727
(2,052)
(22,676)
2,052
2,949
-
19,727
6,496,663
(6,572,888)
76,224
206,967
(226,694)
19,727
6,496,663
(6,572,888)
76,224
-
-
-
(206,967)
226,694
(19,727)
Deferred income tax
liabilities
Prepayments
Available-for-sale
investments
Unrealised FX gain
Net deferred tax asset
prior to derecognition
Derecognition of
deferred income tax from
temporary differences*
Total
* During the previous year the Company has not recognised any deferred tax on the basis that it did not meet the requirements under AASB
112 Income Taxes.
4. CASH AND CASH EQUIVALENTS
Call deposits
Exchange settlement balance
Cash in hand
2013
$
2012
$
2,206,218
2,264,640
20,738,331
15,917,982
500
500
22,945,049
18,183,122
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
34
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
4. CASH AND CASH EQUIVALENTS (cont'd)
Call deposits earn interest at floating rates based on daily bank deposit rates. The Reserve Bank of Australia (RBA) pays
interest on balances held in exchange settlement accounts at a rate of 25 basis points below the cash rate. Refer to note 15 for
details of cash and cash equivalents pledged as security.
Term deposits earn interest based on an agreed rate and term.
Reconciliation of operating loss after tax to net cash flows used in operations
Operating profit/(loss) for the year
Adjustments for:
Depreciation of non-current assets
Share-based payments expense
Gain on disposal of property plant and equipment
Deferred Tax Benefits
Changes in assets and liabilities
Increase in trade and other receivables
Increase in prepayments
Increase in inventory
Increase in trade and other payables
2013
$
2012
$
9,865,602
(528,234)
1,098,146
969,574
49,001
(22,865)
(6,572,888)
84,503
(5,689)
-
(388,393)
(261,561)
(20,975)
(239,057)
(38,972)
(27,444)
2,238,864
4,345,182
Net cash used in operating activities
6,007,435
4,537,358
5. TRADE AND OTHER RECEIVABLES
Trade debtors
Term deposits
Interest receivable
Other receivables
623,057
436,085
1,855,730
1,729,748
72,834
94,122
21,525
69,992
2,645,743
2,257,350
The Company's ageing of trade and other receivables is as follows:
Trade and other receivables before
impairment
Carrying value 2013 (Total $717,179)
Current
$
1-30
days
$
31-60 days
$
61-90
days
$
>90 days
$
438,880
277,637
660
-
3
2012 (Total $506,077)
380,437
99,323
20,831
2,680
2,806
Movements in the general reserve for credit losses account are detailed in Note 13 and the Company's accounting policy is
outlined in Note 1(v).
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
35
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
6. INVENTORIES
2013
$
2012
$
Terminals and accessories
374,652
135,595
7. AVAILABLE-FOR-SALE INVESTMENTS
Investment in VISA shares
335,945
206,839
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 buy-back of up to 80% of the common stock
allocated to VISA members out of IPO proceeds as soon as possible after listing.
8. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of net carrying amounts at the beginning and end of the year:
Eftpos
Terminals
Furniture
and Office
Computer
Equipment
Total
$
Equipment $
$
$
Year ended 30 June 2013
At 1 July 2012 net of accumulated
depreciation and impairment
Additions/transfers
Disposals/transfers*
Depreciation for the year
At 30 June 2013
net of accumulated depreciation
1,376,596
1,021,632
(27,606)
(961,587)
36,503
63,047
-
237,509
127,275
-
1,650,609
1,211,954
(27,606)
(21,259)
(115,300)
(1,098,146)
and impairment
1,409,036
78,291
249,485
1,736,810
At 1 July 2012
Cost or fair value
Accumulated depreciation and
impairment
Net carrying amount
At 30 June 2013
Cost or fair value
Accumulated depreciation and
impairment
Net carrying amount
4,075,953
(2,699,357)
167,276
1,679,730
(130,773)
(1,442,221)
5,922,959
(4,272,351)
1,376,596
36,503
237,509
1,650,608
5,001,799
(3,592,763)
230,324
(152,033)
1,807,005
(1,557,520)
7,039,128
(5,302,316)
1,409,036
78,291
249,485
1,736,810
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
36
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
8. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Eftpos
Terminals
Furniture
and Office
Computer
Equipment
Total
$
Equipment $
$
$
1,063,297
1,129,350
(1,699)
(814,352)
48,052
9,527
-
277,117
94,539
-
(21,076)
(134,146)
1,388,466
1,233,416
(1,699)
(969,574)
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
1,376,596
36,503
237,509
1,650,608
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
2,954,383
(1,891,087)
160,059
(112,007)
1,585,192
4,699,634
(1,308,075)
(3,311,169)
1,063,297
48,051
277,117
1,388,465
4,075,953
(2,699,357)
167,276
(130,773)
1,679,730
5,922,959
(1,442,221)
(4,272,351)
1,376,596
36,503
237,509
1,650,608
Fully depreciated assets as at 30th June 2013 $3,754,171 (2012 : $1,913,275)
* Disposals are net of depreciation
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
37
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
9.SHARE-BASED PAYMENTS
The Company will provide benefits to employees and Directors from time to time including share-based payments as
remuneration for service.
(a) Employee Share Option Plan
The Employee Share Option Plan was established to grant options over ordinary shares in the Company to employees or
Directors who provide services to the Company.
Options granted pursuant to the Employee Share Option Plan may be exercised, in whole or part, subject to vesting terms and
conditions as indicated below:
Type of Option
Vesting Terms and
Conditions
Linear vesting schedule Options granted will vest in proportion to the time that passes linearly during the vesting schedule,
subject to maintaining continuous status as an employee or consultant with the Company during the
vesting schedule.
Service vesting
schedule
The options vest according to a period of service may be exercised as to a set number of shares per
agreed day of service, as defined in the specific option grant.
Fully vested at time of
grant
Options may be exercised as to all shares from the vesting commencement date.
All option grants must be held for a minimum period commencing on the date on which the options are granted and
continuing until the earlier of:
- the date which is 3 years after the date on which options are granted; or
- the date on which the Participant ceases employment with the Company.
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. The table
below lists the assumptions used in determining the fair value of the options granted during the year ended 30 June 2013:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price ($)
2013
0%
74%
2.64% - 5.28%
$0.04
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
38
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
9.SHARE-BASED PAYMENTS (cont’d)
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 130,707 options exercised during the year ended 30 June 2013 (2012: 1,036,232).
The weighted average remaining contractual life for the share options outstanding as at 30 June 2013 was 5.0 years (2012:
4.65 years).
The following table summarises further details of the stock options outstanding at 30 June 2013:
Range of Exercise
Prices
Contractual life
Vesting
conditions
No of Outstanding Options
2013
2012
6 cents to 55 cents
10 years or less
5 year linear vesting
20,478,093
19,496,689
6 cents to 45 cents
5 years and 10 years
12 months service
1,565,217
1,565,217
6 cents to 55 cents
3, 5 and 10 years
12 months linear vesting
12,848,031
14,936,349
6 cents to 55 cents
10 years or less
Fully vested at time of grant
29,235,501
29,399,137
Total
64,126,842
65,397,392
The following table illustrates the number and weighted average exercise prices (WAEP) in Cents and movements of share
options during the year:
2013
No
2013
WAEP
(Cents)
2012
No
2012
WAEP
(Cents)
Linear vesting schedule
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Fully vested at time of grant
34,433,038
2,004,501
(130,707)
(2,980,708)
33,326,124
33,021,123
Outstanding at the beginning of the year
29,399,137
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
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
-
-
(163,636)
29,235,501
29,235,501
39
12
11
6
17
12
12
7
55
7
7
36,330,593
-
(166,667)
(1,730,888)
34,433,038
33,881,821
31,210,566
-
-
(1,811,429)
29,399,137
29,399,137
12
8
26
12
12
10
19
7
7
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
9.SHARE-BASED PAYMENTS (cont’d)
Service vesting schedule
Outstanding at the beginning of the year
1,565,217
Granted during the year
Exercised during the year
Forfeited/expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Total outstanding at the end of the year
Total exercisable at the end of the year
-
-
-
1,565,217
1,565,217
64,126,842
63,821,841
6
6
6
6
6
6
6
2,434,782
-
(869,565)
-
1,565,217
1,565,217
65,397,392
64,846,175
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments is disclosed in Note
2.
10. TRADE PAYABLES AND OTHER LIABILITIES
2013
$
2012
$
9,558,841
410,094
8,070,479
393,799
59,249
66,894
1,331,656
1,176,930
665,179
400,259
12,025,019
10,108,361
2013
$
2012
$
381,809
295,839
192,584
130,630
(53,423)
(44,660)
520,969
381,809
2013
$
2012
$
197,585
93,917
91,179
103,669
288,764
197,585
Merchant payables
Accounts payable
Rent payable
Accruals
Other liabilities
11. PROVISIONS
Annual leave provision
Balance at the beginning of the year
Provision during the year
Leave taken during the year
Balance at the end of the year
12. LONG SERVICE LEAVE LIABILITY
Balance at the beginning of the year
Provision during the year
Balance at the end of the year
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
40
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
13. CONTRIBUTED EQUITY AND RESERVES
(i) Ordinary Shares
Issued and fully paid
Ordinary shares paid at 5 cents each
Ordinary shares paid at 6 cents each
Ordinary shares paid at 8 cents each
Ordinary shares paid at 10 cents each
Ordinary shares paid at 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
148,738,712
166,667
3,540,688
10,475,433
32,520,837
8,111,112
11,282,322
2013
$
2012
$
2,730,937
8,924,323
13,333
354,069
1,571,315
9,756,251
3,650,000
6,205,277
33,205,505
2,730,937
8,916,480
13,333
354,069
1,571,315
9,756,251
3,650,001
6,205,277
33,197,663
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.
No:
Shares
$
213,668,832
30,401,219
54,618,733
2,730,937
869,565
52,174
166,667
13,333
269,323,797
33,197,663
50,000
3,000
80,707
4,842
269,454,504
33,205,505
2013
$
2012
$
6,262,249
6,177,746
49,001
84,503
6,311,250
6,262,249
Movement in ordinary shares on issue
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 1 July 2012
Shares issued during the year:
- 25 September 2012 shares exercised at 6c each
- 21 January 2013 shares exercised at 6c each
At 30 June 2013
(ii) Share-based payments reserve
Balance at the beginning of the year
Share-based payments expensed during the year
Balance at the end of the year
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
41
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
13. CONTRIBUTED EQUITY AND RESERVES (cont’d)
Nature and purpose of reserve
The share-based payments reserve is used to record the value of share-based payments / benefits provided to any Directors,
employees and consultants as part of their remuneration or compensation.
Refer to Note 9 for further details of these plans.
(iii) General reserve for credit losses:
Balance at the beginning of the year
Transfer to retained earnings
Balance at the end of the year
2013
$
2012
$
211,398
142,995
74,222
68,403
285,620
211,398
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
Balance at the end of the year
2013
$
2012
$
124,975
38,536
52,882
86,439
177,857
124,975
480,320
-
480,320
166,720
313,600
480,320
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.
Total reserves at the end of the year
7,255,047
7,078,942
(vi) Retained losses
Movements in retained losses were as follows:
Retained losses at the beginning of the financial year
Net loss attributable to shareholders of the Company
Transfer to general reserve for credit losses
Retained losses at the end of the financial year
(28,366,478)
(27,769,841)
9,865,602
(74,222)
(528,234)
(68,403)
(18,575,098)
(28,366,478)
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
42
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. 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 risk framework and all risk
management policies. The Board has installed a Board Risk Committee to assist the Board in fulfilling its responsibilities in the
management of risk. The Board Risk Management Committee provides non-executive oversight of the implementation and on-
going operation of Tyro’s risk management framework. The Board Risk Committee provides recommendations to the Board on
risk appetite; reviews and approves the frameworks for managing risk; monitors the risk profile, exposures against limits and the
management and control of our risks.
(ii) Risk controls
Risks are controlled through a system that identifies key risks, establishes controls to manage those risks (with an emphasis on
preventive control), and maintains a regular review process to monitor the effectiveness of controls. Business risks are
controlled within tolerance levels approved by the Board Risk Committee and Board.
(iii) Internal audit
Tyro has an independent and adequately resourced internal audit function. The internal audit function provides independent
assurance to the Board on the adequacy and effectiveness of the control environment and risk framework. Internal Audit also
reviews the controls implemented by management to ensure compliance with APRA's prudential requirements. This program of
internal control and audit is reviewed and approved on a regular basis by the Audit Committee. The internal auditor has
unfettered access to Tyro’s business lines and support functions.
The internal auditor has unfettered access to Tyro’s business lines and support functions.
(iv) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. Tyro is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing
activities, including deposits with banks and financial institutions, foreign exchange transactions and held to maturity
investments.
The maximum exposure to credit risk is represented by the carrying amounts of the financial assets at reporting date. Tyro's
credit risk management principles define the framework and core values which govern its credit risk taking activities and reflect
the priorities established by the Board.
From these principles flow the development of target market strategies, underwriting standards and credit procedures which
define the operating processes. Ongoing monitoring, reporting and review allow Tyro to identify changes in credit quality at
client and portfolio levels and to take corrective actions in a timely manner.
In addition, Tyro is subject to the risk of credit card chargebacks. The maximum period Tyro is potentially liable for such
chargebacks is 120 days after the date of the transaction. Tyro prudently manages credit risk associated with its merchant
portfolio both at an individual and a portfolio level, by monitoring the concentration of risk by industry and type of counterparty.
It is Tyro's policy that all merchants are subject to credit verification procedures including an assessment of their independent
credit rating, financial position, past experience and industry reputation.
As part of equity, a general 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 expected future credit losses as described in Note 1(v).
Tyro does not hold any credit derivatives or collateral to offset its credit exposure. Tyro trades only with recognised,
creditworthy third parties and as such no collaterals are requested. Credit exposures are monitored on an ongoing basis with
the result that Tyro's exposure to bad debts is not significant at reporting date.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
43
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES (cont’d)
30 June 2013
Standard & Poors Credit Rating*
AAA
AA-
unrated
30 June 2012
Standard & Poors Credit Rating*
AAA
AA-
A
unrated
*Long-term credit rating
(v) Operational risk
Trade receivables
Cash and balances
with financial
institutions
20,738,331
2,206,220
1,401,617
1,244,126
Cash and balances
with financial
institutions
15,917,982
2,264,451
190
Trade receivables
1,729,748
527,602
Operational risk is the risk that arises from inadequate or failed internal processes and systems, human error or misconduct, or
from external events. It also includes, among other things, technology risk, model risk and outsourcing risk.
The Board Risk Committee is responsible for monitoring the operational risk profile, the performance of operational risk
management and controls, and the development and ongoing review of operational risk policies.
(vi) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such
as equity price risk. Tyro does not engage in financial market trading activities nor assume any foreign exchange, interest rate
or other derivative positions and does not have a trading book. The Company does not undertake any hedging around the
values of its financial instruments as any risk of loss is considered insignificant to the operations of the Company.
Any government securities, bank bills or other marketable instruments that the Company holds are for investment or liquidity
purposes and held in the normal course of business in line with investment and liquidity guidelines. Each component of market
risk is detailed below as follows:
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
44
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
1) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company has exposure to interest rate risk on its variable interest-bearing cash and cash equivalent
balances. Other interest bearing assets are held to maturity and carried at amortised cost.
The following table demonstrates the sensitivity to a reasonably possible change in interest. With all other variables held
constant, Tyro’s profit before tax is affected as follows:
Variable
Interest
Rate
Cash and cash equivalents
USD Term Deposit
22,945,049
Sensitivity analysis:
Fixed Interest Rate
Less than
3 Months
-
-
3 to 12
Months
-
1,401,617
More than
1 Year
-
-
Total
22,945,049
1,401,617
An increase of 100 basis points in the general cash rate (assuming every other factors being constant) will increase the
Company's profit after tax and increase equity by $229,450 (2012:$181,831). A decrease of 100 basis points in the general
cash rate will have an equal and opposite effect.
2) Foreign Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
FX Sensitivity analysis:
An appreciation of 15% of the US Dollar and EUR compared to the Australian Dollar (assuming every other factors being
constant) will increase the Company's profit after tax and increase equity by $240,256 (2012: $212,964). A depreciation of 15%
of the US Dollar and EUR compared to the Australian Dollar will reduce the company's profit after tax and reduce equity by
$177,581 (2012:$370,368).
Tyro is not exposed to foreign currency risk in the settlement of merchant transactions as all monies received and paid are in
Australian Dollars. The Company's settlement of fees with card schemes and the purchases of inventory from foreign suppliers
are transacted in foreign currencies at the exchange rate prevailing the balance sheet date. At reporting date the Company has
some US Dollar and Euro exposure.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in the US dollar, Euro and AUD exchange
rates, with all other variables held constant
AUD
2013
AUD
2012
335,945
40,480
206,839
68,854
1,401,617
1,275,635
Available-for-sale investments-
VISA shares
Trade Payables
USD Term Deposit
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
USD
EUR
USD
45
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
3) Other Price Risk
The Company's investment in available-for-sale financial assets is valued by way of reference to an underlying listed equity on
the New York Stock Exchange (NYSE) and as such its fair value will fluctuate in direct proportion with the quoted market price
indicated.
(vii) Capital Management
Tyro Payments Limited capital management objectives are to:
- Maintain a sufficient level of capital above the regulatory minimum to provide a buffer against loss arising from unanticipated
events, and allow Tyro to continue as a going concern; and
- Ensure that capital management is closely aligned with Tyro’s business and strategic objectives.
Tyro manages capital adequacy according to the framework set out by APRA Prudential Standards.
APRA determines minimum prudential capital ratios (eligible capital as a percentage of total risk-weighted assets) that must be
held by all authorised deposit-taking institutions. Accordingly, Tyro is required to maintain a minimum prudential capital ratio
(eligible capital as a percentage of total risk-weighted assets) on a Level 1 basis as determined by APRA.
The board considers Tyro’s strategy, financial performance objectives, and other factors relating to the efficient management of
capital in setting target ratios of capital above the regulatory required levels. These processes are formalised within Tyro’s
internal capital adequacy assessment process (or ICAAP).
Tyro operates under the specific capital requirements set by APRA. Tyro has satisfied its minimum capital requirements
throughout the 2012/13 financial year in the form of Tier 1 capital which is the highest quality components of capital.
Capital Adequacy
Risk weighted capital ratios
Tier 1
Tier 2
Total capital ratio
Qualifying capital
Tier 1
Contributed capital
Retained profits & reserves
Innovative Tier 1 capital
Less
Intangible assets
Net deferred tax assets
50/50 deductions
Other adjustments
Total Tier 1 capital
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
46
2013
2012
14,767,226
11,479,104
69,078
268%
26,878
218%
33,205,505
33,197,663
-11,605,671
-21,623,911
21,599,834
11,573,751
94,648
6,832,608
14,767,226
11,479,104
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
Tier 2
General reserve for credit losses
Subordinated debt
Asset revaluation reserves
Less
50/50 deductions
Total Tier 2 capital
Total qualifying capital
Total risk weighted assets
(viii) Liquidity risk
69,078
65,287
56,239
94,648
69,078
26,878
14,836,304
11,505,981
5,526,254
5,275,585
Tyro's liquidity risk is the risk that the Company will have insufficient liquidity to meet its obligations as they fall due. This could
potentially arise as a result of mismatched cash flows.
Tyro manages this risk by the Board Risk Committee approved liquidity framework. Responsibility for liquidity management is
delegated to the Financial Controller and CEO. The Financial Controller manages liquidity on a daily basis and submits monthly
reports to the CEO and to Compliance, and bi-monthly reports to the Board Risk Committee. The Financial Controller is also
responsible for monitoring and managing capital planning. The capital plan outlines triggers for additional funding should
liquidity be required.
Liquidity risk management framework models the ability to fund under both normal conditions and periods of stress. The capital
plan and liquidity management is reviewed at least annually.
At balance sheet date, the board of directors determined that there was sufficient cash resources available to meet its
anticipated expenditure and other financial liabilities.
< 6 months
6-12 months
Total
Year ended 30 June 2013
AFS Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables and other liabilities
22,945,049
1,244,126
24,189,175
-
1,401,617
1,401,617
22,945,049
2,645,743
25,590,792
(12,025,019)
-
(12,025,019)
-
(12,025,019)
(12,025,019)
Net inflow
12,164,156
1,401,617
13,565,773
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
47
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
Year ended 30 June 2012
AFS Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables and other liabilities
Net inflow
(ix) Fair values
< 6 months
6-12 months
Total
18,183,122
-
981,715
19,164,837
1,275,635
1,275,635
18,183,122
2,257,350
20,440,472
(10,108,361)
(10,108,361)
-
-
(10,108,361)
(10,108,361)
9,056,476
1,275,635
10,332,111
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.
Quoted
market
price
(Level 1)
Year ended 30 June 2013
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non market
observable
inputs
(Level 3)
Total
335,945
-
-
335,945
Financial Asset
Available for sale
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
48
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
Quoted
market
price
(Level 1)
Year ended 30 June 2012
Valuation
technique -
market
observable
inputs
(Level 2)
Valuation
technique -
non market
observable
inputs
(Level 3)
Total
206,839
-
-
206,839
Financial Asset
Available for sale
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 no transfers between Level 1 and Level 2 during the current year. But there were transfers between
Level 1 and Level 2 during the previous year.
15. COMMITMENTS AND CONTINGENCIES
Commitments relating to BECS
Tyro pays merchants through the BECS system (Bulk Electronic Clearing System). Tyro commits the amount to be paid to
merchants with the BECS file sent. The amount committed must be available on the RBA Exchange Settlement Account (ESA),
a day before the actual payment. At balance date, the amount committed was $14,188,164 (in 2012:11,479,535). This
commitment was settled the following day.
On each settlement day, Tyro would have received a portion of the funds committed, thus the actual contingent asset and
corresponding liability would be less than the total amount committed.
2013
$
2012
$
2,801,617
2,675,635
140,000
140,000
454,113
3,395,730
454,113
3,269,748
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
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
49
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
15. COMMITMENTS AND CONTINGENCIES (cont’d)
The Company has provided an irrevocable standby letter of credit of $2,941,617 (in 2012: 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 months rent and is refundable on expiry of the lease agreement, subject to satisfactory vacation of the
leased premises.
16. LEASES
(a) Operating lease commitments - Company as lessor
Prior to April 2010, Tyro operated a "rent to own" model whereby ownership of the terminal would transfer to the merchant once
they had made 36 consecutive rental payments. However Tyro bears the risk of repairing or replacing the terminal over the 3
year period. The merchant would then continue to pay a service and maintenance fee after this period. There is no minimum
rental period for merchants and they are able to terminate with Tyro at any time with no penalty or buy out fees. From April
2010, the company has moved to a perpetual rental model whereby there will be no transfer of ownership of the asset and the
merchant will pay terminal rental for the duration that they are with Tyro.
Type of Terminals
Cost
Xenta
Xentissimo
Yomani
Others (Accessories)
2,641,447
1,942,112
195,724
222,516
Depreciation
Expense
2,253,367
1,091,744
32,979
214,674
Net Carrying Value
388,080
850,368
162,745
7,843
5,001,799
3,592,763
1,409,036
(b) Operating lease commitments - Company as lessee
2013
$
2012
$
Future minimum rentals payable under the non-cancellable operating leases as at 30 June 2013 are as follows:
- Within one year
- After one year but not more than five years
581,999
966,461
544,324
1,548,460
1,548,460
2,092,784
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 3 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%.
17. SEGMENT REPORTING
The Company operates in one geographical segment being Australia and within one business segment being the provision of
credit and debit card acquiring services to merchants.
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
50
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
18. AUDITOR'S REMUNERATION
Amounts received or due and receivable by Ernst & Young:
- an audit of the financial report of the Company
- other services in relation to the Company
19. RELATED PARTY DISCLOSURES
(a) Key Management Personnel
2013
$
2012
$
193,875
57,500
251,375
196,875
46,255
243,130
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.
Appointed
Resigned
18-Apr-08
10-Dec-09
14-Nov-05
28-Aug-09
05-Apr-05
01-Jan-07
03-Feb-03
19-Mar-07
2013
$
1,590,122
109,475
5,675
1,705,272
2012
$
1,954,130
159,800
13,701
2,127,631
Details of Key Management
Personnel
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
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
51
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
19. RELATED PARTY DISCLOSURES
30 June 2013
Directors
Kerry Roxburgh
Michael Cannon-
Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
30 June 2012
Directors
Kerry Roxburgh
Michael Cannon-
Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Short-term
Termination
Post
Share-based
Benefits
Salary &
fees ($)
Benefits
($)
Employment
Super-
annuation ($)
Payments
Options
($)
Total
($)
60,000
40,000
40,000
40,000
365,262
394,684
391,777
258,399
1,590,122
Short-term
Benefits *
Salary &
fees ($)
60,000
40,000
40,000
40,000
466,946
491,596
479,815
335,773
1,954,130
-
-
-
-
-
-
-
-
-
5,400
3,600
3,600
3,600
21,102
23,750
23,488
24,936
109,475
-
-
-
-
1,669
1,370
1,674
962
5,675
65,400
43,600
43,600
43,600
388,033
419,804
416,939
284,297
1,705,272
Termination
Post
Share-based
Benefits
Employment
Payments
Total
Super-
($)
annuation ($)
Options
($)
-
-
-
-
-
-
-
-
-
5,400
3,600
3,600
3,600
43,225
24,942
44,383
31,050
159,800
($)
65,400
43,600
43,600
43,600
513,272
518,862
529,846
369,452
-
-
-
-
3,101
2,324
5,647
2,629
13,701
2,127,631
* the salary in the prior year includes bonus payment for 2 years
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
52
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
19. RELATED PARTY DISCLOSURES (cont'd)
Shareholdings of Key Management Personnel and their Related Entities Transactions
30 June 2013
Directors
Kerry Roxburgh
Michael Cannon-Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
30 June 2012
Directors
Kerry Roxburgh
Outstanding
at start
of year
Shares
issued/
transferred
during the
year
On exercise
of
options
Outstanding
at end
of year
940,182
2,966,667
30,352,950
248,204
53,467,309
3,113,325
5,405,977
700,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
940,182
2,966,667
30,352,950
248,204
53,467,309
3,113,325
5,405,977
700,000
97,194,614
-
-
97,194,614
Outstanding
at start
of year
Shares
Issued
during the
year
On exercise
of
options
Outstanding
at end
of year
690,182
-
250,000
940,182
Michael Cannon-Brookes
-
2,000,000
966,667
2,966,667
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
22,072,348
-
8,280,602
30,352,950
124,102
-
124,102
248,204
41,585,685
-
11,881,624
53,467,309
2,155,379
-
957,946
3,113,325
5,405,977
-
-
5,405,977
-
-
700,000
700,000
72,033,673
2,000,000
23,160,941
97,194,614
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
53
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
19. RELATED PARTY DISCLOSURES (cont'd)
Option Holdings of Key Management Personnel
30 June 2013
Outstanding
at start of
period
1-Jul-12
Options
granted
as
remuner
ation
Other
movement*
Options
exercised/
expired/
forfeited
during the
year
Outstanding
at end of
period
2013
Exercisable
at end of
period 2013
Linear/Service vesting schedule
Directors
Kerry Roxburgh
Michael Cannon-
Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
1,787,967
1,111,110
2,962,477
1,333,334
4,204,100
545,046
2,812,244
595,927
15,352,205
Fully vested at time of grant
Directors
Kerry Roxburgh
Michael Cannon-
Brookes
Rob Ferguson
Paul Rickard
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
-
1,625,000
1,625,000
-
13,506,027
5,537,874
8,588,142
3,105,538
33,987,581
49,339,786
* Other options transfer or issuance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,787,967
1,111,110
1,787,967
1,111,110
-
-
1,050,000
2,962,477
1,333,334
3,154,100
2,962,477
1,333,334
3,154,100
-
-
-
1,050,000
545,046
2,812,244
595,927
14,302,205
545,046
2,812,244
595,927
14,302,205
-
1,625,000
-
1,625,000
1,625,000
-
13,342,391
1,625,000
-
13,342,391
163,636
5,537,874
8,588,142
3,105,538
33,823,945
5,537,874
8,588,142
3,105,538
33,823,945
163,636
1,213,636
48,126,150
48,126,150
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
54
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
19. RELATED PARTY DISCLOSURES (cont'd)
30 June 2012
Outstanding
at start of
period
1-Jul-11
Options
granted
as
remuner
ation
Other
movement*
Options
exercised/
expired/
forfeited
during the
year
Outstanding
Exercisable
at end of
period
2012
at end
of period
2012
Linear/Service vesting schedule
Directors
Kerry Roxburgh
1,787,967
Michael Cannon-Brookes 1,111,110
2,962,477
Rob Ferguson
1,333,334
Paul Rickard
4,640,464
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
545,046
2,812,244
595,927
15,788,569
Fully vested at time of grant
Directors
250,000
Kerry Roxburgh
Michael Cannon-Brookes 1,625,000
9,905,602
Rob Ferguson
124,102
Paul Rickard
25,496,742
Jost Stollmann
Executives
Garry Duursma
Peter Haig
Justin Mitchell
Total
6,495,820
10,254,809
3,105,538
57,257,613
73,046,182
* Other options transfer or issuance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
436,364
-
-
-
436,364
1,787,967
1,111,110
2,962,477
1,333,334
4,204,100
1,787,967
1,111,110
2,962,477
1,333,334
3,790,056
545,046
2,812,244
595,927
15,352,205
217,837
2,396,997
366,069
13,965,847
-
966,667
-
-
-
250,000
966,667
8,280,602
124,102
11,990,715
-
1,625,000
1,625,000
-
13,506,027
-
1,625,000
1,625,000
-
13,506,027
-
(1,666,667)
700,000
-
957,946
700,000
23,270,032
5,537,874
8,588,142
3,105,538
33,987,581
5,537,874
8,588,142
3,105,538
33,987,581
-
23,706,396
49,339,786
47,953,428
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
55
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
19. 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
Type of Option
Linear vesting schedule
Terms and Conditions
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.
Related Party
Health Communications Network
Commissions Paid
1,816,334
2,268,273
2013
$
2012
$
Rob Ferguson, a director of Tyro Payments is also the Non-Executive Chairman of Primary Health Care Ltd. Health
Communications Network is a subsidiary of Primary Health Care Ltd.
c) Loans from related parties
On 14 December 2012 the company entered into a nineteen day loan facility of $2.5m with five 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 11% 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)
Loan Amount
$ 984,000.00
Robert Alexander Ferguson (Director)
$ 290,000.00
Euclid Capital Partners ABN 79 937 786 536
related party David Fite (Major Shareholder)
$ 320,000.00
Thomas Girgensohn (Major Shareholder)
$ 500,000.00
Fiona Stollmann
related party Jost Stollmann (Director)
$ 406,000.00
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
56
Interest Paid
$5,634.41
$1,660.55
$1,832.33
$2,863.01
$2,324.77
TYRO PAYMENTS LIMITED
ABN 49 103 575 042
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
19. RELATED PARTY DISCLOSURES (cont'd)
On 14 December 2012 the company entered into a forty nine day loan facility of $3.0m with four lenders, all of whom being
Directors or related parties to Directors 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 11% 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)
Loan Amount
$ 1,476,000.00
Robert Alexander Ferguson (Director)
$ 435,000.00
Euclid Capital Partners ABN 79 937 786 536
related party David Fite (Major Shareholder)
$ 480,000.00
Jost Stollmann (Director)
$ 609,000.00
Interest Paid
$21,796.27
$6,423.70
$7,088.22
$8,993.18
20. Matters subsequent to end of the financial year
No matter or circumstance has arisen subsequent to 30 June 2013 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 2013
57
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
Website
www.tyro.com
Tyro Payments Limited ABN 49 103 575 042
Annual Report 2013
61