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6
ANNUAL
REPORT
2016
BUILDING THE
FOUNDATIONS FOR
TOMORROW
TABLE OF
CONTENTS
CHAIRMAN’S MESSAGE
OUR VALUES
BOARD OF DIRECTORS
LEADERSHIP TEAM
MESSAGE FROM THE CEO & MANAGING DIRECTOR
OUR PURPOSE & OPERATING MODEL
CORE CAPABILITIES
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
AUDITORS’ INDEPENDENCE DECLARATION
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ADDITIONAL INFORMATION REQUIRED BY ASX
CORPORATE DIRECTORY
ABOUT THIS REPORT:
2
3
4
5
6
10
11
13
18
23
24
25
26
27
28
49
50
53
55
This Annual Financial Report (Report) is lodged with the Australian Securities and Investment Commission and ASX Limited and is a summary of
Tempo Australia Limited’s (Tempo) operations, activities and financial position as at 31 December 2016. Any references in this report to ‘the year’ or
‘the reporting period’ relate to the financial year, which is 1 January 2016 to 31 December 2016 unless otherwise stated. All figures used in this report
are Australian Dollars unless otherwise stated.
Tempo Australia Ltd (ABN 51 000 689 725) is the parent entity of Tempo group of companies. In this report references to ‘Tempo’, ‘TPP’ and ‘the
company’ and ‘we’, ‘us’ and ‘our’ refers to Tempo Australia Limited and its controlled entities, unless otherwise stated.
To review the report online, visit www.tempoaust.com or alternatively contact Link Market Services Limited of Level 4, Central Park 152 St George’s
Terrace Perth WA 6000, telephone 1300 554 474.
CHAIRMAN’S
MESSAGE
Dear Shareholder,
On behalf of my fellow directors, I am pleased to present
the Tempo Australia Limited Annual Report for the year
ended 31 December 2016.
It has been a year marked by steady progress and
achievement for Tempo – and one in which we have
continued to advance our Company’s strategic priorities
with discipline and determination amidst challenging
market conditions.
Our resolute focus on creating sustainable shareholder
value has enabled Tempo to maintain a strong balance
sheet and operating cash flow that will continue to
support your Company’s growth in the coming years.
The positive results achieved this year demonstrate the
strength of your Company, and reflect the significant
commitment and contribution of the entire Tempo team.
From our workers on the frontline to our office staff,
leadership team and board of directors, I am particularly
proud of the unique culture that distinguishes the way
Tempo operates in a highly competitive industry.
It is immensely rewarding to be part of a company whose
client-centric culture is demonstrated by a continuing
commitment to safety and excellence, and whose frontline
workers are continually empowered to drive initiatives,
productivity and innovation from the bottom-up.
These values were evident during the successful
acquisition of the Cablelogic business in July 2016, and
ensured a smooth and seamless integration that has
provided Tempo with a competitive edge in the delivery of
electrical, telecom, and data services.
Further strengthening our Company, in 2016 private
investment house, Angophora Capital, became a
cornerstone investor in Tempo. We were delighted to
welcome accomplished Director and joint Managing
Director of Transfield Holdings, Guido Belgiorno-Nettis,
to our board.
This strategic investment is a significant vote of
confidence in Tempo and provides us with additional
capacity to grow organically, or through strategic
acquisitions, with an emphasis for 2017 on expanding our
construction and maintenance services capability and
establishing an east coast presence.
Tempo is very fortunate to be led by an energetic and highly
experienced management team. Under their direction, I
am confident Tempo will continue to flourish and create
sustainable outcomes for our shareholders, employees,
partners and the communities in which we operate.
On behalf of the board, I would like to thank all shareholders
for their ongoing support, and for entrusting us to steer
Tempo through its next promising phase of growth.
Yours sincerely,
Carmelo (Charlie) Bontempo
Non-Executive Chairman
Tempo Australia Limited
2
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 TEMPO’S VALUES
OUR
VALUES
Our values are centered around our
commitment to safety and underpin
who we are and how we operate.
T E AMWORK
We believe that the best
solutions come from working
together with both
colleagues and clients.
Good teamwork requires
trust, respect and
willingness to solicit
suggestions for
improvements from
everyone.
E
T
H
We act beyond our own
self - interest. We strive
to make a profit,
decently.
I
C
S
SAFETY
WE COMMIT TO
“OPERATION
ZERO”
AY
E W
N
O
Everyone works and
follows our Management
System. This is the key
that locks in our
learnings.
We will focus on planning every
aspect of our work. Effective
planning is at the foundation of
our mandate to monitor and
continuously improve
productivity.
P
R
We aim to be the best at what we
do. We recognise that mastery is
a continuous process and that
even when you think you’ve
achieved mastery, you’ll almost
always find that there is
more you can achieve.
O
D
U
C
TIVITY
S
M A
T E RY
Rio Tinto, Cape Lambert Port (courtesy Rio Tinto).
3
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 BOARD OF
DIRECTORS
Left to Right: Philip Loots, Guido Belgiorno-Nettis, Carmelo Bontempo, Max Bergomi, Brian Thomas, Michael West.
CARMELO (CHARLIE)
BONTEMPO - CHAIRMAN
One of the four founding partners
of United Construction Holdings
(today known as UGL Ltd). Managing
Director of Monadelphous Group
Limited during the company’s early
restructuring period in the late 1990’s.
GUIDO BELGIORNO-NETTIS
AM - DIRECTOR
Guido is Managing Director of the
private company, Transfield Holdings
Pty Ltd, which changed business
focus in 2001 from Engineering
and Construction to private equity.
Leading up to this change, Guido
held a number of key positions within
the Transfield Group, including
Managing Director, CEO Transfield
Engineering and Construction,
and Project Development Director.
In 2015 he started his own Family
Office – Angophora Capital Pty Ltd.
Guido is Chairman of the Australian
Chamber Orchestra, and a Member
of the Australian School of Business
Advisory Council. He was named a
Member of the Order of Australia in
2007 for service to the construction
industry and the arts. He holds a
Bachelor of Engineering from UNSW
and an MBA from AGSM and is a
fellow of Engineers Australia.
PHILIP LOOTS - DIRECTOR
Philip is a lawyer with a PMD from
Harvard Business School and
brings to the board significant risk
management experience in the
development and construction of
projects in the infrastructure, mining
and oil and gas sectors. Philip has
had significant involvement in the
mega oil and gas projects in Western
Australia and internationally.
BRIAN THOMAS - DIRECTOR
Brian is the principal of a corporate
advisory practice working with
small to mid-market capitalisation
companies in the areas of corporate
finance, mergers & acquisitions and
investor relations. Over the past
10 years he has been an Executive
and Non-Executive Director with
a number ASX listed companies.
This followed a 12 year career in
corporate stockbroking, investment
banking, funds management and
banking after more than 20 years
operational experience in the energy
and resources industry. He holds
a Bachelor of Science from The
University of Adelaide, an MBA from
The University of Western Australia,
and a Graduate Certificate in Applied
Finance and Investment from FinSIA.
4
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 LEADERSHIP
TEAM
MAX BERGOMI - CHIEF
EXECUTIVE OFFICER AND
MANAGING DIRECTOR
Max joined Tempo in January 2016.
A highly experienced and successful
engineering and oil and gas industry
executive, Max has held a number
of high-profile senior leadership
roles during his 20-year career.
Prior to joining Tempo Max built
a successful career with major
Australian engineering and project
services contractor, Clough Ltd,
over a period of eight years. He
was previously Managing Director
Australia and PNG for Clough’s
Oil & Gas and Mining & Minerals
divisions. He has also held senior
positions with Saipem and Maverick
Tube Corporation in Milan, Houston,
Jakarta and London.
Max has a Bachelor of Engineering
(Management and Production) from
the Politecnico of Milan. He is also
a graduate of the Harvard Business
School’s Advanced Management
Program.
MICHAEL WEST - CHIEF
FINANCIAL OFFICER AND
COMPANY SECRETARY
Michael has extensive experience
working in financial, strategy
and commercial roles in private
and public businesses involved in
the construction, maintenance,
engineering, energy, private equity
and investment banking sectors. He
holds a Bachelor of Commerce and a
Bachelor of Mechanical Engineering
(Honours Class I) from Sydney
University.
JONATHAN WILSON - VP
OPERATIONS AND GM
RESOURCES
Jonathan is an experienced
professional engineer with an
extensive broad range of design,
project, commercial and management
experience. He brings to Tempo 30
years of experience gained across
lump sum design and construct
(brownfield and greenfield sites),
maintenance, and management of
EPCM contracts across mineral
resources, oil and gas and
infrastructure projects. He holds a
Bachelor of Civil Engineering.
BRETT EASTON - GM
INDUSTRIAL AND
COMMERCIAL
Brett has been responsible for
founding and growing Cablelogic,
which was acquired by Tempo in
2016. With over 20 years’ experience
in electrical, telecommunications,
data and renewable projects, he has
developed business relationships
and worked across an extremely
diverse range of industry sectors.
Brett holds an electrical trade
certificate with communications
endorsements, and advanced
diploma in renewable energy.
GABRIEL MALLARINI - GM
BUSINESS ACQUISITIONS
Gabriel has 14 years’ experience
in the minerals, oil and gas, and
power generation industry, spanning
from engineering, construction
management, commissioning to
execution. He brings significant global
leadership experience to his role with
Tempo and has specific expertise in
contract negotiation, formation and
execution across various types of
partnerships, including consortiums,
joint ventures and alliances. Gabriel
holds a Masters and Bachelor of
Mechanical Engineering.
Top to Bottom: Max Bergomi, Michael West, Jonathan Wilson, Brett Easton, Gabriel Mallarini.
5
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 MESSAGE
FROM THE
CEO &
MANAGING
DIRECTOR
Dear Shareholder,
I am pleased to report that 2016 has been a solid year for
our Company, marked by strong financial results, steady
growth and continued progress towards our strategic
priorities as outlined below.
As a leadership group, we have worked hard to further
differentiate our offering in a competitive resource
industry landscape, further upskilling our management
team and strengthening our relationships with existing
and prospective partners and clients.
On a personal note, the successful outcomes achieved
by our highly capable leadership and frontline team have
contributed to a very rewarding first year at the helm of
Tempo. I would like to acknowledge all of our employees
for their ongoing dedication and contribution during
the year which has enabled us to progress and remain
buoyant, despite a challenging market.
CREATE SHAREHOLDER VALUE
Tempo reported a strong financial performance in 2016,
with revenues of $81.2 million for the 2016 fiscal year,
compared to $79 million in 2015. The business delivered
a Net Profit After Tax (NPAT) of $5.5 million, and reported
a net asset value of $30.5 million for 2016, which
represents a growth of over 115 percent year on year.
Pleasingly, the share price rose from 11 cents to
22.5 cents, and liquidity in the stock also increased
considerably – indicating greater interest in the Company
and allowing for trades in and out of the share. Similarly,
Tempo has gained support from the institutional market,
with a number claiming their place on the registry for the
first time. We were also pleased to welcome strategic
cornerstone investor, Angophora Capital, in December
2016, whose involvement will help to further strengthen
our Group.
This share price performance and institutional
sponsorship is a strong validation of Tempo’s strategic
health, financial prospects, economic purpose,
leadership and Board capability.
MANAGE RISK
The strategic acquisition of Cablelogic was a significant
milestone for Tempo in 2016, and has enabled us to
diversify into the industrial and commercial sectors
rather than relying solely on the resources sector.
Importantly, it has also enabled us to secure further
electrical, data and telecom specialisation within the
resources sector.
While we believe that the resources market will continue
to offer significant opportunities over the medium term,
we have noted a tendency from resources clients to defer
a portion of spending – a trend that we anticipate will
continue into the first half of 2017.
Rio Tinto, Cape Lambert Port (Courtesy Rio Tinto)
6
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 However, Tempo’s move into the commercial and
industrial sector has allowed us to manage such
potential risk, broadening the available market across
Australia, and allowing the business to target planned,
reactive and preventive maintenance, as well as project
development and refurbishment work in this adjacent
sector. We note that there is approximately $3.3 billion
per annum spent in electrical maintenance services,
and approximately $5.5 billion per annum spent in
electrical construction or refurbishment work in
commercial and industrial across Australia.
In addition to enhancing our capabilities and
diversifying into new markets, we have continued
to focus on Tempo’s risk management foundations.
Our team has participated in numerous internal and
external audits to achieve third party management
system certification for quality, environmental,
occupational health and safety process (ISO 9001, ISO
14001:2015, OHS, AS/NZS 4801:2001). Our commitment
to safety continues through our focus on driving leading
safety indicators and behaviours across the business.
By instilling in our business the same tools and
systems of larger service organisations, while
maintaining a lean and agile structure, we aim to
ensure that Tempo can differentiate its services,
responsibly mitigate risk and grow sustainably.
ENHANCE COMPETITIVE
ADVANTAGE
During 2016 we also focused on further improving our
delivery capabilities, both from a progress reporting
standpoint by broadening the use of our ERP system
modules, and from a site-based productivity standpoint
by refining and improving our productivity tool kit.
One of the tools, Productivity Intelligence (patent
pending), forms part of our core productivity tool kit.
It has been developed by our highly-skilled engineers
and through exclusive collaboration with a technology
Company that provides a portion of the data analytics.
The tool acquires site-based productivity metrics to
drive frontline efficiencies through the use of innovative
micro-fencing and geo-fencing techniques. We believe
that productivity, much like safety performance, starts
with giving management and frontline workers access
to leading indicators that can be used to drive improved
behaviours.
Another productivity tool, developed and rolled out
across all sites in 2016, provides daily, fully-automated,
workforce feedback on site productivity drivers,
enabling our frontline workforce to communicate
work stoppages and delays to management. The data
is automatically collected and displayed across the
organisation to identify trends, helping to address
‘bottleneck’ work areas.
$90M
$90M
$90M
$60M
$60M
$60M
$30M
$30M
$30M
$0
$0
$0
$8M
$8M
$6M
$8M
$6M
$4M
$6M
$4M
$2M
$4M
$2M
$0
$2M
$0
($2M)
$0
($2M)
($2M)
$40M
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$30M
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$20M
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$10M
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$10M
$0
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$0
$0
MESSAGE FROM CEO & MANAGING DIRECTOR
Revenue
Revenue
Revenue
2014
2015
2016
2014
2014
2015
2015
2016
2016
NPAT
NPAT
NPAT
2014
2015
2016
2014
2014
2015
2015
2016
2016
Net assets
Net assets
Net assets
2014
2015
2016
2014
2014
2015
2015
2016
2016
7
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 MESSAGE FROM CEO & MANAGING DIRECTOR
With people remaining core to our business, we have
also concentrated efforts on better defining and
improving the way we engage with our workforce. The
workforce engagement standard issued during the
year has been designed to be an integrated part of
our business strategy and provide access for regular,
two-way dialogue with our people. From on-boarding
to performance evaluation and succession planning,
it describes how Tempo engages with our people
throughout the entire employment life cycle on issues
that affect them or our business.
During the year we also further strengthened the
capability of our management team to ensure we
continue to offer compelling technical, commercial and
industry expertise, setting us apart from other groups
of our size. I am humbled to work with such a strong
leadership group and have no doubt they will prove to be
the foundation for the future of Tempo.
ENSURE A SUSTAINABLE FUTURE
From an operational perspective, 2016 was underpinned
by delivery of the BHP Billiton Ore Care Repair Shop
and Structural, Mechanical and Piping, Electrical &
Instrumentation (SMPE&I) works at the Chevron-
operated Barrow Island/Gorgon LNG Project.
Following a smooth transition into Tempo, the Cablelogic
division focused on completing the electrical works at
the Esperance Health Campus, the sporting complex
in Kalgoorlie, the works at the Mandurah Aquatic and
Recreation Centre, and stages 2 & 3 at the Red Cross
Blood bank in Perth. In the latter part of the year,
Cablelogic also mobilised and commenced its operations
for the installation of the Distributed Antenna System
(DAS) mobile infrastructure cabling project for CAMs and
Vodafone at T1T2 at Perth International Airport.
Since the acquisition of Cablelogic, offshore electrical
works for Chevron and BEA on the Wheatstone platform
have continued, coupled with onshore E&I work carried
out directly for Woodside’s Karratha Gas Plant, and
electrical and instrumentation maintenance in the
resources sector for Rio Tinto, BHP and CITIC.
With these projects underscoring our strong results, we
are also continuing to focus our efforts on other work
fronts across the commercial, industrial and resources
sectors. Pleasingly, Tempo was able to negotiate and
secure a number of Master Service Agreements (MSAs)
and project extensions during the year, valued at
approximately $10 million, including:
• The electrical fit-out of stage 4 at the Red Cross Blood
Bank in Perth;
• Agreement with international telecommunications
provider, Huawei for DAS mobile systems installations
for Optus across a wide range of commercial and
industrial sites;
• Agreement with Lend Lease for various electrical and
communications services for infrastructure, roads and
tunnels, commercial buildings and other client assets
in WA;
• Agreement with Ansaldo for Rio Tinto Auto Hall to carry
out communication for rail automation systems;
• Agreement with Downer for general support work on
the Gorgon Project;
• Agreement with Chevron for general electrical support
work on the Wheatstone offshore platform.
We believe that these MSAs, together with the MSA
executed in the previous years and still in place (namely
Santos blanket agreement for asset maintenance, and
CKJV on the Chevron Operated Gorgon support work),
represent the foundation for the future growth of the group.
“BUILDING THE FOUNDATIONS FOR TOMORROW”
Mardalup Electrical, Communication and Automation Project (courtesy Mardalup).
8
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 MESSAGE FROM CEO & MANAGING DIRECTOR
• Fostering and developing relationships with our clients
and partners; and
• A priority commitment to robust and focused cash
management.
Finally, I extend my sincere thanks to the Board for their
significant contribution to Tempo throughout the year,
and for their invaluable guidance and friendship as I
transitioned into the role of CEO and Managing Director.
Thank you to our shareholders for your interest and
ongoing support.
Yours sincerely,
Max Bergomi
Chief Executive Officer and Managing Director
Tempo Australia Limited
WORK WITH THE RIGHT CLIENTS
AND PARTNERS
As part of our enduring commitment to a partnership-
centric approach, during the year we focused on
developing and expanding our reach with prospective
clients and partners through a range of relationship-
building initiatives.
In instances where potential opportunities require
capabilities that extend beyond our current execution
capabilities, we established joint ventures with key
market leaders aimed at ensuring that our client
offerings on all projects remain truly unique.
As a result, we are proud to be recognised as a partner
of choice for larger EPC and OEM groups that recognise
the value of our specialised, integrated maintenance and
construction delivery capabilities.
In summary, Tempo has had a strong and rewarding year.
With our capable team, an unwavering focus on pursuing
our strategic priorities, and a commitment to remaining
lean and agile, I am confident Tempo will continue to
prosper and excel in the years ahead, always remaining
true to the following core business ingredients:
• Maintaining a values driven culture, and employing like-
minded people;
• Constantly engaging, developing and upskilling our people;
• Setting up processes and systems that give a true
voice to our frontline workforce, driving continuous
improvement and site safety;
• Relentlessly investing time and effort in developing and
refining our core productivity tools;
• Being a specialist multidisciplinary maintenance and
construction provider, and, where possible, diversifying
into other adjacent industries;
9
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 OUR PURPOSE
& OPERATING
MODEL
EPCs &
EPC(m)s
Blue Chip
Operators
OEMs
CLIENTS
To deliver to clients in the resources,
industrial and commercial sector,
specialist multidisciplinary
maintenance and construction
services, which protect and enhance
their investments, without ever
compromising on our values.
MARKETS
Logistic &
Distribution
Resources
& Defense
EPCs &
EPC(m)s
EPCs &
EPC(m)s
OEMs
Blue Chip Materials
Companies
OIL &
GAS
MINERALS &
METALS
TANK
FARMS
SERVICES
Specialized multidisciplinary construction
and maintenance
DIFFERENTIATORS
Customer responsiveness, productivity tools, front line workers
engagement process, ERP and risk management
GEOGRAPHIES
Australia
(and internationally for existing partners and clients)
CLIENTS
BLUE CHIP
OPERATORS
EPCS &
EPC(M)s
OEMs
BLUE CHIP
MATERIALS
COMPANIES
EPCS &
EPC(M)s
OEMs
LOGISTIC &
DISTRIBUTION
EPCs &
EPC(M)s
RESOURCES
& DEFENCE
MEDICAL,
RETAIL &
EDUCATION
OPERATORS
EPCS &
EPC(M)S
GOVT
&
TELECOM
Oil &
Gas
Minerals &
Metals
Tank
Farms
Industrial &
Commercial
SPECIALISED STRUCTURAL, MECHANICAL, PIPING, ELECTRICAL,
TELECOM AND DATA COMMUNICATIONS SERVICES FOR CONSTRUCTION AND MAINTENANCE
CUSTOMER RESPONSIVENESS, PRODUCTIVITY TOOLS, FRONT LINE WORKERS
ENGAGEMENT PROCESS, ERP AND RISK MANAGEMENT
AUSTRALIA (AND INTERNATIONALLY FOR EXISTING PARTNERS AND CLIENTS)
MARKETS
SERVICES
VALUE
PROPOSITION
GEOGRAPHIES
Willetton Senior High School
10
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 CORE
CAPABILITIES
RESOURCES
Greenfield Activities (Oil & Gas, Minerals)
Brownfield Activities (Oil & Gas, Mineral)
EARNINGS FROM EFFICIENCIES
EARNING FROM OPERATIONS
DEVELOPMENT COSTS
SAVINGS THROUGH EFFICIENCIES
R
O
T
C
E
S
S
E
C
R
U
O
S
E
R
E
L
C
Y
C
E
F
I
L
GEOTEC
INVESTIGATION
EXPLORATION
PROJECT
DEVELOPMENT
OPERATIONS
(PRODUCTION)
DOWNSTREAM
DECOMMISSIONING
/CLOSURE
ENGINEERING
MAINTENANCE
TANK FARMS
• Support on construction pricing
and partnership models
• Constructability reviews
• Prefabrication, pre-assembly,
and modularization strategy
definition
• Cost estimating and feasibility
reviews
• Hazard and operability study
(HAZOB) support
• Site productivity reviews, and tools
• Maintenance management,
planning and execution services
• Shutdowns management
and execution services
• Fabrication management
and execution services
• IR management and
employment of front line
workers through established
industry agreements
• Conventional off foundation
construction management,
planning and execution services
• Bottom up construction
management, planning and
execution services
• Top down / tank jacking,
construction management,
planning and execution services
CONSTRUCTION
MODIFICATIONS
• Multidisciplinary construction
management, planning and
execution
• Turnkey construction
management and execution
services
• Prefabrication, pre-assembly
and modularization management
and execution services
• Fabrication management and
execution services
• IR management, and
employment of front line
workers through established
industrial agreements
• Multidisciplinary construction
management, planning and
execution for sustaining and
minor capital works
• Turnkey construction
management and execution
services
• Prefabrication, pre-assembly
and modularization management
and execution services
• Fabrication management and
execution services
• IR management, and
employment of front line
workers through established
industrial agreements
COMMISSIONING
FIELD/MINE
SITE OPERATIONS
• Plant commissioning planning
and execution services
• IR management, and
employment of front line
workers through established
industrial agreements
Core Capabilities
11
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
CORE CAPABILITIES
INDUSTRIAL &
COMMERCIAL
Chevron, Wheatstone LNG offshore platform (courtesy Chevron).
Greenfield Activities (Industrial, Commercial) Brownfield Activities (Industrial, Commercial)
EARNINGS FROM EFFICIENCIES
EARNING FROM OPERATIONS
E
L
C
Y
C
E
F
I
L
DEVELOPMENT COSTS
SAVINGS THROUGH EFFICIENCIES
FEASIBILITY, DESIGN AND
DEVELOPMENT APPLICATIONS
PROJECT DEVELOPMENT
BUILDING MAINTENANCE &
MANAGEMENT
REFURBISHMENT
I
L
A
C
R
E
M
M
O
C
&
L
A
R
T
S
U
D
N
I
I
• Electrical and data
infrastructure construction
for refurbishments and
expansions
• Electrical and structured
cabling
• Fibre Optic
• Satellite and wireless
communications
• Security and access control
• Fire and EWIS
• Lighting and telephony
• Electrical and data
infrastructure design and
constructability reviews
• Solar power and energy
efficiency reviews and
designs
• Electrical and data
infrastructure construction
and installation
• Solar power and energy
efficiency construction
• Electrical and structured
cabling
• Fibre Optic splicing and
installation
• Satellite and wireless
communications
• Security and access control
• Fire and EWIS
• Lighting and telephony
Core Capabilities
• Planned and reactive
maintenance for electrical
and communications
network to minimise
downtime
• Preventive maintenance to
minimize exposure to
unplanned outages
• Compliance testing and
tagging
• Dedicated service &
installation team
• Repair of data outlets and
cabling
• Repair and testing of fibre
optic cabling
• Repair or replacement of
electrical cabling, light
fittings, emergency light
audits, RCD test and repair,
test and tagging of power
points, outlets, office
equipment and stores
equipment
12
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
DIRECTORS’
REPORT
The directors present their report together with the financial report of the consolidated entity consisting of Tempo Australia
Limited (Tempo) and the entities it controls, for the financial year ended 31 December 2016 and the auditor’s report thereon.
PRINCIPAL ACTIVITIES
During the year ended 31 December 2016, the Company generated revenues from construction, maintenance and
personnel management activities, which included the supply of blue collar trades as well as supervised teams.
RESULTS
For the year ended 31 December 2016, Tempo reported revenues of $81.4 million, a ~3% growth over revenues for fiscal
year 2015.
The Net Profit After Tax (NPAT) delivered in 2016 was $5.5million. This strong result was underpinned by the Company’s
activities undertaken across Australia for clients in the oil and gas, minerals, industrial and commercial sectors, delivering
maintenance, capital projects and sustaining capital works. The result also included the benefit of previously unrecognised
tax assets.
Net assets value of $30.5 million was reported for the full fiscal year, which represented growth of over 115% compared
to the previous year.
Tempo had a net cash balance of $25 million at the year-end and no substantial bank debt. This compares highly
favourably with the net cash balance at 31 December 2015 of $6.9 million. Tempo generated a strong cash position
from operations which, together with a capital raising of $9.5 million from Angophora Capital Pty Ltd and a $10 million
working capital facility, which remains fully undrawn, will help fund future growth expenditure.
REVIEW OF OPERATIONS
Tempo provides sector specialist multidisciplinary maintenance and construction services which protect and enhance our
clients’ investments, without ever compromising on our values.
Highlights of Tempo’s activities and operations for the year ended 31 December 2016 are presented as follows:
OPERATIONS
During 2016, the Company was awarded a contract extension for works at the Chevron-operated Barrow Island/Gorgon
LNG Project to support the Structural, Mechanical and Piping, Electrical & Instrumentation (SMPE&I) works. This work
continues in 2017. The business also completed the stage 2 installation and commissioning of process equipment at BHP
Billiton Iron Ore’s state of the art automated Ore Car repair shop facility.
The Company acquired the core assets of specialist electrical, telecom and data communications contractor, Cablelogic
Pty Limited, increasing Tempo’s capabilities in electrical, telecom and data communications, and expanding the business
into the industrial and commercial sectors. This integration was seamless and the business has since picked up a
number of new contract wins and master service agreements with leading companies.
The Company also made excellent progress developing relationships with other leading Oil & Gas and mining
organisations across Australia, and developed a number of joint ventures with large multinational corporations to focus
on projects in specific sectors.
The Company also invested in further developing its management systems and proprietary productivity tool kit, including its
Productivity Intelligence (patent pending) device, which has gained an excellent response from clients across the country.
During 2016, the Company received accreditations from SAI Global for its quality management system to ISO 9001,
13
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 our environment management system to ISO14001:2015 and its occupational health and safety certification to ISO AS/
NZS4801:2001.
BOARD AND MANAGEMENT
On 8 March 2016, Tempo announced that from 31 March 2016 Max Bergomi would assume the role of Chief Executive Officer
and Managing Director. A highly experienced and successful engineering and oil and gas industry executive, Max has held a
number of high-profile senior leadership roles during his 20-year career and his appointment is a key, strategic addition to
Tempo’s executive leadership team.
On 20 December 2016, as a term of Angophora Capital’s A$9.5 million investment, the Company welcomed Mr Guido
Belgiorno-Nettis AM as a non-executive director of Tempo.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Apart from the matters noted in the operations section above and in the financial statements and accompanying notes
attached, there were no other significant changes in the state of affairs.
AFTER BALANCE DATE EVENTS
Nil
LIKELY DEVELOPMENTS
Tempo will continue its existing strategy of delivering specialist multidisciplinary maintenance and construction services
to clients in the resources, industrial and commercial sectors.
ENVIRONMENTAL REGULATION
We take our commitment to the environment seriously. Everything we do revolves around our commitment to zero harm
to our people and the environment, and respecting the communities in which we operate.
We identify and adhere to all relevant regulatory and contractual obligations that we are required to meet. During the year,
Tempo received accreditation of its environmental management system to ISO14001:2015. Based on the results of enquiries
made, the directors are not aware of any material breaches of environmental legislation during the reporting period.
DIVIDEND PAID, RECOMMENDED AND DECLARED
No dividends were paid, declared or recommended since the start of the financial year.
SHARE OPTIONS
There were no repurchases or repayments of debt securities in the year.
In 2016, the Company:
• cancelled 4,000,000 options, being:
a) 2,000,000 C Class Unlisted Options – exercise price of $0.10 per ordinary share, expiring 21 March 2016; and
b) 2,000,000 D Class Unlisted Options – exercise price of $0.14 per ordinary share, expiring 21 March 2017.
• had 685,000 options expire without exercise, being:
a) 685,000 unlisted options issued under the Tempo ESOP - exercise price of $0.10 per ordinary share, expiring
09/04/2016.
• issued options as follows:
a) 1,500,000 Unlisted options issued under Tempo ESOP – can only be exercised on the achievement of certain vesting
conditions attached to the options and have an exercise price of $0.15 per ordinary share, expiring 7 August 2017.
b) 2,000,000 Unlisted options – can only be exercised on the achievement of certain vesting conditions attached to the
options and have an exercise price of $0.34 per ordinary share, expiring 30 June 2019.
• issued performance rights as follows:
a) 6,330,000 performance rights issued under the Employee Share Incentive Right Plan (ESIRP) approved by
shareholders at the 2016 AGM. The performance rights are subject to certain vesting conditions and convert to one
fully paid ordinary share for nil cash consideration, with various vesting periods between 15 March 2018 – 1 July
2019.
14
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016DIRECTORS’ REPORT SHARES ISSUED ON EXERCISE OF OPTIONS
There were 6,408,307 shares issued following the exercise of 8,421,000 options (all with an exercise price of $0.10). The
remaining 2,012,693 shares were transferred to option holders from shares held in the Tempo employee share trust.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
For the year ended 31 December 2016, Tempo had agreements to indemnify Directors and Officers of the Company
against all liabilities to persons (other than the Company or related body corporate) which arise out of the performance of
their normal duties as directors or executive officers unless the liability relates to conduct involving lack of good faith.
The Company agreed to indemnify the Directors and Executive Officers against all costs and expenses incurred in defending
an action that falls within the scope of the indemnity. The Directors’ and Officers’ liability insurance provides cover against
costs and expenses involved in defending legal actions and any resulting payments arising from a liability to persons (other
than the Company) incurred in their position as a Director or Executive Officer unless the conduct involves a wilful breach of
duty or an improper use of inside information or position to gain advantage.
The insurance policy does not allow specific disclosure of the nature of the liabilities insured against or the premium paid
under the policy.
The Company has not indemnified or agreed to indemnify the auditor of the Company.
PROCEEDINGS ON BEHALF OF THE CONSOLIDATED ENTITY
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity.
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
The directors of Tempo Australia Limited during the financial year and up to the date of this report are provided below,
together with Company Secretary.
MR CARMELO BONTEMPO – CHAIRMAN
Appointment: Initial appointment as Non-Executive-Director 3 August 2011
Appointed as Chairman 7 February 2014
Appointed as Executive Chairman 17 April 2014
Appointed as Non-Executive Chairman 31 March 2016
Experience and expertise: Mr Bontempo was one of the four founding partners of United Construction Holdings (today
known as UGL Limited), where he held the positions of General Manager and Executive Director. He was also Managing
Director of Monadelphous Group Limited and a key advisor to numerous private and publicly listed companies in Australia.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
MR GUIDO BELGIORNO-NETTIS AM – NON-EXECUTIVE DIRECTOR
BE Civil UNSW; MBA AGSM; FIEAust
Appointment: Initial appointment 22 December 2016
Experience and expertise: Guido is Managing Director of the private company, Transfield Holdings Pty Ltd, which changed
business focus in 2001 from Engineering and Construction to private equity. Leading up to this change, Guido held a number
of key positions within the Transfield Group, including Managing Director, CEO Transfield Engineering and Construction,
and Project Development Director. In 2015 he started his own Family Office – Angophora Capital Pty Ltd. Guido is Chairman
of the Australian Chamber Orchestra, and a Member of the Australian School of Business Advisory Council. He was named
a Member of the Order of Australia in 2007 for service to the construction industry and the arts. He holds a Bachelor of
Engineering from UNSW and an MBA from AGSM and is a fellow of Engineers Australia.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
MR PHILIP LOOTS – NON-EXECUTIVE DIRECTOR
BComm LLb, PMD Harvard
Appointment: Initial appointment 20 February 2014
Experience and expertise: Philip is a lawyer with a PMD from Harvard Business School and brings to the board significant
risk management experience in the development and construction of projects in the infrastructure, mining and oil and gas
sectors. Philip has had significant involvement in mega oil and gas projects in Western Australia and internationally.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
15
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016DIRECTORS’ REPORT
MR BRIAN THOMAS – NON-EXECUTIVE DIRECTOR
BSc, MBA, Grad Cert App Fin Inv, SAFin, MAICD, MAusIMM
Appointment: Initial appointment 7 April 2015
Experience and expertise: Brian is the principal of a corporate advisory practice working with small to mid-market
capitalisation companies in the areas of corporate finance, mergers & acquisitions and investor relations. Over the past 10 years
he has been an executive and Non-executive director with a number ASX listed companies. This followed a 12 year career in
corporate stockbroking, investment banking, funds management and banking after more than 20 years operational experience
in the energy and resources industry. He holds a Bachelor of Science from The University of Adelaide, an MBA from The
University of Western Australia and a Graduate Certificate in Applied Finance and Investment from FinSIA.
Current directorships in listed companies: Orinoco Gold Limited
Directorships in listed companies in the last three years: Go Energy Group Limited, Ensurance Limited, Potash Minerals
Limited, Noble Mineral Resources Limited.
MR MAX BERGOMI – CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
B.Eng. Management and Production, Graduate of Harvard Business School’s Advanced Management Program
Appointment: Initial appointment as Chief Executive Officer 11 January 2016
Appointment as Chief Executive Officer and Managing Director 31 March 2016
Experience and expertise: Max joined Tempo in January 2016 as Chief Executive Officer and on 31 March 2016 became
Tempo’s Chief Executive Officer and Managing Director. A highly experienced and successful engineering and oil and gas
industry executive, Max has held a number of high-profile senior leadership roles during his 20-year career.
Prior to joining Tempo, Max built a successful career with major Australian engineering and project services contractor, Clough
Ltd, over a period of eight years. He was previously Managing Director Australia and PNG for Clough’s Oil & Gas and Mining &
Minerals divisions. He has also held senior positions with Saipem and Maverick Tube Corporation in Milan, Houston, Jakarta
and London. Max has a Bachelor of Engineering (Management and Production) from the Politecnico of Milan. He is also a
graduate of the Harvard Business School’s Advanced Management Program.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
COMPANY SECRETARY
MR MICHAEL WEST
B.Com (Finance and Economics), B.Eng. Mechanical Engineering (Honours Class 1), GAICD
Appointment: Initial appointment as Non-executive director 23 June 2014 – Resigned on 7 April 2015
Appointment as CFO and Company Secretary 24 September 2014 - Current
Experience and expertise: Michael has extensive experience working in financial, strategy and commercial roles in private and
public businesses involved in the construction, maintenance, engineering, energy, private equity and investment banking sectors.
He holds a Bachelor of Commerce and a Bachelor of Mechanical Engineering (Honours Class I) from Sydney University.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: Tempo Australia Limited
16
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016DIRECTORS’ REPORT
DIRECTORS’ MEETINGS
The number of meetings of the board of directors and of each board committee held during the financial year and the
numbers of meetings attended by each director were:
Carmelo Bontempo
Guido Belgiorno-Nettis*
Philip Loots
Brian Thomas
Max Bergomi*
Directors’ meetings
Audit & Compliance Committee
Eligible to attend
Attended
Eligible to attend
Attended
13
-
13
13
9
13
-
12
13
9
3
-
3
3
-
3
-
3
3
-
* Guido Belgiorno-Nettis and Max Bergomi joined Board on 22 December 2016 and 31 March 2016 respectively.
Carmelo Bontempo
Guido Belgiorno-Nettis*
Philip Loots
Brian Thomas
Max Bergomi*
Nominations and Remuneration Committee
Risk, HSE and Commercial Committee
Eligible to attend
Attended
Eligible to attend
Attended
3
-
3
3
-
3
-
3
3
-
4
-
4
4
4
4
-
4
4
4
* Guido Belgiorno-Nettis and Max Bergomi joined Board on 22 December 2016 and 31 March 2016 respectively.
DIRECTORS’ INTERESTS IN SHARES OR OPTIONS AND RIGHTS OVER SHARES
Current directors’ relevant interests in shares of Tempo Australia Limited or options over shares in the Company at the
date of this report are detailed below:
Carmelo Bontempo
Guido Belgiorno-Nettis
Max Bergomi
Philip Loots
Brian Thomas
Total
Ordinary shares
Options and rights over
ordinary shares
42,021,632
38,000,000
3,835,000
2,000,000
-
85,856,632
2,000,000
-
5,500,000
2,000,000
-
9,500,000
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration in relation to the audit for the financial year is provided within this
financial report.
NON-AUDIT SERVICES
Non-audit services are approved by the board of directors. Non-audit services provided by the Company’s auditors, RSM
Australia are detailed below. The directors are satisfied that the provision of the non-audit services during the year by the
auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
Amounts paid or payable to an auditor for non-audit services provided during the year by the auditor to any entity that is
part of the consolidated entity for:
Taxation services
2016
$
-
2015
$
8,550
17
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016DIRECTORS’ REPORT
REMUNERATION
REPORT – AUDITED
REMUNERATION POLICIES
The board policy for determining the nature and amount of remuneration of directors and executives is agreed by the
board of directors as a whole. The board obtains professional advice where necessary to ensure that the Company
attracts and retains talented and motivated directors and employees who can enhance Company performance through
their contributions and leadership.
For directors and executives, the Company provides a remuneration package that incorporates both cash-based
remuneration and share-based remuneration. The contracts for service between the Company and specified directors
and executives are on a continuing basis, the terms of which are not expected to change in the immediate future aside
from normal negotiations on contracts as they approach their conclusion and the normal annual review processes.
As the Company is transitioning from a start-up to a sustainable business, the board has sought to align remuneration of
directors and executives with industry best practice, including setting of short-term and long-term incentives and targets.
SHORT-TERM INCENTIVE PLAN (STIP)
For Key Management Personnel, a Short-Term Incentive Plan (STIP) has been developed which enables eligible members
to a cash bonus, based on annual performance of the Company against a range of metrics. These targets include
performance against; financial metrics such as profitability, cash flow, costs, and order intake; leadership targets, such
as engagement with workforce and leadership behaviour; operational metrics such as customer satisfaction, system
development and governance; and Risk and HSE targets.
LONG-TERM INCENTIVE PLAN (LTIP)
A Long-Term Incentive Plan (LTIP) has also been developed which will allow eligible employees to options or
performance rights in the Company. Any issue under the LTIP would be subject to vesting over three years subject to
continued, performance of the Total Shareholder Returns (TSR) of the Company versus the ASX300 over the vesting
period and future earnings per share growth over the vesting period.
NON-EXECUTIVE DIRECTOR REMUNERATION
Non-executive directors receive fees and share-based remuneration. The Company determines the maximum amount for
remuneration, including thresholds for share-based remuneration, for directors by resolution. ASX listing rules require
the aggregate non-executive directors remuneration be determined periodically by a general meeting. The most recent
determination was at the Annual General Meeting held on 7 October 2011, where the shareholders approved an aggregate
remuneration of $500,000. Directors’ share-based remuneration was voted on by members at general meetings.
VOTING AND COMMENTS MADE AT THE COMPANY’S 31 MAY 2016 ANNUAL GENERAL MEETING (‘AGM’)
At the last AGM held on 31 May 2016, 99.5% of the votes received supported the adoption of the remuneration report
for the year ended 31 December 2015. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
18
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 DIRECTORS’ AND EXECUTIVES’ COMPENSATION
(a) Details of Directors and Key Management Personnel
The directors and key management personnel during the year ended 31 December 2016 were:
Directors
Carmelo Bontempo
Chairman
(Appointed Chairman 31 March 2016)
(Appointed as Executive Chairman 17 April 2014)
(Appointed as Chairman 7 February 2014)
(Joined as Non-Executive Director 3 August 2011)
Guido Belgiorno-Nettis Non-Executive Director
Philip Loots
Brian Thomas
Max Bergomi
Executive
Michael West
(Joined as Non-Executive Director 22 December 2016)
Non-Executive Director
(Joined as Non-Executive Director 20 February 2014)
Non-Executive Director
(Joined as Non-Executive Director 7 April 2015)
CEO and Managing Director
(Joined Board as Managing Director on 31 March 2016)
(Began as CEO on 11 January 2016)
Chief Financial Officer and Company Secretary
(Resigned from Board 7 April 2015 to continue as Chief Financial Officer and Company Secretary)
(Appointed as Executive Director, Chief Financial Officer and Company Secretary 24 September 2014)
(Joined as Non-Executive Director 23 June 2014)
Daniel Hibbs
Chief Operating Officer
(Appointed 5 November 2012, ceased employment 22 February 2017)
KEY MANAGEMENT PERSONNEL COMPENSATION
Short-Term
Post-employment
Long-
term
Share-based
payment
Total
Salary
fees
Cash
bonus
Non-
monetary
Other
Super-
annuation
Other
payments
Incentive
plans
Options
granted
Rights
granted
$
$
$
$
$
$
$
$
$
$
2016
Carmelo
Bontempo
13,713
Max Bergomi 389,735
Daniel Hibbs
321,606
Philip Loots
15,000
-
-
-
Michael West 225,004
63,750
Brian Thomas
28,921
-
Total
993,979
63,750
2015
Carmelo
Bontempo
$
13,698
$
-
$
Daniel Hibbs
321,601
90,000
Philip Loots
15,000
-
Michael West 225,001
67,500
Brian Thomas
10,063
Nick Bowen*
13,750
-
-
Total
599,113
157,500
* Resigned 22 November 2015.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
1,303
19,462
30,818
-
19,462
2,603
73,648
$
$
1,302
39,233
-
27,271
14,000
956
-
1,307
14,000
70,069
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
61,957
-
76,973
49,445
210,200
668,842
15,188
23,508
-
-
-
-
367,612
38,508
97,364
405,580
31,524
150,098
307,564
1,589,039
$
$
$
-
62,767
26,357
-
-
-
89,124
-
-
-
-
-
-
-
15,000
513,601
41,357
319,772
25,019
15,057
929,806
Total
Perform-
ance
Related
%
80%
39%
4%
61%
40%
0%
%
0%
30%
64%
21%
0%
0%
19
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016REMUNERATION REPORT – AUDITED
DIRECTORS’ AND EXECUTIVES’ EQUITY HOLDINGS
SHAREHOLDING
The number of ordinary shares in the parent entity held during the financial year by each director and other member
management personnel of the consolidated entity, including their personally related parties, is set out below:
2016
Balance at the
start of the year
Received as part of
remuneration
Additions
Disposals/
other
Balance at the
end of the year
Carmelo Bontempo
42,021,632
Guido Belgiorno-Nettis
Brian Thomas
Daniel Hibbs
Philip Loots
Michael West
Max Bergomi
Total
2015
-
-
1,231,000
-
528,000
3,835,000
47,615,632
-
-
-
-
-
-
-
-
-
38,000,000
-
4,421,000
2,000,000
-
-
-
-
-
(2,302,200)
-
-
-
42,021,632
38,000,000
-
3,349,800
2,000,000
528,000
3,835,000
44,421,000
(2,302,200)
89,734,432
Balance at the
start of the year
Received as part of
remuneration
Additions
Disposals/
other
Carmelo Bontempo
39,021,632
Brian Thomas
Daniel Hibbs
Philip Loots
Michael West
Nick Bowen*
Total
* Resigned 22 November 2015.
-
921,000
-
-
5,847,954
45,790,586
-
-
-
-
-
-
-
3,000,000
-
310,000
-
528,000
-
3,838,000
-
-
-
-
-
(5,847,954)
(5,847,954)
Balance at the
end of the year
42,021,632
-
1,231,000
-
528,000
-
43,780,632
Option holding
The number of options over ordinary shares in the parent entity held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties is set out below:
Balance at the
start of the year
Granted
Exercised
Expired/ forfeited/
other
Balance at the
end of the year
-
-
-
5,106,000
4,000,000
-
-
9,106,000
2,000,000
-
-
-
-
-
1,500,000
3,500,000
-
-
-
(4,421,000)
(2,000,000)
-
-
-
-
-
(685,000)
-
-
-
(6,421,000)
(685,000)
2,000,000
-
-
-
2,000,000
-
1,500,000
5,500,000
Balance at the
start of the year
Granted
Exercised
Expired/ forfeited/
other
Balance at the
end of the year
-
-
3,381,000
4,000,000
-
4,000,000
11,381,000
-
-
2,000,000
-
-
-
2,000,000
-
-
-
-
-
-
-
-
-
(275,000)
-
-
(4,000,000)
(4,275,000)
-
-
5,106,000
4,000,000
-
-
9,106,000
2016
Carmelo Bontempo
Guido Belgiorno-Nettis
Brian Thomas
Daniel Hibbs
Philip Loots
Michael West
Max Bergomi
Total
2015
Carmelo Bontempo
Brian Thomas
Daniel Hibbs
Philip Loots
Michael West
Nick Bowen
Total
20
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016REMUNERATION REPORT – AUDITED RIGHTS HOLDING
The number of rights over ordinary shares in the parent entity held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties is set out below:
2016
Carmelo Bontempo
Guido Belgiorno-Nettis
Brian Thomas
Daniel Hibbs
Philip Loots
Michael West
Max Bergomi
Total
Balance at the
start of the year
Granted
Exercised
Expired/ forfeited/
other
Balance at the
end of the year
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
4,000,000
6,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
4,000,000
6,000,000
TRANSACTIONS WITH RELATED PARTIES
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
None in 2016.
Details concerning share-based compensation of directors and executives:
Options
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
28/02/2014
28/03/2016
$0.10
3,106,000
30/05/2014
21/03/2016
$0.10
2,000,000
30/05/2014
21/03/2017
$0.14
2,000,000
14/04/2015
9/04/2016
$0.10
2,000,000
Granted
Exercised
Expired /
forfeited/
other
Balance at
the end of
the year
Vested at
the end of
year
-
-
-
-
(3,106,000)
(2,000,000)
-
-
-
-
-
-
2,000,000
(1,315,000)
(685,000)
-
11/02/2016
7/08/2017
9/06/2016
30/06/2019
10/06/2016
10/06/2031
10/06/2016
10/06/2031
10/06/2016
10/06/2031
$0.15
$0.34
$0.00
$0.00
$0.00
-
-
-
-
-
1,500,000
2,000,000
2,500,000
1,500,000
2,000,000
-
-
-
-
-
-
-
-
-
-
1,500,000
2,000,000
2,500,000
1,500,000
2,000,000
Total Granted
9,106,000
3,500,000
(6,421,000)
(685,000)
5,500,000
Weight average exercise Price
$0.11
$0.26
$0.10
$0.10
$0.22
Vesting
Date
28/02/2016
22/02/2016
22/02/2017
28/02/2016
7/07/2017
31/05/2019
1/07/2018
1/07/2019
21/12/2018
-
-
-
-
-
-
-
-
-
-
-
Performance Rights
Grant date Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired /
forfeited/
other
Balance at
the end of
the year
Vested at the
end of year
Vesting
Date
10/06/2016
10/06/2031
10/06/2016
10/06/2031
10/06/2016
10/06/2031
Total Granted
$0.00
$0.00
$0.00
-
-
-
-
-
2,500,000
1,500,000
2,000,000
6,000,000
-
-
-
-
-
-
-
-
2,500,000
1,500,000
2,000,000
6,000,000
1/07/2018
1/07/2019
21/12/2018
-
-
-
-
For the options and rights granted during the current financial year, the valuation model inputs used to determine the
fair value at the grant date are as follows:
Grant date
Expiry date
Share price at
grant date
Exercise price
Expected
volatility
Dividend yield
Risk-free
interest rate
Fair value at
grant date
11/02/2016
7/08/2017
9/06/2016
30/06/2019
$0.110
$0.235
$0.15
$0.34
125%
124%
-
-
1.75%
1.65%
$0.0539
$0.1590
For the performance rights granted during the current financial year, the valuation model inputs used to determine the
fair value at the grant dates are as follows:
Grant date
Number of Rights
Underlying share price
Probability %
10/06/2016
10/06/2016
3,000,000
3,000,000
$0.235
$0.206
100%
100%
Value
$
705,000
618,000
21
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016REMUNERATION REPORT – AUDITED
Additional information
The earnings of the consolidated entity for the five years to 31 December 2016 are summarised below:
Revenue
EBITDA
EBIT
Profit/(loss) after income tax
2016
$
2015
$
2014
$
2013
$
81,142,374
78,079,491
16,026,422
14,006,914
6,392,674
6,200,759
5,454,698
4,578,810
4,504,939
6,739,995
(1,859,910)
(1,935,510)
(1,306,483)
(441,873)
(517,473)
(450,393)
2012
$
5,967,386
(1,578,392)
(1,616,192)
(1,237,319)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
0.230
-
2.713
0.120
-
3.449
0.050
-
(0.772)
0.040
-
(0.294)
0.085
-
(0.858)
SERVICE AGREEMENTS
The company currently has service agreements with its directors. The agreements detailing the formal terms and
conditions of the appointment, expected time commitment, procedure regarding conflicts of interest, performance
appraisal, remuneration, superannuation and insurance arrangements. The Tempo Constitution governs the election
and appointment of directors, rotation of elected directors, casual vacancies and eligibility for election. The terms and
entitlements of non-executive directors are governed by normal employment law.
The following summarises the key provisions of service agreements with executives:
Name:
Title:
Max Bergomi
Chief Executive Officer and Managing Director
Agreement commenced: 11 January 2016
Term of agreement:
Permanent full time
Details:
Fixed remuneration of $420,000 per annum (including statutory superannuation). 1,500,000
unlisted options to be issued under the Tempo Employee Share Incentive Rights Plan (ESIRP)
to acquire shares in the Company at an exercise price of 15 cents each expiring 7 August 2017.
Subject to shareholder approval at the 2016 Annual General Meeting, 4,000,000 performance rights
(Performance Rights) in two tranches: Tranche 1: 2,500,000 Performance Rights vesting on 1 July
2018; and Tranche 2: 1,500,000 Performance Rights vesting on 1 July 2019. The Performance Rights
will be subject to performance hurdles agreed by the Board and based on relative performance of
Total Shareholder Returns (TSR) to the ASX300 and Earnings Per Share growth. Employment may
be terminated by the Company with six months’ notice. Mr Bergomi may terminate by giving the
Company three months’ notice. The Company can terminate the ESA without notice for serious or wilful
misconduct. The ESA contains a three (3) month Australia wide restraint of trade provision from the
date employment ceases.
Name:
Title:
Michael West
Chief Financial Officer / Company Secretary
Agreement commenced: 26 September 2014
Term of agreement:
Permanent full time
Details:
Base salary of $225,000 per annum plus superannuation. Three (3) months termination notice by
either party, bonus of up to 30% subject to the satisfaction of specified milestones and performance
criteria (both individual and company). Entitled to participate in the company’s Employee Share
Incentive Rights Plan (ESIRP) to the value of 30% of base salary subject to the satisfaction of specified
milestones and performance criteria (both individual and company).
Signed in accordance with a resolution of the directors.
Carmelo Bontempo
Director
Date: 27 February 2017
22
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016REMUNERATION REPORT – AUDITED
AUDITOR’S INDEPENDENCE DECLARATION
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Tempo Australia Limited for the year ended 31 December
2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 27 February 2017
TUTU PHONG
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Aust ralia Part ners is a member of t he RSM net work and trades as RSM. RSM is t he t rading name used by t he members of t he RSM net work. Each member of t he RSM net work is an independent
accounting and consulting firm which practices in it s own right . The RSM net work is not itself a separat e legal entit y in an y jurisdiction.
RSM Aust ralia Part ners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
23
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Revenue
Other income
Revenue
Employee and director benefits expense
Administration costs
Occupancy costs
Depreciation and amortisation
Other expenses
Listing and other statutory charges
Interest and finance charges
Other professional expenses
Total expenses
Note
3
3
8, 11
4
Consolidated entity
2016
$
81,142,374
227,965
81,370,339
66,341,992
557,808
289,254
191,915
2015
$
78,079,491
1,074,262
79,153,753
54,840,307
343,232
250,320
73,870
6,884,467
17,358,165
58,256
212,186
711,187
19,046
492,483
689,691
75,247,065
74,067,114
Profit before income tax expense
6,123,274
5,086,639
Income tax expense
Profit attributable to the members of the parent
Other comprehensive income
Total comprehensive income
Net profit attributable to members of the parent entity
Earnings per share
Basic earnings (loss) – cents per share
Diluted earnings (loss) – cents per share
5
17
17
(668,576)
5,454,698
5,454,698
5,454,698
1,653,356
6,739,995
6,739,995
6,739,995
2.713
2.713
3.449
3.449
24
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
STATEMENT OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2016
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
NON-CURRENT ASSETS
Plant and equipment
Goodwill
Intangibles
Deferred tax assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Borrowing
Provisions (including employee benefits)
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities
Borrowings
Provisions (including employee benefits)
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Share based payment reverse
Accumulated losses
Total equity
Consolidated entity
Note
2016
$
2015
$
6
7
8
9
11
21
12
13
14
21
13
14
15
25,711,347
5,779,937
93,403
592,886
32,177,573
892,417
3,118,087
-
2,941,961
6,952,465
7,426,812
20,290,736
-
310,853
28,028,401
400,383
3,118,087
-
2,886,457
6,404,927
39,130,038
34,433,328
2,536,269
690,083
5,231,145
8,457,497
114,344
44,518
45,198
204,060
12,301,341
354,854
7,583,273
20,239,468
73,566
179,353
-
252,919
8,661,557
20,492,387
30,468,481
13,940,941
80,075,545
1,333,472
(50,940,536)
30,468,481
70,153,493
182,682
(56,395,234)
13,940,941
25
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Consolidated
Issued capital
Accumulated losses
Share-based
payments reserve
Total equity
$
$
$
$
At 1 January 2015
70,153,493
(63,135,229)
84,647
7,102,911
Profit
Other comprehensive income
Total comprehensive income
Share based payments
Transaction costs
-
-
-
-
-
6,739,995
-
6,739,995
-
-
-
-
-
98,035
-
6,739,995
-
6,739,995
98,035
-
At 31 December 2015
70,153,493
(56,395,234)
182,682
13,940,941
At 1 January 2016
Profit
Other comprehensive income
Total comprehensive income
Share issues
Share based payments
Options exercised
Treasury shares
Transaction costs
Acquisition of treasury shares
Tax effect relating to share based
payment
Tax effect relating to share issue cost
70,153,493
-
-
-
11,548,409
-
842,100
(19,125)
(214,204)
(2,247,980)
-
12,853
(56,395,234)
5,454,698
-
5,454,698
-
-
-
-
-
-
-
-
182,682
-
-
-
-
480,340
-
-
-
-
670,450
-
13,940,941
5,454,698
-
5,454,698
11,548,409
480,340
842,100
(19,125)
(214,204)
(2,247,980)
670,450
12,853
At 31 December 2016
80,075,545
(50,940,536)
1,333,472
30,468,481
26
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Consolidated Entity
Note
2016
$
2015
$
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers, employees and transfers to administrator
Interest and finance charges paid
Interest received
Net cash provided by operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Payment for acquisition of business
Payments for property plant and equipment
Net cash (used in) investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Payment for shares acquired by Employee Share Trust
Proceeds from issue of equity instruments
Equity issue transaction cost
Proceeds from borrowings
Loan repayment
Net cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Total cash and cash equivalents at the end of the year
16
20
96,339,903
(87,131,577)
(245,686)
170,677
9,133,317
(605,159)
(247,570)
(852,729)
(409,121)
10,342,100
(24,204)
1,967,725
(1,872,553)
10,003,947
18,284,535
7,426,812
25,711,347
72,550,181
(65,401,048)
(492,483)
73,171
6,729,821
-
(360,660)
(360,660)
-
-
-
1,051,400
(1,117,193)
(65,793)
6,303,368
1,123,444
7,426,812
27
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
NOTES TO THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTE 1: BASIS OF PREPARATION
Tempo Australia Limited is domiciled in Australia.
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, including Australian Accounting Interpretations, of the Australian Accounting
Standards Board (AASB) and the Corporations Act 2001. The entity is a for-profit entity for financial reporting purposes
under Australian Accounting Standards.
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only. Supplementary information about the parent entity is disclosed in the notes to the financial statements.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial
statements containing relevant and reliable information about transactions, events and conditions. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International
Financial Reporting Standards. Material accounting policies adopted in the preparation of the financial statements are
presented below and have been consistently applied unless stated otherwise.
The financial statements were authorised for issue on 27 February 2017 by the directors of the Company.
The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial
assets and liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar.
The following is a summary of material accounting policies adopted by the consolidated entity in the preparation and
presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
The consolidated entity has adopted all of the new, revised and amending Accounting Standards and Interpretations
issued by the AASB for the current reporting period. The adoption of these Accounting Standards and Interpretations did
not have a material impact on the financial performance or position of the consolidated entity.
Summary of the significant accounting policies:
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Tempo Australia Limited
('Company' or 'parent entity') as at 31 December 2016 and the results of all subsidiaries for the year then ended. Tempo
Australia Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the
date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.
28
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 (B) BUSINESS COMBINATIONS
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities
or businesses under common control. The business combination will be accounted for from the date that control is
attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed
is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability is re-measured in each reporting period to fair value, recognising any
change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive
income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
(C) REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. When the inflow of consideration is deferred, it is treated as the provision of
financing and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The
difference between the amount initially recognised and the amount ultimately received is interest revenue.
Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the
transaction at the end of the reporting period, when the outcome of the contract can be estimated reliably. The stage of
completion is determined with reference to the services performed to date as a percentage of total anticipated services
to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related
expenditure is recoverable.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant
risks and rewards of ownership of the goods and the cessation of all involvement in those goods.
Interest revenue is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax (GST).
(D) EMPLOYEE BENEFITS
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to the
end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at
the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been
measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the
liability, consideration is given to employee wage increases and the probability that the employee may satisfy any vesting
requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity
that match the expected timing of cash flows attributable to employee benefits.
Share Based Payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount
of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that
do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either
the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the
award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
• from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
29
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS NOTE 1: BASIS OF PREPARATION CONTINUED
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid
to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other
conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not
satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period,
unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
(E) INCOME TAX
The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense
(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets)
are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year
as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled and their measurement also reflects the manner in which management expects to
recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax
assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets
and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective
asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are
expected to be recovered or settled.
(F) PLANT AND EQUIPMENT
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and
any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated
recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and
impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a
re-valued asset. A formal assessment of recoverable amount is made when impairment indicators are present.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost
of the item can be measured reliably. All other repairs and maintenance are recognised as an expense in the statement of
comprehensive income during the financial period in which they are incurred.
30
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS Depreciation is provided on a straight-line basis over the asset’s useful life to the consolidated entity commencing
from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the
unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used are listed as below:
Asset Class
Furniture and fixtures
IT
Plant & Equipment
Motor Vehicles
Depreciation rate
25%
25%
25%
25%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are included in the statement of comprehensive income. When re-valued assets are sold, amounts included in the
revaluation surplus relating to that asset are transferred to retained earnings.
(G) OPERATING LEASES
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are
classified as operating leases. For operating leases, lease payments are recognised as an expense in the profit or loss
on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time
pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in profit
or loss as an integral part of the total lease expenses.
(H) INTANGIBLES
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years.
(I) IMPAIRMENT OF NON-FINANCIAL ASSETS
At the end of each reporting period, the consolidated entity assesses whether there is any indication that an asset may
be impaired. The assessment will include the consideration of external and internal sources of information. If such
an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of
the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is
carried at a re-valued amount in accordance with another Standard. Any impairment loss of a re-valued asset is treated
as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with infinite lives.
(J) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are reported within
short-term borrowings in current liabilities in the statement of financial position, if any. For the statement of cash flows,
the item includes cash and cash equivalents less cash subject to restriction, if any.
(K) FINANCIAL INSTRUMENTS
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to
the instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase
or sale of the asset.
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of
the difference between that initial amount and the maturity amount calculated using the effective interest method.
31
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS NOTE 1: BASIS OF PREPARATION CONTINUED
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term)
of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected
future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an
income or expense item in profit or loss.
The consolidated entity does not designate any interests in subsidiaries, associates or joint venture entities as being
subject to the requirements of Accounting Standards specifically applicable to financial instruments.
(i) Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose
of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid
an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk management or investment strategy.
Such assets are subsequently measured at fair value with changes in carrying amount being included in profit or loss.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through
the amortisation process and when the financial asset is derecognised.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable
payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial
asset is derecognised.
(iv) Available-for-sale investments
Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into
other categories of financial assets due to their nature or they are designated as such by management. They comprise
investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with any re-measurements other than impairment losses and foreign
exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the
cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified
into profit or loss. Available-for-sale financial assets are classified as non-current assets when they are expected to be
sold after 12 months from the end of the reporting period. All other available-for-sale financial assets are classified as
current assets.
(v) Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is
derecognised.
(L) INVESTMENTS
Investments are initially recorded at cost, being the fair value of the consideration given and including acquisition charges
associated with the investment. After initial recognition, investments, which are classified as available-for-sale, are
measured at fair value.
(M) GOODWILL
Goodwill is carried at cost less any accumulated impairment losses.
Goodwill is calculated as the excess of the sum of:
(i)
the consideration transferred;
(ii) any non-controlling interest; and
(iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair
value of any previously held equity interest shall form the cost of the investment in the separate financial statements.
32
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where
changes in the value of such equity holdings had previously been recognised in other comprehensive income, such
amounts are recycled to profit or loss.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included
in investments in associates.
Goodwill is tested for impairment annually and is allocated to a cash-generating unit or groups of cash-generating units,
representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains and losses
on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of. Changes in the
ownership interests in a subsidiary are accounted for as equity transactions and do not affect the carrying amounts of
goodwill.
(N) IMPAIRMENT
At the end of each reporting period, the consolidated entity assesses whether there is objective evidence that a financial
asset has been impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events (a “loss event”) having occurred, which has an impact
on the estimated future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument
is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any
cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at
this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group
of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments;
indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic
conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used
to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures
of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the
written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced
directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the
consolidated entity recognises the impairment for such financial assets by taking into account the original terms as if the
terms have not been renegotiated so that the loss events that have occurred are duly considered.
(O) TRADE AND OTHER RECEIVABLES
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary
course of business. Receivables expected to be collected within 12 months of the end of the reporting period are
classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment.
(P) TRADE AND OTHER PAYABLES
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the
end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days
of recognition of the liability.
(Q) CURRENT AND NON-CURRENT CLASSIFICATION
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as
non-current.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as
non-current.
Deferred tax assets and liabilities are always classified as non-current.
33
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS NOTE 1: BASIS OF PREPARATION CONTINUED
(R) BORROWINGS
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
(S) FAIR VALUE MEASUREMENT
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
(T) ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(U) EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the entity, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
(V) NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 31 December
2016. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset
shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order
to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading)
in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair
value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch).
New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk
management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to
recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The
standard introduces additional new disclosures. The consolidated entity will adopt this standard from 1 January 2018 but
the impact of its adoption is yet to be assessed by the consolidated entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied)
to be identified, together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance
obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will
be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the
service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied
over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised
as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial
34
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will adopt this
standard from 1 January 2018 but the impact of its adoption is yet to be assessed by the consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to
exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value
of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases
of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to
profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge
for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher
when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in
profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated
into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for leases. The consolidated entity will
adopt this standard from 1 January 2019 but the impact of its adoption is yet to be assessed by the consolidated entity.
NOTE 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements,
estimates and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates
will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial
or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The
accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Goodwill
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined
based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount
rates based on the current cost of capital and growth rates of the estimated future cash flows.
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is
required in determining the provision for income tax. There are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises
liabilities for tax based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of
these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions
in the period in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for tax losses and deductible temporary differences only if the consolidated entity
considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay
increases through promotion and inflation have been taken into account.
35
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS NOTE 3
REVENUE
Revenues from operations
Other income
Total revenue
NOTE 4
OTHER EXPENSES
Project recoverable cost
Project material cost
Candidate screening cost
Equipment and subcontractor costs
Total other expenses
NOTE 5
INCOME TAX
Profit before income tax
At the statutory income tax rate of 30% (2015: 30%)
Tax effect of amounts which are not deductible in calculating taxable income
Tax effect relating to share based payment
Tax effect relating to share issue cost
Adjustment relating to prior years
Recognition of previously unrecognised prior year tax losses
Income tax expense (benefit)
NOTE 6
RECEIVABLES
CURRENT
Trade receivables
Other receivables
Accrued income
Total current receivables
Consolidated entity
2016
$
81,142,374
227,965
81,370,339
2015
$
78,079,491
1,074,262
79,153,753
Consolidated entity
2016
$
2015
$
(2,797,003)
(274,731)
(3,812,733)
(6,884,467)
(5,833,548)
(945,603)
(10,579,014)
(17,358,165)
Consolidated entity
2016
$
6,123,274
1,836,982
(527,838)
481,087
(12,852)
-
(1,108,803)
668,576
2015
$
5,086,639
1,525,992
(250,340)
433,459
(3,362,467)
(1,653,356)
Consolidated entity
2016
$
2015
$
4,897,135
221,782
661,020
5,779,937
6,636,710
-
13,654,026
20,290,736
The Accrued income shown at each balance date has all been subsequently invoiced and converted to cash or retention.
The following table details the trade and other receivables exposed to credit risk with ageing analysis and impairment
provided for thereon. Amounts are considered as “past due” when the debt has not been settled; with the terms and
conditions agreed between the consolidated entity and the customer or counterparty to the transaction. Receivables that
are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are
specific circumstances indicating that the debt may not be fully paid to the consolidated entity.
36
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high
credit quality.
Gross amount
Past due and
impaired
$
$
Past due but not impaired
< 30
$
31 - 60
$
61 - 90
$
>90
$
-
-
-
-
-
-
-
-
2,553,877
5,002
4,250
-
-
-
34,896
33,742
-
2,316
-
-
2,558,127
5,002
68,638
2,316
89,603
-
-
89,603
-
-
-
-
-
-
-
-
-
-
-
-
2016
Trade and term receivables
4,897,135
Other receivables
Accrued income
Total
2015
221,782
661,020
5,779,937
Trade and term receivables
6,636,710
-
13,654,026
20,290,736
Other receivables
Accrued income
Total
NOTE 7
OTHER CURRENT ASSETS
Prepayments
Insurances
Other
Total other current assets
NOTE 8
PLANT AND EQUIPMENT
Furniture and fixtures - at Cost
Furniture and fixtures - accumulated depreciation
Net book value furniture and fixture
Plant and equipment - at cost
Plant and equipment - accumulated depreciation
Net book value plant and equipment
IT – at cost
IT – accumulated depreciation
Net book value IT
Motor vehicles – at cost
Motor vehicles – accumulated depreciation
Net book value motor vehicle
Total cost
Total accumulated depreciation
Total net book value
Reconciliations
Reconciliations of the carrying amounts of plant and equipment at the beginning and
end of the current financial year
Consolidated entity
2016
$
2015
$
519,502
73,384
592,886
270,033
40,820
310,853
Consolidated entity
2016
$
2015
$
83,841
(28,351)
55,490
100,811
(52,156)
48,655
691,848
(191,732)
500,116
314,364
(26,208)
288,156
1,190,864
(298,447)
892,417
65,664
(16,351)
49,313
46,343
(42,097)
4,246
395,175
(48,351)
346,824
-
-
-
507,182
(106,799)
400,383
37
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
-
-
-
-
-
-
347,864
(33,500)
75,793
360,660
-
(36,070)
400,383
281,070
436,380
(33,500)
NOTE 8 CONTINUED
Furniture and
fixtures
$
Plant and
equipment
$
IT
$
Motor vehicles
$
Total
$
Balance at 1 January 2015
Additions
Disposals
11,478
43,518
-
12,392
-
-
51,923
317,142
-
Depreciation expense
(5,683)
(8,146)
(22,241)
Balance at 31 December 2015
Additions
Additions through business combinations (note 20)
Disposals
Depreciation expense
49,313
13,526
4,652
-
4,246
-
54,468
-
346,824
267,544
29,396
-
(12,001)
(10,059)
(143,648)
(26,208)
(191,916)
Balance at 31 December 2016
55,490
48,655
500,116
288,156
892,417
NOTE 9
GOODWILL
Goodwill – at cost
Accumulated impairment losses
Net carrying amount
Reconciliations
Reconciliations of the carrying amounts of Goodwill at the beginning and end of the
current financial year
Carrying amount at beginning of year
Acquisitions through business combinations
Amortisation expense
Impairment
Carrying amount at end of year
Consolidated entity
2016
$
2015
$
3,118,087
3,118,087
-
-
3,118,087
3,118,087
3,118,087
3,118,087
-
-
-
-
-
-
3,118,087
3,118,087
Impairment disclosures
Goodwill is allocated to Tempo Personnel Management (previously known as Tempo Industry Partners). Goodwill has an
infinite useful life.
The recoverable amount of the cash-generating unit is determined based on value-in-use calculations. Value-in-use is
calculated based on the present value of cash flow projections over a 5-years period with the period extending beyond
1 year extrapolated using an estimated growth rate. The cash flows are discounted using a discount rate which reflects
management’s estimate of the time value of money and the group’s weighted average cost of capital, the risk free rate
and the volatility of the share price relative to market movements.
The following assumptions were used in the value-in-use calculations:
Growth Rate (revenue and expense)
Discount Rate
5.00%
19.5%
The Directors believe that any reasonable change in the key assumptions on which the recoverable amount of the CGU is
based would not cause the CGU’s carrying amount to exceed its recoverable amount.
38
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 10
SEGMENT REPORTING
The Group has identified its operating segment based on internal management reporting that is reviewed by the Board of
Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
The group operated in one segment being the resources services segment.
Major customers
The consolidated entity has a number of customers to which it provides services. The consolidated entity supplies a
single external customer who accounts for 82% of external revenue (2015: 49%). The next most significant customer
accounts for 12% (2015: 41%).
NOTE 11
INTANGIBLE ASSETS
Customer contracts – at cost
Customer contracts – accumulated amortisation
Net book value customer contracts
Reconciliations
Reconciliations of the carrying amounts of Intangibles at the beginning and end of the
current financial year
Carrying amount at beginning of year
Amortisation expense
Impairment
Carrying amount at end of year
Consolidated entity
2016
$
2015
$
-
-
-
-
-
-
-
-
-
-
37,800
(37,800)
-
-
Intangible assets have finite useful lives. The current amortisation charges for intangible assets are included under
depreciation and amortisation expense per the statement of comprehensive income.
The intangible asset - customer contracts, is expected to have a finite useful life of 3 years. It has been amortised on
straight line basis over 3 years.
NOTE 12
PAYABLES
Trade payables
Other payables
Total payables
NOTE 13
BORROWINGS
Current
Consolidated entity
2016
$
636,636
1,899,633
2,536,269
2015
$
2,152,357
10,148,984
12,301,341
Consolidated entity
2016
$
2015
$
Other finance facilities (equipment, insurance, software)
690,083
354,854
Non-current
Other finance facilities (equipment, insurance, software)
Total borrowings
44,518
734,601
179,353
534,207
39
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 13 CONTINUED
Financing arrangements
Access was available at the reporting date to the following line of credits:
Total facility limit
Total facility limit
Consolidated entity
2016
$
2015
$
10,734,601
10,534,207
10,734,601
10,534,207
Used at the reporting date
734,601
534,207
Unused at the reporting date*
10,000,000
10,000,000
Total facility limit
10,734,601
10,534,207
*availability to borrow depends on prevailing debtor balances at any point in time
Tempo has a $10,000,000 Invoice Finance Facility with the National Australia Bank Limited (‘NAB’), that is completely
undrawn at present. It is secured by a first ranking general security interest, a security interest registered pursuant to
the Invoice Finance Facility Agreement and a Guarantee and Indemnity given by the Company. The applicable interest rate
at 31 December 2016 was 6.27%.
Other various financing agreements in place amount to $734,601, which relate to financing for equipment, software and
insurance funding. These agreements vary in interest rates from 2.25% to 6.5% and are generally secured against the
item purchased.
Bank Guarantees and Surety Bonds
The Company has access to Bank Guarantee facilities of up to $2 million and surety bond facilities of $14.5 million.
NOTE 14
PROVISIONS (INCLUDING EMPLOYEE BENEFITS)
Current provisions
Employee benefits
Other provisions
Total current provisions
Non - current provisions
Employee benefits
Total non - current provisions
Consolidated entity
2016
$
2015
$
2,554,508
2,676,637
5,231,145
45,198
45,198
5,414,406
2,168,867
7,583,273
-
-
Total provisions
5,276,343
7,583,273
Employee benefits
Provision for employee benefits represents amounts accrued for annual leave, sick leave and redundancy.
EMPLOYEE BENEFITS PROVISIONS
Carrying amount at the beginning of period
Additional provision made
Amounts used
Total employee benefits provisions
Consolidated entity
2016
$
5,414,406
20,860,105
(23,674,805)
2,599,706
2015
$
262,890
12,018,203
(6,866,687)
5,414,406
Other provisions
Other provisions mainly consist of provisions for insurance and estimated warranty provisions in respective of service
which are still under warranty at the reporting date.
40
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
OTHER PROVISIONS
Carrying amount at the beginning of period
Additional provision made
Amounts used
Total other provisions
NOTE 15
CONTRIBUTED EQUITY
Ordinary shares fully paid
Share based payment reserve
Treasury shares
Consolidated entity
2016
$
2,168,867
3,763,019
(3,255,249)
2,676,637
2015
$
-
2,168,867
-
2,168,867
Note
15(a)
15(b)
15(c)
Consolidated entity
2016
$
80,094,670
1,333,472
(19,125)
2015
$
70,153,493
182,682
-
81,409,017
70,336,175
ORDINARY SHARES
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
CAPITAL RISK MANAGEMENT
The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure
to reduce the cost of capital. In order to maintain or adjust the capital structure, the consolidated entity may adjust the
dividends paid to shareholders or issue new shares. The consolidated entity’s capital risk management policy remains
unchanged from the Annual Report for the year ended 31 December 2015.
15(a) Movements in shares on issue
Beginning of the financial year
Issue during the year
Option exercised - proceeds received
Deduct: share issue costs
Deduct: acquisition of treasury shares
Tax effect relating to share issue cost
End of financial year
Parent entity
# of shares
($)
195,440,059
45,364,522
8,421,000
-
(8,421,000)
-
240,804,581
70,153,493
11,548,409
842,100
(214,204)
(2,247,980)
12,852
80,094,670
Share based payment reserve
The Company offered employees participation in the employee share incentive rights plan as a long-term incentive and as
part of the remuneration arrangements. The amount expensed in the statement of comprehensive income is determined
by reference to the fair value of the options and performance rights at the grant date.
15(b) Movements in share based payment reserve
Number
($)
Number
($)
2016
2015
Outstanding at beginning of year
12,106,000
182,682
11,381,000
Issue during the year
Share-based payment
Exercised during the year
Lapsed or expired during the year
Tax effect relating to share based payment
-
9,830,000
(8,421,000)
(1,685,000)
-
-
-
490,007
5,000,000
-
-
(9,667)
670,450
(4,275,000)
(56,301)
-
-
84,647
-
154,336
-
Outstanding at year end
11,830,000
1,333,472
12,106,000
182,682
Treasury Shares
During the year, the company has established an Employee Share Trust for the purpose of acquiring, holding and
transferring shares in connection with the Employee Share Option Plan established by the company for the benefits of
participants in those plans. Under the Trust, 8,421,000 shares were issued by the Trust to the participants.
41
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 15 CONTINUED
15(c) Movements in treasury shares
Opening balance at beginning of the year
Acquisition of shares issued by the company
Acquisition of on-market shares
Issue of shares under Employee Share Incentive Rights Plan
Share revaluation reserve
Balance at year end
NOTE 16
CASH FLOW INFORMATION
Reconciliation of the net profit (loss) after tax to the net cash flows from operations
Net profit/(loss)
Non-cash items
Depreciation and amortisation
ESOP, option and performance rights expenses
Changes in assets and liabilities
Receivables
Inventories
Other assets
Payables
Provisions
Deferred tax assets
Deferred tax liabilities
Net operating cash flow
NOTE 17
EARNING PER SHARE
The following reflects the income and share data used in the calculations of basic and
diluted earnings per share
Net profit after tax
Earnings used in calculating basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating basic earnings per
share
Effect of dilutive securities
Share options and performance rights
Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share
2016
Number
($)
-
(6,408,307)
(2,097,693)
8,421,000
-
(85,000)
-
(1,858,410)
(409,121)
2,247,981
425
(19,125)
Consolidated entity
2016
$
2015
$
5,454,698
6,739,995
191,915
480,765
73,870
98,035
15,140,240
(13,379,862)
3,704
(282,033)
(9,765,072)
(2,759,476)
627,798
40,778
9,133,317
-
(103,610)
7,634,366
7,320,383
(1,703,917)
50,561
6,729,821
Consolidated entity
2016
$
2015
$
5,454,698
5,454,698
6,379,995
6,379,995
201,074,294
195,440,059
-
-
201,074,294
195,440,059
42
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 18
LEASE EXPENDITURE COMMITMENTS
Operating leases (non-cancellable)
(a) Operating leases related to office
(b) Operating leases related to plant & equipment
Minimum lease payments
- Not later than one year
- Later than one year and not later than five years
- Later than five years
Aggregate lease expenditure contracted for at reporting date
The entity had no capital commitments as at 31 December 2016 (2015: Nil)
FINANCE LEASE COMMITMENTS
Committed at the reporting date and recognised as liabilities payable:
- Not later than one year
- Later than one year and not later than five years
Total commitment
Less: future finance charges
Net commitment recognised as liabilities
Representing
- Other financing facilities - current (note 13)
- Other financing facilities - non-current (note 13)
Aggregate lease expenditure contracted for at reporting date
NOTE 19
Consolidated entity
2016
$
2015
$
350,253
-
270,733
79,520
-
350,253
54,092
35,674
89,766
-
-
89,766
Consolidated entity
2016
$
2015
$
690,083
44,518
-
734,601
690,083
44,518
734,601
366,011
194,194
(25,998)
534,207
354,854
179,353
534,207
RELATED PARTY AND KEY MANAGEMENT PERSONNEL DISCLOSURES
2016
2015
Consolidated entity
(a) The consolidated financial statements include the financial
statements of Tempo Australia Limited and its controlled entities
listed below
Parent Entity
Tempo Australia Limited
Subsidiaries of Tempo Australia Limited
Tempo Resources Solutions Pty Ltd
Tempo Engineering Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
Cablelogic Pty Ltd (formerly Tempo Engineering Services Pty Ltd)
Australia
Tempo Construction & Maintenance Pty Ltd
Tempo Personnel Management Pty Ltd (Formerly Industry Partners
Pty Ltd)
Tempo Global Pty Ltd
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
43
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 19 CONTINUED
(b) Compensation by category for Directors and nominated executives
Short-term employment benefits
Post-employment benefits
Share based benefit
Others
Total benefits
2016
$
2015
$
1,057,729
73,648
457,662
-
1,589,039
756,613
70,069
89,124
14,000
929,806
Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
There were no other payments than payments for director’s fees with related parties during 2016.
NOTE 20
On 28 July 2016, the Company entered into an agreement to purchase the core assets of specialist electrical, telecom
and data communications contractor, Cablelogic Pty Ltd, for the total consideration transferred of $605,159. This total
consideration represented the fair value of the net assets and hence no Goodwill or Intangibles were created as a result
of this transaction.
Details of the fair value are as follows:
Fair value recognised
on acquisition
$
629,441
97,107
436,380
1,162,928
105,223
452,546
557,769
605,159
605,159
81,122
Business combination
ASSETS
Trade and other receivables
Inventories
Plant and equipment
Total assets
LIABILITIES
Borrowing
Provisions (including employee benefits)
Total liabilities
Total identifiable net assets at fair value
Cash used to acquire business
Acquisition costs expensed to profit or loss
44
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 21
DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax asset comprises temporary differences attributable to:
Consolidated entity
2016
$
2015
$
Carry forward tax losses
Accrued expenses
Employee benefits
Share based payment reserve
Others
Balance as at year end
Movements:
Opening balance
Charged to profit or loss
Take up of prior year losses
Charged to equity
Future Employee Share Trust contributions
Balance as at year end
Deferred tax liability comprises temporary differences attributable to:
Inventory
Prepayment and receivables
Plant and equipment
Balance as at year end
Movements:
Opening balance
Charged to profit or loss
Balance as at year end
1,156,748
687,613
882,556
189,363
25,681
2,941,961
2,886,457
(1,247,206)
1,100,495
12,852
189,363
2,941,961
28,021
73,531
12,792
114,344
73,566
40,778
114,344
434,781
448,053
1,974,229
-
29,394
2,886,457
1,182,540
1,703,917
-
-
-
2,886,457
-
50,048
23,518
73,566
23,005
50,561
73,566
In the tax assets recorded on the statement of financial position, Tempo has recognised a further $1,100,495 of tax losses
from previous years that may be available to Tempo, to offset future taxable income. The ability to utilise these losses will
depend on Tempo’s ability to continue to pass the continuity of ownership and control tests in accordance with the Income
Tax Assessment ACT 1997.
45
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 22: FINANCIAL INSTRUMENTS
The consolidated entity’s activities expose it to credit risk and liquidity risk. Interest rate risks are not considered as
significant. The consolidated entity uses different methods to measure different types of risk to which it is exposed.
Risk management is carried out by the Chief Executive Officer and the Chief Financial Officer under policies approved by
the Risk, HSE and Commercial Committee and the Board. The Board provides directions for overall risk management, as
well as policies covering specific areas.
(a) Credit risk exposures
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date for
recognised financial assets is the carrying amount of those assets, net of any provisions for doubtful debts of those
assets, as disclosed in the financial statements. The consolidated entity has no derivative financial instruments or
forward exchange contracts. At year end, 63% ($3,626,536) of receivables were due from one debtor. Subsequently to the
year-end $3,626,536 has been paid and exposure to this debtor decreased to $nil. As a result there is no material credit
risk exposure to any single debtor or group of debtors under financial instruments.
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to meet the ongoing expenditure requirements
whilst the group is in start-up phase. In addition to cash, the group also has access to working capital facilities with
a major Australian banking group. Management and the board monitor rolling forecasts of the consolidated entity's
liquidity on the basis of expected cash flow.
(c) Fair value estimation
The fair value of financial assets and financial liabilities is estimated for recognition and measurement and for disclosure
purposes. The carrying value less impairment provision of trade receivables and payables is a reasonable approximation
of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is
available to the Group for similar financial instruments.
(d) Interest rate risk
The group has an exposure to interest rates through its working capital facilities and its borrowings for equipment,
insurances and software. Given the short term nature and size of the borrowings, the board believes there is no material
credit risk regarding interest rates.
NOTE 23
Profit/(Loss) after income tax
Total comprehensive income
Parent Entity Information
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Accumulated losses
Total equity
Contingencies
The parent entity had no contingent liabilities as at 31 December 2016 (2015: Nil).
Capital Commitments
The parent entity had no capital commitments as at 31 December 2016 (2015: Nil).
2016
$
(3,013,309)
(3,013,309)
25,708,858
32,370,180
16,148,222
16,295,277
83,676,122
(67,601,219)
16,074,903
2015
$
176,153
176,153
464,539
7,060,348
1,238,520
1,312,086
70,336,175
(64,587,913)
5,748,262
46
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 24: SHARE BASED PAYMENTS
An Employee Share Incentive Right Plan (ESIRP) has been established by the Company, and approved by shareholders at
the general meeting held on the 2nd of May 2013 and renewed at the general meeting held on 31 May 2016, whereby the
Company may grant options and/or performance rights over ordinary shares in the parent entity to certain employees of
the Company. The options and/or performance rights are issued for nil consideration and are granted in accordance with
guidelines established by Tempo Employee Share Incentive Right Plan.
Set out below are summaries of options and performance rights granted under the plan:
Options
Grant date Expiry date
28/02/2014
28/03/2016
30/05/2014
21/03/2016
30/05/2014
21/03/2017
14/04/2015
9/04/2016
28/02/2014
7/08/2017
11/02/2016
7/08/2017
9/06/2016
30/06/2019
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired /
forfeited/
other
Balance at
the end of
the year
Vested at the
end of year
Vesting
date
$0.10
$0.10
$0.14
$0.10
$0.15
$0.15
$0.36
3,106,000
2,000,000
2,000,000
4,000,000
1,000,000
-
-
-
-
-
-
-
1,500,000
2,000,000
(3,106,000)
(2,000,000)
-
-
-
-
-
-
2,000,000
(3,315,000)
(685,000)
(1,000,000)
-
-
-
-
-
-
-
1,500,000
2,000,000
28/02/2016
22/02/2016
22/02/2017
28/02/2016
7/07/2017
7/07/2017
31/05/2019
-
-
-
-
-
-
-
-
-
Total Granted
12,106,000
3,500,000
(8,421,000)
(1,685,000)
5,500,000
Weight average exercise Price
$0.11
$0.26
$0.10
$0.13
$0.22
Performance rights
Grant date Expiry date
10/06/2016
10/06/2031
10/06/2016
10/06/2031
10/06/2016
10/06/2031
10/06/2016
10/06/2031
Total Granted
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired /
forfeited/
other
Balance at
the end of
the year
Vested at the
end of year
Vesting
date
$0.00
$0.00
$0.00
$0.00
-
-
-
-
-
2,680,000
1,500,000
2,000,000
150,000
6,330,000
-
-
-
-
-
-
-
-
-
-
2,680,000
1,500,000
2,000,000
150,000
6,330,000
1/07/2018
1/07/2019
21/12/2018
15/03/2018
-
-
-
-
-
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at
the grant date are as follows:
Grant date
Expiry date
Share price at
grant date
Exercise price
11/02/2016
7/08/2017
9/06/2016
30/06/2019
$0.110
$0.235
$0.15
$0.34
Expected
volatility
125%
124%
Dividend yield
Risk-free
interest rate
Fair value at
grant date
0%
0%
1.75%
1.65%
$0.0539
$0.1590
For the performance rights granted during the current financial year, the valuation model inputs used to determine the
fair value at the grant date are as follows:
Grant date
Number of Rights
Underlying share price
Probability %
10/06/2016
10/06/2016
3,330,000
3,000,000
$0.235
$0.206
100%
100%
Value
$
782,550
618,000
47
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
NOTE 25
AUDITORS REMUNERATION
Audit or review of the financial report
RSM Australia Partners
Tax compliance
RSM Australia Partners
Total
Consolidated entity
2016
$
2015
$
64,000
61,000
-
64,000
8,550
69,550
NOTE 26: SUBSEQUENT EVENTS
Nil
NOTE 27: CONTINGENCIES
The consolidated entity has no contingent assets or liabilities as at 31 December 2016 (2015: nil).
48
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’
DECLARATION
FOR THE YEAR ENDED 31 DECEMBER 2016
The directors declare that the financial statements and notes are in accordance with the Corporations Act 2001 and:
a. Comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
b. Give a true and fair view of the financial position of the consolidated entity as at 31 December 2016 and of its
performance as represented by the results of their operations and its cash flows, for the year ended on that date; and
c. Comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
In the opinion of the directors, there are reasonable grounds to believe the Company will be able to pay its debts as and
when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Director
Carmelo Bontempo
Perth
Date 27 February 2017
49
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT
50
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation RSM Australia Partners 8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TEMPO AUSTRALIA LIMITED Opinion We have audited the financial report of Tempo Australia Limited (the company) and its subsidiaries (the consolidated entity), which comprises the consolidated statement of financial position as at 31 December 2016, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the consolidated entity is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its financial performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the consolidated entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 51
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016INDEPENDENT AUDITOR’S REPORT Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed this matter Recognition of Revenue Refer to Note 3 in the financial statements A substantial amount of the company’s revenue relates to revenue from contracts to provide construction and maintenance services. Revenue recognition was considered a key audit matter, as it may be complex and involves significant management judgements. These include: the recognition of claims and variations, based on an assessment by the consolidated entity as to whether it is probable that the amount will be approved by the customer and therefore recovered; and determining the financial period when the revenue from contracts has been earnt by the consolidated entity. We believe this is a key audit matter because of its significance to profit and the judgement required in recognising revenue from contracts. Our audit procedures in relation to the recognition of revenue included: assessing whether the company’s revenue recognition policies were in compliance with Australian Accounting Standards; testing a sample of transactions from major contracts by sighting evidence of completed claims and comparing the revenue recognised to the approved claims; assessing the recoverability of accounts receivable from major contracts by vouching the subsequent receipts to bank statements; and reviewing revenue transactions before and after year-end to ensure that revenue is recognised in the correct financial period. Other Information The directors are responsible for the other information. The other information comprises the information included in the consolidated entity's annual report for the year ended 31 December 2016, but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 52
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016INDEPENDENT AUDITOR’S REPORT Responsibilities of the Directors for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the consolidated entity to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the consolidated entity or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/Pronouncements/Australian-Auditing-Standards/Auditors-Responsibilities.aspx. This description forms part of our auditor's report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors' report for the year ended 31 December 2016. In our opinion, the Remuneration Report of Tempo Australia Limited, for the year ended 31 December 2016, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. RSM AUSTRALIA PARTNERS Perth, WA TUTU PHONG Dated: 27 February 2017 Partner ADDITIONAL
INFORMATION
REQUIRED BY ASX
CORPORATE GOVERNANCE STATEMENT
The purpose of Tempo Australia Ltd (“Tempo”) is to deliver to clients in the resources, industrial and commercial sectors
specialist multidisciplinary maintenance and construction services, which protect and enhance their investments,
without ever compromising on our values. Whilst doing this the Board is committed to providing a satisfactory return
to its shareholders and fulfilling its corporate governance obligations and responsibilities in the best interests of the
company and its shareholders. Good governance enables Tempo to deliver this purpose whilst meeting the Boards intent.
The governance structures and processes are defined in Tempo’s Corporate Governance Statement which can be found at
https://www.tempoaust.com/who-we-are/corporate-governance.html
SHAREHOLDER INFORMATION
The information below is current at 15 February 2017, and includes additional information required by the Australian
Securities Exchange Limited which is not shown elsewhere in this report.
SECURITIES EXCHANGE LISTING
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian
Securities Exchange Limited
DISTRIBUTION OF SHAREHOLDERS
The number of shareholders, by size of holding, in each class of share is:
Category
(Size of holding)
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number of ordinary
shareholders
Number of ordinary
shares
% of issued capital
202
499
143
318
255
217,636,865
20,816,378
1,167,387
1,100,641
83,310
1,417
240,804,581
90.38
8.64
0.48
0.46
0.03
100.00
Non marketable securities totalling a number of 186,344 ordinary shares are held by 319 shareholders (2015: 323). There
is no current on-market buy-back of securities.
OPTIONS AND PERFORMANCE RIGHTS
As at 15 February 2017 the Company had 11,830,000 unquoted options or performance rights over unissued ordinary
shares in the Company held 9 different holders.
VOTING RIGHTS
On show of hands: one vote for each member on poll: one vote for each share held.
53
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 ADDITIONAL INFORMATION REQUIRED BY ASX
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders disclosed in substantial holding notices given to the Company are:
Name
Bontempo Nominees Pty Ltd
Angophora Capital Pty Ltd
Anthony Barton and Associates
TOP 20 SHAREHOLDERS
Rank
Name
Number of ordinary
shares
% of issued capital
42,021,632
38,000,000
20,000,000
17.45
15.78
8.31
Number of ordinary
shares
% of issued capital
BONTEMPO NOMINEES PTY LTD
ANGOPHORA CAPITAL PTY LTD
INGLEWOOD LODGE PTY LTD
MR IVAN TANNER & MRS FELICITY TANNER
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
ZERO NOMINEES PTY LTD
UBS NOMINEES PTY LTD
MISS SILVANA MASALKOVSKI
MR ANTHONY PETER BARTON & MRS CORINNE HEATHER BARTON
AUST EXECUTOR TRUSTEES LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR PAUL SANTILLO
VANAVO PTY LIMITED
MRS CHIARA RENIS
SEARCH POINT PTY LTD
INGLEWOOD LODGE PTY LTD
KAHLIA NOMINEES PTY LTD
CHEMCO SUPERANNUATION FUND PTY LTD
MISS VICTORIA ROSE BARTON
NATIONAL NOMINEES LIMITED
CAMPBELL KITCHENER HUME & ASSOCIATES PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
Total
Balance of register
Grand total
41,702,632
38,000,000
10,350,000
5,000,000
4,991,661
4,827,673
4,800,000
4,317,298
3,724,711
3,491,562
3,286,219
2,978,669
2,750,000
2,410,228
2,350,000
2,000,000
2,000,000
2,000,000
2,000,000
1,800,000
1,750,030
1,735,284
1,710,000
149,975,967
90,828,614
240,804,581
17.32
15.78
4.30
2.08
2.07
2.00
1.99
1.79
1.55
1.45
1.36
1.24
1.14
1.00
0.98
0.83
0.83
0.83
0.83
0.75
0.73
0.72
0.71
62.28
37.72
100.00
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54
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 CORPORATE
DIRECTORY
DIRECTORS
Carmelo Bontempo
Guido Belgiorno-Nettis
Philip Loots
Brian Thomas
Max Bergomi
LEADERSHIP TEAM
Michael West
Jonathan Wilson
Brett Easton
Gabriel Mallarini
Chairman
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Chief Executive Officer and Managing Director
Chief Financial Officer and Company Secretary
VP Operations and GM Resources
GM Industrial and Commercial
GM Business Acquisitions
STOCK EXCHANGE LISTING
The company’s shares are quoted on the Australian Stock Exchange under the code TPP.
REGISTERED OFFICE
1, 111 Colin Street
West Perth, WA, 6005
POSTAL ADDRESS
PO Box 588, West Perth
WA, 6872, Australia
PRINCIPAL PLACE
OF BUSINESS AND
REGISTERED ADDRESS
Level 1, 111 Colin Street
West Perth, WA, 6005, Australia
T: +61 (8) 6180 2040
E: info@tempoaust.com
www.tempoaust.com
AUDITOR
RSM Bird Cameron Partners
8 St Georges Terrace
Perth WA 6000
T: 08 9261 9100
www.rsmi.com.au
SHARE REGISTRY
Link Market Services
Level 4, Central Park
152 St George’s Terrace
Perth WA 6000
SOLICITOR
Steinepreis Paganin
Level 4, The Read Buildings,
16 Milligan Street,
Perth WA 6000
T: 1300 554 474
www.linkmarketservices.com.au
T: 08 9321 4000
www.steinpag.com.au
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TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 PAGE LEFT BLANK INTENTIONALLY
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TEMPO AUSTRALIA LTD ANNUAL REPORT 2016 TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
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Level 1
111 Colin Street
West Perth WA 6005
Australia
Postal Address:
PO Box 588
West Perth WA 6872
T: +61 (8) 6180 2040
E: info@tempoaust.com
www.tempoaust.com